N.C. Wants Dell to Repay Incentives for Closing Plant

By Jeffrey Burt  |  Posted 2009-10-09 Print this article Print

N.C. government leaders are asking Dell to repay tax breaks and other incentives the PC maker received from them when it built its PC plant four years ago. Dell has announced it is closing the manufacturing plant by January 2010, a move that will cost 905 employees their jobs. The shutdown is part of a larger initiative by Dell to save $4 billion through cost-cutting measures.

North Carolina leaders want Dell to pay for shutting down a 4-year-old PC manufacturing plant in their state.

Dell officials announced Oct. 7 that they were closing the plant in Winston-Salem, N.C., by January 2010, a move that will cost 905 employees their jobs. The closing is part of a companywide initiative designed to cut costs and save Dell about $4 billion.

It is the same plant that Dell built after state and local government leaders promised Dell more than $300 million in tax breaks and other incentives to come to North Carolina. States routinely offer such incentives to businesses in hopes of enticing them to locate there.

After a talk Oct. 8, N.C. Gov. Beverly Perdue told local reporters that she was determined to ensure that the state gets back "every red cent back that Dell has received."

City and Forsythe County officials also are looking to get repayment from the PC maker.

A Dell spokesman has said the company will meet with state and local officials to talk about incentive agreements, and that Dell will honor those agreements.

Dell is looking not only to reduce expenses, but also to remake itself. The company is still the world's second-largest PC vendor, behind Hewlett-Packard, but is feeling the pressure from other OEMs, such as Acer, in a market that has been severely hit by the global recession. Research firm Gartner in June said overall PC shipments will decline this year by 6 percent over 2008, with desktop sales dropping 16 percent.

PC makers are hoping to see a boost in shipments later this year and into next as businesses refresh their aging fleets of computers. They also expect Microsoft's release of its Windows 7 operating system this month to fuel sales.

Dell also is looking to grow its services business, as illustrated by its anticipated $3 billion purchase of Perot Systems, announced in September.



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