Mike Dell's Dirty Little Secret
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
* 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,
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local businesses lose workers, these employees have largely been replaced by out-of-town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
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
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
It's pretty obvious that Dell's slickmeisters have taken these country boys real
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.