Dell to close Texas plant, outsource more manufacturing to EMS firms
By David Hannon -- Purchasing, 5/8/2008 2:00:00 AM
PC maker Dell said in April it will close one of its two Austin, Texas manufacturing plants and plans to outsource more manufacturing to contract manufacturers in low-cost regions as part of a broader $3 billion cost-reduction plan.
“You’ll see us partner more,” said Mike Cannon, Dell’s president for global operations, at a meeting with analysts in April. Cannon came to Dell in 2007 from EMS firm Solectron and said the Round Rock, Texas PC maker will “have more and deeper partnerships with ODMs (original design manufacturers) and EMS (electronics manufacturing services) companies…I’ve been in that business. I know the capabilities of those companies and what they can do.”
The Austin plant slated for closure makes desktop PCs and employs 900 workers. Dell said its other Austin plant, which makes servers, will remain open. The strategy of keeping high-end server production in the U.S. is similar to the one used by IBM, Sun Microsystems and Hewlett-Packard, as outlined in Purchasing’s report on high-tech manufacturing in the U.S. “No place like home for high-end electronics” (Purchasing, Nov. 16, 2006, p. 29).
Dell’s announcement came the same week that the American Electronics Association reported that the high-tech manufacturing industry in the U.S. shed 29,800 jobs in 2007.
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