Can Irish tech sector weather the storm?

06-06-2008

by Emmet Ryan

The Irish technology sector is feeling the jobs squeeze in a harsh economic climate.

There seems to be no end to the job losses and plant closure announcements of late. It's hardly the 1980s but there seems to be an abundance of misery on the employment front at the moment.

Few sectors have been hit quite as badly as IT, with the electronics industry in particular bearing the brunt of the gloom.

The rot began around 18 months ago when Motorola announced cutbacks in Cork. The Rebel County suffered further losses in recent months with the announcements of the closure of Bourns Electronics in March and Hormann Electronics in May.

These recent blows have seen hundreds of people lose their jobs in a matter of months. Bourns' closure resulted in 80 redundancies while 138 staff were let go at Hormann Electronics. Then, towards the end of May, Freescale Semiconductors, a spin-off firm from Motorola, also announced that it was shutting up shop in Cork with 47 highly-skilled employees being let go.

"For a lot of the people laid off it will be their first time facing the unemployment line. Some of them were working in these plants for 30 years," said Ciaran Lynch, Labour TD for Cork South Central.

Most of the staff that have been made redundant at these firms were based in and around the Blackrock area of Cork. "What was once a prosperous area is now in danger of becoming an unemployment black spot," said Lynch.

It's not just Cork that's feeling the pinch. PC maker Dell announced in April it would cut 250 Irish staff at its facilities in Limerick and Dublin.

The capital also felt the pinch in May with news that digital entertainment firm Creative Labs was to cut 50 staff, and security software company Symantec is to move 70 manufacturing jobs from Dublin to the Czech Republic. Other notable losses in recent times have seen Kimball Electronics in Longford shed 66 jobs.

The Irish IT industry has two choices on how to deal with its current plight. The sector can act like an episode of Grey's Anatomy and sit about crying and whining about its woes whilst getting nothing done. Alternatively the sector can be like MacGyver and use its creativity and ingenuity to overcome these setbacks.

Fortunately the latter appears to be winning out, not that you could ever really doubt MacGyver.

On the same day Kimball closed, Longford saw Cameron Ireland deliver 140 jobs to the county. The firm, which develops technology for the oil industry, is part of a shift in focus on the IT employment front.

Look at the firms that have cut staff in recent times. The bulk of these are involved in manufacturing or the electronics sectors. These are the kinds of jobs that in the current global economic climate can be done at a much lower cost by staff in the Far East or Eastern Europe.

A straight up fight on this battlefield will only result in defeat. Ireland Inc. simply can't provide the cheap labour available in these territories. Instead it needs to adjust its tactics; Ireland needs to look for new areas where it can make the most of the talent currently available.

This change is already underway. Dundalk secured 40 jobs from a Chinese infrared technology firm, SATIR, in May. In the same month Donegal welcomed 235 new jobs in the contact centre and diagnostic sectors.

Dublin too has seen its fair share of good news. Origina, an IT services firm, created 60 jobs in the capital in May. This followed news of 20 new positions introduced at pharmaceutical services company United BioSource in the same month.

The biggest jobs boost to Dublin in recent times was the news that e-payments firm Chase Paymentech Solutions would create 100 positions over the next three years.

Even Cork, probably the biggest victim of this harsh economic reality, is fighting back. Abtran, a specialist in outsourcing services, has announced the creation of 100 new positions, while pharmaceutical giant Pfizer is also helping to turn the tide on Leeside with 100 new positions at its Shanbally facility.

While the IT sector is facing the challenges before it head on, many of the staff affected by the recent cuts will have little to cheer about.

Lynch wants to see a change in the Irish approach to the workplace in order to ensure these staff will be ready for future changes to the economy.

"We need to incentivise people to further their education," he said. "It's about having the best options available to you in a changing economy."

Tax incentives or other inducements to staff to keep learning new skills while in employment could certainly help improve their chances of finding alternative employment should the need arise.

More importantly, however, such a move will prevent the Irish technology sector from being caught napping again.

These closures and job losses occurred because Ireland stood still. It rested on its laurels and didn't watch out for competitors in the rear view mirror.

To avoid this in future the IT sector needs to stay fluid, ready for the future changes in the global economy. Consistent up-skilling of staff can help ensure the technology industry is ready for the battles ahead