P&G To Cut Workforce in Ireland

Procter & Gamble Co. said Tuesday it is cutting more than half of the workforce at its cosmetics plant in Ireland and is shifting some of its operations to Poland over the next two years.

The plant in Nenagh, County Tipperary, will continue operating with some 220 employees, down from about 500 now, company spokesman Doug Shelton said.

He was responding to questions about the company’s plans after employees at the Irish plant said they were told on Tuesday not to go to work, pending an announcement from company executives.

“That plant remains important to P&G business,” Shelton said in Cincinnati, home of the consumer products company. “It will continue manufacturing of cosmetics.”

He said 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.

He said some employees will have the opportunity to transfer, while others will be offered separation packages. The reduction will be phased over a two-year period, Shelton said.

The Irish government, which in 1999 provided a $34 million (euro26 million) grant package to help P&G’s Nenagh plant expand, had said earlier it feared that the operation was facing closure.

Workers at the Nenagh plant have feared for their jobs since January, when P&G executives said they were considering closing one of their European manufacturing facilities. Those anxieties increased in mid-February after reports that the company was planning to open a new cosmetics factory in Aleksandrow Lodzki, Poland, in 2008.

The Nenagh plant, opened in 1985, 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. Oil of Olay production will move to Poland, P&G said.

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, high-skill base for the European Union. Ireland’s unemployment rate of 4.3 percent is among the lowest in Europe.

But that appeal has been fading since the EU’s expansion into the formerly communist east, where workers’ skills are improving and wages are 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 shot up rapidly, making it less attractive for foreign investors.

A string of foreign multinationals have closed shop or cut employee numbers in Ireland. Last month, drug maker Pfizer Inc. said it planned to close two plants in Cork, southwest Ireland, and lay off 545 workers.