Austin Real Estate Scene

It was just announced that Dell Computers is CLOSING their Austin, TX manufacturing plant. This is big news for Austin because Dell had been hiring lots of people this last year. They are going to cut 900 jobs. While this is good move for Dell’s bottom line which they are ruthless about, it can’t be good for our Austin or Round Rock economy. They are moving the plant to North Carolina which will be great for their market. What will this mean for the Austin area real estate market? We’ll be updating it on our blog soon.

Here is the article off the Austin Statesman Business Blog:

Dell Inc. said Monday it will close its desktop computer manufacturing plant in North Austin by the end of this year, cutting 900 jobs as part of a global cost-cutting campaign.

The company said the plant closing is part of a $3 billion program to cut its product costs worldwide over the next three years.

That move will affect engineering design, manufacturing, logistics and materials across the company’s global product operations.

The factory that will be closed is the massive Topfer Manufacturing Center on Howard Lane, which has been a leading Dell factory since the late 1990s.

The plant closing is the biggest job hit at Dell in Central Texas since the company cut more than 5,700 jobs during the tech downturn in 2001.

The company also said it is considering “strategic alternatives” for some parts of its Dell Financial Services arm. A sale also could affect those jobs in Austin.

“We believe we have a $3 billion opportunity to drive both productivity and efficiency,” CEO Michael Dell said.

A spokesman said Dell officials will likely provide more details on the cost-cutting campaign at a financial analysts’ meeting in Round Rock which begins Wednesday.

Dell did not say where its desktop manufacturing operations will be shifted, but industry analysts expect most of the work will go to Dell’s newest U.S. factory in Winston-Salem, N.C.

The company employs about 17,500 people in Central Texas and 85,000 worldwide.

Dell said it has cut 3,200 jobs worldwide since it announced plans for a 10-percent workforce cut last May. The company said recently it still planned to hit that goal.

“Any additional cuts to its bloated cost structure would be well received,” wrote analyst Brent Bracelin with Pacific Crest Securities iin a recent report to investors. “Operating expenses are at an eight year high of 13.3 percent, which suggest that tighter cost-containment efforts are needed to restore investor confidence.”

Analyst Roger Kay with Endpoint Technologies Associate Inc. said such a move would repair Dell’s tarnished image for manufacturing and logistical efficiency.

“They let things slip. They took their eye off the ball,” Kay said.

Concentrating desktop assembly in North Carolina could make sense, Kay said, because Dell ’ splant there is close to its East Coast customers. The company also got hefty incentives from the state to build the plant.

“They carved a real sweet deal in North Carolina, and they need to use a lot of the plant capacity there,” Kay said.

http://www.statesman.com/blogs/content/shared-gen/blogs/austin/theticker/entries/2008/03/31/source_dell_to_close_plant_cut.html