Dell cuts jobs in Ireland, moves manufacturing to Poland to cut costs

Computer giant Dell, Inc. today said it would axe 1,900 jobs at its main Irish manufacturing plant and move the bulk of its production for Europe, the Middle East and Africa to Poland as part of its cost-cutting programme. The jobs will be slashed in the next 12 months, the Irish unit of Round Rock, Texas-based Dell said today in an e-mailed statement.

Like many of its Western peers, Dell is struggling to compete against cheaper, aggressive Asian vendors. Chief executive Michael Dell is in the midst of revamping the company's business model, but the changes, including selling personal computers through retail stores, have yet to bear fruit. As part of a recently launched review of its global supply chain, Dell is also moving manufacturing to cheaper locations.

Dell's Irish workers aren't the first ones to be laid off. The company has been cutting jobs throughout the world. It ended the third quarter with 80,800 employees, down 11 per cent from its high point earlier in the year.

The measures at the 18-year-old Dell plant, which became a symbol of Ireland's ''Celtic Tiger'' economic boom, mark another blow to a nation where unemployment has already jumped to the highest in more than a decade. The boom began to falter in 2007 with the collapse of a housing bubble, compounded by the global financial crisis. Dell employs about 4,300 people in Ireland.

''This is a difficult decision, but the right one for Dell,'' Sean Corkery, vice president of Dell's operations in Europe, said in the statement.

The Irish government said it will ''continue to engage'' with Dell about attracting other functions and investments from the company. ''A successful Dell is in our interests, as even with this level of redundancies, Dell remains a major employer in Ireland and a major contributor to the economy,'' Deputy Prime Minister Mary Coughlan said in a statement.

The company has been struggling of late. Its latest earnings release, last November, testifies to the difficulties of maintaining market share and of coping with the general economic downturn.
Third-quarter sales came in significantly worse than expected and CEO Michael Dell admitted that the company is likely to endure more difficulties in the next year.

The whole tech industry is being hit by the economic downturn resulting from the credit crunch and ensuing collapse in the housing market and consumer spending. On Wednesday computer chip giant Intel Corp cut its fourth-quarter sales outlook, citing plummeting demand for personal computers. Even manufacturers with lower operating costs aren't immune to the slowdown. Today Lenovo shares lost a quarter of their value after it warned of a "material loss" this quarter and said it would cut 11 per cent, or 2,500 of its workers, because of the sharp drop in consumer demand.

(See: Lenovo announces new resource redeployment and 11 per cent job cut / Data storage giant EMC to slash 2,400 jobs even as fourth-quarter results meet expectations / Japan electronics major TDK looking at first loss in seven years, will cut 8,000 jobs)