Fears escalate over future of Dell Limerick plant

22 Dec 2008

Dell has said it is pressing ahead with a US$3bn cost-cutting plan that places doubts over the future of the 2,000-job manufacturing plant in Limerick.

Irish ministers, including the Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan TD, and  Defence Minister Willie O’Dea TD met with senior Dell executives last week to seek clarity on the matter.

They were told Dell will proceed with a US$3bn plan to transform the company.

However, over the weekend fears have escalated and a statement has been issued by Tánaiste Mary Coughlan. It reads: “The company has confirmed to the Tánaiste and Minister for Defence that it was pushing ahead with its cost-saving plan.

“Weakening demand and associated cost pressures continue to put pressure on the company to implement its new strategy.”

”Dell is continuing its internal consideration of exactly what its new strategy means for its operations in Limerick. The company has undertaken to communicate the details both to staff and to the Government as soon as it is in a position to do so.

“The significant benefits that the Limerick operation brings to the company, the city and the region. For its part, the company expressed its wish to continue to work with the IDA and the Government, and agreed to revert to the Tánaiste as soon as it had finalised its detailed plans for the Limerick operations,” the statement said.

In September, it emerged Dell has plans to sell its factories worldwide to contract electronic manufacturers.

At the start of November, it emerged that some 700 contract workers were to be let go from Dell’s manufacturing operation at Raheen, which the company described as a seasonal rotation at the time.

The official line Dell is maintaining on the matter reads: “Dell is currently undertaking a global review of manufacturing operations, which is still underway, and it is business as usual in Limerick.”

A more definitive outline of Dell’s plans for the future of its total workforce of 4,000 people in Ireland is anticipated in January.

In recent weeks, Dell country manager Dermot O’Connell told siliconrepublic.com that while he cannot comment specifically on the future of the company’s operations in Ireland, higher value-add divisions have been steadily added to the Limerick manufacturing plant in recent years.

He said that the operation has been transformed solely from a manufacturer of consumer and business PCs based solely on direct sales via the internet and phone to include custom manufacturing and supply chain roles that possibly have a long term future.

These include a Custom Factory division, which builds PCs for corporates with built-in asset tags; an Industrial Systems Group that makes bespoke server products for companies such as Google and Microsoft; a Global Services Command Centre that tracks and routes products and parts to places of need; and a Solutions Factory group that designs data centre systems.

Limerick is also home to Dell’s Global Product Development for Wireless, where all wireless intellectual property and R&D is conducted, and a Global Solutions Innovation Centre where enterprise IT-deployments and websites can be tested.

O’Connell hinted strongly that Dell’s future overall is no longer as a direct seller of PCs but of a myriad of technology devices from laptops to higher-end servers that have at their core hardware as a service (HaaS) and software as a service (SaaS) capabilities manageable via the internet.

Aside from straightforward manufacturing, the question is: will these latter investments be the nucleus of a still viable, although reduced, Dell in Limerick?

Ultimately, such investments have at their core state grants for employment and R&D, underpinned by specific employment targets.

It might be possible to surmise that Dell could go in the direction of Apple in Cork, which began in the Eighties in Ireland as a manufacturing operation, and at its peak employed 3,000 people.

Today, Apple employs over 1,100 people at its Cork operation but no longer in manufacturing but in higher-value finance, e-commerce, R&D, supply chain and legal activities.

A worse-case scenario could be that of Gateway 2000, which came to Dublin in the mid-Nineties, and at its peak employed close to 3,000 people in direct PC manufacturing and call-centre work before closing abruptly in 2001.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years