To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
Subject: [Homestead] Who's Afraid of China?
Date: Sun, 19 Dec 2004 09:12:56 -0700
Who's Afraid of China?
By GARY RIVLIN
Published: December 19, 2004
Austin, Tex.
SHAYNE MYHAND, the day-shift manager of Dell's flagship factory here, does
a lot of chaperoning. As many as four or five times a day, he finds himself
playing host to corporate chieftains and midlevel scouts who come to marvel
at the dazzlingly efficient assembly plant that may be the best hope for
keeping blue-collar jobs in the United States.
A 31-year-old with a crisp, militarylike bearing, Mr. Myhand begins each
tour the same way, moving to a display case and grabbing an unimpressive
wooden plaque commemorating Dell's production of 49,269 personal computers
in the last three months of 1991. "On a good day, during peak demand, we'll
exceed that number by lunchtime," he said, with a slight nod and a faint
smile gracing his lips. He told a visitor that even now, during the
Christmas season rush, an order that hits the factory floor at 9 a.m. is
typically stacked in the back of a truck motoring down an interstate
highway by 1 p.m.
Inside Dell, the world's largest computer maker, executives study the
assembly process with the intensity of Alfred Kinsey and his researchers.
They wheel in video equipment to examine a work team's every movement,
looking for any extraneous bends or wasted twists. Designers give one
another high-fives for eliminating even a single screw from a product,
because that represents a saving of roughly four seconds per machine built
- the time they've calculated it takes an employee, on average, to use the
pneumatic screwdriver dangling above his or her head.
Computer software clocks the assembly-line performance of workers, whether
they're putting together PC's or the servers and storage equipment that
Dell sells to large companies. The most able are declared "master builders"
and then videotaped so that others may watch and learn. The weak are told
that it takes a special set of talents to cut it on the Dell factory floor
- and shown the door.
Steely-eyed cold, to be sure, but at a time when economists and politicians
fret over the future of American manufacturing as China emerges as the
workshop of the world, Dell isn't just defying a global trend; it's helping
to set the standard. "When everybody is outsourcing - when everybody is
outsourcing - Dell continues to manufacture in the United States because
over two decades of fine-tuning, they've figured out how to do it cheaper
and smarter," said Charles R. Wolf, an analyst at Needham & Company who has
been following Dell since 1991. (He has also been reaping the financial
rewards as a longtime Dell shareholder, seeing a 33-fold return on his
investment.) "They're truly in the 21st century when it comes to
manufacturing."
No other major computer maker produces computers in the United States. Long
ago, Dell's top rival, Hewlett-Packard, outsourced assembly of its PC's to
third parties, primarily based in Asia, as did I.B.M., the world's
third-largest PC maker. And I.B.M., which created the PC market in 1981, is
leaving the business, announcing this month that it is selling its PC unit
to Lenovo, the Chinese computer giant. "It's been a long time since one of
our competitors actually made a computer," said Michael S. Dell, the
founder and chairman of the company that bears his name.
Dell, by contrast, operates three giant assembly plants in the United
States - two in Austin and the third outside Nashville. Each is large
enough to house six contiguous football fields. Last month, the company
announced that it would build a fourth plant, twice as big as the others,
near Winston-Salem, N.C. And, inside the company, executives talk about
opening a fifth one, probably in Nevada, where it would build computers
according to each customer's specifications. At a White House conference on
the economy on Wednesday, Kevin D. Rollins, Dell's chief executive,
boasted, not quite accurately, that all the computers the company sells
domestically are made right here in the United States. "None is outsourced;
none is made in other countries and shipped in," he said, though Dell
laptops are in fact assembled overseas.
Dell's decision to expand its American manufacturing presence, however, has
nothing to do with patriotism. Executives here say their decisions are
based on the bottom line as well as on geography; it is simply more
efficient to stamp out computer equipment closer to the customer. "The
reason we continue to manufacture in the United States is that