Hewlett-Packard Taps into New Resource: Sarpy County, Neb., Assembly Plant
May 13, 2002 (Omaha World-Herald - Knight Ridder/Tribune Business News via
COMTEX) -- Hewlett-Packard Co. wasted no time tapping the resources of its newly
acquired Sarpy County computer assembly plant.
Following Tuesday's festivities marking the merger with Compaq Computer Corp.,
Hewlett-Packard announced Wednesday that it had won $90 million in contracts
from Texas state agencies.
The contracts make Hewlett-Packard the largest hardware and services supplier to
Texas state government.
An executive said Omaha-based Compaq Direct, which custom-builds computers, was
a factor in getting the orders.
"A chunk of that $90 million will actually be built and delivered to these
customers through Compaq Direct," said Mike Larson, a Hewlett-Packard executive
in Houston.
"Compaq Direct is really the heart and soul" of the new Hewlett-Packard's
direct-business engine, Larson said. And Omaha is the "center of gravity" for
Compaq Direct, he said.
Direct business means customers can order a computer via the company's Web site,
and the order will be shipped directly to the customer. No middleman has to be
involved.
Hewlett-Packard, which manufactures computers and is widely known for its
printers, lacked the capability to custom-build computers with the speed of
Compaq Direct's direct-business model.
The merger of the two companies was effective last week. Site manager Kathleen
Garcia, who runs the Sarpy operation, is busy these days showing visiting
Hewlett-Packard executives and managers what they've bought: a plant in which
630 workers can build and ship 2,000 computers a day, from mass-produced,
one-just-like-the-next machines for retailers such as Circuit City, to
individually configured computers for clients such as General Motors or
Bloomberg News Service.
Garcia's plant has some regular assembly line operations, where the first worker
on the line puts the motherboard into a chassis and the worker next to him adds
a hard drive and CD-ROM, and so on down the line.
But it was the plant's specialized operations that caught the eye of Carly
Fiorina, Hewlett-Packard's chief executive.
In those build-to-order operations, one technician assembles the entire
computer. Computers that control the assembly line assign the most difficult
orders to the most experienced workers.
Reading the bar code on a tray of parts for a specific order, a computer routes
the tray along a conveyor and stops it at the work station of an assembler whose
skill level matches the job.
Following a computer screen of instructions, the worker puts together the
hardware. The instructions are precise, right down to the placement of the
Windows and Intel logos on the case.
Then the worker loads an "image" -- the operating system and software package
requested by the customer -- with a few clicks of his mouse. The "image" has
been pre-assembled and loaded into a server to be downloaded on demand by
assemblers on the line.
Assembling the hardware takes a worker 15 to 20 minutes, depending on the
complexity of the order. Loading the image takes another 15 to 20 minutes.
That's how a corporate customer's order for dozens, hundreds or thousands of
computers can be met quickly.
Many orders are turned out in 24 hours or less, Garcia said.
Besides the plant at 13900 Chalco Valley Parkway, Compaq Direct has four other
factories: in Indianapolis, Swedesboro, N.J., Memphis, Tenn., and Ontario,
Calif. Administration and support operations for the entire system employ more
than 1,000 people in Omaha.
Compaq bought the plants from now-bankrupt Inacom Corp. two years ago.
"We made the purchase because we felt they had the capability of building
configure-to-order computers better than anybody else in the industry," said
Larson, who was a Compaq Computer Corp. executive at the time. Now he is senior
vice president and general manager of the Americas unit of Hewlett-Packard's
Personal Systems Group, under which Compaq Direct now falls. The Americas unit
covers North America and South America from Canada's Baffin Bay to Cape Horn at
the tip of Argentina.
Alan Hodel, a Compaq spokesman, said in March that no computer company could
meet customers' needs without being able to custom-build computers like Compaq
Direct does at the Sarpy plant. That capability was key to Hewlett-Packard's
decision to link up with Compaq because Hewlett-Packard didn't have that
ability, he said, pointing to comments made by Fiorina.
The $18.3 billion merger took effect May 3 following an eight-month effort to
derail it that was mounted by dissident Hewlett-Packard shareholders.
The last obstacle was cleared May 2 when a Delaware judge ruled against Walter
Hewlett, son of one of the Hewlett-Packard founders, in a suit he brought to
block the merger.
The company projects the merger will save $2.5 billion a year. Part of the
savings will come with the elimination of 15,000 jobs. With the addition of
63,000 employees from Compaq, Hewlett-Packard now has an employment of 150,000.
Fiorina is CEO and strategist of the merged company, which has revenue of $82
billion. Michael Capellas, the Compaq CEO, is president of Hewlett-Packard and
will handle day-to-day operations.
Headquarters is in Palo Alto, Calif. Compaq Computer Corp. had its headquarters
in Houston.
By Virgil Larson
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