Dell offloads Polish factory to Taiwanese (yes the one that left Limerick)

ei.sdraob

Dell is offloading its factory in Poland to Taiwanese knock 'em out giant Foxconn, less than a year after axing most of its Irish workers and shifting their jobs to the East European facility.

Hon Hai Precision, Foxconn's parent, has reportedly agreed to take over the factory in return for around $310m.

A Dell Poland spokesperson told AFP that the deal would make little difference to production at the plant. Dell will continue to source PCs from the place.

The latest deal will raise questions over exactly how committed to European manufacturing Dell is. Its decision to effectively pull out of Ireland with the closure of its Limerick facility caused massive political fallout in the country, which was already grappling with an economic disaster.

Dell was the Republic's biggest manufacturer in Ireland, and the retreat cost the local economy €117m and the government €173m in lost tax and social insurance contributions.

Still, the European Commission handed Dell €54.4m in aid for the Polish plan in September, AFP reports.

And last week, the EU sent €14.8m to Limerick to tide the stricken town over while it copes with the loss of the Dell jobs

http://www.channelregister.co.uk/2009/12/04/dell_poland/

ouch, looks like it wasnt Ireland that became unattractive but Europe itself

Foxcon make iphones btw

Dannyboy83

Confusing article, have Dell pulled out of Poland then?

LoLth

from what I got from it they will continue to produce Dell machines but Foxconn will run the plant itself.

no idea what Dell bought the plant for but this means they essentially made 310m - cost of plant + 54million. should dell not be made pay the 54 million grant back to the EU?

gandalf

They are doing this worldwide, they have shut plants down in the US and are moving production to Foxconn in Mexico as well. It all part of their outsourcing model. Most, if not all of their clients will be manufactured by third parties now.

ei.sdraob

they are selling the factory to Foxconn who will it seems continue to make pcs for Dell (among other things) for some time

seems Dell are outsourcing their core business

Dannyboy83

LoLth wrote: »

no idea what Dell bought the plant for but this means they essentially made 310m - cost of plant + 54million. should dell not be made pay the 54 million grant back to the EU?

Or give Foxconn a 54m discount on the 310m pricetag.

Martin 2

ei.sdraob wrote: »

http://www.channelregister.co.uk/2009/12/04/dell_poland/

ouch, looks like it wasnt Ireland that became unattractive but Europe itself

Foxcon make iphones btw

ei.sdraob, don't disagree with what you're saying at all but just want to point out that that article has a number of factual errors.

Dell is offloading its factory in Poland to Taiwanese knock 'em out giant Foxconn, less than a year after axing most of its Irish workers and shifting their jobs to the East European facility.

Hon Hai Precision, Foxconn's parent, has reportedly agreed to take over the factory in return for around $310m.

A Dell Poland spokesperson told AFP that the deal would make little difference to production at the plant. Dell will continue to source PCs from the place.

The latest deal will raise questions over exactly how committed to European manufacturing Dell is. Its decision to effectively pull out of Ireland with the closure of its Limerick facility caused massive political fallout in the country, which was already grappling with an economic disaster.

Dell was the Republic's biggest manufacturer in Ireland, and the retreat cost the local economy €117m and the government €173m in lost tax and social insurance contributions.

Dell was not our biggest manufacturer, Intel was bigger in terms of number of employees (4800) and turnover. I'd be surprised if some of the indigenous manufacturers such as Glanbia (3000+) and CRH (?) weren't bigger in terms of the number of employees. Btw, Dell still has a substantial customer services division in Ireland.

Still, the European Commission handed Dell €54.4m in aid for the Polish plan in September, AFP reports.

The European Commission did not hand Dell €54.4m in aid, in fact what the EU commission did was to approve a grant of that amount by the Polish government to Dell. EU member governments including ours do this all the time and seek permission from the EC.

And last week, the EU sent €14.8m to Limerick to tide the stricken town over while it copes with the loss of the Dell jobs

A more correct way of putting this would be that the EU is providing €14.8m to retrain and help former Dell employees find work.


Edit: I should have read the previous posts, yes the factory is changing ownership but remaining in Poland
.

ei.sdraob

Martin 2 wrote: »

ei.sdraob, don't disagree with what you're saying at all but just want to point out that that article has a number of factual errors.

yeh they were first to report tho it seems

The Register are like the "Daily Mail" tabloid of IT news

Scofflaw

ei.sdraob wrote: »

yeh they were first to report tho it seems

The Register are like the "Daily Mail" tabloid of IT news

True - with snappier headlines.

cordially,
Scofflaw

the_syco

Meh. Doesn't look like foxconn are doing greatly at the moment http://www.chinadaily.com.cn/bizchina/2009-11/30/content_9080812.htm

halkar

Foxconn is also building a plant in Turkey with HP to serve Emea markets. If they do the deal with Dell I would not suprise that they will leave Poland next 5 years and move to cheaper locations.

asdasd

I never really get this out sourcing of core business malarky. Dell, unlike Apple, dont have a software differential and will inevitably be doing no manufacturing at all. I think this feeds into the globalisation "mantra" that "we" get to do the supposedly smart stuff ( marketing, brands etc.) and "they" get to do the easy stuff.

In fact manufacturing, Just in Time stuff, takes a fair amount of organisation skills.

All that FoxConn need to do in future is make their own branded version. Yes, they need to work on distribution etc. And a sales force.

The name is catchy enough. If people know that a FoxConn machine is made in the same place, and with the same parts as a Dell, they will buy FoxConn if cheaper. This is what inevitably happens. The West continues to bleed manufacturing.

( That wont happen to the iPhone because of the proprietary format of the OS).

gandalf

Ah but they are not going to brand their own because outsourcing is what they do.

They also build for the following organisations Hewlett Packard, Sony, Nintendo, Microsoft, Motorola, Amazon, Cisco. The main difference is Dell made their name as a build to order assembler, they are now retracting to a more traditional vendor in building to sell. You will notice going forward that their systems will have less changable options on the website when you go to buy them because of this.

Cuddlesworth

Word within Dell would imply that the factory is a Lemon and it was never going to last long anyway.

97i9y3941

if you think about it they only exist by name,since most of the components in p.c's come from different chip suppliers from asia,only the manufactors add their names to the final product,wonder are dell doing an ibm job,selling the home pc devision to lenovo*who make great laptops*

Joyful

Global strategy is to outsource all mfg, that's been the case for some time now. Look at HP, Toshiba etc, it's easily been 10yrs since they manufactured anything themsleves, Dell needed to do this to keep the company going. Better to have 1500 still employed in limerick in support roles, and another 1000 in dublin in Sales than a big fat zero . . . don't you think?

As for Dell future state loosing out on "customisating" of systems . . . that wont happen. They will continue to define their product range with Customer need sin mind, simplicity for the homeuser who wants to walk into Dixons and buy off the shelf plus keeping the ability to offer choice for the techies!

I;d watch this space when it comes to Dell, harsh decisions have to be made for the greater good, i would write them off just yet.

CeNedra

I worked in Computer manufacturing co. in supply chain 10yrs ago. At that stage, manufacturing of laptops was all being done in Taiwan and China. Hon Hai was one of the companies we dealt with (they built laptops mainly).
Hon Hai had a factory in Wales at the time, which they closed and moved to Czech republic. I haven't a clue if it is still there. But even so, most manufacturing even for Europe was coming from China.

However, with Dell's customisation I would say that a portion would still have to come from Europe, its too expensive to airfreight PC's around the place and takes too long to put them on the sea. Laptops will probably move out of Europe longer term.

I'd say the Polish plant will not be significantly different with Hon Hai as owners, but probably leaner and meaner if that is possible. This is completely irrelevant to closing Limerick. That was on the cards for years. Offloading manu plants is something that all other computer manufacturers did approx 10years ago and Dell are very behind the 8-ball on this. A sign of the tighter times that they have to follow the now old trend of the rest of the industry.

dny123456

V short sighted in my opinion for an assembly company (i.e. takes standard pc components and assembles them into a pc) to outsource their assembly!

All they have left as a differentiation is the name "dell", which if standards are allowed to fall, could be blackened very quickly. Outsourcing is a trend which has being growing in popularity over the last decade or so. I think these things are cyclical though and companies are beginning to realize the strategic value they are swapping for the short term savings. Down with that sort of thing!

asdasd

Totaly agree - dny123456 .

This short-termism is the nature of the form of capitalism driven by the American stock market. The demand for quarterly results.

Compare with German capitalism. BMW's plants

* Spartanburg, South Carolina, United States
* Berlin, Germany
* Dingolfing, Germany
* Cairo, Egypt
* Cassinetta, Italy
* Chennai, India
* Eisenach, Germany
* Goodwood, Great Britain
* Graz, Austria
* Hams Hall, Great Britain
* Jakarta, Indonesia
* Kaliningrad, Russia
* Kuala Lumpur, Malaysia
* Landshut, Germany
* Leipzig, Germany
* Munich, Germany
* Oxford, Great Britain
* Rayong, Thailand
* Regensburg, Germany
* Rosslyn, South Africa
* Shenyang, China
* Swindon, Great Britain
* Steyr, Austria
* Wackersdorf, Germany

sure, China is in there. But not much. And the manufacturing is not outsourced.

Dell is now not making PC's. It is a branding and sales company, and it does not even do build to order. This helps it compete, for now.

Evantually the people who have the skills to build, will develop the skills to sell and brand, and game over - even more - for American capitalism.

ei.sdraob

the final nail in the coffin for Dell, and when i swore i would not touch them with a stick is their atrocious support who are incapable of speaking English

tho many companies (large) only buy dell for branding reasons still and will continue to do as they are locked into contracts

smaller and more agile companies just ignore the likes of dell, and its not only their desktops and laptops, their servers are ridiculous

i can see why companies would outsource, and i understand the practice as business person myself, but you get to a point of diminishing returns when outsourcing starts to seriously hurt your business, or worse the people you outsource to do one up on you and then become your competitor

ROS123

Cuddlesworth wrote: »

Word within Dell would imply that the factory is a Lemon and it was never going to last long anyway.

Interesting, I worked for an international company who manufactured product for the european market. It closed in 2000 moved to Poland. One of the guys I worked with went to work in Poland, I met him a year later, the parent company regretted the move, Poland was a disaster but they had commited a lot investment and couldn't turn it back.

masteroftherealm

LoLth wrote: »

from what I got from it they will continue to produce Dell machines but Foxconn will run the plant itself.

no idea what Dell bought the plant for but this means they essentially made 310m - cost of plant + 54million. should dell not be made pay the 54 million grant back to the EU?

Not having huge knowledge of the situation but the grant usually would pass to the new company will the same conditions of employment term of emplyment and terms of business lenght.

hinault

There can be only so much outsourcing any company can do - while maintaining quality standards.

I heard that it quickly became apparent that DELL regretted the move to Poland from Limerick because the quality of the product made in Poland was nowhere near the standard of product made in Limerick.
Yes, Poland was cheaper in terms of wages..........but the cost in terms of poorer quality has cost DELL in terms of sales.

oppenheimer1

hinault wrote: »

There can be only so much outsourcing any company can do - while maintaining quality standards.

I heard that it quickly became apparent that DELL regretted the move to Poland from Limerick because the quality of the product made in Poland was nowhere near the standard of product made in Limerick.
Yes, Poland was cheaper in terms of wages..........but the cost in terms of poorer quality has cost DELL in terms of sales.

But how could the quality be poorer really, all Dell Limerick was, was an assembley plant. Pretty much a place where jigsaws were put together. Nothing really high tech was going on there.

97i9y3941

i dont mean to insult anyone but this is what i think about when they say how great ireland is when comes to graduates etc,in the end i dont think it matters to a company who wants someone just to put things together like factories in mexico etc..

ROS123

hinault wrote: »

There can be only so much outsourcing any company can do - while maintaining quality standards.

I heard that it quickly became apparent that DELL regretted the move to Poland from Limerick because the quality of the product made in Poland was nowhere near the standard of product made in Limerick.
Yes, Poland was cheaper in terms of wages..........but the cost in terms of poorer quality has cost DELL in terms of sales.

Thats what I just said, quality, productivity and efficiency much better in Ireland. wages much lower in Poland....

asdasd

Pretty much a place where jigsaws were put together. Nothing really high tech was going on there.

The idea that an assembly line just runs itself without intervention from smart people is a major fallacy. We want to believe it because the jobs are going to China.

Quality control, purchasing, line managent, making productivity increases per line ( knowing what equipment to buy to speed things up) etc.

I dont say that the Polish couldnt have done this over time, but that there was a body of knowledge built up in Limerick.

The Chinese, running their own companies, seem to have taken to this like ducks to water.

ROS123

On the question of outsourcing/ globalisation. Surely there comes a time when this results in diminishing returns. If the western world have no work, who will buy the goods.

hinault

oppenheimer1 wrote: »

But how could the quality be poorer really, all Dell Limerick was, was an assembley plant. Pretty much a place where jigsaws were put together. Nothing really high tech was going on there.

You tell me?

DELL itself arrived at the decision that the quality of product issued from Poland outweighed any savings generated in terms of lower wages.

That's coming from a friend of mine who works for DELL based in USA.

In fact, there was serious consideration given to relocating back to Limerick, I'm told.

lmimmfn

this news was out on Friday - http://www.fudzilla.com/content/view/16697/38/

ei.sdraob wrote: »

they are selling the factory to Foxconn who will it seems continue to make pcs for Dell (among other things) for some time

seems Dell are outsourcing their core business

Yep, thats pretty much it, apparently( according to the FUD ) though Foxconn are only hoping Dell will use them for outsourcing.

Oafley Jones

CeNedra wrote: »

Hon Hai had a factory in Wales at the time, which they closed and moved to Czech republic. I haven't a clue if it is still there. But even so, most manufacturing even for Europe was coming from China.

It's still there. Ton of iMacs get assembled there.

znv6i3h7kqf9ys

I have to say I'm not surprised at this. I worked for Dell for over 3 years they make Ryanair look like puppy dogs when it comes to protecting their bottom line

Joyful

They had it good in Limerick, no union, a workforce that wanted to do exactly that "work". People who came out of school and onto the factory floor, it was a family of sorts. Plus a pool of graduates to equal no other in europe, or even the US if i might ad.

Dells leadership team made a mistake in opening Poland. They spent millions, but the factory didn't ramp with the speed that was needed, the workforce would down tools at every opportunity, labour laws in Piland are very strict . . . Dell didn't consider this.

Then the man that said "lets move to poland" was fired! And Michael Dell took over, if he hadn't done that, Limerick would have been shut down, 100% . . . manufacturing and and support services, like buyers, engineers, supply chain etc all bye bye. Michael Dell recognises that Dell limerick is a natural pool of resources that he can tap into, and that's what he is doing.

Yes, it was a sad day for limeirck when they announced the plant was closing, but for those still in there plugging away, they keep their heads down and do the job. They deal with constant rumours of more jobs moving to China, or other locations in Europe . . . it must be a difficult environment to work in.

We all need to sell Ireland as a hight tech services country, get broadband sorted out for the Small Medium Businesses, ask companies like Dell to explain why they stayed in ireland, and build on that, otherwise ireland will sink!!