The scale of redundancies in the sector is shocking and more pain seemsinevitable as cash-strapped firms come under more strain, writes Jamie Smyth
The decision by Tellabs to close its Shannon facility with the loss of 400 jobs is a blow to the region but it is not a surprise for an industry that is suffering its worst crisis in history.
Most industry observers and IDA Ireland predict that the telecoms sector will not recover for several years and more job losses are likely as cash-strapped firms come under more financial strain.
Spending on the type of telecoms networking equipment that Tellabs manufactures has fallen off a cliff since the technology bubble burst in mid-2000.
Hundreds of thousands of jobs have been lost over the past two years as Tellabs customers and the telecoms companies with ambitious plans to circle the globe with fibre optic networks have found that the dramatic increase in Internet traffic, predicted by over-enthusiastic analysts, failed to materialise.
Several of the big telecoms infrastructure companies - including Global Crossing and 360 networks which had significant Irish operations - went bankrupt as a glut of telecoms capacity undermined the price of their products.
Unable to generate revenue streams to drive their own growth, these firms cut back sharply on buying new telecoms products, thereby plunging the equipment business deeper into crisis.
Telecoms carriers in Europe such as France Telecom and Deutsche Telecom are struggling under billions of euro debt after expensive auctions for third generation mobile phone licences further compounded the industry slowdown.
Tellabs, a US firm with headquarters in Illinois, has almost halved its workforce to 4,700 people since April 2001, due to pressures on its business. This had already hit its Irish operations with the closure of a plant in Drogheda and its research and development centre in Shannon.
But even after the company's extensive restructuring over the past 12 months, Tellabs admitted yesterday that its losses are ballooning and customers are still spending less on equipment.
The firm's pull-out from the Republic in some respects mirrors that of computer giant Gateway, which withdrew in a bid to ensure its own survival amid declining sales.
Further pain is probably inevitable for telecoms firms due to the sheer scale of the sector's decline. Three other big equipment makers in the Republic - Nortel Networks, Lucent and Ericsson - have all shed workers over the past two years here, and further job losses are likely given the poor state of world economy and the sector.
The scale of the redundancies has been shocking with Ericsson planning to reduce its total workforce to just 60,000 by 2003, down from 107,000 last year. This will make it more difficult for workers losing their jobs at Tellabs to get new jobs, although the low unemployment rate in the Republic should help somewhat.
Indeed, we have escaped relatively lightly in terms of job cuts in the telecoms sectors here when compared with the UK or Germany, where industry giants such as Siemens or Marconi employed thousands of staff. Aligning research and development centres with traditional manufacturing sites has added some robustness to Ericsson, Lucent and Nortel's Irish operations. But if there is no upturn in equipment spending shortly, the 4,000-plus staff employed at these firms' Irish facilities will also be at risk.
Few industry figures or analysts predict a strong recovery in either telecoms or information communications technologies any time soon. But the history of the technology industry has been dominated by cyclical upturns and downturns so it is inevitable recovery will arrive. It is only a question of when.
Probably we will not see a return to growth in these sectors until 2004 - the date which chip giant Intel has set for the opening of its new fabrication plant in Leixlip.