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News : Irish Economy Last Updated: Nov 20, 2012 - 4:58 AM

Dell remains Ireland's biggest manufacturing exporter despite closing Limerick plant
By Michael Hennigan, Finfacts founder and editor
Nov 16, 2012 - 8:02 AM

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Dell Inc. reported on Thursday that its global net income fell 47% for its fiscal third quarter ended November 2, while revenue fell 11%.  Given the concern in early 2009 about the closure of the Limerick plant where 1,900 were employed and additional employment was generated in supplier firms, it may seem surprising that the company remains Ireland's biggest manufacturing exporter.

On the global results, Dell said it expects another fall in revenue and profits for the current quarter.

"The market's a lot different than anyone expected coming into the year," Dell's chief financial officer, Brian Gladden, said in an interview.

Revenue from PCs, which still account for about half of Dell's sales, plunged 19% from a year ago to $6.6bn. The biggest decline was in sales to consumers, which fell 23% to $2.5bn.

Dell Ireland has over 2,000 on the payrolls of its Irish companies now compared with 4,300 in 2006. Dell Products Ireland employs about 1,000 staff (possibly most of them outside Irelans) and the rest are in support services.

Dell Products reported that pre-tax profits fell from $12.6m to $6.1m in the year to the end of February 2012. But sales revenues rose by 5%, from $12.3bn to $13bn (€9.7bn). So the taxable profit on the big revenue figure was miniscule.

According to The Irish Times Top 1,000 companies, Dell Products is the fifth biggest by sales and it's the No. 1 for manufacturing revenues.

How could Dell be booking revenues of  €9.7bn in manufacturing sales after closing its Limerick factory?

Dell transferred PC assembly from Limerick to its new plant in Lodz, Poland in 2008/09. The company had planned to sell the Polish plant to Foxconn of Taiwan, the electronics contractor.  However that did not materialise.

Dell Products Ireland books the output of the Polish factory as a cost of sale and its revenues come from sales to third-party distributors in the EMEA (Europe, Middle East and Africa) region.

The number of staff on the payroll as per the accounts does not indicate how many are based overseas.  

So when good headline export figures do not impact the domestic economy, there are several reasons why.

That issue is explored here.

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