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Home > The=20 Ticker > Archives=20 > 2008=20 > March=20 > 31=20 > Entry

Dell=20 to close Austin plant, cutting more than 800 jobs

By Kirk = Ladendorf=20 | Monday, March 31, 2008, 02:41 PM

Dell Inc. said Monday it will close its desktop computer = manufacturing plant=20 in North Austin by the end of this year, cutting 900 jobs as part of a = global=20 cost-cutting campaign.

The company said the plant closing is part of a $3 billion program to = cut its=20 product costs worldwide over the next three years.

That move will affect engineering design, manufacturing, logistics = and=20 materials across the company=92s global product operations.

The factory that will be closed is the massive Topfer Manufacturing = Center on=20 Howard Lane, which has been a leading Dell factory since the late 1990s. =

The plant closing is the biggest job hit at Dell in Central Texas = since the=20 company cut more than 5,700 jobs during the tech downturn in 2001.

The company also said it is considering =93strategic alternatives=94 = for some=20 parts of its Dell Financial Services arm. A sale also could affect those = jobs in=20 Austin.

=93We believe we have a $3 billion opportunity to drive both = productivity and=20 efficiency,=94 CEO Michael Dell said.

A spokesman said Dell officials will likely provide more details on = the=20 cost-cutting campaign at a financial analysts=92 meeting in Round Rock = which=20 begins Wednesday.

Dell did not say where its desktop manufacturing operations will be = shifted,=20 but industry analysts expect most of the work will go to Dell=92s newest = U.S.=20 factory in Winston-Salem, N.C.

The company employs about 17,500 people in Central Texas and 85,000=20 worldwide.

Dell said it has cut 3,200 jobs worldwide since it announced plans = for a=20 10-percent workforce cut last May. The company said recently it still = planned to=20 hit that goal.

=93Any additional cuts to its bloated cost structure would be well = received,=94=20 wrote analyst Brent Bracelin with Pacific Crest Securities iin a recent = report=20 to investors. =93Operating expenses are at an eight year high of 13.3 = percent,=20 which suggest that tighter cost-containment efforts are needed to = restore=20 investor confidence.=94

Analyst Roger Kay with Endpoint Technologies Associate Inc. said such = a move=20 would repair Dell=92s tarnished image for manufacturing and logistical=20 efficiency.

=93They let things slip. They took their eye off the ball,=94 Kay = said.

Concentrating desktop assembly in North Carolina could make sense, = Kay said,=20 because Dell =92 splant there is close to its East Coast customers. The = company=20 also got hefty incentives from the state to build the plant.

=93They carved a real sweet deal in North Carolina, and they need to = use a lot=20 of the plant capacity there,=94 Kay said.

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