IDA admits Dell cost competitiveness fears

4 Apr 2003

An IDA spokesman has acknowledged that rising labour costs and infrastructural deficits in such areas as telecommunications and our road networks are indeed affecting Ireland’s competitiveness and we may well lose out to lower cost economies such as in Asia for major IT and pharmaceutical projects.

Reports have been growing that one of Ireland’s biggest employers, Dell Computer, which employs close to 5,000 people in Ireland and contributes to 5pc of Ireland’s GDP, has been highly critical of rising labour costs and other infrastructural deficits. In recent weeks comments by local staff have warned that “Ireland faces a watershed period”.

Over the past couple of months, IDA chief executive Sean Dorgan was vociferous on the subject of competitiveness, echoing similar soundings from Forfas that Ireland was losing its edge on the competitiveness front.

This morning an IDA spokesman told “We warned since last year that competitiveness is being eroded in Ireland, with overall operating costs constantly rising this year and last year. It’s not just labour costs, but all the issues around infrastructures of business, such as telecoms and transport. If it costs an executive an extra day just to meet a client in Europe, well it’s not good enough.

“Forfas says the same thing; we warned that if we are to continue in the sectors that we are in, like IT and pharmaceuticals, then we’ve got to continue to improve competitive position,” the spokesman warned.

Ireland, he added, could be a victim of its own success. “Parallel to this, there is the fundamental shift where Ireland is not as suitable for labour-intensive industries. Any industry dependent on labour input is severely pressured right now.

“In terms of Dell, it is undertaking major productivity improvements and this has enabled it to remain competitive but that gets squeezed at a certain point and more has to be done to accommodate its concerns. Not just labour cots, but operating costs as a whole, the cost of getting to market is increasingly difficult.

Dell, like all labour intensive industries, has to remain competitive or it will look for lower cost locations,” the IDA spokesman said.

By John Kennedy