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Is OFFSHORING harmful in an economic downturn?

100 points posted to Service and Support by phubert Apr 3

Is Dell CLOSING its Austin plant and OFFSHORING?

If so, is this HARMFUL in the current economic downturn?

Will YOU or your company consider a supplier building in the U.S.?

phubert
Apr 3		 Might this move result in order delays? LESS customization of systems?

Will this, perhaps, make 2nd and 3rd tier suppliers more attractive?
leolonewolf_nw08
Apr 3		 I'm all for keeping things in the US. To often companies are outsourcing to OCONUS locations and the language barriers alone are a huge headache!
jervis961
Apr 3		 Dell plans to buy back $1 billion in stock this quarter, they must be betting that they will see a quick turn around as they only bought back about $400 million in stock last quarter.

http://www.reuters.com/article/marketsNews/idUKN0346629720080403?rpc=44

I see this as possibly being a problem as Dell's shortsightedness got it into the pickle it is in today. Are they still being shortsighted?

They are also looking into options for the Dell Finance unit. I take that as they are shopping for a buyer now that they own the whole unit.

http://biz.yahoo.com/nytimes/080402/1194760888125.html?.v=20

The first outsourcing winner seems to be compal. http://en.wikipedia.org/wiki/Compal_Electronics

http://www.digitimes.com/systems/a20080403PB200.html

Dell is looking to outsource more.

http://malaysia.news.yahoo.com/rtrs/20080403/tbs-dell-7318940.html

At least they are moving operations from the Austin plant to other ones in the USA.

http://www.statesman.com/news/content/business/stories/technology/04/02/0402d...

Sorry for the choppy comments. I had a much better one worked out but IE7 didn't agree with me and closed my tabs on me. Arg!
anyway gotta go to work now I'll check back in tomorrow.
dawn_l
Apr 3		 All- As Jervis mentioned above, this article http://www.statesman.com/news/content/business/stories/technology/04/02/0402d... captures the summation of the plan and the reasons for the change. As the article mentions, we plan to migrate work done at the Austin manufacturing (desktop) plant across our global network including operations in Winston-Salem, N.C. and Nashville, Tenn. As I am sure many of you know, we opened the Winston-Salem plant only a couple of years ago and continue to have a strong presence in the US.
Dawn
cestuila
Apr 3		 Is this an idea?
undead999
Apr 3		 I wonder if ideastorm moderators will be outsourced as part of Dells cost cutting.
toyota_supra
Apr 3		 Dell CEO Says to Expect More Job Cuts

ROUND ROCK, Texas (AP) — Dell Inc. is committed to reducing costs and will cut more jobs than the 8,800 previously announced in a bid to make the world's second biggest computer maker more competitive, founder and CEO Michael Dell said Thursday.

http://ap.google.com/article/ALeqM5itgY1825xiobliELMypHe26ZATCgD8VQFDGG1
jmxz
Apr 3		 @phubert: "If so, is this HARMFUL in the current economic downturn?"

Of course it's harmful to some (those TX people losing jobs), and helpful to others (those NC, Tenn, and Offshore people gaining jobs).

It'll be interesting to see if it's helpful or harmful to Dell customers and/or Dell shareholders.
phubert
Apr 4		 Well, jmxz, unfortunately I posted this one based on inadequate information. Heck, I can't imagine why anyone would want to be in Texas to BEGIN with! :-D

The basic question vis a vis -offshoring- remains valid. However, I hope I have shown equal respect for every participant's nationality and interests. Meaning, local production is better for the local population!
jervis961
Apr 4		 Not totally inadequate information phubert.

Dell is spreading the work of the Austin plant to the other ones in an effort to consolidate and save costs. The NC plant is an obvious choice as it gets big tax breaks from the state and should lower shipping costs to the northeast. Dell has also said that it is looking to outsource more of their EMS and ODM work to save even more. Word has also come out that Compal of Taiwan has been awarded a contract to build low cost PCs, which I pointed out above as well. I was also referencing Dell’s past moves to outsource its call centers to India. Also as sugarbear pointed out on storm room Dell is looking to limit the customization of its computers to save money now. All these moves make we question Dell’s thinking and wonder if they have not learned from past mistakes.

Dell seems to focus on short term cost savings and not the long term effects of their actions. Look at the call center fiasco as an example where Dell saved money in the short term only to discover that threw the baby out with the bathwater. One of the largest complaints from Dell customers is the overseas tech support that is difficult to understand and seems to be lacking in training. Dell saved money in the short term but lost many customers in the process due to the lower quality service. Product quality at Dell has also suffered in the past. When I mention Dell to my IT department they grumble that Dell uses cheap plastic innards that break easily and are a pain to fix. I do not know if this is or ever was true but it is the opinion I have heard before. There have also been complaints from customers (such as myself) about Dell’s cheap paint jobs rubbing off the wrist rest on notebooks and other quality issues. Price wise customers have also complained that Dell advertises a low cost computer and then charges a rather large premium for upgrades. Dell has worked to lower some of these prices and now is saying they will limit the number of choices a customer has when buying a system. This will bring down Dell’s cost by giving them better buying power but at what expense in the long run. Dell used to be the place to go to get the latest tech options now they lag behind the competition and try to play catch up. Look at how long it took to introduce a tablet, they still have no ultra mobile products and the one rumored ultra mobile is still almost 6 months away. Dell used to be known from price, customization, quality and being first to offer newer technology but now is known as a follower company that is falling fast and sacrificing quality to save money in an effort to save itself.

I think that Dell needs to focus less on shareholders and short term stock prices and more on keeping customers in the long term which will lead to more profits and higher stock prices in the future. Dell should stop focusing on being the cheapest and concentrate on being the best quality for the money. Dell should work to improve its overall offerings to customers: better product quality, improved choices for upgrades and software, good customer service, superior customer support and bring new products to market rather than being last to do so. Dell has lost touch with the core values that made it the largest computer company in the world and needs to return to its roots. I have no problem with Dell branching out into the retail chain and some of the other moves to remove waste from the company but unless they revert back to those core values all the cost cutting in the world cannot save the company.
cestuila
Apr 4		 Wow jervis! Great analytical skills!
phubert
Apr 4		 Agree 100%. I was hoping you would post this comment here as well...
jervis961
Apr 4		 I was getting very frustrated trying to do links on the storm room version because I kept losing the text. I was opening links to add and once in a while IE7 would open the link in the window I was doing my reply in and I would lose everything. That is why my first comment here was so choppy as I had given up on it and had to go to work. I tried switching to Opera but of course Dell's websites aren't very compatible with it and I had the same issue with links opening in the wrong tab. I finally decided to construct my comments today in Word and then did a cut n paste. What a pain just to post a comment. :)
dawn_l
Apr 4		 Jervis- Thanks for taking the time to share your suggestions and particularly to type them multiple times! When they give me the corner office in the executive suite... I will have to bring you in as an advisor! For now, I will share your thoughts with those who have the influence!

Dawn
jervis961
Apr 4		 Trust me you don't want the corner office unless it is by the stairwell for when you need to make a quick exit in an emergency. :)

I did notice that I left out part of the comments after IE7 messed up again. Offering no OS, Linux and other open source programs on all systems can be costly for Dell in the short term buy upsetting Microsoft who may start charging more for their programs. Just remember that Ubuntu has sold better than originally anticipated and customers may actually flock to Dell if they make these options available. Also when Dell starts limiting the hardware options it will be easier to ensure compatibility.

Not quite as well written as I had done it the first time but oh well. :D
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