Dell deal was trouble just waiting to happen
(By Scott Sexton, Winston-Salem Journal) - Nobody with an ounce of sense, an iota of healthy skepticism, or a trace of public awareness should have been surprised that Dell Inc. yesterday laid off an unspecified number of its employees in Forsyth County.
It was only a matter of time -- the financial picture for a computer giant with an appetite for public money has been less than rosy for some time now.
Dell reported in August that its net income fell from $746 million to $616 million -- 17 percent -- in the second quarter of last year. Company officials laid much of the blame at the feet of "restructuring charges," and said at the time that all was well because they had already cut 8,500 of the 8,900 jobs that they intended to ax.
Then the bottom really fell out.
In September, The Wall Street Journal reported -- and Dell never actually denied -- that the company was considering selling most, if not all, of its plants around the world so it could save on labor costs by contracting for its manufacturing needs.
Fast forward through the early stages of the Great Depression 2.0, and we arrive at yesterday's news.
"Obviously you have to feel bad for the people who got laid off and the community, which made such a huge investment in it. What (the layoffs) do is point out the fallacy of a system where you're committing huge sums of money to one company for one plant," said Bob Orr, a longtime critic of the sorts of financial incentives thrown Dell's way. While a member of the N.C. Supreme Court, Orr wrote a dissenting opinion in a 1996 case that opened the door to government incentives to private companies.
Way back in the good old days of 2004, state and local officials were only too willing to throw about $305 million in financial incentives at the company if it agreed to create at least 1,500 jobs in five years and spend at least $100 million on local operations.
Dell threw a lavish party to celebrate its grand opening in October 2005, and many of those same officials who handed over the checkbooks were on hand to glad hand, hobnob and generally pat themselves on the back for landing such a plum.
It was only a matter of time -- the financial picture for a computer giant with an appetite for public money has been less than rosy for some time now.
Dell reported in August that its net income fell from $746 million to $616 million -- 17 percent -- in the second quarter of last year. Company officials laid much of the blame at the feet of "restructuring charges," and said at the time that all was well because they had already cut 8,500 of the 8,900 jobs that they intended to ax.
Then the bottom really fell out.
In September, The Wall Street Journal reported -- and Dell never actually denied -- that the company was considering selling most, if not all, of its plants around the world so it could save on labor costs by contracting for its manufacturing needs.
Fast forward through the early stages of the Great Depression 2.0, and we arrive at yesterday's news.
"Obviously you have to feel bad for the people who got laid off and the community, which made such a huge investment in it. What (the layoffs) do is point out the fallacy of a system where you're committing huge sums of money to one company for one plant," said Bob Orr, a longtime critic of the sorts of financial incentives thrown Dell's way. While a member of the N.C. Supreme Court, Orr wrote a dissenting opinion in a 1996 case that opened the door to government incentives to private companies.
Way back in the good old days of 2004, state and local officials were only too willing to throw about $305 million in financial incentives at the company if it agreed to create at least 1,500 jobs in five years and spend at least $100 million on local operations.
Dell threw a lavish party to celebrate its grand opening in October 2005, and many of those same officials who handed over the checkbooks were on hand to glad hand, hobnob and generally pat themselves on the back for landing such a plum.
posted by BP News Bureau | 12:36 PM
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