Dell To Close Facility, Cut Jobs

Dell is closing its North Carolina manufacturing facility by January 2010, which will eliminate 905 jobs as the PC maker looks to cut costs and save additional dollars through streamlining its operations.

On 7 Oct, Dell announced that the Winston-Salem, N.C., plant, which makes desktop PCs, is slated to close by January. By November, Dell plans to eliminate 600 plant employees and all 900 laid-off workers are eligible for severance pay, benefits continuation and outplacement services.

“This is a difficult decision, especially for our North Carolina colleagues, but a necessary one for Dell customers and our company,” according to a Dell statement.

In March, Dell announced a first round of layoffs for the year and many of the same cuts came from the North Carolina plant.

Dell has about 78,900 employees worldwide.

When the North Carolina plant closes, Dell will then have three company-owned plants in the United States – Miami, Nashville and Austin – along with six others located throughout the world. Earlier this year, Dell announced that it plans to move its Irish manufacturing business to Poland and the sale of its Tennessee remanufacturing operation.

Dell is in the middle of a multibillion dollar cost-cutting program that looks to save the PC maker about $4 billion. The program comes at a time when Dell, which remains the world’s No. 2 maker of PCs, is struggling against both Hewlett-Packard and smaller companies such as Acer and Toshiba, which continue to make inroads in the United States, where Dell’s PC brand remains strong.

The recession in the United States, as well as less consumer and business spending worldwide, has also impacted Dell’s once-healthy PC business. In August, the company announced second-quarter net revenues of $12.8 billion, which were down about 21 percent compared to the $16.4 billion of the previous year.

In June, a Gartner report found that PC shipments were expected to decline about 6 percent this year compared to 2008, which does not help Dell or its rivals. It should also come as no surprise that Dell closed a plant that produced desktop PCs. The same Gartner report found that desktop shipments are expected to decline nearly 16 percent this year.

With these trends in mind, Dell is looking to change the company in several ways. CEO Michael Dell has emphasized several areas where the company is looking to expand. One area is laptops and more consumer devices. At the same time, Dell is looking to transform the company into more of an IT services provider.

In September, Dell announced that it would buy Perot Systems for more than $3 billion.