Dell Selling Factories To Cut Costs

H

HardOCP News

[H] News
Joined
Dec 31, 1969
Messages
0
The Wall Street Journal is reporting that Dell is selling factories around the world in an effort to cut costs. According to “sources” Dell plans to sell most, if not all, its plants over the next 18 months and contract out the labor on its PCs.

The plan is 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. 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.
Click to expand...
 
Goodbye recent headway Dell has made to make their machines and customer service better.
 
Evil said:
Goodbye U.S. Jobs, way to go Dell.
Click to expand...
I'm not sure many US jobs will be lost. Desktop production moved to Mexico years ago and laptops are drop shipped from China. IIRC, the last US "factory" is the repair depot that probably isn't going anywhere.
 
fake edit: Looks like the Winston-Salem plant could go up for sale. I missed that one which opened in 2005.
 
Dell's success was their solid and easily understood identity.

They were the honest, present computer retailers.

They have sold most of that presense to satisfy the whims of stakeholders and speculators. Dell is putting the final nails on its own coffin. Good riddance?
 
While I agree that this sucks, I can not recall many pieces in my PC and I would imagine a good portion [H] population being made in the US. Hell, I really look to buy stuff made here but damn it's getting hard, especially for the PC enthusiast market. I guess all I am saying is that the US PC market has been imported for years now, nothing surprising about this move.
 
New jobs from Dell for the Wintech employees lol Expect Dell to start shipping alot of crap now...?
 
Well they were shipping stuff that was good for office borg armies. Hey at least they arent HP, you know went on their site the other day to get a replacement price on a 475W psu. Guess how much it was? $171.00!!!!!!! No kidding! What kinda retarded business is that? They are basically saying don't buy replacement parts from us we don't want your business. Guess how much the CMOS battery was? $58.90!!!! lol What about a Core2 E4500 - 2.2GHz? $370.50. Clearly HP doesn't like to sell you things lol

Here is the link, select Power Supply from the keyword dropdown
http://h20141.www2.hp.com/hpparts/search_Product.asp?mscssid=BQL88XPM7H1H8JC41549GWJVAXNH72A5&SearchCriteria=RB412UT&Smethod=1&sRefAsp=Search_Multi_Product
 
Dude!!! You're not getting a Dell!!

.../watches continuance of job outsourcing *sigh*
 
When you sell or lose control of your ability to manufacture, you simply lose. Now that Dell is going to sell of their manufacturing interests in order to be more profitable, then I wonder what they will have to sell of next when they go through this cycle again.
 
Dells have always been good PCs to work on, hope this doesn't change that but then again my company just got a contract to deploy and service 500 HPs, plus a few HP servers

thus, i get my HP certification later this month...
 
God If it was only the PC market...The Entire Economy is going down the drains. Bunch of Whores...All they care about is their profit.
 
I'm sick of hearing about all the changes companies are making for the sake of growth. IBM "made an extra $1 billion" last year on top of whatever other profit they made. Still they "had" to cut jobs, outsource to other countries, reduce people's pay, etc. None of that is good for our economy. What would be so wrong with a company just making $100 million a year, or a few billion a year. I understand the need to stay competitive and the desire to make as much money as possible, but it's being done at the expense of the people that made the business profitable in the first place. Growth is healthy, but profit growth by cannibalizing the company or the people that work there is not.
 
And the slow, gradual move towards pc's that are so cheap that repair is not an option draws closer..

Cheers!
 
I've never really understood how selling a factory or outsourcing in general saves any money at all. How come another company can run the same factory and make a profit on it, yet the original owner can't do it with less expenses (Duplicated personell and paperwork)? When the company I used to work at outsourced their PC/Workstation tech support, it was a disaster! It took them nearly a year to get things back to what they were before they made the switch, and the big shots who made the decision later admitted it cost them 10 times what they expected to save in costs, and the hassles involved made it a bad move all around. The big shots trying to fix their PC's talking to the Indian support people was truly funny!

I offered to take over buying their PC's and supplies for $100,000 a year, plus 10% and they laughed at me, but that was another bad move, I could have saved them $200,000-$300,000 a year working a couple hours a day. They bought most of their supplies at FULL LIST PRICE! I ran into the guy who shot me down a while and asked why they really didn't even take my offer seriously. He did a lot of "Well, um, uhh, we have a long term relationship with XXXXXXXXXX and we didn't think a change was a good move!" I just said, "You should have jumped on that deal in a second, if I got greedy, I bet I could have saved you $750,000 the first year easy, and probably a million plus when it was time for new laptops, and a whole lot more when it was time for workstations!" These are supposedly smart people, but buying stuff over the phone for twice or more what it should cost them online is smart?

I don't get it. I guess that's why I'll never be a big shot executive.

They are still buying the stuff at full list, 8 years later!
 
Enduring_Warrior said:
God If it was only the PC market...The Entire Economy is going down the drains. Bunch of Whores...All they care about is their profit.
Click to expand...

No, the entire economy is not going down the drain. Just certain sectors are feeling a bigger pinch more than others.
 
Kingrat said:
I've never really understood how selling a factory or outsourcing in general saves any money at all. How come another company can run the same factory and make a profit on it, yet the original owner can't do it with less expenses (Duplicated personell and paperwork)? When the company I used to work at outsourced their PC/Workstation tech support, it was a disaster! It took them nearly a year to get things back to what they were before they made the switch, and the big shots who made the decision later admitted it cost them 10 times what they expected to save in costs, and the hassles involved made it a bad move all around. The big shots trying to fix their PC's talking to the Indian support people was truly funny!

I offered to take over buying their PC's and supplies for $100,000 a year, plus 10% and they laughed at me, but that was another bad move, I could have saved them $200,000-$300,000 a year working a couple hours a day. They bought most of their supplies at FULL LIST PRICE! I ran into the guy who shot me down a while and asked why they really didn't even take my offer seriously. He did a lot of "Well, um, uhh, we have a long term relationship with XXXXXXXXXX and we didn't think a change was a good move!" I just said, "You should have jumped on that deal in a second, if I got greedy, I bet I could have saved you $750,000 the first year easy, and probably a million plus when it was time for new laptops, and a whole lot more when it was time for workstations!" These are supposedly smart people, but buying stuff over the phone for twice or more what it should cost them online is smart?

I don't get it. I guess that's why I'll never be a big shot executive.

They are still buying the stuff at full list, 8 years later!
Click to expand...

You want to know why? I'll tell you why. Up front costs, capital investments, forecasting and expenditures. What happens is these companies need a particular outlook 1, 2, 3 or more years into the future. Tack on pressure from investors and the boards to be more effiicient and cut costs wherever they can and you end up with a plan that is great for the near future, but never accounts for the unintended consequences. Just like the one you mentioned earlier. I've been a part of many conversions from one source to another. Getting those sources up to speed. The initial costs if not executed properly will cost way more up front, but what happens is that ego gets in the way and no one wants to admit either failure or that they were part of a bad decision making process.

The definition of insanity is doing the same things over and over again hoping for a different result and unfortunately in the corporate world it can be fairly insane. How much money do you think has been wasted on scenarios that you illustrated above instead of just going with the status quo? This type of management team doesn't work from hindsight, but instead are reactive instead of proactive. They see that upfront costs will go down if they make a switch to an outsource. Why hire you for 100k when they don't have to. That upfront cost is to great in their minds, besides they just invested x amount of dollars in this other outsourcing venture. Only to have you come back and illustrate for them that they passed on a good deal and the only response you get is stupification, excuse making, and ego massaging.


None of these types of management teams wants to incur the types of expenditures that you illustrated, but they can't see the forest through the trees as they walk through them. They see quick savings, not back end costs. They only tend to see the raw numbers, not the cultural and knowledge based costs that they are wasting their money on. It's a shame, but it's the truth. Even with you pointing out to them that you were cheaper and could have saved them hundreds of thousands of dollars, did they still offer you the chance to do it? I suspect no. Foolish and nearsighted.
 
Yep, I have seen outsourcing through the years and with one company I have lasted through all my co-workers, management, and upper management. In the beginning, as already pointed out, it sounds great to the business. Reduce up front costs and they save on all the employee management, pay and medical, so it looks great in that certain areas of the budget. The problem now it gets tacked on to another area of the budget and now they don't have the control as they once had. So come next budget cuts they will no longer have the option to lay 20% off to make the numbers look better as that is now up to the outsourcing partner that they contracted service with.

Ironic as I was also the same guy debating the slide points for the outsourcing on cost reductions and improved efficiencies (how is that possible with adding more people in between) is now the same guy that lasted everyone else, and was force transferred to the outsourced partner as part of the agreemant. The kicker is now I have to hear from the new management at the old company that they are being billed as much as 2-3 full time employees for my services but my real wage has never changed. Almost as if they try to make me feel bad as if I'm running the company into the ground. Guess it just depends on the cycle. When I was outsourced I remember "it's just business, don't take it personal" statement coming from up high in a meeting, but I guess that logic on applies when it rolls down hill:)

My older manager, worked for several outsource partners, informed me it goes through cycles. Internal to outsourced to save money, and outsource to internal to save money as outsourcing was more expensive. Problem as already mentioned before, the cycle only changes when the old management guard has changed and new management comes in thinking they know better than the last.

I do know that in my working career the last 13 years I have seen many layoffs, but these last few years were the only time I saw them because they didn't make "enough" money. Problem with this is the people directly impacted by these layoffs have no money to spend, while the people that got lucky now reduce expenses as they don't have the job security they felt they once had. Just brings the economy down further.

I have been very lucky so far, but I have had friends and family that were less so. With the housing market in the shitter, companies cutting back on the few remaining jobs to make number look better, I'm unsure how this can come out positive in the end.
 
Yet another sign of the new market, where investors/shareholders/etc expect get-rich-quick short-term profits, and damn the long-term outlook to get it.

Dell's strength, when they have been allowed to show it, has been their domestic (North American) technical support, and (in most cases) quality-control they've been allowed to dictate. When they have outsourced, it has been proven to be problematic at best, a nightmare at worst.

However, it saves money on paper at first, and that short-term savings seems to be the only thing people get these days. Nevermind that time-per-support call goes up (thereby raising costs higher than projected expectations), or that the number of incidents to achieve a successful resolution may increase, again raising costs, or that the degraded support process (or very possible quality-control slide from outsourcing manufacturing) may serve to alienate and eliminate customers. Investors often are only shallow enough to look at the profit/loss, and never at a company's true long-term sign of success: steady sales, a high customer satisfaction rate year-after-year, and a regular stream of well-received product.
 
LoneWolf said:
Dell's strength, when they have been allowed to show it, has been their domestic (North American) technical support, and (in most cases) quality-control they've been allowed to dictate.
Click to expand...

They chose to give that up years ago. It has been a downward spiral ever since.
 
Wy doesn't Dell just roll over and fucking die like a manly corporation?

Oh woe is me, its hard out there, its tough to sell, I can't handle it.

Well, commit corporate suicide and put us all out of your misery.

Oops, that is what they are doing, nevermind. :eek::rolleyes::p
 
Methadras said:
You want to know why? I'll tell you why. Up front costs, capital investments, forecasting and expenditures. What happens is these companies need a particular outlook 1, 2, 3 or more years into the future. Tack on pressure from investors and the boards to be more effiicient and cut costs wherever they can and you end up with a plan that is great for the near future, but never accounts for the unintended consequences. Just like the one you mentioned earlier. I've been a part of many conversions from one source to another. Getting those sources up to speed. The initial costs if not executed properly will cost way more up front, but what happens is that ego gets in the way and no one wants to admit either failure or that they were part of a bad decision making process.

The definition of insanity is doing the same things over and over again hoping for a different result and unfortunately in the corporate world it can be fairly insane. How much money do you think has been wasted on scenarios that you illustrated above instead of just going with the status quo? This type of management team doesn't work from hindsight, but instead are reactive instead of proactive. They see that upfront costs will go down if they make a switch to an outsource. Why hire you for 100k when they don't have to. That upfront cost is to great in their minds, besides they just invested x amount of dollars in this other outsourcing venture. Only to have you come back and illustrate for them that they passed on a good deal and the only response you get is stupification, excuse making, and ego massaging.


None of these types of management teams wants to incur the types of expenditures that you illustrated, but they can't see the forest through the trees as they walk through them. They see quick savings, not back end costs. They only tend to see the raw numbers, not the cultural and knowledge based costs that they are wasting their money on. It's a shame, but it's the truth. Even with you pointing out to them that you were cheaper and could have saved them hundreds of thousands of dollars, did they still offer you the chance to do it? I suspect no. Foolish and nearsighted.
Click to expand...

Yep, nearsighted and attempting to make shareholders temporarily happy. Between some truly stupid long term decisions, the money wasted by the CEO flying all over the country to play golf on the company jet, the insane prices paid for PCs and accessories, the wasted money in thrown away brand new items (The dumpsters were a treasure trove!), and wasting money in general, they could have probably avoided bankruptcy if they had thought for the long term. The new CEO made some needed changes and they are doing OK now, but I have friends still working there, and they tell me stories that they still waste vast amounts of $$$ on pointless trips, parties, and buying PC's and other items at 3X what they should. The dumpsters aren't quite the treasure troves they used to be, but they are checked constantly, because there is still an occasional "big find". The latest one I heard about was a high dollar HP printer, tossed for unknown reasons. It worked perfectly, and now sits in my friend's house, cranking out posters for his kids. In my room next to me, I have a paper cutter, several very expensive surge protectors, a monitor (Used in case of a failure, as it's only 17"), a very expensive paper shredder, and I just used the last of the paper I fished out of the dumpster! I gave away half of it, and still had over a half ton of it! Why was it tossed? They didn't want to move it to their new building! Not because of the cost, they just didn't want to take "used" paper (Unopened reams by the hundreds!) to the new building! The used paper line was actually on an Email that was sent out to employees!!

I'm typing this on a Dell Laptop I bought 2.5 years ago. It's a great machine, and I have been totally happy with it. I wonder if the next one will be a Dell, of if Dell will even be one of the brands I even consider. Yes, I know my laptop is made for Dell by someone else, but it seems like Dell management is trying to murder the company.
 
willyspuddle said:
And the slow, gradual move towards pc's that are so cheap that repair is not an option draws closer..

Cheers!
Click to expand...

agreed, and this also leads to more shit in the landfills. Take 1 step forward, 5 steps back :rolleyes:
 
They were big and they grew incredibly fast. All good things comes to and end and the CEO's and shareholders don't accept that, they want to see thier incomes increase... so they sell off parts of the company and kill of divisions to cut costs... driving up thier salaries while slowly destorying the company.

Greed for you.
 
You must log in or register to reply here.
Back
Top