Dell planning to sell its factories worldwide

5 Sep 2008

It emerged today that computer giant Dell is considering a plan to sell its manufacturing operations around the world to contract electronics manufacturers (CEMs) to enable it to cut costs.

Dell is understood to have come to the conclusion that its production operations – once the hallmark of the company’s competitive strengths – are no longer competitive.

The news will be of vital concern to the Irish economy in which Dell employs over 4,500 people – some 1,300 at a sales and marketing operation in Dublin and over 3,000 at a long-standing operation in Limerick.

According to a report in this morning’s Wall Street Journal, the company has approached a number of CEMs with offers to sell the plants.

It is understood Dell plans to sell most, if not all, of the factories in the next 18 months. As part of the deal, the CEMs would take over the manufacture of Dell’s range of computer products.

Dell last week reported disappointing quarterly profits, which sent shares down more than 18pc.

Traditionally, Dell was a leading player in lean manufacturing principles like Just In Time and World Class Manufacturing, with components arriving at the operation just as they were needed to assemble PCs.

Dell established its first overseas manufacturing operation in Limerick in the early Nineties. This operation quickly became a model facility which further plants in Malaysia and Poland emulated.

It has been a rocky number of years for the Texas-based computer company with founder Michael Dell stepping back into the role of CEO to save the company from further losses.

In April, Dell said the company was focusing on a restructuring plan that would pursue a “US$3bn opportunity globally to drive productivity and efficiency.”

Part of the plan is a 10pc headcount reduction worldwide. Ireland got its first taste of this plan in April when it was announced that the local operations were to cut 250 jobs in finance, IT, sales, marketing and sales support.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years