Dell, the American computer giant, today delivered a further blow to Ireland's faltering economy when it announced plans to axe 1,900 jobs and shut down production in Limerick, its largest manufacturing plant outside the US.

The US multi-national confirmed it will end production at its Limerick factory in favour of a new facility and cheaper workforce in Poland. Dell said the move was part of a $3 billion global cost-cutting drive announced last year.

Dell's decision emerges just days after Waterford Wedgwood collapsed, potentially leaving 800 people out of work in the Irish city famed for its cut-glass crystal while 1,900 in the UK also face losing their jobs.

This week's developments add to Ireland's gloom-laden economy, once known as the "Celtic Tiger". Ireland became the first country in the European Union to officially enter recession.

Politicians and business chiefs at Limerick Chamber of Commerce today said that the knock-on effect of Dell’s closure to the economy could treble the number of lost jobs.

Jan O’Sullivan, a Limerick Labour Party TD, said: “It would have a devastating effect on the local economy.

“There are a number of other companies, ancillary to Dell, either feeding directly into Dell or otherwise, or in production, packaging, transports and shops.”

Last April, Dell announced plans of a major restructuring. Hundreds of people have already been laid off from its sites in Limerick and Cherrywood, County Dublin. Many more temporary contracts have not been renewed.

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.

In a sign of how important Dell’s contribution to the Irish economy is regarded, the imminent announcement was discussed by the cabinet on Wednesday.

It is understood that personal approaches by both the Tánaiste Mary Coughlan and the defence minister Willie O’Dea, a TD for Limerick, failed to persuade Dell to maintain numbers at the factory.

All production of computer systems for customers in Europe, the Middle East and Africa is moving from Limerick to its Polish facility and third-party manufacturing partners over the next year.

The initial lay-offs of employees will take place in April, with the full transition expected to be completed by January 2010. About 1,000 non-manufacturing staff will be retained in Limerick.

“We are proud of our 18-year tenure as a major manufacturer in Ireland,” said Sean Corkery, vice-president of operations, EMEA at Dell: “This is a difficult decision, but the right one for Dell to become even more competitive, and deliver greater value to customers in the region.

“We will treat affected employees with dignity and respect and offer them every practical support through this extended transition period to minimise the impact on them.”

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