Dell planning to ditch factories
PC assembly at Dell's Parmer North 1 facility in Austin, Texas.
(Credit: Courtesy of Dell)During the conference call reporting on second quarter financial results, Dell's new CFO Brian Gladden said several times that the company has "more work to be done," to improve profitability and decrease costs. He wasn't kidding. Over the last year Dell has cut headcount by more than 8,000, and now The Wall Street Journal is reporting that the company is planning to radically alter its production line by selling off its factories to contract manufacturers.
Dell has four factories in the U.S. and six outside the country. Competitors such as Hewlett-Packard have shifted some of their assembly work to more efficient contract manufacturers to lower production costs and increase operating margins. The Journal noted that Dell may not have an easy time ridding itself of its factories, however:
Dell could face several obstacles to selling its plants. Contract manufacturers may be hesitant to buy factories in places with high labor costs, like the U.S., said one person with knowledge of the talks. And some facilities could be encumbered by agreements with local governments. Dell's North Carolina plant, for example, received several million dollars of state and local tax incentives that are contingent on the factory meeting certain employment and local-investment goals by 2015.
Dan Farber is editor in chief of CBS Interactive News, which includes CBSNews.com and CNET News. He has more than 25 years of experience as an editor and journalist covering technology. E-mail Dan. 
When GM and Ford moved their factories overseas. Toyota built them here. Who won?
Admittedly, they could do better in that space, but there are only so many customers will to pay the premium, and you are fighting Apple for them.
Michael Dell's advice to Apple coming back to haunt him.
As most of you probably know, DELL does not manufacture its own laptops They engineer them but they do so using someone else's laptop chassis. So that's why a DELL laptop looks an awful lot like a 'no name' brand laptop in some independent PC stores. And we all know just how 'reliable' dell laptops are. Toshiba and compaq branded HP's tend to have a better reliablilty rating overall (obviously there are specific model lines in each that have been nightmarish). Why? Because the supplier they use has a better track record, AND, they do more engineering up front.
DELL PC's are next. What will occur is that the plant building the laptops, who will no longer be owned by DELL, will be looking to meet their production targets. Quality will suffer. Dell will CLOSE the factories in NC and Tx and will move them elsewhere, probably to China or Signapore . Quaility will take a giantic nose-dive. DELL will fade into oblivian and the reliable machines that ran so well for so longer will become another junk box just like the average walmart white box PC.
The sad truth is that shareholders and stock analysts run companies now, not CEO's. Customer satisfacation, quality and technical innovation are going the way of the edsel. To paraphase a guy at my old company when asked about quality (which had been very important to us as a manufacturing company), "SCREW QUALITY. QUALITY IS AN 80's THING". that's the attitude that gets us talking to customer service when we take a brand new product out of the box that fails the minute we turn it on.
-S
Even laptops are starting down the "white box" path. (consumer systems)
If Dell outsources their business line desktops that will be the end of them.
You can tell its Hell, its Dell
The crap goes in before the name goes on.
The name goes on before the computer goes off.
If it's from hell, it's gotta be Dell.
You can tell its Hell, its Dell
The crap goes in before the name goes on.
They have benefited from over $3,394,356,651 in federal contracts (secret contracts are routinely not revealed for sensitive government projects, so this figure may be much higher) from 2000-2007. (See http://www.governmentcontractswon.com/search.asp?pg=5&type=dc&criteria=dell&rc=139&prevpage=4 for these stats and a neat little way to check on other government contractors.)
So, Dell takes over $3.3 BILLION from taxpayers and then high-tails it overseas?
I say we kick their entire company out of the country and out of government contracts. There HAS to be some sort of incentive for them to stop stabbing the American people in the back after tacking their tax monies in government contracts.
I say "No Dell, Howie!" - http://www.cafepress.com/NotDell .
I've actually been pleased with Dell and usually buy a new machine every year. While I have no experience with their laptops, I am and have remain very pleased with the performance and quality of their desktop machines.
Recently, though, they pulled a stunt that has made me a bit upset. I ordered a new system with a Sound Blaster card, but little did I know that the "(D)" in the description meant that it was some kind of "less than complete" card. Creative will not provide any support, nor will their software updates work -- only the original software from Dell will power the card.
I wrote a letter to Dell; let's see how it goes. I'm really angry about this one, since the card was not purchased at a discount! I paid full retain price, which is fine... assuming I got a *real* Creative Sound Blaster card.
Aside from that issue, Dell has been pretty good. All manufacturers have a problem now and again, but overall I've been quite pleased with Dell.
That said, I will admit that their customer support is lacking. It's virtually useless, now that it has been moved over seas. Years ago when it was here in America, it was great. But, Dell is no different than HP on this. Call HP support and you'll quite likely get a person who knows little or nothing about the product he/she is supposed to be supporting.
I do echo the concerns about loss of American jobs. But, why is it happening? The reason is not that Dell or other companies are evil. How many of us go to Wal-Mart and buy a $4 foreign-made hammer rather than a $6 US-made hammer. We cannot put the blame on Dell. It is the consumer who is driving Dell and other companies out of the country to produce lower-cost products that we will buy. If you want to keep American jobs in the US, then perhaps you need to start buying a few more American products.
- by sccoast1700 February 3, 2009 12:29 PM PST
- Does anybody still make laptops in the USA? If a company like Dell is closing up factories, why don't the technicians and employees form their own American based companies and compete against them? The same thing with customer service. Can't displaced workers set up their own companies and compete? I don't know many American based customers that like talking to those Indians you can't understand.
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