COMPUTER MAKER Dell has moved to make 250 Irish staff redundant after a worldwide plan to cut costs and reduce staff numbers failed to meet its targets.
It is expected that 180 to 200 of the job losses will occur at its Cherrywood, Co Dublin, facility, where it employs 1,500 staff in sales, marketing and support for customers across Europe. The remainder will go at its Limerick factory, one of the Texan PC maker's two European manufacturing facilities.
Dell employs 4,500 staff in Ireland and accounts for close to 6 per cent of gross national product, due to the number of PCs it exports.
None of the job cuts will be on the production line. It had been widely expected that manufacturing capacity in Limerick might be reduced following the opening of a second factory in Lodz, Poland, last autumn. A Dell spokeswoman confirmed that the Limerick manufacturing facility was operating at "full capacity".
In a statement released yesterday, Dell Ireland said it "regrets the impact that this will have on its employees" but was confident the cuts would position it well for "continued future growth".
Following a tough couple of years which saw it lose its position as the world's largest PC manufacturer to Hewlett Packard, Dell sales have been increasing, but a high cost base means this hasn't fed into profits. Results for its fourth quarter 2007 which were announced in February showed that revenues grew 10 per cent year-on-year to $15.9 billion (€10.2 billion), but net profit was down 6 per cent to $679 million.
Managers at Dell in Ireland had been expecting an announcement on staffing levels. Last month, the company's founder and chief executive Michael Dell announced plans to cut costs by $3 billion by 2011. It has shut a manufacturing plant in its home base of Austin, Texas, and this week closed its Canadian call centre with the loss of 1,100 jobs.
Dell is facing increasing competition in the highly competitive PC market. Its own low-cost selling model has ruthlessly driven down the price of PCs. The company is more focused on the US than competitors HP and Lenovo, which means it is feeling the impact of slower spending. It is also more heavily skewed towards corporate customers, which account for about 85 per cent of its revenues. This sector has reined in spending on technology more quickly than retail consumers.
Last summer, Dell's Irish operations escaped the brunt of a plan to cut the company's worldwide staff numbers by 10 per cent. Just 100 job losses were sought here - on a voluntary basis.
The bulk of job losses will be among less highly skilled workers or those with less experience. Some managers will also leave. Sources at the company said that, due to the high cost of doing business in Ireland, Dell is trying to ensure its Irish operations are focused on "high-value activities".
"These job losses are further evidence of how rising business costs and declining competitiveness are hitting companies based in Ireland," said Fine Gael labour affairs spokesman Damien English.
Labour Party leader and Dún Laoghaire TD Eamon Gilmore called on State agencies to identify the skills of the employees being made redundant to assist them in finding alternative work or developing their own businesses.
Although the current round of job losses will include compulsory redundancies, the US firm has been generous to departing staff in the past, paying them six weeks' wages for each year of service.
While Dell has been struggling globally, its Irish operations were boosted last year with a €27.1 million profit on the sale of its old factory in Bray, Co Wicklow.