The falling price of personal computers was partly responsible for the decision to close MKIR Panasonic plant in Dundalk, Co Louth, with the loss of 360 jobs, the Japanese company has said. It informed employees yesterday afternoon.
Matsushita Kotobuki Electronics (MKE) said the closure of its Dundalk subsidiary was forced by intense price competition. In a statement, MKE senior managing director Mr Takao Kanamura said: "Our business environment has drastically changed with sales price reductions of 40 per cent to 50 per cent since 1998 because of intense competition for market share in personal computers."
Panasonic established the plant in 1992 and is the last remaining disk drive factory in Europe. It has been competing with the low cost countries of south-east Asia in Singapore, Thailand, Malaysia and the Philippines.
The company's biggest competitor, Seagate, closed its Clonmel facility in early 1997 and IBM transferred its UK production to Hungary around the same time.
Despite this, there was shock among the workforce yesterday. "The immediate situation for them is bleak. I am calling on the Tanaiste and the IDA to do everything possible to bring an alternative industry to Dundalk," said SIPTU official Ms Jane Bushell.
There have been strong rumours recently that jobs losses were imminent in a local company, but there was surprise at the closure announcement. The loss of the 270 permanent and 90 temporary jobs was described as a "body blow to the area" by the Minister for Social, Community and Social Affairs, Mr Ahern, who is from the area. He said the firm had provided excellent employment in Dundalk and he had spoken to ???????anaiste, Ms Harney and leading IDA officials about redressing the loss.
The Tanaiste said the job losses were a severe blow and finding alternative employment must be a priority. "Dundalk has been a key focus for IDA promotion over the last number of years and I am confident, however, that during the period leading up to the June closure many workers will be able to access the large number of jobs now available in the expanding facilities at Xerox and ICL," she added.
The plant ceases production at the end of June and will employ all permanent employees until then to enable them to find alternative employment. Temporary employees will not be laid off until the end of next month.
"We are the last man standing, no one else in western Europe could do it and we did it as long as we could but we had to give up," said Mr Richard Hanlon, general manager of the Dundalk plant.
Mr Hanlon had been proud of the company's ability to survive in the market. "The erosion in sales prices in the last six months was too much and we could not sustain it. We tried other reductions and in the last couple of weeks shared our worries with our employees," he said.
Labour deputy Mr Michael Bell called for the immediate establishment of a new task force to find a replacement for the jobs. "I fear that the losses will have huge knock-on effects on service industries in Dundalk," he added.
The decision to open a European plant was made after a demand from European customers for a local supplier. But in 1997 the EU decision to remove tariffs on disk drives made outside Europe dealt a major blow to the company.
At the end of 1997, the competitiveness in the market led to Seagate leaving Clonmel with the loss of 1600 jobs.
Panasonic has told the union it will negotiate redundancy packages and it recognises the commitment of the workers over the last eight years.
"They are highly skilled people, they built 12 million disk drives in the last 71/2 years. We have excellent employee relations," Mr Hanlon said.
To put the market pressure into perspective, he said that in 1992 the company sold 160MB disk drives for $153, last year it sold 15GB drives for $77, "so the customer has a product 100 times better for half the cost eight years later."
