€7-an-hour pay gap cost 1,900 Dell jobs
DELL has shipped its entire manufacturing base from Limerick to Poland because it can pay Polish workers up to €7 an hour less than its axed Irish employees.
The company yesterday confirmed their worst fears after it announced 1,900 redundancies at its Limerick plant.
It is estimated a further 10,000 people working in firms supplying and servicing Dell in the mid-west region will lose their jobs as a result of the decision.
Devastated workers were informed via a video link from the US that production was being moved to cheaper locations in eastern Europe as part of the company's €3bn cost-cutting plan yesterday morning.
The loss of the jobs is a hammer blow for Limerick and the wider region, and will have an immediate knock-on effect on thousands of support jobs, mortgage repayments and consumer spending.
It will also have huge implications for the wider economy.
Dell is Ireland's second-largest corporate employer, its biggest exporter, and, in recent years, has contributed about 5pc to national gross domestic product.
Economists have warned that each Dell job underpins another four to five jobs in Ireland.
The company refused to confirm how much it will pay its new workforce in the Polish industrial city of Lodz.
However, sources said manufacturing employees in Lodz will be paid €3 an hour, less than a third the amount paid to its Limerick workforce.
Business leaders last night said we can no longer compete with low labour costs in Eastern Europe and Asia.
"There is no way we can ever compete with Eastern European wages, a different formula has to be adopted here," said President of the Limerick Chamber of Commerce Sean Lally.
Dell's decision to move east has heightened fears that other blue-chip companies operating here -- including Intel, which employs 4,500 at its Co Kildare plant -- will follow suit.
Intel chief Paul Otellinni yesterday said he expected the recession to be the worst of his lifetime after the company reported a crash in its sales, with fourth-quarter revenue down $10.7bn on a year earlier.
In Limerick, Dell workers on the assembly lines at the computer giant's manufacturing base in the Raheen Industrial base will be "phased out" over a 12-month period, beginning in April.
Tanaiste and Enterprise Minister Mary Coughlan last night came under fierce criticism from Opposition TDs and workers who accused her of failing to act soon enough.
Rumours about the Dell job losses have been circulating for months. The company yesterday insisted they only decided on the redundancy plan in recent days.
However, last night it emerged Ms Coughlan and her Cabinet colleague, local TD Willie O'Dea, learned of the lay-off plan last month, after they travelled to meet the company's chief executive in the US.
She said she was "politely" told by Michael Dell that the company had "no choice" but to outsource the jobs to its plant in Poland.
Fine Gael Limerick East TD Michael Noonan last night claimed the Government knew about Dell's intentions for at least three months, but still had no definite plan in place.
Labour Limerick East TD Jan O'Sullivan described the 1,900 redundancies as an "economic catastrophe" for the city, while Fine Gael Limerick East TD Kieran O'Donnell said it was one of the blackest days for the city in recent history.
Minister O'Dea denied that he was spreading false hope by speaking of plans to bring up to 750 new Dell jobs to Limerick, even though the IDA is still engaged in a bidding war with several other countries.
Meanwhile, Taoiseach Brian Cowen announced the setting up of a multi-agency task force to retrain workers being made redundant at Dell.
The Government is also giving "consideration" to providing financial support for those struggling to pay mortgages. Unions blasted the government for a "pitiful" performance after workers learned they will get a "basic" redundancy package.
The severance deal of six weeks pay per year of service is based on basic pay, and takes no account of extra earnings, including overtime and shift allowances.
The Dell job losses also continue an exceptionally bleak start to the year for a string of big companies nationwide, including the Tara Mines, Chartbusters, Waterford Wedgwood and Zavvi.