Dell announced this week it will close its desktop computer manufacturing plant near Winston-Salem, NC by the end of January. The plant, which employs 905 workers and produced units mainly for business customers opened four years ago.
The Dell facility was showered with a state incentives package worth an estimated $318 million, primarily tax breaks and grants, when the computer firm decided to locate the plant in North Carolina. The state created the generous package after projecting that the Dell plant would have an overall economic impact on the region of $24.5 billion over 20 years, and create more than 2,000 direct and indirect jobs.
However, consumer preferences rapidly shifted to laptops and handheld devices during the past four years. The combination of the shrinking market for desktops and the deep recession appear to have doomed the Winston-Salem plant.
“Given the dynamics at play across the landscape, we made the difficult decision to shut this down,” Dell spokesman Venancio Figueroa told the Associated Press.
Dell, based in Round Rock, TX, said the decision was part of an effort to simplify operations and improve efficiency, while retaining U.S. plants in Miami, Fla.; Nashville, Tenn.; and Austin, Texas. The company had announced a drive to save $4 billion a year by 2011. Dell previously sold its Lebanon, Tenn., remanufacturing plant in June and is moving its Ireland manufacturing operations to Poland.
Dell is also moving away from hardware and into more profitable technology services. Dell said last month it will spend $3.9 billion for Perot Systems Corp., adding consulting and computing services like systems integration to Dell’s offerings.
Assistant state Commerce Secretary Kathy Neal said it was not immediately known how much in state tax breaks or outright grants Dell received and how much they would be asked to repay.
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