Dell's manufacturing plants in Limerick are among the company's lowest-cost operations in the world, Mr Paul Bell, president of the corporation for Europe, the Middle East and Africa (EMEA), has said. "Our operation in Limerick had a very good year in terms of driving productivity," he added.
He confirmed the official company statement that 1,700 redundancies would be confined to the US. About 4,500 are employed at the three plants in Limerick, where revenues increased by 23 per cent in the last quarter. A further 1,200 are employed in the company's sales operations in Bray, Co Wicklow, and Cherrywood, Dublin.
He was speaking after the announcement of Dell's fourth-quarter results last week.
Mr Bell added that despite the higher wage costs compared to operations in Malaysia, the operations in Limerick were extremely competitive. High shipping costs ruled out the importing of computer products to the EMEA from south-east Asia. The EMEA had a 19 per cent sequential growth rate, the highest in 12 quarters, according to a spokeswoman. The growth can be traced directly to Limerick, which provides all the manufacturing output for the region. Dell grew six times faster than the computer market in Europe, she said. On fourth-quarter net revenues of $8.7 billion (€9.57 billion), the company made a pre-tax profit of $508 million, a 16 per cent increase on the same period last year. Mr Bell said he was quite pleased with the performance. The market had been cyclical and there had been similar downturns about four times since the end of the 1980s. Commenting on the next quarterly results, he said historically first-quarter results go down a little and the company expected that to happen again. "What we are looking to do is continue to grow faster than what the market does by at least a multiple of two or three times," he said.
The company now had "aggressive price reductions in the servers and storage areas" and markets would grow as businesses upgraded to increase productivity. Dell, the world's number two PC manufacturer, is the number one ahead of Compaq in Britain and the Republic. It is also number one in Sweden, and work stations are number one in Europe. Mr Bell said the US had come off "an incredible high", and in the face of a ripple effect from a slowdown, the company was preparing for a slower market by being aggressive and taking market share.
Its direct sales model meant that operating expenses were about 11 per cent of revenue compared to 18 per cent for competitors. This allowed Dell more room in making price reductions.
