Firm’s tech bubble bursts to hit IDA for €3m grant
ON Friday September 18, 1998 the Department of Enterprise, Trade and Employment announced the creation of 500 jobs in Swords.
Celestica, a Canadian technology firm, had decided to locate a facility in Ireland and at the height of the tech bubble in 2001 would expand to employ more than 1,000.
But the Swords-based facility shut its doors last May. All jobs were lost.
The development was a huge blow for north Dublin, which had already experienced a spate of redundancies, including high-profile factory closures such as Motorola and Gateway.
Five years before the closure Celestica had cited numerous reasons for locating in Ireland, including a "highly developed electronics industry infrastructure and the availability of people with relevant electronics manufacturing skills".
But there was another reason the favourable corporation tax rate offered by the Government and generous IDA grants.
All told Celestica received IDA grants worth €3,673,493 to aid its Irish operation, all paid for by the taxpayer.
Most of that grant €3,118,641 was to be repaid to the IDA under the terms of a contract between the IDA and Celestica. But today, almost 18 months later, nothing has been repaid and negotiations over repayments are still ongoing between the company and the IDA.
The 33 IDA-supported companies which left Ireland in 2003 received more than 31m in grants from the IDA, of which more than €20m was non-returnable.
However, Celestica, which received the largest grant of all 33 firms, was one of 13 firms which agreed to repay some or all of the IDA money received.
Despite the fact that grant repayments are usually made in a matter of a few months, Celestica is one of just six firms which still owes the IDA.
Others companies, including Powerscreen Ltd, Vertex Interactive and Plaut IT Services Ltd, owe between them far less than Celestaca's 3.1m debt.
An IDA statement released to the Irish Examiner said outstanding repayments could still be due for a number of reasons including "a settlement figure still being negotiated; a staged payment schedule and identification of liability responsibility".
An IDA spokesperson later denied the delay in repayments was necessarily indicative of a dispute over the money.
"We are still in negotiations it doesn't mean there are any problems with them it just means there are some companies we are in continuing negotiations with over a repayment schedule," the spokesperson said.
Asked how long it usually takes for repayments to be negotiated and made, the IDA said "most would be completed within a couple of months to a year".
When asked why repayment obligations were not set in concrete when a firm first moved to Ireland, the IDA said every grant contract was different.
The agency said it could make no further comment on why the Celestica payment was taking so long as negotiations were ongoing.
Celestica's European spokesperson did not respond to messages left yesterday while a spokesperson at the company's Canadian headquarters failed to respond in time for publication last night.
But Fine Gael enterprise spokesman Phil Ryan called for the IDA to tighten up the way it regulates grants to ensure prompt repayment.
"The IDA should look at the contents of its contractual obligations and look at the legal basis to ensure that contracts entered into ensure the refunding of Irish taxpayers' money within a defined period of time," he said. "It's totally unacceptable on the part of the taxpayer that it could be up to 18 months before that money is repaid."
Speaking in 1998, Iain Kennedy, senior vice president and chief information officer at Celestica, spoke of the importance of the new Dublin plant.
"Along with our other facilities throughout the world, the Dublin facility will play a key role in our further growth and development."
This month Celestica posted third quarter results, showing a healthy quarterly revenue growth of 33% to $2.1bn.
The Swords plant may indeed have played its part, but that's little consolation to the hundreds of workers made redundant or to Irish taxpayers who are still waiting for Celestica to fulfil its repayment obligations.
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