Dell moves logistics hub to Holland


28 Apr 2003

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Adding further fuel to fears that Dell may be looking to move out of Ireland, reports at the weekend suggest that the computer giant has moved a significant part of its warehousing and logistics operations to Tilburg in Holland, resulting in some €400m worth of business leaving the country.

Following months of speculation sparked by Dell’s misgivings about rising costs of doing business in Ireland due to poor infrastructure, the move may result in layoffs in Dell’s Limerick operations, where it employs over 3,000 people. The move has already resulted in Shannon-based freight and logistics firms cutting their workforces due to potentially lost business.

The decision was said to be taken due to rising costs and Tilburg’s attractiveness in terms of shipping product to eastern Europe.

However, according to a report in yesterday’s Sunday Independent, a Dell representative played down the likely impact of the move, saying that the operations that were moved to Holland made up only 5pc of the company’s US$2bn operations in Europe, Middle East and Africa (EMEA).

Reports suggest the move has taken IDA Ireland and the Department of Enterprise and Employment by surprise.

In recent months, operations executives in Dell’s Limerick operations as well as chief operations Kevin Rollins highlighted the fact that Ireland is no longer a competitive location, despite the fact that its Irish operations are the company’s most productive in the world.

Rumblings from industries based around Shannon suggest consternation at lack of infrastructure, particularly in the realm of transport and logistics, with some sources alleging it takes executives and goods anything from one to three days just to get to the European mainland.

However, a spokesperson for the local operation told siliconrepublic.com that the hub in Holland will not be a Dell site, but belongs instead to a third-party partner. “This is all part of a process to reduce costs. There are parts of our products that we don’t manufacture ourselves, like monitors or speakers. We store these in hubs close to the local markets we serve.

“We don’t see the value in importing these goods into Ireland only to re-export them and incurring unnecessary additional freight costs. We have no further plans at present to add further hubs,” the spokesperson said.

In terms of the US$400m in lost business, she said that this was incorrect. “Whilst the eastern European segment represents 5pc of our EMEA business, to extrapolate this as 5pc of our overall revenue is misleading. Monitors, speakers and other peripherals are a small cost of our overall system value. In terms of the warehouse we were using locally to store these goods, we can now store more raw materials, which have risen by 50pc over the past year,” she said.

By John Kennedy