|Dell headquarters Round Rock, Texas - - Dell is Ireland's largest exporter and has an Irish payroll of about 4,000. Dell’s importance to the Irish economy is evidenced by the company’s contribution of at least 5.5% of Irish exports in 2005, 2% of GDP and over 4% of all expenditure in the Irish economy. |
The Wall Street Journal says today that Dell is trying to sell its computer factories around the world, a move to sharply overhaul a production model that was long a hallmark of the PC giant's strategy but is no longer competitive.
The Journal says that in recent months, according to people familiar with the matter, Dell has approached contract computer manufacturers with offers to sell the plants. One person briefed on the plan said he expects the company to sell most -- and possibly all -- of its factories "within the next 18 months." Other factories could close, this person said. Dell would enter into agreements with the contract manufacturers to produce its PCs.
The plan is reported as the latest sign of changes in the global PC business, and the increasing pressure on Dell to improve its profitability. The Round Rock, Texas, company last week reported disappointing quarterly profit that helped send shares down more than 18%, and has been trying to reduce expenses since early last year.
The Journal says Dell, which led the industry in lean manufacturing approaches and build-to-order PC manufacturing, now finds itself lagging rivals in wringing the most savings by outsourcing operations to production partners.
In a quarterly report to the US Securities and Exchange Commission filed on Thursday, Dell said, “We are actively reviewing all aspects of our logistics, supply chain and manufacturing footprints.” It added, “We continue to evaluate and optimize our global manufacturing and distribution network, including our relationships with original design manufacturers.”
“Dell’s traditional manufacturing model was optimized for flexibility, configurability and proximity to customers, especially business customers,” said A. M. Sacconaghi, a high-tech industry analyst at US broker Sanford C. Bernstein. “But if you’re selling 500,000 notebooks to Best Buy, it is far more efficient to have them made by one contract manufacturer in Taiwan, and shipped in bulk.”
Dell has factories in Texas, Tennessee, North Carolina, Florida, Ireland, Malaysia, China, Brazil, India and Poland.
In a research report this week, Sacconaghi wrote, “Dell’s opportunities for cost reduction and profit improvement are rife.”
In Europe, Dell's main operation is based in Ireland with about 4,000 employed. Last year, the PC manufacturer opened a plant in Lodz, Poland.
Over the past decade, Dell has been Ireland's biggest exporter.