Dell put Ireland to shock: sales of PCs fall causing job cuts

The news put Ireland to shock: Dell announced the company would relocate its computer production from Ireland to Poland. The location of new computer-assembling facility will be the Polish city of Lodz.

The closing of the Dell plant in Ireland is more than just a regular close-up. By operating the plant in the country Dell was one of the largest exporters. Dell’s plant was the trendsetter for further economic growth of Ireland in the 90-ies. It contributed highly to transformation into a new “tiger”. Now that the news is out, over 1900 jobs will be erased and the high-technology image of Ireland will suffer immensely.

Dell is following the world’s decline in demand for PCs. Another computer manufacturer, the Chinese Lenovo, which had surprised the world a couple of years ago by buying the computer division of IBM, announced it would cut 2500 jobs, 11% of its work effectives.

No matter how shocking the news could seem, it did not come as pure surprise to industry experts. Lenovo as well as Dell face strong declines for their products at the global scale. Sales of PCs were greatly affected by the financial crisis. So, their pumped inventories prompt at diminishing production, which can be reached either by job cuts or relocation and passing to services of outsourcing.

According to forecasts of research agencies, IDC in this case, the global demand for PCs will fall by 1.3% in 2009. The decrease will be very significant in North America – 13.7% and Western Europe – 5.8%. The global demand for servers will shrink by 1.6%.

Another factor that made PC manufacturers revise their production plans is the increasing interest to laptops and notebooks. Gartner informs that the Taiwan Acer outstaged HP in sales of small computers in Europe.

Semiconductors suffer as well

Following its main customers, manufacturers of semiconductors do every effort to save in the environment of a worsening economy. Intel recognized its sales plans would not be reached in 2009. Its turnover promises to fall by 23% as compared in 2008.

The Japanese TDK recurred to job cuts – 8000 people were laid off and its four plants were shut down. In 2008 the market of semiconductors shrank by 4% and will shrink by 16% in 2009, says Gartner.

Key words: Lenovo, Dell, job cuts, crisis, semiconductors