THE announcement early this morning by Delphi Packard that the Packard Electric plant in Tallaght was to close was worded bluntly. The statement said: "International market forces in the production of electrical harnesses for the automotive industry have dictated the decision."
Behind this lies a complex case of a company which failed to adapt to the pressures of a rapidly changing industry. It is a challenge which many other Irish companies are increasingly having to face as competition intensifies from low cost producers in areas like East Asia and Eastern Europe.
The challenge for Packard in recent years was to transform itself from an old automotive assembly line making electrical harnesses into a modern, high tech plant. Other companies in this sector have managed the transition, as shown by a number of recent investment announcements. However, Packard Electric has struggled, forced to resort to almost all the industrial relations machinery in the State.
The Packard plant has effectively had to compete with other plants in the Delphi Packard group, which is a subsidiary of General Motors. The company's parent has claimed that its plants in Portugal, Spain and Turkey have much lower production costs.
In Tallaght, local management has been unable to combine new technology with the long and valuable experience of the local workforce to make the company competitive. A history of poor relations with the unions, stretching back to a major dispute in 1987, did not help.
It is a challenge which is facing many Irish companies, particularly in sectors such as automotive components, textiles and clothing, where low cost competitors are becoming an increasing force. This creates new problems for both management and trade unions as they struggle to adapt to a world where a major multinational can compare production efficiency across the globe and close operations accordingly.
Inevitably, there will now be pressure on the Government and IDA Ireland to find a replacement industry for Tallaght. It will not be easy to find one which offers employment to approximately the same workforce. Neither will many of the employees readily find work in similar companies or be able to set up on their own, as was the case when Digital Equipment closed its manufacturing plant in Galway.
IDA Ireland may feel its best hope is to attract an industry into the Packard plant. Otherwise, the nearest available large parcel of industrial land is the CityWest industrial park on the Naas Road.
Unfortunately, the signs are that attracting further major projects to Ireland will be difficult.
When Packard Electric established in Ireland 21 years ago, business operated on a different basis. Then the company could concentrate on making its product and selling at a profit. Now its customers - major automotive companies such as Opel - set the ground rules of what they want in terms of price and delivery. After pulling back from the rocks on a number of occasions, it is inability to adapt to this new world which appears to have finally sunk Packard Electric.
