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To: John Koligman who wrote (91386)	5/25/2001 9:25:37 AM
From: Elwood P. Dowd	Read Replies (2) \| Respond to of 97611

Dell's growth won't be in Texas by: yucatanbob 05/25/01 09:02 am EDT Msg: 236632 of 236633 Dell's growth won't be in Texas By John Pletz American-Statesman Staff Friday, May 25, 2001 Dell Computer Corp. Chairman Michael Dell left no doubt Thursday that his company won't be the same engine for growth of the Central Texas economy in the next decade that it has been in the past 10 years. Dell said what the company has been signaling for the past two years: His company's future growth will happen outside the region. "Austin's going to continue to be the center of the company in terms of activity," Dell said in an interview with the Austin American-Statesman. "But, generally speaking, we're not targeting a lot of growth for our operations here." Instead, Dell said, the primary focus of the company's U.S. growth will be in Nashville, Tenn., where Dell started sales and manufacturing operations two years ago -- its first U.S. plant outside of Central Texas. Dell indicated when it chose Nashville that the company was leery of depending too much on an already tight Central Texas labor market. It also cited increasing traffic congestion that made it harder to move the company's workers and products around the region. "I'm not sure that Austin needs a lot more growth right now . . . with the price of housing costs, the pressures that exist here," Michael Dell said Thursday. Dell will remain the area's largest private-sector employer, but it will cut as many as 5,700 local jobs this year. When those layoffs are completed, the company's employment will be about 16,000 -- back to late 1998 levels, before Dell began a hiring binge in which it added about 10,000 employees in just 24 months. The region has grown and prospered along with Dell as the company grew rapidly over the past decade. The computer maker now accounts for $20 billion in revenue, or 15 percent of regional economy, and a $600 million tax base. When Dell announced layoffs last month, the company said it would move production of corporate notebook computers to Nashville, where 3,000 employees produce and sell desktop and notebook computers for consumers. "Clearly, we've been expanding in the United States outside of Austin, particularly in Nashville, and we have a lot of opportunity to continue to grow in Nashville," Dell said. "And we would expect that's going to keep on." But it's unlikely there will be much expansion domestically. Computer demand has slowed dramatically in the United States, Dell's primary market. In contrast, Dell's business is growing in Asia. "If you look at a lot of our growth, certainly we would expect we're going to grow faster in Asia than the U.S.," Dell said. Dell also has shelved plans for a 500-employee call center in Fort Worth, which gave the company a 60-year tax break for possible expansion on 500 acres near the Alliance cargo airport. "At this point, it's kind of academic," Dell said Thursday. "Any expansion there is on hold because we have plenty of capacity in Austin and Nashville, so we don't have to contemplate that." Officials in Round Rock and Austin, which are home to Dell's two primary campuses, have downplayed the company's decision to slow growth here. In Round Rock, which receives a 2 percent tax from Dell's sales in Texas, Mayor Robert Stluka said Thursday that he would be concerned "if somewhere down the line there is a continued reduction and that it has an impact on sales." Two weeks ago, after Dell announced more layoffs, Austin Mayor Kirk Watson left no doubt that the region is grateful for what it's already gotten from Dell. "By virtually any standard -- job creation, revenue in the community, property tax base, philanthropy -- by any of those things, they've been a success," Watson said. "If you look back, they have been a big part of a lot of the good that has happened in the Austin economy." Lori Taylor, a senior economist with the Federal Reserve Bank of Dallas, said less dependence on Dell might not be such a bad thing for Austin.