Mohan: DELL sure isn't fooling around in Nashville <G>...Check this out:
<<As Dell Heads to Nashville,
Suppliers Hurry to Meet It
By Jennifer Ordonez
06/23/1999
The Wall Street Journal
Southeast Journal
Page S1
(Copyright (c) 1999, Dow Jones & Company, Inc.)
Dell Computer Co. has a reputation as a drill sergeant. Suppliers must deliver everything from computer chips to packaging foam on demand, often with less than a few hours' notice.
And marching in Dell 's army has been particularly rigorous as the Round Rock, Texas, computer powerhouse prepares to open its first U.S. plant outside of Texas in Nashville. Since the May announcement, companies hoping to grow with Dell in Tennessee have been scrambling to set up shop to meet the early-August start-up date -- often with little guarantee from Dell on how much business they can count on, or for how long.
"We explain to them what our objectives are, and if they find they need to co-locate within the same community, they do," says Dell spokeswoman Cathie Hargett. "We don't ever want to be in the position of telling somebody else to expand their business."
For an idea of the speed companies have been putting on for Dell -- and the risks they face doing so -- consider two logistics companies seeking to operate a Nashville "supplier logistics center": a distribution hub used by suppliers that in many cases don't manufacture their wares locally.
Within days of Dell 's announcement, Ryder Integrated Logistics Inc. had assembled a team of planners for its Nashville operations. Now, just two weeks before it hopes to open, the unit of Ryder Systems Inc. of Miami, Fla., has a letter of intent for space in a LaVergne, Tenn., industrial park, less than 20 miles from both Dell 's temporary suburban site and its permanent Nashville location.
The company has "layers" of contingency plans to ensure it will be ready next month, including, if necessary, offering workers elsewhere "temporary housing, a plane ticket, paying them a per diem for food," says Dave Hanley, Ryder's director of business development. "We're prepared to do what it takes."
Like Ryder, Skyway Freight Systems Inc., Watsonville, Calif., has been recruiting staff and searching for just the right space for a Dell hub over the past month. Like Ryder, it already works with Dell in suburban Austin, Texas. But, unlike Ryder, Skyway last week abruptly put its Nashville plans on hold.
"Skyway will not be opening a hub in the Nashville area after all for the time being," Louise Smith, Skyway's vice president of marketing, wrote in an e-mail to a Wall Street Journal reporter only hours after describing some of the company's Nashville preparations in an interview. Dell , she added, "indicated that they want to be sure that their operations will require multiple providers before our company moves forward and makes financial commitments to acquire space, etc."
Dell won't comment on contracts or understandings with Ryder or Skyway.
On top of contract uncertainties, companies face other challenges in Nashville: an unemployment rate that hovers at 3%, mounting traffic congestion and limited industrial space for the largest vendors. Final approval of plans for a Dell campus near Nashville's airport won't even come up for a vote by the Nashville County Metro Council until July 20. With few long-term guarantees, many suppliers are looking for leases of no more than three years, says Whitfield Hamilton, industrial division leader of Colliers Turley Martin Tucker, a Nashville real-estate company.
Of course, none of that is dissuading suppliers. "All these people know is that if they want to continue their relationship with Dell , they have to have the parts here," says Janet Miller, director of economic development for the Nashville-area Chamber of Commerce. Three weeks ago, Ms. Miller accompanied Bill Baxter, commissioner of the Tennessee Department of Economic and Community Development, to Austin to give about two dozen suppliers a crash course in the Nashville area and the future Dell site.
Mr. Hanley says his company has it easier than most. In Texas, Ryder operates a hub that distributes parts for 44 Dell suppliers. And it already boasts operating revenue of $100 million with its transportation and logistics presence in Nashville. Still, Mr. Hanley says, as prime an opportunity as it is to work with Dell , "It's a challenge. ... We can't have a problem. We need to be on track."
Ryder expects to eventually triple the 120,000-square-foot space it has agreed to lease in LaVergne. It has contracts with more than 20 Dell suppliers in Nashville, and hopes to have at least another 20 signed up in the next two weeks. And Ryder anticipates few problems getting 50 employees in place, thanks to an existing recruiting operation in Nashville.
Austin Foam Plastics Inc., which makes the packaging that protects Dell computers during shipping, doesn't have the benefit of ties in Nashville. But it has another edge -- a long history with Dell .
The company has supplied Dell with packaging since the early 1980s -- "before they shipped their very first computer," says Chief Executive Tim O'Hearn. Dell now makes up more than a third of the firm's annual sales of $65 million.
Soon after Dell announced its plans, Mr. O'Hearn flew to Nashville to get first pick of the area's limited large industrial space. The company will manufacture its packaging in 81,000 square feet of industrial space in Lebanon, Tenn. So there's room to grow, it has first option on an extra 40,000 square feet.
"We're going to Nashville with no guarantees," Mr. O'Hearn says. "We don't have a contract, and we don't know what their projections are going to be."
Until the building can be fully equipped, Mr. O'Hearn says the firm will pay to ship packaging to Nashville from Austin. To start operations, he says the firm will invest about $250,000. "If you're really going to service Dell , you're going to service them from your own pocket at times," he adds. "The volumes we've been told to expect will satisfy the investment we make by far.">>
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