Gateway's announcement this week that it plans a total exit from Europe has given rise to new concerns about the impact on Irish-based electronics companies that not only supplied the US multinational in the Republic but also its sister operations in Europe.
The company this week said it would cut its global workforce by 25 per cent, take a $475 million (€522.4 million) third-quarter charge, and close operations around the Pacific Rim and possibly Europe.
The previously announced plan to shed 900 jobs with the closure of Gateway in Clonshaugh, which was the company's European headquarters, will cost the Irish economy more than $50 million a year in lost salaries, and payments to local supply firms and contractors who did business with the multinational.
It will also severely affect Irish-based firms that supply a range of services to Gateway, from telecommunications to computer components to catering services.
IDA Ireland estimated Irish-based firms would lose business worth €6 million to €8 million per year.
Mr Brendan Butler, director of information and communications technology policy at IBEC, said Gateway's decision to pull out of Europe represented an unusual step among major technology multinationals.
"It might represent a signal to other businesses to move away from Europe but it also represents a positive thing because it creates business opportunities for other companies," he said.
Nonetheless, indigenous sub-suppliers supplying the IT sector will still find things difficult in the short term, particularly if a sizeable proportion of their business was with a company like Gateway. "Those companies are finding that it is getting more difficult to get funding. The market has dried up for them." He said things would pick up for them because the "forward march of IT is relentless".
IBEC's advice to suppliers is to hold up on plans for about six months but use that time to take a strategic look at their business and find out where they should best position themselves for the future, whether that would be in the Republic, Europe or further afield.
However, Mr Tom Kennedy of Enterprise Ireland's international business division insists that, while the closure and the downturn in the technology sector in the US would undoubtedly impact on European markets for Irish companies, most electronics sub-suppliers here tend to spread their business across different segments and not necessarily just PCs.
"The Gateway closure will have little or no effect on an overall sub-supplier," he said, adding that one of the companies that had suffered the most had been Campbells Catering, which operated the canteen in Clonshaugh. Other suppliers affected by the closure include large and small companies such as Esat, ATI Technologies, Microsoft and Intel.
The dependency of suppliers on particular contracts was higher where international brands are concerned, but most suppliers had more than one single customer, said Mr Kennedy. In terms of the overall outlook, he said that the agency expected to see some continuing business decline and further jobs cuts but not company closures. "That's the difference."
Enterprise Ireland continues to work "quietly behind the scenes" briefing companies on the economic circumstances that are likely to prevail in the next couple of years.
Mr Kennedy said that the agency focused its clients very strongly on increasing their international business and advised companies to spread their risk as much as possible.
