Thread: Company Loyalty
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Old July 31 2010, 07:24 PM   #13
Location: Kentucky
Re: Company Loyalty

I've programmed assembly lines at both Dell and IBM.

Your mistake was being loyal to Dell. As you probably know, one of the fundamental ways that Dell established its cost advantage over rivals like IBM was to avoid the mistakes made by IBM, such as IBM's massive inventory (off topic) and crushing pension burden. The easiest way to do that is to:

(off topic) Not have any significant inventory. When you order a Dell, they bill your card and use the money to order the parts to build your computer - Dell only owns the parts for three or four hours while the computer is being assembled. This pushes the inventory costs onto their suppliers. In contrast, when I was doing an IBM line in Research Triangle Park, the IBMers mentioned that they had a huge warehouse nearby full of PC-jrs.

Don't incure large pension costs. Dell likes to hire people fresh out of college or off the streets, works them like dogs while they're still bright-eyed, idealistic, and thrilled to rent a nice apartment, and then kicks most of them out the door before any serious raises or retirements come due. In their Nashville assembly plant most of the line workers were temps from North Africa. How Dell can even find North Africans in Nashville is beyond me, but they had busloads of them. But Dell wasn't content with just that, no. They fired them all every few months and then rehired them so that none of them could become full-time employees.

The only large PC company that compete with Dell on a cost basis is Lenovo, out of mainland China. I assume the Chinese looked at the various PC companies, figured out which was the most competitive, and then copied their business model. That made them competitive in laptops but not desktops because desktops cost much more to ship across an ocean, so Lenovo bought IBM's assembly plants. I'm not sure if they're having much success because IBM employees wouldn't be very open to working in a Chinese sweat shop.

So yes, Dell is very good at motivating their young employees, but Dell is successful because they're ruthlessly efficient. If the spreadsheet says they should discard a bunch of workers, then goodbye workers.
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