Dell shuts Limerick factory and scraps 1,900 jobs

Your Shannon Water, tears of joy that flow

Update Dell is closing its Limerick manufacturing facility, with the assembly plant's functions due to be transferred to a Polish plant in Lodz.

The Limerick plant assembles notebooks, desktops and servers for all of Dell's Europe, Middle East and Africa customers. About 1,900 jobs will be cut, starting in April and completed by January, 2010. Sacked employees will receive a severance package and some assistance in finding a new job.

However, Dell's Limerick operation will carry on coordinating EMEA manufacturing, logistics and supply chain activities for product development, engineering, procurement and logistics. Direct assembly plant jobs go to Poland but supervisory management jobs stay in Limerick.

The fired workers will remove their spending from the local economy and the closing plant will stop its spend on local products and services. The knock-on effect could be between one and three jobs lost elsewhere in the region for every one lost at the Dell plant directly. That could mean up to 6,000 or so other jobs going too.

There has been speculation that Dell might have to repay grants from the Irish government and its development agency (IDA), but the company said: "No; we have fulfilled all our obligations to the Irish Government and to IDA Ireland."

The die was cast when Dell instituted a $3bn cost-cutting and restructuring operation last year. Manufacturing costs in Ireland were higher than those in Poland and customers' kit in Europe can be delivered from Poland as easily as from Ireland. Even a trip to Round Rock to see Michael Dell and some of his executives by Irish government officials and the deputy prime minister or Tánaiste Mary Coughlan and the Defence Minister Willie O'Dea could not stop the winds blowing in from Poland. It was a King Canute mission.

Dell opened its assembly operations in Raheen, Limerick, in 1991. They have lasted just 17 years before the Irish tiger was shown to be just another costly overfed western European tabby cat which could be replaced by a skinnier Polish moggy. It's probably only because Dell needs to be as responsive as it can be to European customers, building to order their phoned-in and web orders, that it needs a European manufacturing base at all.

Poland can be thankful for that, but it would do well to remember that it is more expensive than China or other far Eastern locations. It would be unwise to presume the jobs coming its way will stay its way. ®