Dáil Éireann debate -
Thursday, 26 Jan 1995

Vol. 448 No. 2

Adjournment Debate. - Proposed Job Losses at Dublin Plant.

Mrs. O'Rourke

I have congratulated the Minister for Enterprise and Employment, Deputy Richard Bruton, but I wish to formally do so now by putting it on the record. I wish him well in his new ministerial post and I am sure by now he realises he is responsible for a complex Department. I look forward to future debates here and in committee and I am sure we will have edge and endeavour in our enterprises together.

I raise the matter of the Borland International firm in my national role as Opposition spokesperson on Enterprise and Employment and on behalf of my colleague, Deputy Ray Burke. On 18 January the firm announced a reconstruction of its organisation which by 31 March will amount to a closure of the Dublin facility and the loss of approximately 80 jobs. The firm and its employees have enjoyed an excellent working relationship under the present management of Borland International and in the early 1980s under the management of the Ashton Tate Corporation as it was known previously. The announcement of the anticipated potential closure was made in the light of company restructuring.

As we are nearing the end of January and before more time elapses, will the Minister make direct contact through his office with that firm to see if the decision can be either reversed or mitigated. The potential closure of that firm would be a distinct loss, particularly to an area like Swords, which has serious unemployment problems, as have most areas in Ireland. I emphasise the strong work ethic of the workforce. There has been an excellent working relationship between the previous and present management and workers. The firm is recognised worldwide as having a very good product and it seems that the US decision to restructure its organisation is the dreadful effect that part of it will be the closure of the Swords plant. I was very interested in how the Minister, Deputy Richard Bruton and the Minister of State, Deputy Rabbitte, dealt with the industrial dispute in Packard Electric. Before Christmas I said that the Ministers should intervene in the dispute and take all the measures, which if implemented with rapidity and skill, could be effective. While that proved to be the case it was nearly unsuccessful.

I know the Minister has the enviable back-up of very skilled civil servants in his Department. I pay tribute to their dedication in serving Ministers of the day. Be that as it may, there is a tradition in Kildare Street of non-inter-ventionist action, perhaps one should say "inaction". As I said, there are good skills in the section of the Department that was formerly the Department of Labour. I believe the Department, having regard to the global market, the changing economic climate, demands for market and industrial relationships, realises that there must be intervention.

I was glad to hear the Minister say recently that a special unit will be set up — I expect it will be additional to the competitiveness and employment protection unit which is operating satisfactorily in a modest way — to anticipate potential industrial difficulties and head them off before they arise. The potential closure of this firm does not arise as a result of an industrial difficulty because there is a good working relationship in the firm. In a little over two months a nice tidy compact company in Swords, County Dublin, making a good product, with efficient workers, will close. Even at this stage it should be possible for the Minister to adopt the type of tactics about which I have often spoken. Will he ensure that Borland International is given the necessary encouragement to remain in situ and keep its viable operation open?

Minister for Enterprise and Employment (Mr. R. Bruton)

I thank Deputy O'Rourke for her kind words on my appointment and congratulate her on being appointed deputy leader of Fianna Fáil. It reflects her contribution to the House and her party.

Mrs. O'Rourke

Thank you.

Mr. R. Bruton

I wish her success in her role. I also concur with her sentiments regarding the dedication of the staff with whom both she and I have had the pleasure to work in the Department.

On 17 January 1995, Borland International announced it was restructuring its organisation with a reduction in staff numbers worldwide by 650, from 1,700 to 1,050. The reduction involves the closure of its Swords plant — where 83 people are employed — by 31 March 1995.

Borland International, with its headquarters in Scotts Valley, California is a database software company founded in 1983. The company grew rapidly to sales of $430 million and employed 1,700 people in 1994. It became involved in Ireland in 1991 when it acquired a competitor, Ashton Tate Corporation who already had a software operation in Swords since 1988. It was originally scheduled to grow to 90 people and, indeed, employment peaked at 110 in 1992 but has now dropped back to 83.

Borland International achieved rapid growth in a short period. It attempted to win market share by undercutting prices of much larger and more powerful competitors including Microsoft, Lotus and Novell. This happened at a time of intense competition which is continuing in both personal computer hardware and software markets. While the strategy succeeded in increasing Borland's sales, it had a devastating effect on profits. In the quarter to 31 December 1994, analysts expect Borland to lose $17 million with a further $15 million loss forecasted for the following quarter.

In an attempt to reduce costs, Borland has decided to outsource manufacturing functions to third parties. In recent years this has become a strong trend among software companies. Software manufacturing functions lend themselves to economies of scale. Outside third parties can carry out these functions for many software companies much more efficiently and at a lower cost. This trend is expected to increase even further in the future as software companies concentrate on their core competence of development and marketing, leaving routine production and certain other functions to third parties. Borland's decision to outsource manufacturing will involve the loss of the 83 jobs in the Swords plant which is engaged in manufacturing. The company is currently engaged in discussions with a number of other companies to outsource its manufacturing on a world-wide basis. Two of these companies have operations in Ireland. I do not propose to name these companies as this could have an adverse effect on negotiations at this stage.

In general, the software industry in Ireland has been making excellent progress over the past number of years. From a base of 8,000 employed in 1992. it is intended to grow the sector to 20,000 jobs by the end of the decade. In 1993 employment had risen to almost 9,000 and the trend is still on an upward curve. Employment is divided almost equally between indigenous and overseas companies.

Significant emphasis is now being put on the development of indigenous industry in Ireland and the indigenous software sector is no exception. We have a national software directorate in place and I hope to be in a position very shortly to announce the launch of a development capital fund for software. Lack of venture capital funds has been identified as a major issue facing indigenous software companies.

While the information technology area has been going through some turbulent times. Ireland has been doing particularly well overall. For example, there have been two major developments in the electronics area in north County Dublin and one in Swords in particular.

Last year, Motorola, who already employ 800 people in Swords, announced proposals which will create an additional 2,650 jobs in the town by 1998. Work on fitting out buildings is underway and I expect the company to begin recruiting full time staff in the near future. Motorola is the world leader in the telecommunications industry with a track record of over 65 years. The products to be made in Swords — battery chargers, pagers and two-way radios among others — are at the core of the corporation's business.

In nearby Clonshaugh Industrial Estate in Coolock, Gateway 2000 has established a European telemarketing, technical support and production centre for personal computers. The company will employ up to 618 in three substantial telemarketing groups to address primarily the United Kingdom, French and German markets and, in addition, will employ 403 people in the manufacture and test of personal computers. These jobs are all due to be in place by 1998. Projected employment in 1994 was originally put at 196, but by the end of the year employment was actually 500.

I can assure the Deputy that steps have already been taken to meet the company. A meeting was held today between the IDA and Borland management. A further meeting has been arranged for 13 February next. Discussions are centering on how the work that is being outsourced can be secured in Ireland. The IDA is also assessing the future for the premises and the possibility of locating alternative activity there.