Dell Hell, NC Version

**Update** If you'd like to see a really good discussion about the Dell situation then head over to Cone's blog and check out the comments.  No shouting and lots of thought behind the comments.  Really good stuff. 

A couple of years back Jeff Jarvis, author of What Would Google Do?, blogged about a very negative experience he had with Dell and he dubbed it Dell Hell.  After yesterday's news that Dell is closing down their desktop plant here in Winston-Salem I'd say we're having our own version of Dell Hell.

Yesterday I wrote that Dell's move couldn't possibly have been a surprise to anyone who's been awake the last 18 months.  Ed Cone quoted me on his blog and since at least one of his commenters suggested that it is a surprise to a lot of people I felt compelled to explain myself in the comments:

The reason I wrote that it shouldn't be a surprise was really an observation that given the overall economic environment of the last 18 months, the fact that the plant was built to produce desktops, that the market has been moving strongly towards laptops and Dell didn't seem to be interested in re-tooling the plant to produce laptops and that Dell has been reducing it's workforce at the plant, then it shouldn't really be seen as very surprising that this has happened. Abrupt? Sure, but these things tend to be.

As for Winston-Salem getting back its incentive money I heard an interview on WXII this morning in which the Dell rep said that the incentives were based on job creation and the Dell had met those conditions, so maybe Dell is planning on fighting the return of those incentive dollars.

In addition to my points in that comment I'd also like to put forward the following thoughts:

  • I remain convinced that subsidies stink. I also remain convinced that if subsidies are a part of the economic development competition between states then state and local officials are pretty much forced to use them. 
  • Hopefully Mayor Joines is right when he says "The city, the county and the community will get reimbursed every dollar we put into the project." What worries me is that Dell might go to court to fight the reimbursements. Even if Dell is wrong they probably have less to lose in taking the issue to court and working for a settlement than they do in ponying up the reimbursements without a fight.
  • Even if we get our money back we still have over 900 people being added to the unemployment rolls by January. That's a heck of a hit for an already overburdened unemployment system, not to mention a potentially chatastrophic impact on the employees.
  • Some leaders have pointed out that the silver lining here is that we have a relatively new manufacturing facility that can now be marketed to another company. I guess that's a good long term view, but short term I wouldn't hold my breath. From the Fed's September 9 Beige Book report for the fifth district, which includes North Carolina:

    "Vacancy rates climbed higher across office, industrial, and retail space in most District markets, while the amount of available office sublease space remained fairly steady since our last report. On the sales side, very little activity was reported in recent weeks."

    Maybe we can re-purpose it as a fabulous new indoor soccer park.

  • I've read some comments on other blogs and news stories that essentially say, "Hindsight is 20/20" or "It's easy to criticize the deal now, but no one could have known this was going to happen at the time the deal was struck." Those folks are right, and at this point I don't think it's appropriate to criticize the folks who put the deal together. I truly believe they were doing what they thought was best for the community and given that incentives are a tool that most state and local governments are using to attract business it's hard to criticize them for trying to compete. (We could argue that the price tag was too high, but that horse is out of the barn).  What we should be focusing on is how we protect ourselves in the future. Winston-Salem is in the unfortunate position of having two deals (the downtown baseball stadium and Dell) go squirrelly on them in very short order and I think it's clear that we have to go into these deals with eyes wide open and assume that the worst can happen.
  • Any which way you slice it, this situation stinks.

links for 2009-10-08

  • "Our experience over the years has shown us that the vast majority of managers and leaders in Fortune 1000 companies have deficiencies in their basic financial knowledge. We spend most of our time teaching managers and leaders in corporate America how to read their own financial statements, understand key financial measures, and use financial tools to understand the data."

About Those Incentives

News that cannot possibly be a surprise to anyone who's been conscious for the last 18 months:

Dell Inc. announced today that it will close its plant in Forsyth County by the end of January, cutting 905 jobs overall, including 600 in November.

Just in time for the holidays.  Nice.

links for 2009-10-07

  • "A generation ago, Warren says, basics (housing costs, health insurance, transportation, education, and taxes) accounted for fifty-four per cent of the average family’s income. Today, they account for seventy-five per cent of it. Now, some of those costs arguably do reflect a lack of frugality—homes are more expensive in part because they’re so much bigger. But the fact that more than fifteen per cent of personal consumption expenditures now go to medical care, when in 1930 only three per cent of personal consumption did, isn’t a reflection of frivolity, and that’s not going to change any time soon."
    (tags: economy)
  • Getting smart energy management for your house without having to wait for your utility to install it. Interesting.
    (tags: energy google)
  • Health care reform is vitally important to our country, but I fear that whatever reform we get will not go nearly far enough to truly help us or our economy. One problem is we have people in prominent positions saying crap like what a leader in the Southern Baptist Convention said:
    "A top Southern Baptist official has accused President Barack Obama and congressional Democratic leaders of attempting to do 'precisely what the Nazis did.'" and "'The Nazis said people should be euthanized when they had lives unworthy of life,' Land argued. 'Well, at the very least Dr. Emanuel, [House Speaker] Nancy Pelosi, [Sen.] Max Baucus and President Obama are saying that some people have lives less worthy of life. And the older you are, the sicker you are, the less valuable your life is and the more likely they want to terminate your care.'"

    Look, I have no problem with anyone disagreeing with the Democrats' reform proposals, but comparing the Democrats to Nazis is beyond the pale.

  • My favorite part of Rex Hammock's post is this bit: "Over the weekend, PaidContent.org’s Staci Kramer passed along a joke via Twitter she heard at the Online News Association awards:
    How does a journalist count?
    “One, two, Trend!”"

  • From the story: "U.S. Rep. Virginia Foxx, a Republican from Banner Elk, is warning that Democrats will try to sneak health care reform through Congress.

    It's the political equivalent of slipping a 747 through a toll booth, but Foxx told 1240 3WC, "Hometown Christian Radio," in Wilkesboro that she thinks Democrats will put health care reform inside another piece of legislation that lawmakers would find difficult to oppose."

links for 2009-10-06

  • Stealing is bad. Stealing from a charity is really bad.
  • Esbee linked to this at Life in Forsyth. A truly awesome obit.
  • When I was at George Mason U back in the 80s I was a member of a petitioning local chapter of Sigma Chi and we spent a lot of time at the house of George Washington U's Sigma Chi chapter (Epsilon) participating in all kinds of clean fun like mantle diving (don't ask). I didn't realize they'd gotten into a bunch of trouble and lost their house about 10 years, but it looks like they've made a pretty full recovery with the dedication of their new house.
    (tags: school)

Rethinking GDP

The quote of the day comes from Dennis Leyden's blog on the subject of macroeconomics: "As Stiglitz says, 'If you don’t measure the right thing, you don’t do the right thing.'” He then links toan article in the NY Times about how we measure our economy.  From that article comes this:

In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.

About damn time.

links for 2009-10-05

  • In this particular case I can't blame the folks in Charlotte for not wanting to be like us here in Camel City. Looks like they're getting ready to build a new stadium for the AAA team and the goings-on with Winston-Salem's downtown stadium has some people in Charlotte asking questions about their projected stadium costs.
  • I used to play in a regular basement poker tourney in VA that usually had about 35 guys at $100 each. I always figured it would be bad news if some kids heard about it and decided robbing us would be a good way to get some easy cash. Never happened, but this story reminded me of those thoughts.
  • "The News & Observer reported that Cooper's BBQ was about to close Saturday when the band's private jet services coordinator called, asking for enough food for 25 people: barbecue, pork rinds, five fried chickens, pig skins, ribs, cole slaw, hush puppies…

    The Holts prepared the food for the 10:50 p.m. delivery. Debbie Holt and her 14-year-old daughter, Ashley, delivered the food to U2's private jet at Raleigh-Durham International Airport, receiving $300 cash."

  • "Mr. Eitel, former colleagues said, really wanted to bring some sizzle to the ho-hum mattress business. He was paid millions of dollars to run Simmons for several private equity investment companies, first Fenway, then Thomas H. Lee Partners. Like those firms, he fared well, even though Simmons plans to file for bankruptcy…

    But while Simmons now faces an uncertain future, Mr. Eitel was a winner in The Great Game of Life. As chief executive, he enjoyed country club memberships, personal use of the corporate jet and thousands of dollars a year in free mattresses. Before stepping down last fall, he earned more than $40 million in compensation, bonuses and perks, according to an analysis by Brian Foley, an independent compensation consultant in White Plains. He earned the bulk of his money when Simmons was sold to Thomas H. Lee Partners."

    h/t to Cone for the link.

  • h/t to Lex for this find. I think half of these pics were taken at my house.

    (tags: diy)

  • "It's a bit tricky to estimate how much money the Sweet Seeds For Haiti has raised to date because you can earn FV cash and you can buy FV cash. When purchased, 25 FV cash costs $5. So if everyone bought the FV cash that has been used to buy the roughly 100k of sweet seeds to date, then $500k will have been raised, $250k of it going to charitable organizations in Haiti."

  • "The long tail is real, but sometimes the longest parts reach underwater. When there's enough choices, it means that some things will never get picked."

  • After reading this I don't think I'll be eating a burger any time soon. Found the link via Cone who had a pic of the cover of Upton Sinclair's book "The Jungle" on the page and I recall feeling much the same way when I read "The Jungle." Ugh.

    (tags: food health)

links for 2009-10-05

  • In this particular case I can't blame the folks in Charlotte for not wanting to be like us here in Camel City. Looks like they're getting ready to build a new stadium for the AAA team and the goings-on with Winston-Salem's downtown stadium has some people in Charlotte asking questions about their projected stadium costs.
  • I used to play in a regular basement poker tourney in VA that usually had about 35 guys at $100 each. I always figured it would be bad news if some kids heard about it and decided robbing us would be a good way to get some easy cash. Never happened, but this story reminded me of those thoughts.
  • "The News & Observer reported that Cooper's BBQ was about to close Saturday when the band's private jet services coordinator called, asking for enough food for 25 people: barbecue, pork rinds, five fried chickens, pig skins, ribs, cole slaw, hush puppies…

    The Holts prepared the food for the 10:50 p.m. delivery. Debbie Holt and her 14-year-old daughter, Ashley, delivered the food to U2's private jet at Raleigh-Durham International Airport, receiving $300 cash."

  • "Mr. Eitel, former colleagues said, really wanted to bring some sizzle to the ho-hum mattress business. He was paid millions of dollars to run Simmons for several private equity investment companies, first Fenway, then Thomas H. Lee Partners. Like those firms, he fared well, even though Simmons plans to file for bankruptcy…

    But while Simmons now faces an uncertain future, Mr. Eitel was a winner in The Great Game of Life. As chief executive, he enjoyed country club memberships, personal use of the corporate jet and thousands of dollars a year in free mattresses. Before stepping down last fall, he earned more than $40 million in compensation, bonuses and perks, according to an analysis by Brian Foley, an independent compensation consultant in White Plains. He earned the bulk of his money when Simmons was sold to Thomas H. Lee Partners."

    h/t to Cone for the link.

  • h/t to Lex for this find. I think half of these pics were taken at my house.

    (tags: diy)

  • "It's a bit tricky to estimate how much money the Sweet Seeds For Haiti has raised to date because you can earn FV cash and you can buy FV cash. When purchased, 25 FV cash costs $5. So if everyone bought the FV cash that has been used to buy the roughly 100k of sweet seeds to date, then $500k will have been raised, $250k of it going to charitable organizations in Haiti."

  • "The long tail is real, but sometimes the longest parts reach underwater. When there's enough choices, it means that some things will never get picked."

  • After reading this I don't think I'll be eating a burger any time soon. Found the link via Cone who had a pic of the cover of Upton Sinclair's book "The Jungle" on the page and I recall feeling much the same way when I read "The Jungle." Ugh.

    (tags: food health)