Dell to close Texas plant

PC plant shutdown part of $3 billion cost reduction strategy.

By Dave Hannon -- Purchasing, 4/2/2008 1:21:00 PM

PC maker Dell said this week it will close one of its two Austin, Texas manufacturing plants as part of a broader $3 billion cost-reduction plan that also includes cutting logistics and materials costs.

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.

According to a company statement, “The actions Dell will take during fiscal 2009 and beyond are expected to position the company to further accelerate growth in its five focus areas: global consumer, enterprise, notebooks, small and medium enterprise and emerging countries, while improving profitability and cash returns.”

The news comes 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. Overall, high-tech employment grew by 91,400, or by 1.6% in the U.S. last year, a slower rate of the growth than the two previous years, with growth fueled primarily by the software services sector.

Dell didn’t provide any details about its plans for reducing logistics or materials costs. More than a year ago, Dell shifted its supply chain headquarters to Singapore to be closer to its Asian manufacturing and suppliers.

Dell also announced it is undertaking a strategic assessment of ownership alternatives for its Dell Financial Services financing activities.