The significance of the Intel job losses
29 September 2007
The presentation of the latest announcement of job cuts in the multinational sector - in Intel, the largest private sector employer in the State and the symbol of the Celtic Tiger, was masterful. ‘No more cuts expected, Cabinet told’, went the front page headline in the ‘Irish Times’. At the same time as Intel announced two hundred job losses three hundred and fifty new jobs from two new US companies were also announced. In general the size of the Intel job losses was played down even as the significance of it for what it said about Ireland Inc.’s competitive position was played up; the latter yet another dire warning of Irish workers pricing themselves out of the market and out of work.
What happens at Intel is very important. It is the key multinational investment in the Irish State. One author has described the reason for the growth of foreign investment in computers and software etc. in Ireland as ‘astonishingly simple: Intel.’ (Denis O’Hearn, ‘Inside the Celtic Tiger’, Pluto Press London, 1998, p70) Commenting on the large amounts of money spent attracting the company to Ireland he declared that this investment ‘bought tigerhood.’ (ibid, p71)
Intel was, and still is, important because it led the way for a whole host of other US and other companies to follow – Gateway, Dell, AST, Apple, Hewlett-Packard, Siemens-Nixdorff, Fujitsu, Microsoft, Oracle and many others. The obvious concern is that this process could work in reverse and indeed some of these names are already part of Ireland’s industrial history. In the case of Intel the worry is that the company could play the pivotal role in a reverse process of disinvestment in the same way that it led the inflow of foreign investment in the 1990s.
Intel’s current investment stands at about $7 billion, employing 5,500 workers at its facility at Leixlip outside Dublin. Both the government and Industrial Development Agency have described it as ‘a strategically important investor,’ this is the first time it has cut its Irish workforce. These job losses come after a series of job cuts in other multinational companies including Pfizer, Proctor & Gamble, O2, Vodaphone, Motorola, Bourns Electronics and Thomson Scientific. The opposition TD Leo Varadkar from Fine Gael stated that 30,000 manufacturing jobs had gone in the last five years and that the State’s share of international trade had fallen by one third since 2002.
The announcement of job gains hardly alters this picture as the 350 jobs are a prediction to be rolled out over five years while the 200 announced at Intel are to go in three months. Even more revealing of the overall picture has been the revelation that 200 is not the total number of jobs that have gone at the company; a spokesman admitted that a further 350 staff had gone over the last year. Because of an opaque system of suppliers and sub-contractors Intel has claimed it cannot give a break-down of how its staff are employed but it is believed that 20 per cent may be employed by specialist suppliers and it is among these that the losses have occurred. Earlier in the year an independent member of the local council stated that up to 800 jobs could go from third party suppliers this year.
The threat to Intel’s Irish operation can be appreciated when it is realised that the company has ruled out the Irish operation producing the companies latest product and only this month started construction of a $2.5 billion plant in China to open in 2010, the company’s first advanced manufacturing facility in Asia. The company has stated that there is nothing unusual about the Irish plant not being considered for the production of the latest product and that it can bid for future product developments, planned to take place every two years. This however can hardly be reassuring given the direction of development.
That multinational manufacturing jobs are under threat from lower wage competitors in Eastern Europe, India and China etc. is hardly news. This is implicitly recognised by the State’s industrial development agency prioritising the attraction of higher value processes into the State. The haemorrhaging of manufacturing jobs has not become a torrent but it is recognised as an irreversible process. Just as the State was able to upgrade the low skilled multinational assembly jobs of the 1960s and 1970s that went to lower wage competitors so it is hoped to replace the more skill intensive manufacturing jobs of today with higher skilled research and development and ‘knowledge based’ jobs tomorrow. But success in this is by no means guaranteed.
The earlier success in upgrading multinational investment was no smooth process of evolution and was interrupted by the economic crisis of the 1980s, characterised by mass unemployment and mass emigration. Much of the eventual success was outside of the Irish State’s control. To achieve today’s economic development required a disproportionate success in attracting mobile US investment.
A presentation to the American Chamber of Commerce in Dublin by a former Deputy Assistant Secretary of State for European Affairs noted that the Irish State received $44.3 billion of direct investment from the US between 2000 and 2006 while China and India received $15.4 billion and $5.3 billion. More than 5 per cent of US investment around the world since 2000 had gone to Ireland. Repeating such a level of investment at the next level and in the next stage of development will be hard.
Today all analyses of the Irish State’s competitive position underscore the weakness of the State’s comparative research & development performance, precisely the area it seeks to expand into. Part of the difficulty is that R & D capacity is itself as much a by-product of industrial development as it is an independent factor such as low taxes, educated workforce and infrastructure that the State can put in place in advance. If the industrial development that has already taken place hasn’t created it this is a real cause for concern. The development to any sort of critical mass of successful R & D as part of a ‘knowledge economy’ is difficult to achieve. Even if successful it is likely to exacerbate the inequalities of the current model of development.
The overall decline in the State’s competitive position is put down to a number of factors including, in Intel’s case, the rising cost of energy. This has been reported to have increased from 15 per cent below the EU average four years ago to 30 per cent above today. Other areas of threat include the rising cost of services, rising labour costs and adverse exchange rate movements. The Irish State can do nothing about the latter. Its policy of seeking to privatise electricity generation and create a single all-island energy market means increasing prices to encourage private firms to enter the energy market. So much for competition reducing prices when the State has to increase prices to create this ‘competition’ in the first place.
The rise in service costs includes the cost of health care – again to encourage private capital and increased local service charges – once again to stuff money into the private sector. Other services have increased as small businesses, middle class professionals and the self-employed – the core support for the current social and political establishment – has attempted to take its share of the economic boom. Some of these are examples of displaced competition between local and foreign capital. These developments may put pressure on the profitability of foreign investment but it is the working class that will be asked to pay for the greed of local small capital.
Rising wages have been pressed down by successive social partnership deals and a policy of promoting the super-exploitation of immigrant labour. Rising wages for skilled labour has been the product of free market competition for skills and is the capitalist mechanism for ensuring the survival of the fittest and elimination of uncompetitive rivals. It is how one multinational attracts labour to make profits at the expense of another multinational. It has not been due to the collective demands of labour.
The much maligned public sector has recently grown no more than the growth of population and will be the first to feel cutbacks. The brutal, crazy and unplanned moratorium on recruitment during September by the Health Services Executive is an indication of what is to come.
The most telling aspect of the announcement of job losses at Intel was the reaction of workers at the Leixlip plant when they were interviewed by a journalist. ‘What job cuts?’ asked one worker. Another stated that those higher up might have heard of them but that the media would hear about it before workers lower down. So much for new human resource management techniques designed to make workers feel part of the company. Of course it is also a damning judgement on the country’s trade union movement which has had a policy of not even trying to organise in multinational companies.
This movement has had a policy of complete dependence on the State – recruit in the public sector to maintain the organisation’s financial viability and support the State’s economic, social and political policies in return. The threats that face the economic and social perspectives of the Irish State thus also threaten its friends in the trade union bureaucracy.
What is needed is a working class economic
alternative and a rank and file working class movement to fight for it.
The job losses at Intel demonstrate that the current capitalist economic
system is incapable of promising security. The prosperity that does
exist is rather precarious and definitely threatened. The policies
ruefully endorsed at the last general election will fail to provide a solution.
Elaboration of an alternative remains the task a socialist movement has