Opinion
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The Dell Blues
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Published: September 9, 2008
Dell hasn't made it official, but a report in The Wall Street Journal Friday that said it may be considering selling some or all of its manufacturing plants is troubling indeed.
Three years ago next month, Dell opened its Winston-Salem plant with promises of millions in incentives from local and state officials who had aggressively recruited the computer maker as an economic boon to the area. We sure hope Dell doesn't sell. But if it does, officials must be as aggressive at protecting their investment as they were in recruiting Dell.
The local plant "is on the wrong side of an industrywide trend toward slowing (computer) desktop sales and surging notebook sales as the price of notebooks continues to fall," Richard Craver wrote in Saturday's Winston-Salem Journal. But that situation doesn't make it any easier for all the taxpayers who have seen the local Dell plant as a major milestone on the road to a higher-tech economy.
Dell has about 1,150 employees at its plant here, and the hope has been that the number of employees would steadily grow.
But the Wall Street Journal reported that Dell may be considering selling plants as part of its intensified effort to cut expenses. The paper reported that Dell has talked with contract computer makers who could buy the plants and build computers for Dell. But finding buyers could be a challenge. Some Dell factories could close.
Officials with the state, Winston-Salem and Forsyth County must be ready to protect their investment. The company is eligible for up to $37 million in local incentives and up to $268 million in state incentives if it complies with its requirements between 2005 and 2020. Millions have already been paid out.
If Dell sells or closes the plant before October 2010, by the terms of its incentives agreement, it would have to pay back all of the upfront incentives money it received as well as the money it's received since the plant opened.
If the plant is sold or if Dell makes a deal with another company to run the plant, that would raise the question of whether the incentives promised to Dell could be transferred to another company. If that could happen, officials would have to make sure that the new owner or operator is worth trusting with millions of dollars in incentives.
Ideally, Dell will hold onto the local plant. But if it doesn't, officials will be left with one big problem to tackle.
Dell was doing great when state and local officials went for this incentives deal, and when we backed it on this page. But we saw this deal, just as other incentive deals, as a necessary evil in today's business world.
What's needed is federal legislation to end incentives and all the costly headaches they can entail.
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