Dell in Ireland

This doesn\’t sound right to me at all.

Established in Ireland in 1990, Dell employed more than 4,500 staff in Ireland at its height and is the country’s biggest exporter and second largest company.

It accounts for approximately 5 per cent of Irish GDP and last year contributed €140m to the south western economy in wages alone.

Eh? Out of a population of 4.something million, 4,500 create 5% of GDP? Nonsense! € 140 million in wages against a GDP of $ 188 billion? Absurd!

I fear that what the reporter is done is compared turnover of that factory with Eire\’s GDP. Which is nonsense. I\’m not even sure it makes sense if you do that. $ 9 billion turnover from one factory and 4,500 jobs? Even that\’s a stretch, don\’t you think?

Anyway, the amount that a factory or company adds to GDP is the value added by that company or factory. Not the pure turnover. For GDP itself is a measure of value added, not turnover. Buying in components from Asia, plugging them together and re-exporting them will indeed provide a large turnover. But not a large amount of value added.

OK, prizes and lashings of ginger beer for the people who find this being repeated by the credulous.

 

 

9 comments on “Dell in Ireland

  1. I’ve heard people on the Beeb refer to GDP as “the size of the economy”. But since they seem always to use it to compare with some annual sum, their bleatings are what we technical types might call “dimensionally inconsistent”.

  2. A quick legal correction though to your use to the term “Eire”. The constitution declares the name of the state to be “Ireland” in the English language. Eire is simply the name in Irish, rather than a way to refer to the 26 counties.

  3. Oddly enough, the Irish constitution is not a legally binding document determining how one must refer to the 26 counties. And calling them ‘Ireland’ is obviously bloody stupid, because that’s a word that refers to the 32 counties.

    (the DDR wasn’t officially called East Germany. Did you ‘correct’, in the sense of ‘pedantically assert stupid things about’, people who referred to it thusly?)

  4. A google search suggests the Times, BBC, Scotsman, Herald, Irish Times , FT (!), etc all use it, so presumably there’s a single source.

    Tim adds: Found it. Press Association report. Have written to the journo concerned.

    Update: from the journo, he got confused with GDP and exports. Which sounds about right, although I’d think Dell are also close to 5% of imports as well.

  5. I think it comes from this report, see table 2 towards the end but also the text

    http://www.ucc.ie/en/iss21/issp/DocumentFile,56999,en.pdf

    What is “5% of GDP” is company revenue (and 20% for the top 10), which is enormous, something like $2mn per worker for Dell or $7mn in the case of Microsoft.

    I think this is that high due to things like tax mininimisation and transfer pricing which I don’t understand. Clearly it’s not the same as GDP, but on the other hand I’m not sure of the interaction as it might explain some of the discrepancy between GDP and GNP?

    Incidentally, as I always say, I think if you are looking at a factory’s contribution to GDP it is not just profits, but wages too.

  6. >$ 9 billion turnover from one factory
    >and 4,500 jobs? Even that’s a stretch,
    >don’t you think?

    Assume the computers there cost $750 each, and you get about 12 million computers a year. Assume that all the computers Dell sells in Europe are assembled there, and it seems a reasonable number. That’s about 2500 computers per employee, which clearly indicates that whatever goes on in Ireland is highly automated. This is to be expected, because all the labour intensive stuff is done in China and other places where labour is cheap. So for the numbers to make sense, what is done in Ireland is highly automated, not terribly value added, and only done in Ireland for tax reasons.

    That’s what I would have thought anyway.

  7. The standard practice in Ireland is to refer to the state as “Ireland”, or “Republic of Ireland” for those occasions when one needs to be careful about the distinction with Northern Ireland. Nobody in Ireland says “Eire” unless they are speaking Gaelic.

    The norm in British government circles, which seems to have been long ago adopted by UK newspapers, but not the average person on the street, is to say “Eire”. I’d assume it was a battle of common usage against official usage that the newspapers didn’t feel like annoying their government sources over.

    It’s an unfortunate pedanticism, but not one that’s unique to this blog.

    Tim adds: fair do’s. I, as very much an Englishman who also has the right to Republic of Ireland citizenship through descent, find it a convenient method of distinguishing. Ireland is the island, Ulster is, umm, well, the six counties rather than the correct nine, Eire is the Republic. As with the Red Queen, words mean what I say they mean……:-)

  8. And while I’m being pedantic…. 🙂

    The 1,900 layoffs are about 60% of Dell’s current 2,900 employment in Limerick. So 40% of staff will still be employed, and they account for a lot more than 40% of the wages and salaries (what’s going is mostly assembly stuff). So less of a disaster than it appears, unless you’re one of the 1,900 of course.

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