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View Full Version : Wham, bang, thank you ma'am (Dell, Eire and the EU)


airship
10th Jan 2009, 15:52
As someone who has bought several PCs from Dell Computer over the years, ORAC's original post "Blow for Ireland as Dell quits (http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/technology/4177507/Blow-for-Ireland-as-Dell-quits.html)" here (http://www.pprune.org/jet-blast/343768-sub-prime-mess-world-economics-52.html#post4637224) intrigued me to investigate further in the endeavour to answer some questions.

Why would Dell almost unceremoniously end its amorous affair with Eire dating back from the '90s? Eire, with all her charms and 12.5% corporate tax rate? Was it a case of classical infidelity, saggy tits or a newly-discovered Polish "je ne sais quoi"?

It's important to Eire because Dell contributes anywhere between 2 and 5% of the country's GDP depending on which website you consult. And important to the rest of us in the EU in 2 ways: 1) 1 in 2 marriages end in divorce on average and 2) if you're marrying a corporation, should one insist on a pre-nuptial agreement in future?

In the beginning (the romantic period)...

In the beginning God created the heaven and the earth
And the earth was without form, and void; and darkness was upon the face of the deep. And the Spirit of God moved upon the face of the waters.
And God said, Let there be light; and there was light.
And God saw the light, that it was good: and God divided the light from the darkness.
And an American corporation named Dell found Eire; an alluring face surrounded by the darkness of the European continent.
And Dell saw the light: a 12.5% corporate tax rate, that it was good: and Dell divided the light from the darkness, creating employment.
And the EU approved the light, that it was good: and the EU's bounty fell upon the parched sands of Eire.

Sometime in the interim period, before things soured (the transition between old and new testament?)...

And Dell saw, where before, there was light: that now, that light had been transformed into personal greed and avarice - that the light was dimming.
"Sodom" said Dell (according to the gospel of Michael): let us renew the source of the light. Let us move closer towards Jerusalem.

The revelation(s)...

Bracknell, September 18, 2006 (http://www1.euro.dell.com/content/topics/topic.aspx/emea/corporate/pressoffice/2006/uk/en/2006_09_18_brk_000?c=uk&l=en&s=corp): Dell is expanding its manufacturing operations in Europe by building a facility at Łódź, Poland to meet increased demand and support the company's growth across Central and Eastern Europe. Scheduled to open in Autumn 2007, the new facility is expected to employ around 1,000 people initially...

...The new facility represents a Dell investment of €200 million in the growing Polish economy. Further indirect investment by Dell suppliers in the region is expected to be around €53 million. According to Dell, the new factory in Poland will be among the most advanced worldwide, offering improved flow of materials and newly-designed ergonomic manufacturing cells.

November 20, 2007 (http://www1.euro.dell.com/content/topics/topic.aspx/emea/corporate/pressoffice/2007/uk/en/2007_11_20_brk_001?c=uk&l=en&s=corp): “Our customers are now receiving premium class computers ‘Made in Poland’,” said Nicky Hartery, vice president of operations, Dell EMEA. “Locating the facility in the heart of Europe puts us much closer to our customers in the expanding markets of Central and Eastern Europe. And being closer to our customers means we can get product to them faster.”

The site in Łódź is Dell’s second manufacturing facility in Europe; the other being in Limerick, Ireland. The plant construction was completed in less than one year. Initially, 400 employees who trained in Limerick will operate the plant with the employment expected to increase to 1,100 by January. (Emphasis added)

The standard corporate tax rate in Eire is 12.5%, the standard corporate tax rate in Poland is 19.0%, unless that is, you invest in a Polish "special economic zone" (http://london.trade.gov.pl/en/download/file/f,1166) (wholly-approved and subsidised by the EU). Whilst being a fully-fledged EU member with aspirations to eventually join the €uro, Poland is not yet part of the €urozone.

Compared to Eire therefore, Poland's only qualifications in the current divorce proceedings are that 1) average Polish labour rates are a fraction of those compared to elsewhere in the EU (including Eire): 2) the EU is itself the origin of substantial funds used in the transfer of jobs from 1 EU country to another - and all to the profit of an American computer company...?! :}

Further to my earlier extract and emphasis: Initially, 400 employees who trained in Limerick will operate the plant with the employment expected to increase to 1,100 by January I read somewhere that there were somewhere between 200,000 and 500,000 Polish workers in Eire up until the recent economic downturn.

If it only takes 400 ex. Eire Polish workers to learn whatever's necessary to 'work from home' and become the core of Dell's latest initiative in Poland in their dominance of PC sales (2nd only to another American corporation), with wallops of EU approved and aided ice-cream, where will the Poles be in another few years...?!

Somewhat belatedly, the EU has launched an investigation into the Polish government's subsidies to Dell's Polish unit (http://www.reuters.com/article/americasRegulatoryNews/idUSL84245920090108). I onder if an Irishman was behind the complaint...?!

Looks like whilst the USA generally disapproves of an EU, or at least any political or strong economic union, her corporations are reaping all the benefits whilst they last. But what of Eire and her citizens, now one of the richest per capita within Europe? Are they destined to become once again, a nation of emigrants, awaiting the next potato famine? :uhoh:

When will all Europeans wake up and realise that the EU is now nothing more than a rich gravy train serving special interests? Starting with EU politicians and institutions, followed by mostly European corporations, closely followed by American and other ones...?! Sad to say it, but increasingly, I believe that the EU is nothing more than a group of mainly aspiring / conspiring "do-gooders" who expect their ambitions to be attained within their own life-times whilst earning comparatively pharoahnic salaries by virtue of their state-provided university degrees.

Having said all that, I'm somewhat surprised that Dell have not yet asked the US or EU for any financial aid during this credit-crunch (unlike Ford and GM). Or perhaps they don't really need it, having already quaffed their thirst from on-going EU programs that pre-ordaine the death and rebirth of initiatives within the EU...?! An EU-initiative has never been a source of unfair financial gain in the markets. Long live the city of London (http://news.bbc.co.uk/2/hi/americas/7821600.stm). Why does everyone complain about Switzerland, the Cayman Islands or Bermuda - it strikes me that London is, alwats has been and will continue to be the world's most important market open to all-comers...?!

ORAC
10th Jan 2009, 16:01
Ireland got massive inward investment because it was one of the poorer countries in Europe and the EU poured infrastructure funds their way. They also set up tax free or low tax industrial parks. Now it's a high wage environment and the new EU members are following the same route.

Live by the sword, die by the sword.

There'll be little or no sympathy for Old Ireland in the UK, France, Germany or the other countries industries moved out of for Dublin and the counties outside the Pale......

corsair
10th Jan 2009, 16:35
Do I detect a hint of schadenfreude? It ill behoves you to mock.

Having worked for an American multinational, IBM. I have an inkling into the mindset of those corporations and the way they work.
They do make cold hearted decisions like this. It happened to the plant I worked in and another on the same site. They simply closed us because it was more cost effective to do the job elsewhere or to concentrate the same type of manufacturing on one site.

You're off beam with your intepretation of this comment Initially, 400 employees who trained in Limerick will operate the plant with the employment expected to increase to 1,100 by January


I think you'll find they would be Polish Dell employees seconded to Ireland to learn the ropes. Not emigrants working for Dell in Ireland who were then recruited on their return to Poland. Most of them would be Engineers or supervisors with a smattering of shop floor workers. I was sent to the USA for the same purpose by IBM. In turn we had Singaporean IBMers come to us in Ireland so we could train them to take our jobs. When I started work there, we would joke that we'd be gone in ten years. Actually it took seven. No one was surprised. It's the nature of the business.

The move to Poland is logical in Dell's eyes because the new plant is state of the art and the cost base is lower. Whether it works from a quality perspective is another matter. That won't last anyway because the Poles are going to expect to enjoy a standard of living comparable to the rest of Europe quite soon anyway. So next stop Vietnam or somewhere.

This comment from Dell made me smirk:
“Locating the facility in the heart of Europe puts us much closer to our customers in the expanding markets of Central and Eastern Europe. And being closer to our customers means we can get product to them faster.”


That's BS, corporate BS. The reality is that with overnight cargo, everywhere in Europe is 24 hours away and in any case practically everything will go through Brussels anyway or wherever the hub is now. You can have a plant anywhere.

This had to come, the PC market has contracted quite considerably. It is worth remembering that PC assembly is not exactly rocket science either. Unlike for example Intel, also in Ireland which is a manufactory and R&D centre for EMEA. It wouldn't be quite so easy to move that lot to Poland. Low skill, low paid manufacturing jobs are always in danger of being offloaded. IBM got out of the PC business by selling it to the Chinese and IBM invented the PC.

As for the rest of Ireland Inc. To be fair the flight of manufacturing jobs has been forseen and even our slow thinking government knows that the future lies in other directions.

As for you concluding paragraphs, you could indeed be right. Who knows.

corsair
10th Jan 2009, 16:43
Orac, would you have preferred Ireland reamained backward and poor? Sounds like it.

In practical terms many American companies set up business in Ireland because of favourable business conditions. That option was available to any country in old Europe.

There has always been a sneering disrespect for Ireland's recent economic success in certain circles. It seems some of you would prefer Ireland to stay as you left it. Impoverished and backward.

StaceyF
10th Jan 2009, 18:12
It might explain why a 23" fully HD capable monitor I ordered on 17th December has twice had the ETA changed.

Currently it's 19th January but I suspect it will move again :(

Fly-by-Wife
10th Jan 2009, 18:22
Other reasons why Ireland was a good choice for a lot of US corporations - perhaps not as strong as the financial, but significant nonetheless - were the high standard of education in the workforce and the fact that English is the native language.

But then mainland Europeans seem to be much better at learning English than vice versa.

FBW

SpringHeeledJack
10th Jan 2009, 19:17
There has always been a sneering disrespect for Ireland's recent economic success in certain circles. It seems some of you would prefer Ireland to stay as you left it. Impoverished and backward.

I think that in years to come Ireland will be referred to by University lecturers as an example of what not to do. Although tis true that the emerald isle was often used and abused in former times, since the 1980's, or at least the end of that decade the ball has been firmly in the court of the mandarins in Dublin.

What has transpired is perhaps a study of the avarice of mankind. Never in modern times has SO much wealth been created out of nothing and wasted on throwaway items. Never have SO many opportunities been squandered to better the lives of the people, adequate public transport, hospitals, schools etc. The quality of life has been eroded rather than bettered for the majority and especially for the younger generation who having bought into the dream of property riches find themselves in real negative equity for years to come. Add in social problems that are ever worse and it's a (self-made) mess.

Ireland priced themselves out of many things some time ago and the only winners are the FF mandarins in the Dail whose wages and perks have climbed to the heavens. At least in former times there was a cead mille failte.... :(


regards


SHJ