Procter & Gamble Cutting Jobs, Reducing Operations at Plant in Ireland

By: The Associated Press

Published: March 6, 2007 International Herald Tribune

This article is about Procter & Gamble cutting jobs in their manufacturing plant in Ireland and moving them to a new plant in Poland. The company plans to cut their workforce in half in a two year phase out plan. The company is moving the plant's skin-care production to Poland for strategic reasons, including its proximity to the important emerging markets in Eastern Europe.

The Nenagh, County Tipperary, Ireland plant, opened in 1985 and is the biggest employer in the town. It makes products for the Max Factor and Cover Girl makeup ranges, Oil of Olay skin products, and perfumes for the Hugo Boss and Laura Biagiotti brands. The Oil of Olay production will move to the new plant in Aleksandrow Lodzki, Poland, which is expected to open in 2008.

This is bad news for Ireland, where a string of foreign multinationals have recently closed shop or cut their workforce. Last month, drug maker Pfizer Inc. said it planned to close two plants in Cork, in southwest Ireland, and lay off 545 workers.

This article is important because Ireland has been Europe's biggest economic beneficiary of globalization over the past decade. “Hundreds of high-tech multinationals, particularly in the computer and pharmaceutical industries, have chosen Ireland as a low-tax, low-wage, and high-skill base for their operations in the European Union. As a result, Ireland's unemployment rate of 4.3 percent is among the lowest in Europe.”

However, Ireland’s appeal for these companies has been fading since the EU's expansion into the formerly-Communist east. Eastern Europe is becoming much more attractive to employers because the workers’ skills are improving rapidly, but wages are still much lower. While Ireland's corporate tax rate of 12.5 percent remains one of the lowest in Europe, wages and the cost of living have risen rapidly, making it less attractive for foreign investors.

This article is really about outsourcing as a result of globalization. Procter & Gamble are simply moving to a new area where production is cheaper because they can. The workers in Poland are simply rising to compete on a level playing field with workers from around the world for employment.