Dell looking to sell off factories

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Dell looking to sell off factories

Paul Kunert

Dell is looking to sell most of its factories worldwide within the next 18 months which were once part of its successful model but have now become uncompetitive, according to a newspaper report.

The move forms part of the PC makers' strategy to save $3bn by the end of 2011, it has already shed 8,500 jobs globally - with 400 more to come - and has developed new procurement models.

The firm owns 4 manufacturing plants in the US, one in India, China, Brazil, Malaysia and opened a new site in Poland this year.

According to the Wall Street Journal (WSJ), a sale of any factory would hinge on Dell outsourcing manufacturing to the buyer, and Chinese OEMs have been mooted as the likely suitors.

One stumbling block the paper raised was the higher salaries commanded by staff at some of the plants in the West and the sites may have also received Government funding to save local jobs.

Once the envy of rivals, Dell BTO model was a good fit with corporate desktop customers' but the firm has been caught out by the shift to notebooks, particularly in the retail space.

Company-owned factories are not considered to be the most cost effective way of building laptops which are complex and time consuming to assemble.

The pressure on costs was highlighted last week as Dell posted second fiscal quarter 2009 results with profits falling 17% to $616m on the back of 11% rise in revenues to $16.4bn.

In a letter sent to employees February 2008, CEO Michael Dell said op-ex had grown "too fast" and it needed to "hold cost, and eliminate marginal activities" and wring out saving.

Dell said it did not comment on rumour or speculation.

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