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Dell gets meagre $240m package for North Carolina plant

How will it ever manage?

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It took more than old-fashioned southern hospitality to convince Dell to build a new computer manufacturing plant in North Carolina. In fact, it took about $240m in tax incentives and loads of wrangling to put Dell in the Tar Heel State.

Dell, an obvious candidate for copious amounts of government aid, will put up its third US plant in the Triad area of North Carolina. The plant, set to open in the fall of 2005, will employ close to 700 workers in its first year and then make room for up to 1,500 employees within five years. The main role of the new facility will be to supply East Coast businesses and consumers with Dell desktops.

Dell has had a tough time of late. Its consistent, double-digit revenue gains put it only billions ahead of hardware rivals that have barely managed to break even. With its fiscal predicament in mind, Dell put the screws on North Carolina legislators to offer it the sweetest plum available.

Last week, the North Carolina General Assembly cleared the way for a $242m incentive package for Dell. The deal gives Dell a tax credit for each computer or consumer device produced in the state. Dell will receive a $15 per unit credit in 2006 and just a $6.25 credit from 2007 to 2019.

Dell, however, is making serious sacrifices to earn this package. It must, for example, pay 50 per cent of the health care costs for its employees. Ouch! In addition, Dell can only lay off 40 per cent of the employees to still qualify for the tax incentives.

The average salary for a Dell worker at the new plant is expected to be about $28,000. That's about what Michael Dell makes while going to the bathroom in the morning.

It's awesome to see states bend over backwards to make sure they have low-paying jobs for years to come. Lord knows, a patriotic company like Dell needs the help. The North Carolina plant may leave Dell with more US workers than foreign staffers for the first time in a long while. ®

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