In a dramatic move to reduce its expenses and expand its distribution, Dell (News - Alert) is considering selling its factories in the United States and abroad.

 

If the company sells its factories, Dell would get its computer made by contract manufacturers. Dell’s factories in the U.S. include facilities in Texas, Tennessee, North Carolina and Florida. International factories are located in Ireland, India, China, Brazil, Malaysia and Poland.

 

Dell has been approaching contract computer manufacturers in recent months, “with offers to sell its plants,” according to the Wall Street Journal. One unnamed source told the newspaper that the Round Rock, Texas-based company expects to sell most, if not all, of its factories, “within the next 18 months.”

 

Unsold factories would simply close and, the Journal reported, that ex-Dell factories could be first in line for contracts to continue making machines for Dell.

 

For more than a year, Dell has been trying to find ways to reduce its expenses and expand distribution. The reported move toward additional cost-cutting comes as Dell struggles to regain its financial footing and competitive position. Last week, it reported quarterly profits that led to shares dropping more than 18 percent.

 

This is an indication of how seriously this cost-cutting has become, as Dell once prided itself on highly-efficient, build-on-demand PC manufacturing tailored to customer requirements. In ads and publicity, Dell touted that a customer’s computer was built after the order had been placed.

 

By not having to deal with retail channels, Dell was also able to maximize channel efficiency. But, for laptops and other computer products, a number of customers prefer to buy in a brick-and-mortar store, where they can see the product, talk to a real person, and return it if there is a problem. As a result, Dell is now offering products through such retailers as Best Buy.

 

As the market for large numbers of desktop computers sold to enterprise customers has begun to change to laptops sold through retail channels, Dell’s system of building PCs and selling them online has had to be retooled. Key competitor Hewlett-Packard (News - Alert), for instance, reportedly builds more than half of its laptops in contract factories owned by others. HP has eclipsed Dell as the number-one maker of computers on the planet.

 

Dell currently has some of its laptops partially built in Asian factories, and then the unit is completed in a Dell factory. To reduce this two-step process, the company has begun to have some of its laptops – the fastest-growing computer product –  built entirely in contract factories.

Eve Sullivan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Eve's articles, please visit her columnist page.

Edited by Eve Sullivan