Dell to sell its manufacturing plants

What will this do to quality I wonder??

http://www.pcpro.co.uk/news/223110/dell-ditching-computer-factories.html

"Dell ditching computer factories 11:49AM, Friday 5th September 2008

Dell is aiming to sell the majority of its computer factories within the next eighteen months, as it attempts to cut costs.
According to reports in the Wall Street Journal, Dell has been approaching contract computer manufacturers in Asia with offers to sell the plants.

However, the company has reportedly encountered a number of obstacles in selling its plants, with contract manufacturers hesitant to buy factories in places with high labour costs, such as the US.

A number of facilities are also 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.

Contract manufacturers can generally produce computers for less money because their entire operations are narrowly focused on finding efficiencies in manufacturing, as opposed to large firms like Dell, which must balance marketing and other considerations.

No one was available at Dell for immediate comment."

 

That stinks.

 

That's sad...all those peep's that will be w/out jobs

and *no immediate comment* from Dell...


Cin.

 

Without having any further information at the moment, this article has put another sour taste in my mouth. Not that it is the first company to do so, however the layoffs that will result and the local governments that also get burned means a lot. Notable that everyone's tax dollars went into making that plant a possibility in the first place.

Just another example of big companies doing what they want to the detriment of society. I'll try to remember that.

 

I would hope that there will be more info forthcoming, very soon.
This will definitely have a chain type effect on every thing

Cin.

 

Hah, almost all the Dell Notebooks are made by Compal, Wistron and Quanta.

 

I just hope that they don't try to cut corners on quality to save a few bucks.

 

I'm glad someone here has a sense of humor!

Let me assure you. ALL businesses cut corners. Shoddy Gpus, plant closings, defective this or that, business is sometimes nothing but the ruthless exercise of trying somehow to get it done for free. It is a consumer economy only in that they really want you to keep buying to keep it all going.

Stick around Aaron, after the break I will back to give you some great news on CEO's that want to take a pay cut in order to tackle state and local poverty.

(Just ribbin' you Aaron - I spend a lot of time reading history and economics)

 

Devil's advocate here.

What if Dell kept those factories running. If you have been reading the business section for the past few months, you will notice that Dell's earnings are not as hot as they use to be. If the company keeps up with these shoddy earnings reports, the whole friggin company will be in danger of folding. What would you rather choose, laying people off now or laying off a company later?

 

Personally, I just don't like seeing this happen.

I know *business-is-business*, and it happens everyday...but when you foresee the potential of a large company like Dell doing this, in today's economy....I feel bad for the workers..that are possibly going to be out of a job..when or if this happens to them ~ and the whole *trickle* effect.

(Just my opinion)


Cin

 

I appreciate that comment. To address it properly, I think that we would both have to have more intimate knowledge of the company proceedings / strategy ect. Lacking that, I can still comment on a few notable points. One is that, closing factories to protect the stock price does not reflect that the factories were the problem, only that Dell considered it their cost cutting solution. This is as opposed to the myriad of other things which might have contributed to a shortfall. I am talking about things like poor customer service shortfalls, falling quality of product, a recessed national economy, poor sales, bad investments, scandals revealed, whatever. If you followed stock markets you would know that they never paint an accurate picture of companies OR the economy. Many a solid earnings company has gone belly up. Things are just more complex than that.

Protecting the health of a company is not the same thing as protecting the health of the workers that it employs. If Dell closed their doors tomorrow, someone would pick up their customers. Dell or any other company could go away, computers will get manufactured and sold.

What I was focusing on was the comment that many of these plants benefited from tax subsidy's and breaks when they were instituted. That means that the people's money was invested in the company, in the hopes that the company would then invest in the people, in the form of good jobs and good pay. This would correspondingly be good for the economy locally and nationally (the 'virtuous circle' of business). Sponsoring a huge employer locally probably should lead to that. Instead, it looks like the investment was made and the returns will never show themselves. This makes the company a bandit in my eyes, because the ramifications of a plant closing extend to far more places then simply: lost company = lost all jobs opposed to some. The towns also lost a lot of tax revenue, and the local and regional communities will likely feel the loss for a long time. Especially if nothing comes in to take the place of Dell. Where is the earnings report for these communities? If there were one, it wouldn't be looking so hot either.

I find it frustrating that companies can bail out so easily, when it is clear that communities often come to their service in the hopes of building a better economy for their people. Especially when tax money is used. I agree that in the end it is probably better to keep a business limping then just close the doors, but I also believe in a little integrity and honor when the going gets tough. The Japanese typically understand this. Layoffs first, improvements second is an American invention, it is a choice, it is not a sign of anything other than that.

So again, I think that you and I would agree more than disagree, but maintain my right to be suspicious!

 

Instantly my favorite quote of the year.

What I believe is at stake here above all is the reputation and customer confidence in a company. When a company is so quick to dump its factories and leave thousands of loyal workers jobless I think it is time to decide whether or not we really want to give that company our business.

 

Well everyone wants a $500 laptop, and they're not willing to pay for the extra quality.

I only buy the Latitude line of laptops when buying from Dell. Yes, Dell makes more money on the sale, but I know that I am supporting American workers (since Latitude production is the least likely to be outsourced), and I receive tech support by Americans or Canadians whose first language is English.

My Latitudes are, by far, more durable than the low-bidder junk that Dell ordinarily sells to consumers or the low-end business market. And since they last longer, I am wasting fewer precious resources.

 

The internals of your latitude do not differ significantly from Dell's other lines of laptops, and they are manufactured all over the world, in places like Malaysia and China. Welcome to the world economy.

Your expensive business class warranty gives you access to US and Canada based technical support. My inexpensive 1 year warranty limits me to India.

You paid essentially for a different chassis and warranty. If you knew anything about the current state of the laptop market, you would notice that many non-'business' laptops are built like tanks these days. My 'low-bidder junk' Inspiron is noticeably stiffer than the 3-year old latitude I use at work. This 'safe' assumption you make is not informed. Good thing you are using this web forum.

Congratulations on your ability to pay more money for a computer than I or my neighbor, or anyone else that has a non-latitude.

You are a true patriot and conservationist, the poorer among us are clearly not.

 

is this going to make their laptops more expensive?
i already seen their prices rise lately. the m1530 i got for £680 is now £800

 

Most countries outside the US still have tariffs and laws to protect their industrial bases. The US had numerous tariffs and laws to protect their industrial bases that served them well for centuries. However, that all changed in the last couple of decades when the US went to a so called open market system.. which is not open. Anyway, I don't need to go into the specifics but the long term cons of outsourcing ones entire industrial base has many more ill effects then advantages. I think if Obama gets in he says he wants to bring back some of our ability to build things. The republicans say it hurts us by increasing prices.. but it also strengthens the economy and increases wages, benefits, etc.. and evens out the trade imbalances.. every time I hear about crap like this It hurts.

 

My dell vostro is built like a tank, so not all low end business solutions are built like crap. Enough on that please.

As for Dell closing factories is basically how the world economy is going. We as Americans demand higher pay then most, yet typically dont want blue collar jobs therefor jobs in factories suffer. A typical factory worker here in the US gets paid alot more then somebody in china or elsewhere, and because of this businesses will go abroad to save a ton of money. This is the way of business and most of us understand this. Personally I agree with MGH as there is a certain honor in the fact that an American company supports the people here, rather then cutting bait and leaving to fatten its profit margin. Granted Dell may not be seeing profit margins close to Oil companies, but they are still here and like the Big 3 in the auto industry local/state and federal governments are trying to support US companies to stay here. Dell leaving hurts us economically, just as how alot of American companies outsource so much already. People always want to know why the economy sucks and usually point to an easy scapegoat (cough GW cough government), but liberal or conservative, democrat or republican our government has tried to bail US companies out as well as support them so they stay here. Granted I know that its no longer an American economy, rather a global economy. But we are suffering because large corporations are trying to turn insane profits.

I know this is the way of business, and I know this is why Ill never be a CEO as I still have loyalty and honor for my country.

 

Not compared to most of the industrialized world.

Sure, but it dosen't HAVE to be that way. It didn't USED to be that way, for most of our country's existence, and regular people who supposedly run the country never gave an informed consent to it. It's just gotten worse and worse, decade after decade as more and more protections for actual citizens are thrown out in favor of the "rights" of giant mega-corps.

 

25 years of Reagonomics and big media being controlled by large corporations have send a message making people think we have a free market system. Europe, Japan and much of the industrialized world still have tariffs and always have. Countries like France have a strong middle class.. thats why our government always says such bad things about the french... because the citizens there still have power and control of their government. Running a country on debt and overseas cheap labor with very little industrial base is starting to show its ugly face in the US. Our government desperately needs to create incentives to keep dells operations here.. and penalties to move things offshore. But so much damage has been done since the Reagan days with very little of the industrial base left that I am rather doubtful that the negative turn in the US economy will improve anytime soon.

 

Outside of most of Europe and Japan, the average American earns dollar for dollar more for the same job.

I agree 100%. There not only needs to be a penalty for US companies to drop jobs here for outsourcing, but also a look into some other countries finances would be smart. Being as though they have had successful economies well before we were even a country.

 

Hi Desert, Wolfpup, and liquid. I am happy to hear that I am not the only one who apparently actually tries to understand the way the 'real' world works.

I do not think that we should take the thread too far off of its original topic, however I would add that many people simply do not understand that developing and maintaining a healthy economy has never been 'just about the corporation'. As the article cited, tax incentives were and are provided to companies like Dell to help offset what might perceived as competitive disadvantages (the so-called overpaid American). To add to that these companies often do not even have to pay taxes for several years. In fact, while it is true that there is not an even playing field for the majority of the worlds workers, it is still important to know that the numerical value of a wage is not as important as its relationship to the regional / local economy at large. To put it another way, its all about how many dollars it takes to get your basic needs met. Spouting off that Americans are fat lazy and overpaid, or hate hard work is just a hurtful and hateful assumption. No developed country puts in more hours of labor than the US. But the time we spend does not lead to as much OUTPUT as some of our competing countries. You better believe that this might be related to a lot of the BS profiteering that takes place instead of real investment back into the local economies, or the company itself. I am talking about things like actually improving your products or training a better workforce. Or even actually spending a lot of money on R and D.

Going back to my original point here, I agree that policy makers and a lot of lip service is paid to the so-called over regulated and socialistic tendencies of 'liberals' as well as to the way that government always 'ruins' whatever it touches. If you read a brief history of the economy of America, you will notice that when the interstate highway system was implemented and supported by the government, it did in fact trample on the rail road system. However, it also enabled the big three to sell tons of cars and turn into the powerhouses that they are today. It was the big three, who had gained a lot of clout during WW2 (building all those tanks and planes and what not) that earned a lot of pull with uncle Sam. When the war was over, they had more pull then they had ever had before. They had some good ideas, but they could NEVER have built the roadways themselves (most business receive their infrastructures as 'gifts' from the government - sometimes as a auction in the case of cell phone companies).

What I am trying to say is that, governments, communities, research institutes, ect., all play there part in making the success of industry possible. It is terribly short-cited and ignorant to suggest that the only things which breed success are 'markets' and cost cutting initiatives. Many of our largest industries had very obvious 'artificial' head starts. This country way built on protectionism also, and we have used tariffs to our advantage and would tomorrow if we could. The free-market this and that is a shallow facade which makes it seem as if everything plays out as it should. It is a theory of convenience politically. People just need to wake up and understand that there are persons that actually make choices that effect, disproportionately, the rest of us. They need to be held accountable if we are to get real progress into our lives and the lives of others.

A case in point, Exxon made 40 billion in profit. 32 billion was used to buy back stock in the stock market. Does that lower gas prices? Does it advance alternative energy research? Does it really do anything other than line the pockets of the biggest shareholders? And don't give me that 'trickle-down' nonsense. Give a pitcher of water to one man in the desert and let me drink what 'trickles' from his beard. I die. He lives alone. Any real winner there?