Manufacturing is still a vital activity, says IDA

23 Feb 2006

NEC’s decision this week to shift its Meath-based manufacturing operations to the Far East with the loss of 350 jobs does not signal the end of technology manufacturing in Ireland, a senior executive with IDA Ireland told yesterday. He said that the manufacturing sector in Ireland needs to evolve higher up the value chain in order to survive.

On Tuesday, management at the Ballivor, Co Meath-based NEC operation, which manufactured semiconductors for the European automotive industry, told the operation’s 350-strong workforce that the plant was shutting down. It is understood that the company decided to close its Irish manufacturing operation because of high operating costs and is moving its operation to Malaysia and Singapore. Talks are currently underway regarding a redundancy package for the workers.

Barry O’Leary, divisional director for ICT and life sciences at IDA Ireland, said the job losses were part of the inevitable churn in the sector and that management in local tech firms should strive to push their operations higher up the value chain.

“There is a dramatic pace of change in the technology industry right now resulting in churn,” O’Leary said.

O’Leary spoke to during a press conference yesterday where business software firm Sage announced 40 new jobs as part of a combined €3m investment in a CRM (customer relationship management) research and development (R&D) facility and European Data Centre in Dublin.

Regarding the NEC news, O’Leary said: “It really depends on the operation’s position in the overall value chain. NEC in Ballivor was conducting test and assembly operations.”

O’Leary pointed to Intel’s major 4,000-strong manufacturing operation in Leixlip which is engaged in developing and producing the wafers for the latest generation of Intel microprocessors. “Intel’s test and assembly work is conducted in the Far East,” he said. Intel also conducts vital R&D work in Shannon.

He pointed to significant gains in the past year with major technology job creation projects announced by major internet players like Google, Yahoo and eBay.

O’Leary also pointed to the recent announcement that more than 1,100 new jobs are to be created at Carrigtwohill in Cork by 2010 with the investment of more than US$1bn by Amgen, one of the largest biotechnology companies in the world, in a major manufacturing operation. Amgen plans to build process development, bulk manufacturing and fill and finish facilities at Carrigtwohill.

“We are currently focusing on winning higher-value activities for Ireland,” he explained. “Look at Amgen in Cork. It doesn’t mean that Ireland is not interested in manufacturing; it’s the type of manufacturing that’s done at the higher end that’s vital,” O’Leary said.

He also pointed to how local operations of multinational companies can evolve rather than simply close down if the manufacturing function is shifted to lower-cost economies.

“A decade ago Apple in Cork had a heavy reliance on manufacturing and employed well over 1,200 people. Eventually the kind of manufacturing they were involved in went elsewhere and the numbers employed fell to about 400 people.

“However, today employment is up at more than 1,000 people. The local management at Apple effectively reinvented themselves and are responsible for running their entire European business out of Ireland,” O’Leary said. As well as manufacturing, some 800 of the workers at Apple in Cork are involved in areas such as group treasury, supply chain management, web support and financial shared services.

By John Kennedy