Likely job losses at Cork plant show intensity of global competition, writes Colm Keena.

The likely loss of approximately 350 high-end jobs in the Motorola plant in Cork is probably better viewed as a warning to the Irish economy than as a harbinger of impending doom.

The decision by the telecoms multinational to close the plant comes from its assessment that the similar skill sets are available, at lower cost, in other Motorola operations in other parts of the world, according to one source.

For other parts of the world read India.

Other sources said the activities the Cork plant is involved with have reached "a plateau in terms of revenue generation" and are on the way out.

Either way, the development is an indication of the constant pressures that exist for Irish-based operations involved in competitive global business.

For such companies the key to survival is to be doing something that your competitors cannot do.

A number of sources said no blame for the closure rests with the staff, who are excellent.

It also seems the plant may have been profitable, albeit not very. The most recently filed accounts for Motorola Ireland Ltd, for the year to end-December 2005, show a turnover of €53.8 million and a profit before tax of €2.6 million. A slightly larger profit was recorded the previous year.

"The principal activity of the company is the research and development of software for use in network management systems for cellular communications," the accounts state.

"The company's performance is influenced primarily by Motorola Inc's performance on worldwide sales."

Unfortunately Motorola's cellular networks division has not been performing well and the expected closure of the Cork plant is part of the company's strategy for addressing this issue.

Motorola's decision to cut 3,500 jobs worldwide was announced last month after its final-quarter figures for 2006 proved disappointing.

The main issue for the company is the low profit margins it is making in its major activity, the sale of mobile phone handsets. Motorola's major competitors in the sector are Nokia and South Korea's Samsung Electronics - and competition is intense.

Motorola, in what has so far has proved to be a successful effort to sell more handsets in the developing world, has reduced its prices and squeezed its margins.

It posted a 17 per cent year-on-year increase in revenues for the final quarter of 2006, to $11.8 billion (€9 billion), but quarterly operating profit fell by more than 60 per cent due mostly to lower profit margins.

This week's development in Cork is related to the separate issue of the poor performance of Motorola's cellular networks division.

There is little Ireland can do to compete in like-for-like skills with places such as India. What is needed is that, where possible, operations that are based here develop and change so they are always doing work that would be difficult to achieve elsewhere.

"We constantly need to refresh what we do," said one source with a detailed knowledge of the issues. "We need companies that are led by managements that constantly change and challenge themselves. If you stand still you are in trouble. And of course cost is an issue."

Although Ireland does have a difficulty in competing in cost - even in areas where workers have to be highly educated and highly skilled - this does not mean the game is up.

"The world is not collapsing in Ireland," said the Minister for Enterprise, Trade and Employment, Micheál Martin. "We need a balanced perspective on the events of the week. But we also cannot be complacent."

Mr Martin, TD for Cork South Central, pointed out that the ICT sector is one of the biggest employers in the Cork region, accounting for 8,500 jobs.

The ability of certain locations to outbid others for jobs is something that will continue to shift and change as long as global competition and trade continues, and this is particularly true of the telecoms sector.

Just like the sector, Motorola has had its ups and downs. The closure of a Motorola plant in Swords in December 2001, with the loss of 750 jobs, was part of the company's effort to address the crisis it was facing then.

The key point is whether the overall jobs in/jobs out balance is tipping in Ireland's favour at any particular time.

At the moment the balance is very much in Ireland's favour. The Irish Computer Society published the results of a survey this week showing that one in five IT companies is experiencing difficulties in attracting adequate suitably qualified workers.

The closure of Motorola's plant in Cork will be a hard blow for the employees concerned, but it is likely that many if not most of them will be able to find employment elsewhere.

The Irish software and technology sector is doing very well and has been for years. Ireland has done wonderfully well out of globalisation and the competition for foreign investment.

It is because the rewards can be so significant that the competition is intense and relentless.