I thank the Chair for affording me the opportunity to raise this matter and I would like to share my time wiht Deputy Ray Burke.
Adjournment Debate. - Threatened Job Losses at Swords (Dublin) Plant.
That is satisfactory and agreed.
If media reports are correct, major redundancies in Amdahl will be announced shortly. A figure in excess of 230 has been mentioned. In 1992 there were 680 employees in the company. The reported redundancies, together with those announced in May, will reduce the workforce to approximately 150. In 18 months some 530 jobs will have been lost, reducing the workforce by 80 per cent. This will have a devastating effect on the lives of the workers and their families and it will be a disaster for the economic life of Swords, which is already reeling from the prospect of 1,000 job losses in Aer Lingus. The knock on effect of these redundancies and the crisis in the horticultural industry in Fingal will devastate the area.
In May this year Amdahl, who manufacture mainframe computers, laid off 150 workers. At that time we were informed that all parts of the electronic industry were being kept under constant review and that assessments as to future potential and risk are regularly made by the Department of Enterprise and Employment and the IDA. What steps has the IDA taken to monitor the operation of the Swords plant? Was any action considered necessary by the IDA and was any assistance sought by the company? Were any proposals recommended to the Minister to offset this calamity? There is rumour that the factory will close completely. I urge the Minister to ensure that this does not happen particularly if, as forecast, there is to be an uplift in the world economy in the future.
While I would prefer not to discuss redundancies, I ask the Minister to ensure that redundancies are kept to a minimum and that every effort is made to encourage the company to broaden its operations, perhaps into the softwear area. North County Dublin has a workforce highly trained in electronic procedures and it has an infrastructure which is the envy of other areas. We have an international airport on our doorstep, a motorway and close proximity to ports. Given the intolerable level of the projected redundancies in the area, which may reach 2,000 by the end of this year, I call on the Minister to extend the remit of the recently established Aer Lingus task force to cover the entire Fingal area and the new Fingal County Council and ensure that they have the necessary resources to encourage alternative industries to come to the area and restore as many of the jobs as possible as a matter of priority. Action is required now.
North County Dublin is going through a very dark period in its economic life with Aer Lingus facing over 1,000 redundancies and Amdahl, if media reports are correct, showing 500 redundancies in the last 12 months. The horticultural industry is in difficulties, the town of Balbriggan has not been given a factory for some considerable time and unemployment is at an all time high. The Swords area of North County Dublin is facing a very difficult period and I appeal to the Minister to ensure that the IDA does everything in its power to assist Amdahl in restructuring from its mainframe business into other areas. We cannot afford this level of unemployment in an area which is already an unemployment black spot. The remit of the task force should be extended to cover Swords and the whole of north County Dublin. I do not have much confidence in some of the task forces but it is the only avenue open at this stage. I appeal to the Minister to make sure that the IDA and the other State agencies do everything in their power to tackle this major crisis for north County Dublin.
I have been concerned for some time about the future of both the Amdahl Corporation and Amdahl Ireland in Swords, County Dublin. On 16 March 1993 I had a meeting with the chairman of the Amdahl Corporation in California. Unfortunately, the corporation's results so far this year have been very disappointing. Amdahl's first quarter results showed a net loss of $240 million. In the second quarter they had an operating loss of $23.7 million. The results for the third quarter are expected very shortly. However, the company has been warning that it expects to report a considerably larger operating loss for the third quarter over the second quarter.
The company has cited slow mainframe computer sales and intense competitive pressure on pricing as the principal reasons for its losses. Industry analysts have said that mainframe computer prices have declined by about 40 per cent in the 12 months ending July 1993. Both Deputies Burke and Ryan have been in frequent touch with me on this matter and on a number of occasions have conveyed their concerns to me.
Any developments in the Amdahl Corporation would have an immediate effect on Amdahl Ireland. I remind the House that the plant in Swords, County Dublin, is Amdahl's only manufacturing location outside the US. Amdahl Ireland was established in 1977 and it supplies Europe, the Far East and the Pacific Basin. While employment peaked at 680 as recently as 1992, it has now dropped to 385. The main contribution to this was the redundancies in May of this year. Deputies will recall that Amdahl was already discussed in an Adjournment debate in the House on 5 May this year and it is particularly disappointing that it is necessary to discuss Amdahl again less than six months later. The unfortunate truth is that what is happening at Amdahl is a consequence of the interaction between declining mainframe sales and plummeting prices.
Senior management at Amdahl Ireland were in the United States last week for discussions about the future of the Amdahl Corporation as a whole and Amdahl Ireland in particular. It now appears inevitable that there will be further job losses in Swords. I understand that there have been negotiations between management and staff at Swords and that the company will be making an official announcement tomorrow. The corporation is seeking a total of 1,600 redundancies and 250 of these will be made at Swords. There is overall restructuring within Amdahl as the corporation seeks to bring its operating expenses and production costs in line with demand for its products.
While the mainframe computer business has been in serious decline worldwide, the personal computer market, in contrast, is booming. I was pleased to be able to announce last month that Gateway 2000 Inc., one of the world's leaders in direct marketing of personal computers, is setting up a telemarketing, customer support and production operation in the Clonshaugh Industrial Estate in North Dublin. This fully integrated operation will create 400 new jobs within three years. Approximately 220 of these will be involved in sales, technical support and customer service. The company plans to be in full production prior to the end of the year.
Gateway 2000 Inc. will invest £13 million in purchasing and modifying an existing 150,000 sq. ft. building in Clonshaugh and installing manufacturing plant and equipment, computerised order processing systems, telemarketing and general office equipment.
With the downturn in the mainframe business, telemarketing has been identified as an important growth sector particularly suitable for Ireland in general and Dublin in particular. The decision by Gateway to set up its European headquarters in Dublin is a milestone in this regard. Gateway represents the new breed of computer manufacturer in that it is highly responsive to market demand and close to its customers.
It is clear that the electronics industry is currently maturing and consolidating after an explosive growth phase. This is particularly demonstrated on the hardware side of the industry where Amdahl as a mainframe manufacturer is succumbing to price pressures and decreasing margins. Due to rapid technological advances the electronics industry is characterised by high and increasing capital intensity matched by shortening product life cycles. The industry is also characterised by sudden shifts in direction which must be identified and acted upon as quickly as possible. To this end — in response to one of the questions raised by Deputy Ryan — all segments of the electronics industry are kept under constant review by my Department and future assessments as to potential and risk are made regularly by the Industrial Development Authority and officials in my Department in conjunction with outside analysts.
As an illustration of how we in Ireland have sought to respond to this rapidly developing industry, it is worth noting that, as the market has moved towards personal computers and their associated networking equipment, these companies have been targeted by the Industrial Development Authority and many leading representatives of these companies are now located in Ireland where they are performing above expectation both by way of job creation and overall performance.
Two questions were raised by Deputy Ryan and Deputy Burke. I will consider favourably the suggestion made that I should extend the remit of the task force to include north County Dublin or the Fingal Corporation area as it is now known. I will encourage the incoming chairperson of that new authority to liaise directly with the Industrial Development Authority to ensure that suitable land is made available at the right location.
Deputy Burke expressed doubts — this is understandable — as to whether the task force will be effective. I hope to be in a position by the end of this year to announce that the performance of the special task force set up in Galway when a similar problem arose in the other mainframe computer manufacturer, Digital, has been very satisfactory in terms of job replacement in that area directed by the Industrial Development Authority.
Finally, we will continue to work directly with Amdahl. As I indicated, I met the President of the International Corporation on 16 March. Our door will always be open to ensure that it transforms itself and takes account of the changes that have taken place in the marketplace.