US company job losses hit 500 employees at Shannon facility

23 Oct 2019

Shannon, Co Clare. Image: RuthAS/Wikimedia Commons (CC BY 3.0)

Molex, the US company owned by Koch Industries, will wind down its Shannon facility in 2020.

About 500 jobs will be lost following the closure of the Molex facility in Shannon, Co Clare, by the end of 2020.

Staff were reportedly bracing themselves for bad news when a meeting was called for Tuesday afternoon (22 October). It was then that the US company disclosed its plans to gradually close the Shannon facility in phases, starting early in 2020.

Molex said these plans would be enacted subject to an employee consultation process, and the company has committed to engaging with current employees in Shannon and providing supports to help them in the transition ahead.

Two more Molex facilities in Sligo and Donegal are said to be unaffected by this decision.

Impact of China trade woes

The Illinois-headquartered company manufactures electronic, electrical and fibre-optic interconnection systems for a variety of industries. Those made at the Shannon facility, however, were found through a review to have “insufficient financial returns and growth potential”, leading to the decision to close the plant.

“The decision in no way reflects on our Shannon employees, who have made an invaluable contribution to our business over many years,” the company said in a statement.

“Announcing our intention to close this facility is very difficult due to its impact on our employees, and the deep ties Molex has with the region and its people, having operated in Shannon since 1971.”

Approaching 50 years operating in Shannon, Molex was one of the largest employers in the area. Amid the recession, about 100 jobs were lost at the Clare facility and pay was reduced by around 5pc due to falling demand for its products.

In 2013, the company was bought for $7.2bn by Koch Industries, the privately held US multinational led by the billionaire Koch family. Koch Industries has recently been critical of the ongoing US trade war with China and the impact of tariffs on Molex, and the company has laid off employees in the US also.

China accounted for almost a third of Molex’s revenue in 2013 but one analyst wrote in July: “We expect weakness in Chinese markets and related trade pressures will negatively contribute to overall revenue softness over the next year.”

‘Bitterly disappointed’

In a statement, Minister Heather Humphreys said she was “bitterly disappointed” with the news. “My immediate thoughts are with the workers and their families at what is a very difficult time for them and for the wider Shannon area. I fully appreciate how important large-scale employers like this are to regional areas, which makes this company closure all the more difficult.”

Humphreys said that she had spoken to Molex CEO Joe Nelligan and expressed her “deep regret” at the decision. “He unfortunately made clear that, while the decision was made very reluctantly, it is irreversible,” she added.

“He praised the huge work ethic and dedication of the workers, and explained it was a global decision made on the basis that 75pc of the product they manufacture in the Shannon plant is at end of life.”

Government commits support for employees

In her statement, Humphreys assured Molex employees that the Government will be doing “everything possible” to assist those impacted by the closure. Specifically, she said that “the full range of State employment and retraining supports will be made available to [the] firm’s employees”.

Minister of State Pat Breen, an elected representative of Clare, said: “The workers impacted have valuable skills and experience that will make them attractive to other employers. I’ll be working, together with all arms of State, to help get new jobs created on the ground in Clare as soon as we can.”

In a statement from Shannon Chamber, CEO Helen Downes lamented at the loss of an “exemplar employer” that had helped develop the region and its STEM sector.

“It is very clear that this was a very difficult decision for the company and one which they have given careful consideration to. It is not a reflection on the employees’ capabilities or skills, but due to market factors. We would hope that, given the multi-sectoral spread in Shannon and the region that opportunities to match the skills that are being lost will manifest over time.”

Downes added that the chamber “will assist in any way we can to assess opportunities for these employees to gain new employment”.

Shannon, Co Clare. Image: RuthAS/Wikimedia Commons (CC BY 3.0)

Updated, 10.52am, 24 October 2019: This article has been amended to clarify that Koch Industries, not Molex, attributed the latter’s recent difficulties to the impact of US-China trade tariffs, and to include analyst comment on Molex’s forecasted earnings for additional context.

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.