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"The Decline of the Computer Hardware Sector: How Ireland Adjusted"

Professor Frank Barry (Trinity College Dublin) and Dr. Chris Van Egeraat (NUI Maynooth)

Special Article in the Quarterly Economic Commentary, Spring 2008.

(Members of the Media should note that neither Frank Barry nor Chris Van Egeraat are staff members of The ESRI. Whilst this Article has been accepted for publication by The ESRI, the views expressed are not the views of The ESRI.)

By the late 1990s Ireland had become one of the major European locations for the computer hardware industry. The country accounted for some 5 percent of global computer exports and 6 percent of global electronic components exports. One third of all personal computers sold in Europe are thought to have been assembled in Ireland at that time. The sector has experienced a sharp decline since then as production relocated eastwards to China and Central and Eastern Europe. More than 10,000 jobs – around one third of all jobs in the sector – have been lost over the course of the new millennium.

In this paper, Professor Frank Barry of Trinity College Dublin and Dr. Chris Van Egeraat of NUI Maynooth track what became of the firms operating in the sector and the workers whose jobs disappeared as the sector relocated. The paper includes case studies of a number of the major firms, including Apple, Gateway, Intel, Dell and IBM. Of these five, four remain in Ireland but their operations have been significantly transformed. Intel has consistently upgraded into higher value-added activities. Apple’s Irish operations have largely shifted out of manufacturing and into services. There is a less pronounced shift in the same direction by Dell, while IBM has transitioned to services at both the global and the Irish level. 

The case studies also illustrate the various paths followed by displaced employees. Plant closures have occasionally led to high-tech spin offs, as in the case of Digital Electronics Corporation (and more recently in Motorola). Some displaced workers remained employed in their original companies but moved to other higher value-added manufacturing jobs following retraining, as in Intel, or into the newly emerging services jobs in the cases of Apple and IBM. Other displaced workers, as charted in the cases of AST and Gateway, were able to move rapidly into expanding companies in the same locality, serving as an indicator of the value of the skills accumulated in the sector. 

The computer hardware sector is atypical in that it is characterised by higher educational attainment and a lower age profile than the manufacturing average. Both of these characteristics suggest that displaced workers would have had better than average chances of finding new employment.

Though the ability of displaced workers to move to new employment relatively easily was undoubtedly assisted by the overall buoyancy of the economy over the period, the adjustment problems associated with churning and displacement in sectors of this type appear to be substantially less burdensome than in traditional lower value-added sectors.

The thrust of the various strands of evidence drawn upon is to suggest that the flexibility of the labour market will be enhanced by the increasing educational attainment of the workforce and a concurrent expansion in the share of modern higher-technology sectors.

For further information contact:

Prof. Frank Barry (TCD), on (353-1) 896-2311; 087-2263975; Email: Frank.Barry@tcd.ie

Dr. Chris van Egeraat (NUI Maynooth) on (+)353-01-7086171; Email: chris.vanegeraat@nuim.ie.

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