RENEE MONTAGNE, Host:
You can see the way Europe's economy is changing when you look at the affairs of a giant computer maker. Dell has its European manufacturing base in Ireland - or at least it has up to now. Dell is cutting two-thirds of the workforce at a major factory in Limerick. It's moving the 1,900 jobs there to a shiny, new plant in Poland. The move is a shock to the western Irish city, where Dell was the main employer. It's also a sign that Ireland is losing the cost-competitiveness that boosted its economy for decades. NPR's Rob Gifford reports from Limerick.
ROB GIFFORD: Dell has been by far the largest employer in this friendly, verdant corner of the Emerald Isle ever since the company set up here 18 years ago. The impact of the job losses here was summed up by Alan English, editor of the local newspaper the Limerick Leader.
MONTAGNE: Yeah, the headline in the paper today is "The Blackest Day." And we have five further pages of coverage on what is the biggest bad-news story to hit our area in a generation.
GIFFORD: There are still a thousand non-manufacturing Dell jobs remaining here, and another 1,300 in sales and marketing in Dublin. But in Limerick, in small coffee shops like the one run by Liz Murphy(ph) near to the Dell factory, the layoffs will certainly be felt.
MONTAGNE: We're just around the corner from Dell. We're just at the entrance to the industrial estate. So I think the loss of jobs is going to have a huge impact on the business here in just, you know, a small coffee shop.
GIFFORD: Dell opened its Limerick facility with great fanfare in 1990, right at the start of the boom that led Ireland's economy to be known as the Celtic Tiger. Low corporate tax, government subsidies, and a skilled but relatively cheap labor force led other companies to follow Dell's lead and move their manufacturing bases to Ireland. But Dell's European vice president, Sean Corkery, said Dell can't make computers in a place that pays $15 an hour when the company could make them in a place that pays 5.
MONTAGNE: We have to remain cost-competitive. It's a very difficult market out there. And as part of our restructuring program to be more cost-competitive, we need to be a price leader in the market. And for that, we need to have the right costs. It's in that context we had to make this decision.
GIFFORD: Ireland has now become the victim of a policy from which it once benefited, whereby poorer European Union countries could offer subsidies to lure foreign firms. Now, though, the EU Commission says it's investigating the legality of Poland's $66 million grant to lure Dell from Ireland. Stephen Kinsella of the University of Limerick says there could be a silver lining to the closure of the Dell plant.
GIFFORD: This is going to be seen as a watershed moment in Irish economic history. This is the moment when we changed from a low-value, manufacturing-based service economy and our focus changed to a high-value, innovation-based research and development economy - painful, but utterly necessary.
GIFFORD: More jobs will likely be lost in the short term, says Kinsella, but he adds the Irish government needs to invest even a fraction of the money it spent bailing out Irish banks to help laid-off workers of Dell or other companies to set up their own businesses.
GIFFORD: If you give 100 of those people loans, and they create nine more jobs each, you've taken 1,000 people out of the unemployment line. Of those 100 companies, 75 of them are going to fail, five of them will be small to medium enterprises, 10 more might be enterprises with 15 to 50 people in them. One of them might be the next Google.
GIFFORD: Ireland has proved before that it can reinvent itself. The problem is this time, it will have to be done against the looming backdrop of the credit crunch and the global recession. So this time, it's likely to be more difficult, and to take much longer. Rob Gifford, NPR News, Limerick in western Ireland.