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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Tim Bagwell who wrote (9430)	11/24/1997 1:11:00 AM
From: Kai-Uwe	Respond to of 97611

Tim: What about HWP's new mfg facility in Holland (wasn't that where they are supposed to be setting up this huge modern facotry right now???)??? In addition to what you mentioned outsourcing also has an extremely negative impact upon a manufacturers labour cost calculation, as you increase your overheads involuntarily by outsourcing (in addition to what you mentioned about the knowledge transfer). It's a bit like a vicious circle - once you're in it, it's next to impossible to get out of it again! But outsourcing, if practised well, is also a very strategic addition of certain manufacturing segments that need not (any longer) be the core capacity of an IT firm. It can actually make sense to outsource a whole business segment - if executed correctly. Apple is currently following that track - they also use SCI heavily. I am not sure if one can take them as a correct example. But, to use Steve as a quote source (again), FIC is manufacturing the sub zero Presario (in Austin), and is seemingly making money for both themselves as well as CPQ, so we can see that it works at present. Also, I would tend to agree with your statement on the rapid delivery of new products only conditionally. If you don't have the resources and know-how in-house, then you shouldn't really be in mfg in the first place. Hope that you had a good weekend! Kai