Intel Picks Ireland for Factory Site
PREAPARING FOR 1992
BOSTON — INTEL CORPORATION has joined the rush by United States makers of computer hardware and software to establish a manufacturing plant in Europe before 1992. The Santa Clara, Calif.-based company, maker of the microprocessor that powers the microcomputers of IBM Corporation and all IBM compatibles, yesterday announced plans to build microcomputer systems at Leixlip, near Dublin. Two chip-manufacturing plants will eventually be added to Intel's 70-acre site. Ireland belongs to the 12-nation European Community. By the end of 1992, the EC plans tobecome a single market of 320 million people - larger than the US by 75 million. The lifting of intra-EC trade barriers is expected to benefit companies located there, and pose obstacles to those outside. The Ireland plant will be Intel's first in Europe, where the company earned 24 percent of its $2.87 billion net annual revenues last year.
Stratus Computer Inc., one of last year's crop of high-tech investors in Ireland, notes that the prospect of a unified market is sparking European demand for its products now. The International Stock Exchange in London, the world's third-largest bourse, last year bought equipment from the Marlboro, Mass.-based company to prepare for 1992's ``anticipated explosion of international trading under deregulation,'' says an exchange executive.
Intel's decision is a coup for Ireland. While US companies prepare to compete in post-1992 Europe, EC countries compete for US manufacturing operations. In Ireland, 350 US companies have invested $6 billion, creating 40,000 jobs. That's 20 percent of manufacturing employment and 6 percent of the total work force. Some 130 US companies are involved in information technology, a $5 billion industry in Ireland with 25,000 employees.
Intel's plans, though, are a class apart. When complete in 12 months, its facility will provide 400 permanent jobs, and up to 2,500 further on. It will make a $400 million capital investment and spend another $300 million on research and development over a 10-year period.
That is the largest intended electronics investment in Europe announced by a US company this year. But ``something less than half'' of the money - no one's saying exactly - will come from the Industrial Development Authority (IDA), a government agency charged with luring foreign manufacturers to the Emerald Isle.
Investment grants and a 10 percent corporate tax rate through the year 2000 are two incentives for US companies to set up a European base in Ireland. A third is availability of labor. English-speaking high-tech graduates abound (50 percent of the population is under age 28). Intel cited the quality of the workforce and government support as steering it to Leixlip. In addition, IDA executives boast of Ireland's telecommunications system, which from being Europe's most antiquated became its most modern in just 10 years.
But not all of Ireland's advantages are unique. IDA executives say that their counterparts in Scotland ``talk along the same lines.'' The two were on Intel's short list of site candidates.
An executive of the Scottish Development Agency (SDA) notes that Scotland already produces semiconductors. Ireland doesn't, he says, speculating that Ireland won the Intel plant because Intel wants to dominate the market it locates in.
Scotland has had its successes, attracting seven of the top 10 US computer companies. Compaq Computer Corporation announced plans in May to more than double its plant at Erskine, Scotland to 490,000 square feet. It's the second expansion there in two years for Compaq, whose European sales accounted for 44 percent of its $1.3 billion revenue in the first half of 1989. And last month, Compaq bought a nearby plant from troubled Wang Laboratories Inc. By 1992, the SDA executive says, Scotland will account for 12 percent of the world's output of microcomputers.
Still, in 1988 Ireland attracted 17 US startup investments in electronics, against Scotland's three and the rest of Europe's 12.