Dell to Lay Off 900 Jobs in Austin Facility Shutdown

In an attempt to save about $3 billion per year, Dell is reportedly gearing up for a massive staff layoff in shutting down its desktop computer factory in Austin. According to the company, about 8,800 jobs will be axed in order to trim billions in costs.

The system manufacturer and vendor plans to reduce some more 900 positions in its Austin facility, after it has already slashed 3,200 jobs in the last three quarters.

At the moment, Dell has more than 17,500 employees in the Austin area, a facility that has been built on top of a smaller production unit, as part of its "build-to-order" policy. The Topfer Manufacturing Center will be shut down as of January 1st next year.

"The actions Dell will take during fiscal 2009 and beyond are expected to position the company to further accelerate growth in its five focus areas: global consumer, enterprise, notebooks, small and medium enterprise and emerging countries, while improving profitability and cash returns," the company said in a statement.

The company builds its systems on a pre-order basis, to minimize the time hardware parts are stored in the company's inventory.

Dell is still regarded as one of the biggest low-cost manufacturers worldwide, despite the fact that it has started facing more and more market pressure as of 2005, when users first started to complain about the company's customer support. As far as the number of shipped units is concerned, Dell is placed number two, right behind Hewlett-Packard.

"In addition, the company will take further actions to reduce total product costs across all areas, including design, manufacturing and logistics, materials and operating expenses. Dell expects that the initial benefits from these actions will begin to be realized in the second half of this fiscal year," claimed the company representatives.

The mentioned $3 billion in expenses account for about 5 percent of annual operating expenses. Earlier this month, Dell was pressured by its investors to trim down the production costs in order to stay viable. Moreover, the recent fluctuations in the US economy made the company re-consider its US market approach and focus more on China and India-based customers.

Trimming jobs is just the first step in a wide-scale restructuring process, and according to the company, Dell will even take into account selling its Financial Services unit by the end of the third fiscal quarter.