Friday, January 30, 2009

Dell to close part of Lebanon facility as PC sales slow

By Wendy Lee • THE TENNESSEAN • January 30, 2009 Dell Inc. said it plans to close the part of its Lebanon, Tenn., facility that manufactures desktop computers on Friday, due to weaker sales for the products. The closure will move 250 to 300 employees from Lebanon to Nashville, Dell spokesman Ken Bissell said. Some employees who previously built desktop computers would now either be boxing, shipping or handling materials in the company's Nashville distribution center off Murfreesboro Road, he said. The news comes as overall demand for PCs industrywide has declined, hurt by falling home prices, weaker stock values and skittish consumer confidence, said Framingham, Mass.-based research firm IDC. All that leads to deteriorating credit in the corporate world and depressed consumer spending. Dell's shipments of personal computers have slipped 6.3 percent compared with a year ago, according to IDC. "We're managing our volumes (manufacturing operations) by shifting capacities to other production facilities," said Bissell, who declined to give specifics. Way to reduce costs The Lebanon facility has manufactured desktops since it opened in 1999. The remaining workers there will continue to refurbish desktop PCs, with about 250 to 300 employees remaining in Lebanon, Bissell said. Employees were informed earlier this week and the transition to the Nashville facility begins next week, Bissell said. The decision is part of a larger initiative within Dell to reduce operating costs. Dell announced last March it would have $3 billion in planned cost reductions by the end of fiscal 2011. Dell's net income declined 5 percent to $727 million during its third quarter ending Oct. 31, compared with a year earlier. Third-quarter revenues declined 3 percent to about $15.2 billion, the company said. Dell has four Tennessee facilities, including the one in Lebanon, plus two distribution centers in Nashville, and a call center here that houses sales and technical support staff.

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