Mike Dell's Dirty Little Secret
August 2000

When Mike Dell's band of city slickers came here to Nashville, they brought a lot of tall tales and plenty of spin. They didn't bring cash. Instead, they passed the hat and praised the motherboard.

Last year, Dell came a-calling and offered to build a new assembly and support facility here. However, they made Nashville's city fathers promise all sorts of goodies. In return for starting wages of $24,000 to $36,000 a year, Dell would receive the following benefits:

* Free land worth millions of dollars
* No property taxes for 40 years
* A cash payment of $500 per year for each employee at the Dell sites
* Free infrastructure, meaning roads, graded lots, sewers, water, electric power, etc.

Even for a company that is run by Mike Dell and his $20-billion fortune, that was quite a list of gifts. In fact, it turned out to be an offer he could not refuse. Mr. Dell's staff made the following promises:

* 3,000 new jobs created within 5 years
* Dell's high-tech image would replace Nashville's backwoods reputation
* Dell would strong-arm various suppliers into moving their facilities to Nashville

Well, how have things turned out?

Considering that Nashville already had a low unemployment rate of 3 percent, Dell has found it surprisingly easy to find employees -- over 1600 of them, so far. As local businesses lose workers, these employees have largely been replaced by out-of-town commuters, which has caused increased traffic snarls. Meanwhile, small towns in the surrounding hills are dying, leaving abandoned buildings as the "critical mass" of customers and employees vanish. Amazingly, Dell has not been raked over the coals for offering wages far lower than what they had originally promised. Hundreds of PC assemblers slave for $7.50 an hour, with two hours of mandatory overtime per day. That comes to just $21,500 a year. (There is a $1 per hour differential for second shift). The extra worktime is what allows Dell to staff a plant 22 hours per day (leaving 2 hours for daily maintenance) with just two shifts instead of three. (This is the real meaning of New Economy.) Despite the grueling pace of the assembly-line work, Dell has not paid any price for its imposition of low-tech, low-wage, third-world assembly work under the guise of being a high-tech company.

Yes, there's the rub. Dell is a low-tech company. That is Mike Dell's dirty little secret.

Dell is in the assembly business, not the high-tech business. Sure, Mike Dell pretends he is running a high-tech company, and he is even trying to pretend he runs a Linux company. But Wall Street knows better. Over the last two months, Dell's stock has dropped from 55 to 35. This is what happens when people figure out that it is all a smokescreen. Dell hires people off of welfare rolls, off the unemployment line, and off of third-world assembly jobs at other companies. They even advertise on gospel radio stations, in order to target the poorest citizens of Nashville, according to the Nashville Tennessean newspaper. But they refuse to hire sharp, well-educated people who have computer experience, preferring to bring in desperate workers from non-computer fields who cannot find any other kind of work. Dell is afraid of bringing in experienced high-tech people, who will immediately realize that it's all a bunch of hocus-pocus.

When it comes to neurophobia -- fear of smart people -- I'm not talking about just assembly-line jobs, either. Instead of hiring the underemployed former scientists, programmers, and engineers from all over Nashville for white-collar positions, Dell actually selects the uneducated, the unemployable, and the inexperienced -- the very dregs of the labor market -- for such important salaried positions as QA inspector, production manager, and technical support. By providing carefully scripted software-driven telephone systems, for example, Dell insulates the customers from the support personnel, providing the illusion that the Dell employee is an eloquent, polite, well-educated techie instead of a low-wage leftover.

Sure, Nashville appears to benefit from the new employment opportunities, but the claims of a new high-tech Mecca for leading-edge companies have proved false. In return for creating thousands of third-world jobs, Nashville is preparing to pay over $800,000 cash to Dell as this year's jobs payoff, with higher amounts coming in future years. And after spending $5 million on infrastructure work for Dell, Nashville cannot afford to bus its best students to and from the city's eleven Magnet Schools.

It's pretty obvious that Dell's slickmeisters have taken these country boys real good.

Instead of trying to squeeze out new workers from Nashville's tight labor market, the best solution would have been for Dell to locate in Memphis. Not only does Memphis have a depressed inner-city that is desperate for assembly-line jobs, but Memphis is a regional hub for FedEx and is located on the major shipping routes via the Mississippi River and major rail and highway links. A huge abandoned cotton mill in midtown would be an ideal, centrally-located assembly facility, without the need for expensive infrastructure and construction work. Memphis is so poor, even the pawnshops, the banks, and McDonald's are going out of business inside "the loop". Dell's jobs would have been a welcome relief to the job-blighted conditions of midtown Memphis.

Of course, Dell didn't come to Memphis, because Memphis lacks the two things that every slick wheeler-dealer looks for when moving in for a scam: suckers and money. And Nashville has plenty of both.

Most recent revision: August 19, 2000
Copyright © 2000, Tom Nadeau
All Rights Reserved.

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