Dell to close doors before living up to promise of jobs

With the promise of 1700 jobs the North Carolina General Assembly and Forsyth County promised up to $280 million in tax and cash incentives to lure Dell Computers to Forsyth County. Dell never lived up to that promise. In March of this year it was reported that planned layoffs would affect only a small number of the 1400 employees at the plant. Today it is reported that the Dell plant will close completely and it is unknown how much money the state and county will lose.

I'm sure it is nothing compared to what the 905 full-time employees stand to lose.

Winston-Salem Mayor Alan Joines said today the county won't lose much financially.

Joines said that the plant's closing will not have an adverse effect on the city's finances because Dell did not meet the goals spelled out in the incentives package.

The city will be repaid the $15.5 million that represents its portion of the incentives package, become the title holder for 90 acres adjacent to the plant and continue to collect about $500,000 in property taxes from Dell.

I'm sure he wasn't thinking of all the goods and services the 1400 unemployed Dell employees will not be spending money on now that they no longer have a source of income.

Dell representatives say the company will meet all of its financial obligations to the state and county.

Dell said in a statement that it will continue to fully comply with the terms of incentive agreements with the citizens of North Carolina.

"The incentive agreements included milestones at various points in time since opening the plant and extended into future years," Frink said.

"We've met those milestones, save for the May employment figure. So, we'll continue to comply and honor terms of the agreements in place. Dell officials will be meeting with government entities to review the agreements to ensure the commitments are met."

Robert Leak Jr., the president of Winston-Salem Business Inc., and a chief recruiter of Dell in 2004, said that Dell is "contractually obligated to reimburse incentives if they close before the term of the contract."

"By complying they mean that they will reimburse whatever amounts the city/county require based on the contract," Leak said.

When all is said and done we can take a look at just how much was lost in the incentive deal which should help in structuring future deals. In the meantime, our thoughts are with all those people at Dell and other companies across the state who are facing unemployment.

For more information go here and here.

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Dell is getting out of the hardware busienss

With Dells purchase of EDS from Ross Perot; http://www.nytimes.com/2009/09/22/technology/companies/22dell.html it shows they are giving up on hardware and looking at processing federal health claims as their new profit profile.

Why should anyone pay Dell to make a computer in China for them? Consumers can buy direct from China and still have crappy service at a lower price. Dell killed it's customer base when it focused on selling hardware to corporations, specifically after 9/11 when Dell made a fortune replacing hardware lost in the attacks. They did not need individual consumers and their service; Dell was later exposed as having cooked the books on their "award winning service"[ http://www.businessweek.com/technology/content/jun2006/tc20060612_046085.htm devolved into don't bother me with your problems. When you take a page out of Microsoft's customer service program the results are inevitable.

But it's been downhill for Dell ever since, at least they are smart enough to know when their old business model no longer works.

Ross Perot got rich processing SSI data for the US government. Ain't it a gas the way those who get rich off of Uncle Sugar, hate the government.

The sad part of the W/S Dell failure

When Dell first came to Winston Salem, I was in a position of management with a large NC textile firm. We lost a number of employees that gave up 20 years or more with the company to hopefully achieve greater things in their lives economically. Now? Well, you have to bet that most of those people wish they hadn't made that decision. There had to be a great many people that had worked in many other businesses that also made that decision. Now, they are basically screwed. Few job opportunities are now available. Not much in the way of help coming from Dell as well. And, you can bet that Dell's overseas plants aren't seeing this kind of annihilation of jobs.

And, I think whoever here said that this all came from a failed business plan is absolutely correct. Not to mention the fact that this very huge company didn't see the advent of laptops over desktops with regard to marketing of their computers.

It just kind of makes you wonder if there could be an opportunity here for some kind of "bailout", doesn't it? I mean, when it comes to the Piedmont, isn't this a "too big to fail" company? I wonder if there have been any efforts in that respect.

Perhaps Perdue can get involved here and use her position to help these people out.

I've seen this sad lack of foresight an awful lot

In the past ten years, there was a huge retirement community that was supposed to be built adjacent to my property. The crews were out working on Sundays and holidays to clear the wooded land for months, building materials were even delivered and then the project stopped dead. Over committed is what they claimed.

Poor business decisions. It makes one wonder what could be accomplished with the misspent money if there were someone smarter calling the shots.

Everyone supports these dumb ideas.

All you have to do is claim that "it will bring jobs!" and everyone hops on the bandwagon.

Think of all the money the county was prepared to give to Dell in exchange for a certain number of jobs, as if the value of those jobs could be objectively quantified by the government (rather than subjectively quantified by the individuals who do the actual work).

Why not just take all of those millions and instead of giving huge tax incentives to a giant corporation, cut sales taxes and property taxes (especially in poor areas) and let the people themselves decide how best to stimulate the economy. After all, they have localized knowledge about the needs and costs associated with the places they live and are thus able to more efficiently allocate scarce resources.

Unfortunately, that plan doesn't feed the egos of our political superiors.

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"The natural wage of labor is its product." -- Benjamin R. Tucker
A liberal is someone who thinks the system is broken and needs to be fixed, whereas a radical understands it’s working the way it’s supposed to.

I should qualify

Not everyone supports these ideas - that's hyperbole on my part. Politically though, these partnerships between big corporations and hyperactive state and local governments have fairly wide-spread political support from what I've seen.

If wage labor is a form of exploitation as traditional leftist argue (and I agree that it generally is under our current system), why would you want to encourage wage labor jobs for your constituents rather than encouraging them to amass and control their own capital? If Dell is extracting surplus value from the labor of its workers and transferring this surplus value to its rich investors, isn't that removing potential wealth from the local economy?

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"The natural wage of labor is its product." -- Benjamin R. Tucker
A liberal is someone who thinks the system is broken and needs to be fixed, whereas a radical understands it’s working the way it’s supposed to.