The decision by Intel to postpone the construction of its new wafer fabrication plant in Leixlip, Co Kildare, is not a cause for panic. The company, after all, has committed to bringing the plant into production in 2003, producing what will be leading edge microprocessors. However, it does indicate the direct impact of the US economic slowdown on Ireland. Intel, like all the other major international technology companies, is facing an uncertain outlook. Ireland, as the home for the European headquarters of many of these companies, cannot escape the fall-out.
Intel has been one of the Republic's industrial success stories. It directly employs 4,400 people, supports many thousands of other jobs in Leixlip and beyond and contributes many millions of pounds each year to the economy. It has consistently upgraded its operations here to employ the latest technology. The success of such an industry leader has encouraged many other companies to locate in the Republic. It is no exaggeration to say that Intel has been at the centre of our technology revolution; it is vital that the construction of its new plant at Leixlip eventually goes ahead, even if more slowly than had been expected.
Last Friday, Intel issued a warning about its profits outlook. This was precipitated both by the uncertainties affecting the US economy and the difficulties of the technology sector, which have combined to lead to a sharp fall in computer sales. The company is cutting 5,000 of its global workforce of 85,000 people. Fortunately, this looks set to have a limited impact on the Leixlip plant, where the job cuts will be restricted to non-replacement of many staff leaving the company. However, the rapid build-up in employment seen in Leixlip over recent years is clearly over for the moment.
The immediate impact of yesterday's announcement will be on around 1,400 construction workers who were engaged by contractors in building the new plant and have now been laid off. Many will find work elsewhere in a healthy construction market. But a regular source of employment which they will have relied on to pay the bills over the coming months has suddenly disappeared. It is a reminder of how vulnerable the Irish economy has become to the health of a small number of major multinational firms.
The obvious question now is whether there is worse to come. It is too early to conclude that this is the case. Certainly, the slowdown in technology companies will affect the economic outlook this year, although a gentle easing back in growth might be no bad thing. It is also important to realise that the major US plants here are generally serving European markets, where the outlook is healthier than in the US.
Most of the major US firms now have deep roots in Ireland. There is no reason to expect major job cutbacks. But what is clear is that the sharp growth we have seen in the operations of these firms over recent years is now slowing sharply. Their contribution to the economy will remain immense, but they will be a less potent force in driving growth. We must hope that conditions in the US will not worsen this outlook in the months ahead.