Winter comes early for tech sector


25 Sep 2003

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What one hand gives, the other takes away. Ireland’s irrepressible push up the value chain of plum tech jobs seems to have a habit of revealing the stark underside to the fact that the country is no longer a location for low-cost manufacturing.

The news that 3Com was to close its Blanchardstown plant with the loss of 640 jobs after 12 years of loyal service dribbled out in a “will they or won’t they” fashion to be confirmed just as news that a further 315 jobs were to be lost at electrical goods manufacturer Schneider in Celbridge. While a small group of 35 workers will be kept on at 3Com to do valuable R&D work, the stark reality for production workers couldn’t be worse as Christmas looms closer. The closure of the plant is part of a major corporate restructuring programme that will result in the loss of 1,000 jobs worldwide. Over the next six months 3Com will outsource all of its direct manufacturing and related activities for its enterprise networking products to two contract manufacturers — Flextronics in Singapore and Jabil Circuit in Florida. The plant will be wound down between the end of November and February next year.

As for the Schneider workers in Celbridge, the plant that has been operating in the town for 26 years was closed by its parent company as part of a bid to remain competitive. Manual operations at Schneider will be transferred to the Czech Republic and automated production will move to France.

While all of this has been happening, call it a clever PR ploy to distract the good citizen’s attention from the bad news or simply serendipitous fortune, online auction giant eBay announced that it will create 800 new jobs in the — wait for it — Blanchardstown area! Following the successful conclusion of negotiations with IDA Ireland the jobs are to be in place by 2005. Its subsidiary PayPal will establish its European headquarters in Blanchardstown with 400 of the new jobs involved in hosting PayPal’s European customer services and financial services functions for the European market.

The expansion by eBay follows similar announcements by Google and Overture and may satiate the feelings of workers from the westside of Dublin as well as the growing populations of catchment areas such as Meath, Kildare and Louth.

Speaking of Louth, another area riven by freak expansions and unexpected plant closures, green shoots of recovery were spotted in the form of 160 new jobs in a cluster of new projects. Some 100 jobs for Dundalk will come from Swiss-based multinational ABB, which makes quality control systems for industry. The remainder will be provided by Italian firm Finmatica, which is establishing a software licensing operation and multilingual technical centre in the town. It is understood that ABB is to undertake an €8.3m investment to establish a global R&D and marketing centre for its quality control systems for the pulp and paper industry.

A spokesman for IDA Ireland acknowledged the bad news and the devastation that the loss of 640 well-paying jobs will mean to the country, but argued that jobs in the technology sector are still being created. “We must be careful not to knock the technology sector as having had its day. The fact remains that overseas tech firms employ close to 45,000 people and are responsible for exports of more than €30bn — that’s almost one third of Ireland’s GDP.

“The industry is going through a phase that it goes through almost every five or six years. This one has certainly been the worst, but I believe it is bottoming out and before long new jobs will come on stream. That’s why falling interest in technology and science courses is a vital issue right now, we will need the people.

“Some 9,000 jobs have been lost in the industry over the past three years, but what people don’t realise is that we’ve actually gained another 6,000, so that’s a net loss of 3,000 jobs to the economy overall. If you look at the bigger picture and how the tech downturn impacted other economies, particularly in the US, then you realise that Ireland has got off fairly lightly,” the IDA spokesman said.

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Despite job losses and job creation, existing businesses everywhere are grappling with change, not just with the economy, but also with the way they function. There can be no one in Ireland who was not shocked by the massive losses suffered by AIB as a result of the Rusnak/Allfirst saga. Imagine how cheated Americans feel at the actual billions of dollars that sailed down the Suwannee (literally) as a result of the major accounting frauds at Enron and WorldCom.

It seems the new world order is about to spill over into technology if you happen to examine PricewaterhouseCoopers’ (PwC) latest Technology Forecast. Going forward businesses will be investing in real-time financial and productivity reporting systems as well as business intelligence driven by new standards such as extensible business reporting language (XBRL).

“Businesses will be aiming to be able to close and balance their books at the end of the working day using the latest financial reporting and business intelligence technologies,” said Eric Berg, director of PwC’s Global Technology Centre and editor-in-chief of PwC’s bi-annual Technology Forecast. “The number of real-time enterprises is on the rise, with the need for real-time, end-to-end reporting and analysis on business processes. The scandals caused by Enron and subsequently followed by WorldCom and others showed stock exchanges and regulatory authorities that more action was needed and new technologies such as XBRL are being snapped up to ensure that ethical business practices are implemented every day.”

XBRL is an electronic format for simplifying the flow of financial statements, performance reports, accounting records and other financial information between software programmes. Until recently there were no standards that would allow financial information to be automatically communicated between different applications. According to Berg, XBRL will save companies time and money when information consumers, inside and outside a firm, analyse complex data. The standard, a cousin of XML (extensible markup language), is supported by a consortium of over 200 corporations, financial markets, accounting firms and regulators, including the New York Stock Exchange and the Securities and Exchange Commission.

“The effect that XBRL will have on the business community will be more significant than the transition from paper and pencil analysis of financial information to the use of spreadsheets. In the next three to five years, XBRL will move from the early adopter phase to becoming the generally accepted way to report business information,” said Robin Menzies, partner in PwC’s Irish Global Risk Management Solution Practice.

Joe Tynan, a partner in PwC’s Global Technology Industry Group Dublin division, said that Irish companies and the public sector could benefit from the advent of XBRL. He said they “require real-time intelligent data to make better informed decisions on controlling costs and on managing demand. IT efforts over the next few years have to focus on getting this intelligent real-time information into the hands of the people who need it, when they need it.”

The moral of the story? Forget about cooking the books, think about pulling the plug instead.

By John Kennedy