Dell (DELL), which has struggled as of late in keeping up with PC market leader Hewlett-Packard (HPQ) and a resurgent Acer, will be selling one of its factories in Poland to Taiwanese contract manufacturer Foxconn. Along with the sale, 1,600 Dell employees at that facility will become employees of Foxconn.This is a great first move, but it's not enough. Although CEO and company founder Michael Dell has religiously cut costs since his return nearly three years ago, the PC industry was moving too fast for Dell at a time that major change was needed as quickly as possible. One change that couldn't have come soon enough: outsourcing major manufacturing operations. Dell's own in-house, build-to-order operations were outgunned by both HP and Acer and the result is clear. Dell's main competitive advantage since the 1990s has vanished. It's now playing catch-up.
Dell needs to do more of this: to get out of the manufacturing business and offload all that overhead to Taiwanese outsource partners who have become more efficient and leaner at the same time. Although Dell still maintains its own factories across the globe, one by one those will be sold as Dell continues re-inventing itself internally to complete on a changed playing field from just three years ago. As the global economy picks itself up in 2010, expect some larger original design manufacturers (ODMs) to start picking off Dell's factories as Dell offloads them.
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