Motorola, the US telecoms firm, has rebuffed an approach by IDA Ireland and its local managers to consolidate its European finance function in Cork, where it already employs up to 500 staff writes Jamie Smyth, Technology Reporter.
The company has also delivered a warning about rising costs in the Republic, where it bases a software development unit for mobile networks, a sales office and an advanced energy division.
In an interview with The Irish Times, Mr Tom Shirley, vice-president of Motorola's global telecommunications solutions division, said the shift in the value of the euro and the dollar in the past few years was causing a "frustrating pain" for the firm.
"At the moment Ireland is at a substantial disadvantage to the likes of China, India or Malaysia," he said.
"In Ireland it costs $80-90,000 to run an engineer every year whereas in Asia it may cost less than $50,000."
Mr Shirley, who travels to Motorola's software development centre in Cork almost every month, said the firm was now increasing staff numbers in Asia rather than Ireland because of the cost of doing business here.
He said a weakening of the value of the euro against the dollar would not bring Ireland on a par with India or China for cost, but would ease the pain a bit.
However, Mr Shirley said the costs factor in Ireland was not a "get up and move pain" for the corporation and he said Cork's software division was one of the few global Motorola units not to suffer redundancies since 2000.
Mr John Phillips, general manager, Motorola Ireland, said the currency factor meant Motorola's Cork site needed 30 per cent more budget resources just to stay where it was. But he said that Motorola took a long-term view when it invested in a country and was not driven solely by currency shifts.
Mr Phillips and Mr Shirley both confirmed that Motorola's Irish operation and the IDA made a presentation to senior executives at Motorola Group about consolidating its finance function for Europe in Cork.
This would enable Motorola to consolidate its profits to avail of the 12.5 per cent corporate tax rate in the Republic rather than pay the myriad of different tax rates across the European region.
Mr Shirley said that after looking at the specific proposal made earlier this year it didn't appear to yield that much saving.
"Motorola takes a relatively conservative view in this era. But we will continue to have discussions into the future," he added.
Mr Phillips said he was keen to get to a stage where Motorola would be able to benefit from the low-tax model set up in Ireland.
He said that over the past few years Motorola had not made a lot of profit to make low corporation taxes important. But that should change over the next few years, he added.
Any decision by Motorola to consolidate its European finance function in Cork could create scores of extra jobs at the software development site, which already employs 500 engineers.
In a statement yesterday the IDA said it was always in discussion with companies to bring in extra functions to the Republic, but it could not comment publicly on any individual cases.
Motorola is one of the oldest multinational employers in Cork and set up a manufacturing operation as far back as 1981. The latest financial reports for its software development unit in Cork show it generated revenues worth €61.9 million in 2002, up from €53.6 million. It made a pre-tax profit of €3.05 million, up from €2.5 million a year earlier.
Mr Phillips confirmed that Motorola is currently working with Science Foundation Ireland and the IDA to look at opportunities to co-operate with universities on research programmes.
