Dell pull-out may cut exports by 6%

THE DECISION by Dell to move its European manufacturing to Poland could reduce the value of Irish exports by up to 6 per cent, according to the Irish Exporters’ Association (IEA).

IEA chief executive John Whelan said Dell, as the largest manufacturer in the State, accounted for about 6 per cent of the State’s €148.2 billion exports last year.

Mr Whelan said the cost challenges faced by Dell were similar to those faced by other Irish-based manufacturing companies and that “off-shoring” of production to lower-cost countries was happening in many other firms on a smaller scale.

In its end-of-year review published today, the IEA said goods and services exports in 2008 were 4 per cent lower than 2007 and warned operating costs in Ireland were higher and rising faster than in other European countries.

The IEA also forecast a 5 per cent drop in exports this year that could result in €7.5 billion in lost sales and “up to 35,000 job losses”. With the exception of the UK, where a 33 per cent depreciation in the value of sterling hit exporters to that market, declining overseas sales were a direct consequence of a loss of competitiveness, Mr Whelan said.

“Lost sales in the euro zone of 7 per cent must, in the main, be put down to a loss of competitiveness of Irish exports, as wage and non-wage costs in Ireland continued their long-term trend of rising faster than the European average,” he said.

The cost base in Ireland was now much higher than other European states and labour cost was “32.4 per cent higher in 2007 than at the start of the decade relative to that of our trading partners”, said Mr Whelan.

Non-wage costs were also hurting exporters, and the IEA pointed to Eurostat data showing Ireland has the most expensive industrial electricity in the EU.