While there is no immediate indication if this will affect the 4,000 people employed by the company in Ireland, it is likely that there will be some fallout here, considering the magnitude of the job losses. The decision will obviously be of concern to the Government, the IDA and Enterprise Ireland, the latter of which is responsible for supporting Irish businesses in the manufacturing and internationally traded services.
More importantly, it shows just how fragile our economic recovery can be if there is an over-reliance on attracting international companies to site their manufacturing and services sector here.
The push for decades to secure foreign direct investment (FDI) has been largely successful. By the late 1990s Ireland had become one of the major locations for the computer hardware industry, accounting for 5% of global computer exports and 6% of global electronic components exports. One third of all personal computers sold in Europe was assembled in Ireland at that time. However, the sector has experienced a sharp decline since as production relocated to China and Eastern Europe, where employment costs are lower.
That appears to be the plan for HP. Two years ago, 36% of its enterprises services was sited in low-cost locations. This rose to 42% last year and the company plans to make that 60% by 2018, so the omens for Ireland are not good.
There is no doubt that FDI has been good for Ireland but, perhaps, the time has come to reassess its place in the 21st century.
It was an idea conceived of in the 1960s, promoted vigorously by TK Whitaker as secretary of the Department of Finance and enthusiastically supported by the then taoiseach Seán Lemass. It came to fruition in the 1970s as we entered the EEC, grew in the ’80s and underpinned the huge expansion in the late 1990s that eventually led to the rise of the Celtic Tiger.
No reasonable person wants to go back to the bad old days but it is questionable whether an idea conceived of more than 50 years ago continues to have the same relevance today.
We are now a trading nation with a global perspective but we are also the most open economy in the world and that leaves us particularly vulnerable to economic contraction elsewhere, difficulties experienced by multinationals located here and the constant push for cost-cutting in pursuit of profit by major IT companies.
The original vision of men like Whitaker and Lemass was that FDI would spawn Irish enterprise. That has happened to some extent, but not enough.
If we are to truly realise the totality of that vision, it is important that we put as much invention, effort, energy and innovation into assisting businesses born and raised here.