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Dell selling factories

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The WSJ is reporting that Dell is looking to “sell most — and possibly all” of their factories within the next 18 months. The move, designed to cut costs, isn’t a sign of Dell throwing in the towel, rather the computer giant is looking to overhaul their production model.

According to their source, Dell has approached contract computer manufacturers and then they would enter into agreements with said manufacturers.

In recent years Dell’s business has shifted from large corporate accounts, (needing lots of PC’s, quickly) to a more retail-based focus. Farming out the production of their computers should lower costs because contract manufacturers generally have a narrow focus on efficiency.

A Dell spokesman referred to an SEC filing earlier in the year which said that Dell is,

…continuing to expand our use of original design manufacturing partnerships and manufacturing outsourcing relationships.

Several obstacles will stand in the way of Dell being able to easily shed the factories, including being faced with the prospect of losing millions of dollars in tax incentives from local and state governments. More importantly, they’ll be faced with what to do about all those workers. Contract manufacturers may be hesitant to purchase factories with a high-priced work force. Here’s to hoping they see it through.

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