Irish plastics molders are warning of likely plant closures and heavy job losses as a result of a steady influx of foreign injection molders, many from the United States.
The local molders point out the flow of newcomers has increased in the last six months, despite what they consider to be gross overcapacity in the sector.
``The new suppliers are not bringing in new business with them. They are simply displacing business and jobs here in Ireland,'' said Paul Walsh, managing director of Data Packaging Ltd. of Mullingar, Ireland.
That firm laid off 60 of its 210-strong work force early this year after losing a significant contract supplying parts to Dell Computer Corp.
Walsh said Dell gave the contract to a U.S. molder.
Much of the dispute involves the role of multinational electronics customers that have set up major plants in Ireland, including Dell, Hewlett-Packard Co. and Xerox Corp.
According to the U.S. molders, the electronics firms have encouraged them to set up plants in Ireland. But the Irish molders say the U.S. suppliers aren't needed — Irish processors have the wherewithal to serve major original equipment manufacturers.
The Irish molders also complain that overseas suppliers are benefiting from generous development support and substantial training grants from government agencies in Ireland.
Two U.S. injection molders, Tessy Plastics Corp. of Elbridge, N.Y., and Amplaco Inc. of Rochester, N.Y., are the latest with plans to set up production units in Ireland.
Tessy, a molder of copier and inkjet printer parts for Xerox for 20 years, soon will appoint a general manager in Ireland. The company plans to set up a plant, which will likely be near Dundalk, where Xerox Europe is scheduled to start up a complex of five plants at the end of the year, according to Tessy President Henry Beck.
``Xerox is a major customer of our intricate parts and assemblies. They asked us to go over to Ireland with them,'' Beck said by telephone from Elbridge.
The Irish molders blame the influx of new competitors on a growing trend among the OEMs to switch from local molders to what they call ``global suppliers.''
``It is becoming or already is a policy of OEMs to distinguish between suppliers at two different levels. At one level there is the locally-based company and on the other, global suppliers, whatever that means,'' said Reg McCabe, director of the Dublin-based Irish Plastics Industries Association.
``I have reservations about this term. The bulk of the global suppliers are American in origin. They are molders operating in different areas of the United States with perhaps one plant in, say, the Far East.
``Subsupply is a local, not a global, business,'' he said, calling the OEMs' argument a ``lame excuse'' for switching.
Data Packaging, which operates 41 injection presses at its one plant, heard late last year it was to lose its No. 1 customer, Dell. He said the OEM told Data Packaging it wanted a global supplier that could provide both molded plastic and metal components.
Walsh said his firm had supplied Dell's Limerick plant since it began production in Ireland. Data Packaging still does business with other major electronics OEMs, including Hewlett-Packard's operations in Dublin.
McCabe said he was puzzled as to why some big OEMs were dropping longtime Irish suppliers.
``In the last six months there have been a number of new arrivals here at the behest of the Dells and so forth,'' he said.
Suppliers that recently have established an Irish beachhead include LMS Beach of New Braunfels, Texas, a supplier of metal and injection molded plastic components to Dell. The firm started production at the end of 1998 at a plant in Tullamore, Ireland.
The Irish molders feel that newcomers are under the mistaken impression that the Irish market still is booming, as it was in 1997 and 1998.
``If we had evidence that the market was still expanding at a reasonable rate, we would not be so concerned at this situation. But there has been quite a slowdown in custom molding. There have been clear signs since the start of the year,'' McCabe said.
Local suppliers were hurt when a major appliance manufacturer closed a plant in Limerick in December. In addition, some OEMs have cut back business or taken some molding projects in-house.
Earlier this month, IPIA issued a statement about the situation: ``At the industry association we are enormously concerned that a number of major customers, having supported local suppliers over many years, now find it necessary to accord preferential supplier status to a number of new entrants.''
McCabe said in surveys sponsored by IPIA, local molders consistently receive high and improving performance ratings from OEMs. The surveys measure suppliers based on competitive pricing, delivery, product quality and technical support.
At Dell's European base in Limerick, one official said the firm's overriding aim is to simplify and streamline outsourcing through a few global suppliers capable of supplying common components at Dell's plants around the world.
``Our strategy is to consolidate our global supply base. It is to have suppliers who have operations to support us in each of our locations,'' said Padraic Allen, vice president for manufacturing for Dell Europe.
Dell's Irish operation makes products for Europe, the Middle East and Africa. The company also has plants in Austin, Texas; Malaysia and China.
``Companies in Ireland have been excellent suppliers. We are still using a mix of both Irish and outside suppliers. But we are a competitive company and it is a very competitive business we are in. As a manufacturer, we have to look for what is best for Dell overall,'' he said.
He added that Dell's annual spending on Irish suppliers has grown by 50 percent in the last three years to 250 million Irish pounds ($335 million).
Allen said Dell reviews its suppliers quarterly based on quality, process capability, pricing and whether a firm can supply components globally.
Aidan Donnelly, managing director for Xerox Europe Ltd., said his company plans to start production at its new factory complex in Dundalk in the fourth quarter of this year.
Donnelly said Xerox aims to streamline its outsourcing by using a limited number of worldwide suppliers. That minimizes the number of sets of tooling, invoices and paperwork.
``Volumes and accuracy are very sensitive for the production of very high volumes and high precision we require. Xerox is looking for the potential of suppliers to supply on a worldwide basis,'' Donnelly said.
He expected that some Irish plastics molders would have been rejected based on their size, since Xerox does not want to start up and later find out a supplier could not grow with the OEM.
``We're not ignoring the Irish companies,'' Donnelly said, adding that company has used one Irish molder, Mergon Ltd. of Castlepollard, for 15 years as a global supplier of blow molded toner containers.
Xerox held a vendor fair in Ireland in February, where ``a reasonable number'' of Irish plastics processors were chosen for the current pre-qualification process for suppliers, he said.
He added that it is more than likely that within two months Xerox will add two more major Irish molders to its global supplier list.
Donnelly denied that Xerox asked Tessy Plastics to come to Ireland, but admitted that Xerox ``would like them to supply us here.''
Donnelly agreed that the Irish molding market currently is oversupplied, but added that this did not mean that the capacity there is suitable for Xerox requirements.
Hewlett-Packard, which came to Ireland in 1995, said its policy is clearly one of commitment to the local communities where it operates. H-P aims to cultivate a partnership with a local firm and help it to grow with H-P, said spokeswoman Una Halligan.
``We don't have a global supplier policy. We do have a local one,'' she said.
Halligan said H-P uses several established Irish molders including Data Packaging.