Dell is tightening its belt by another notch. As part of its continuing effort to cut costs and increase its competitiveness, the computer maker is reportedly considering selling its factories.
An article in Friday’s Wall Street Journal reported that, according to unnamed sources, Dell has been approaching contract computer manufacturers in recent months “with offers to sell its plants.” One source told the newspaper that the Round Rock, Texas-based company expects to sell most, if not all, of its factories “within the next 18 months.”
Unsold factories would simply close, and Dell would get its computers made by contract manufacturers. The Journal report noted that ex-Dell factories could be first in line for contracts to continue making machines for Dell — an obvious sweetener to any possible deal.
Shares Drop 18 Percent
For more than a year, Dell has been trying to find ways to reduce its expenses and expand its distribution. The reported move toward additional cost-cutting comes as Dell struggles to regain its financial footing and competitive position. Last week, it reported quarterly profits that led to shares dropping more than 18 percent.
The move to close its factories is an indication of how seriously this cost-cutting has become, as Dell once prided itself on highly efficient, build-on-demand PC manufacturing tailored to customer requirements. In ads and publicity, Dell touted that a customer’s computer was built after the order had been placed — often within hours of the order. This just-in-time approach minimized any unsold inventory.
And, by not having to deal with retail channels, Dell also was able to maximize channel efficiency. But, for laptops and other computer products, a number of customers prefer to buy in a brick-and-mortar store, where they can see the product, talk to a real person, and return it if there is a problem. As a…