Ireland: Bombshell -Dell axes 1900 jobs in Limerick and plans new manufacturing plant at Lodz in Poland

Video requires RealPlayer. Download here

Embedded from RTE.IE

Computer multi-national Dell has announced that it is cutting 1,900 jobs at its plant in Limerick over the next 12 months.

Dell will move all production of computer systems for customers in Europe, the Middle East and Africa from Limerick to its Polish facility and third-party manufacturers over the next year...(RTE)

Currently Dell employs 3,000m workers at its Limerick plant. The loss of 1900 jobs is a shattering blow not alone to Limerick but to the entire Mid-West region. In addition thousands of jobs in spin off industries are likely to go. Dell says it will continue to employ approximately 1,000 staff in Limerick to coordinate supply chain, manufacturing and logistics for Europe, the Middle East and Africa.

The Taoiseach Brian Cowen has confirmed that a Government Task Force will now be formed to promote economic activity in the region.

Obama plans to cut Nasa's budget could hand space domination to Russia and China and put US security at risk

In USATODAY

Members of the Texas congressional delegation say they plan to build alliances with other lawmakers as part of a campaign to head off possible deep budget cuts for NASA, officials said.
The drive comes amid expectations that billions of dollars will be shifted from various federal agencies into new programs to stimulate the economy and stabilize the financial system as President-elect Barack Obama seeks to rescue the economy, the Houston Chronicle reported Tuesday in an online story from its Washington bureau......

It is essential for the new Obama administration to pare government spending where possible and to reduce waste. However it is neither sensible nor reasonable to cut expenditure to a level which, will cripple the space exploration programme. The space agency's budget amounts to just $20.2 billion- 0.6% or less of national spending. Severe cuts will also put astronauts safety at greater risk.

In addition the US risks being relegated to third place behind Russia and China.
China plans to build a lunar base. By 2011 China will have started a programme of exploration focusing on Mars. The Chinese intend in the long term to launch manned space probes to Mars and Saturn.
Russia will resume unmanned lunar missions in 2009. A mission to Venus is planned for 2015. Russia plans to replace the ISS (International Space Station) with an all-Russian station in Earth orbit.This will be an assembly platform for probes to the Moon and Mars.

Unwise cuts by Obama will have grave implications for American security. Dominance in space is a sine qua non for global military superiority. The Chinese and Russians realise as much.

Ireland – Tax Revenue shortfall for 2008 to reach €8 billion plus (The 2009 current deficit is likely to come in at around €8 billion)

Figures released show a massive shortfall of close to €7.5 billion in the amount of tax revenue collected by the Government during the first 11 months of the year. Already revenue projections in the October budget are seriously out of line. The October budget forecast a total tax shortfall for 2008 of €6.5 billion. It is now probable that the shortfall for the year could exceed €8 billion. Tax revenue is 16 per cent behind projections made at the start of the year. VAT is €2.1 billion below expectations, capital gains tax is down €1.7 billion and stamp duty is €1 billion below target.

The 2009 Exchequer deficit appears headed for €16.5 billion and the associated General Government Deficit is likely to be 8% instead of the 6.5% projected in the recent Budget. The 2009 current deficit is likely to come in at around €8 billion.
These are horrific figures, which rule out the possibility of a financial injection by the government to reflate the economy. The government has absolutely no leeway. The over expansionary budgets in 2006 and 2007 by the FF/PD government led to an increase in public expenditure of 25% and also fuelled inflation. This was tantamount to pouring petrol on the raging fires of economic growth at a time when it was necessary douse the flames. This spending was supported by revenue from an unsustainable property boom.

The government is now trapped. It lacks the financial wherewithal to boost the economy. Internal revenue sources are shrinking. The property bubble has burst. Unemployment has reached 251,000 and will continue to rise sharply.

The FF/Green government will endeavour to tackle the problem by a combination of further public expenditure cuts and a reduction of public service numbers. It may also target public service pay. In a doomsday situation a 10% pay cut could not be ruled out.

Whither the Republican Party-Obama victory a pyrrhic victory? Cosmetic politics wins the day

There is no denying the scale of Barrack Obamas victory in terms of Electoral College votes. However his share of the popular vote is 52%. It is hardly a wringing endorsement. McCain/Palin secured 46% in the teeth of an economic tsunami, which struck their campaign in September. In addition McCain /Palin had to fight against efforts to tie them to the unpopular Bush presidency. Sarah Palin was subjected to a vicious campaign by Democrats and their acolytes in the liberal media. Her appearance, her dress sense, her character, and her family were shredded in one of the ugliest witch-hunts ever witnessed in American politics. 70% of media coverage was favourable to Obama. CNN, CBS, ABC, NBC,MSNBC favoured Obama/Biden.

John McCain was painted by Democrats as out of touch. His age and health were called into question. Obama spent 600 million dollars to secure his election-a spending splurge unparalleled in US presidential history. The Obama campaign registered millions of Hispanics and African Americans. It pushed early voting to the limits.

Obama continuously emphasized a middle income tax cut. Each speech was peppered with references to change. All very nebulous, all very soothing. Music to the ears of young voters. And yet he barely broke 50%- driven by a favourable gale of political circumstances. The McCain/Palin performance is amazing in the teeth of such unfavourable circumstances.

The message is clear. The GOP is defeated but unbroken. The internal contradictions in Obama's policy positions will come back to haunt him. His promises of a middle income tax cuts cannot be fulfilled by rational economic means. Of course he can increase the deficit to fund tax cuts. Any such decision will court an economic catastrophe. He will of course increase capital gains and dividend taxes. Businesses face a tax hike. This is a recipe for disaster.
In addition he is beholden to workers in states such as Michigan, Illinois, Pennsylvania et al. He has promised to renegotiate NAFTA. He has promised increased protectionism. He has neatly conveyed the message to workers in old declining industries that he is their saviour. Such workers will soon become disillusioned as Obama’s promises fail to deliver.

The GOP must fiercely oppose increased spending plans of Obama and the Socialist/Liberal Democrat controlled Congress. Republicans must go back to basics and defend taxpayers. They must virulently oppose pork barrel projects. Bailouts must cease. They must learn from the organizational efforts of Obama. Efforts must be made to win back Hispanic voters.
By 2010 Democrats will have controlled Congress for four years. The electorate will vent its spleen on the big spenders.
By 2012 it is likely that the Democrats will have controlled Congress for six years whilst a Democrat will have held the presidency for four years. Obama and his friends in Congress will have no place to hide.
The GOP has excellent presidential material coming through. Sarah Palin, Mitt Romney, Mike Huckabee, Bobby Jindal amongst others are likely to seek a presidential nomination.

Obama cannot deliver tax cuts to middle class (Sums do not add up)

Already Barack Obama has made promises totalling 1,000 billion dollars. In addition the bailout just agreed will cost an extra 700 billion dollars. Now he promises substantial tax cuts for the middle class. Quite simply these cannot be funded with an overhang of 1,700 billion dollars. This is political smoke and mirrors-loony bin economics. Such an economic policy will produce economic Armageddon.

Tax cuts can only be introduced by a freeze on government spending. Such a freeze would make resources available to fund such tax cuts. This is the McCain approach. McCain has advocated a freeze (excluding military spending). He has promised a war on waste and pork barrel spending. He has a strong track record in opposing pork barrel spending. Obama on the contrary has been a strong proponent of pork barrel spending and has voted for 94 tax increases.

When challenged on a public expenditure freeze-in the first debate-Obama ran for cover and fudged the issue.
Obama’s plans to double the capital gains tax is a further ingredient in the current instability. The likelihood of an Obama victory could trigger a further massive sell off on the stock market as investors seek to avoid higher capital gains tax rates.

Irish Government plans €440 million in public expenditure cuts

Today Finance Minister Brian Lenihan announced plans to cut public expenditure by €440 million.
Effectively decentralisation appears to have been shelved. Manning levels in the HSE are to be reduced. All Departments, State Agencies and Local Authorities - other than Health and Education - will be required to reduce their payroll bill by 3% by the end of 2009. But is Education really excluded? FG spokesman on Education Brian Hayes has issued the following statement "...Brian Lenihan said that the Department of Education would be excepted from reducing its payroll bill by 3% but in his very next sentence he said that 'the parameters for this exception are to be agreed by the Departments concerned with the Department of Finance.' This means that Education is not exempted at all from payroll cutbacks and has to negotiate with regard to what cuts it faces...." This caveat applies also to Health.

I suspect that the Government is angling for a public sector pay pause in 2009. The Minister expects a shortfall of €3bn in tax revenue this year. To say the least this is in my view highly conservative. I suspect it may be €4 billion at least. An interesting question arises. What will fund manpower reductions in the public service? Many of those made redundant will be entitled to state benefits.
So the Government will gain with one hand and lose with the other. In addition there is potential for serious conflict in the Health sector. Frontline services in the Health sector will inevitably suffer from cut backs.

Much of what is announced today is aspirational and the details remain to be fleshed out. At last the FF/PD/Green Government appears to accept that we have a crisis. Prior to this critics were accused of talking down the economy. Interest in the next few weeks and months will focus on the actual details of the cuts. As usual the devil will be in the detail. Much of this could have been avoided by prudent action in the last two budgets.

Key points of Minister's Speech:

'The Exchequer returns published by my Department last week confirm we are facing a shortfall of €3bn in tax revenue this year.
'Government expenditure is running at 11% ahead of the same period for last year. And there are a number of spending pressures due mainly to higher unemployment.
Accordingly the Government has decided that all of the pending increases for Ministerial and Parliamentary office-holders and for other senior public servants, recommended by the Review Body on Higher Remuneration in the Public Sector will not be implemented.
'The issue will be reviewed in September 2010 but without commitment at this stage to the outcome.
'To meet current expenditure pressures, the following measures will be taken:

* All Departments, State Agencies and Local Authorities - other than Health and Education - will be required to reduce their payroll bill by 3% by the end of 2009 through all appropriate measures identified by local management in the light of local circumstances. The parameters of this exception for the health and education sector are to be agreed by the Departments concerned with the Department of Finance.

* All expenditure by Departments and Agencies on Consultancies, Advertising and Public Relations will be significantly reduced for the remainder of this year and by at least 50% in 2009.

* Further savings in 2008 and in 2009 are to be secured by a range of measures including those identified as a result of the Budget day efficiency review initiated by my predecessor.

* All of the above efficiencies will apply equally to State Agencies. In addition, I have asked that these agencies be reviewed to examine whether they can share services, whether it would be appropriate to absorb some of their functions back into their parent Departments or whether some agencies should be amalgamated or abolished. The outcome of this will be considered by the Government in the Autumn.

* Capital investment will remain a top priority. Capital projects will be examined and prioritised to ensure that resources are targeted in the first instance at construction-related investment in core economic infrastructure that adds to productive capacity.


* The Government has also decided, in the light of the current Exchequer position, that further expenditure for the acquisition of accommodation for decentralisation will await detailed consideration of reports from the Decentralisation Implementation Group.


* Minister of State Martin Mansergh will head up a joint public procurement operation between OPW and the Department of Finance to drive a programme of reform and to produce a business plan for purchasing savings to be achieved by Departments and other public bodies in 2009. Minister Mansergh will report to me in the Autumn with specific proposals to target at least €50m savings in 2009 on this front.


* Given the projected revision to GNP and other factors, there will be savings in Overseas Development Assistance of some €45 million this year. The revised total contribution in 2008 will be over €200 per citizen, totalling around €900 million. Ireland will still be far ahead of almost all other developed nations in our rate of ODA.

'In addition to these measures, the Department of Finance and the Department of Health and Children will draw up proposals for a targeted scheme to reduce surplus staff in the HSE as soon as possible. We will also consider extending this scheme on a selected basis to other public service agencies where staff surpluses are identified.
'In respect of the Tribunals of Enquiry given that they have indicated their intention to conclude their public hearings this year, the costs of their operations will be reviewed by the relevant Ministers as part of the overall review of spending so that expenditure is minimized, both in the remainder of 2008 and residual costs arising in 2009.
'The Government is determined to achieve the savings required. All Departments have been directed to stay within budget.
'These measures are designed to minimise the effects on users of services in the areas of Health, Education and Social Welfare. They seek to protect the vulnerable. But they are the minimum we need to get back on track as soon as possible.
'The savings are estimated to deliver €440m in 2008 and €1,000m in 2009. Even with these savings, the fiscal position in 2009 will be demanding and all spending will have to be rigorously controlled. In framing the 2009 Budget the Government is determined to maintain the right economic and fiscal conditions for sustainable growth.