Ireland - Jobs drain away, but automation plugs gap

When Japanese electronics manufacturer NEC Semiconductors decided in February that it will close its Irish plant this autumn, it was continuing a long-term trend.

Eight hundred jobs will be lost when Danish-owned hearing aid company GN ReSound relocates from Cork to the Far East.

Fruit of the Loom is to close a T-shirt factory in Donegal in May which now employs fewer than 200, compared with 3,000 at its peak. A videotape manufacturer in Sligo is also closing.

But NEC, as one of the first multinational hi-tech investors in Ireland, grabbed all the headlines. Its Irish unit in Co Meath, established 30 years ago, is profitable, but faced with multi-million losses worldwide, the company decided to consolidate at plants in Singapore, where wages are half Irish levels, and in Malaysia and China, where they are a quarter.

Overall the economy is "very buoyant", with 90,000 jobs created last year, says John Whelan, chief executive of the Irish Exporters Association. But many of those were in construction, and he feels a better benchmark is the 9,000 jobs lost in manufacturing.

"That's the equivalent of four factories a month, and it's quite a challenge, " he says.

New jobs are service-oriented and this is reflected in an increase of just 3.5% in visible exports last year, compared with a 9% rise in global trade.

Services' share of exports rose from 10% in 1994 to 34% last year.

Ireland came out in second place in an OECD study of productivity growth. The pharmaceutical and computer sectors, where automation is driving productivity, are leading the way. But in industries where labour accounts for a higher proportion of manufacturing content, Ireland is facing difficulties.

"Wages have gone up significantly, although we're still marginally below the UK, " says Whelan.

Owen O'Brien, MD of Emerald Freight, says: "In certain sectors of the economy, our labour costs are just too high. Manufacture has been shrinking and there's less hard freight around for people like us to compete for.

"We've been in business for 25 years in a sector that's diminishing through acquisition or just running out of steam.

The landscape has changed." More than half Emerald's business is in air freight, but the giftware market, one of the main traditional drivers, has changed with the advent of internet shopping. "US wholesalers carrying Irish gifts can re-stock a couple of times a year by ocean container, " says O'Brien.

"Conventional air freight around Europe has just about dried up, " he adds. "The trailer operators have gobbled up the heavy freight and the integrators the smaller packages." Emerald nevertheless achieved high single-figure growth last year, thanks to cross-trade. Its Swiss partner in the WCA network, of which Emerald has been a member for five years, has a big client requiring pan-European distribution by road and air.

Emerald reports a bright start to this year on both import and export fronts. The company is tendering to operate on behalf of a big 3PL client for which it would hold stock, and is leasing 300sq metres from a neighbour, increasing its storage space by half.

O'Brien believes he is well positioned in Santry, north Dublin, close to the entrance of the port tunnel, the airport and the M50.

But the long-delayed tunnel, which a Dublin port executive smiles will now open in "Julember", remains mired in controversy.

"It's a magnificent piece of infrastructure, but if it goes through in its current form, it will be an absolute disaster in cost terms, " says Mark Cosgrove, director of Redhead International.

The company claims to be the biggest groupage operator in and out of Northern Ireland, through Larne, but also has a sizeable Dublin operation.

Dublin City Council's draft HGV strategy, which went to public consultation at the end of last year, proposes that vehicles with five or more axles will not be able to leave the port between 7am and 7pm.

Trailers more than four metres high, and thus too big for the under-specified tunnel, would therefore not be able to travel during the day.

"Half our fleet would not be able to go anywhere. People who have been prepared to invest in double-deckers will find their goods are five minutes from the customer, but can't be there for 12 hours, " Cosgrove complains.

It gets worse. The consultation document proposes to extend the ban to the tunnel, which was designed to connect trucks to the perimeter M50 motorway without passing through the city centre, but whose northern entrance is now to be brought within the port cordon.

The number of axles, not the height, will now be the criterion and no vehicle of five or more axles will be able to travel in and out of the cordon.

This will later apply to fouraxle vehicles as well. "So it's no go if you run an artic. The whole reason for the tunnel will go out of the window, " says Cosgrove.

"There will be a lot of confusion, and it won't show Ireland up in a good light. From a government perspective, it seems un-joined up." Undaunted by the logistics of moving around Dublin, TransAction International, the Buckinghamshire-based distribution company, has extended its palletised Irish service to three times a week.

Delivery within the city area is promised in 24 hours, and to other Irish destinations in 48 hours, using EFS as the local partner.

"Originally the service was planned to be only twice a week, but demand has been better than predicted. We are planning to increase further to a daily weekday service, " says TransAction MD Adrian Johnstone.

"A lot of recent capital investment has been in service centres. That's what the Industrial Development Agency wants Ireland to concentrate on, " says Garvan Cerasi, who founded specialist recruitment agency Logiskills in 2004.

But if jobs are being created to replace those lost in manufacturing - as indicated by an unemployment rate staying roughly level at 4.7% - then the consumer goods will still flow in.