Feeds

Legal watchdog investigates Dell sweeteners

Incensed over incentives

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

A legal watchdog in North Carolina is challenging the state's corporate welfare sweeteners worth hundreds of millions of dollars to Dell.

The North Carolina Institute for Constitutional Law (NCICL) pledged to file a lawsuit against the computer maker and will hold a press conference tomorrow "to discuss litigation challenging the constitutionality of the economic subsidy packages granted to Dell by the State of North Carolina, the City of Winston-Salem, and Forsyth County." Such a lawsuit had been expected given the controversial nature of the relationship between Dell and North Carolina. State, city and county officials agreed to hand Dell some $280m in subsidies to bring 1,500 jobs and a new factory to the region.

Former state Supreme Court justice Robert Orr - now executive director of NCICL - will take the lead at tomorrow's conference outlining the charges against Dell. The central question appears to center around whether or not it's in North Carolina tax payers' best interests to help out Dell with such a lucrative deal.

"Every job for Dell is there for the purpose of making money for Dell," Orr told local paper the News & Record in a recent interview. "It's a real stretch to say that jobs are created for the public purpose."

Dells' incentive laden package includes tax credits for every computer and consumer device produced in the state. Tax payers will ensure that Dell receives a $15 per unit credit in 2006 and a $6.25 per unit credit from 2007 to 2019. To receive this perk, Dell must pay at least 50 per cent of the health care costs for its staff and not layoff more than 40 per cent of the workers. The average salary of a Dell worker at the new plant should be about $28,000.

In fiscal 2005, Dell saw its revenue surge 19 per cent to $49.2bn. Its goal is to reach $80bn in the next few years. Via ruthlessly efficient supply chain management, strong cost controls and above average marketing, Dell has managed to outpace its major hardware rivals in growth by a massive margin.

Dell has been one of the most aggressive embracers of offshoring operations to the third-world. In March, it reported that 55 per cent of its staff worked outside of the US and that its foreign staff was growing at quicker clip than the US side. India and El Salvador have arisen has two of Dell's favorite worker hideaways.

In January, an embarrassing set of documents exposed how hard North Carolina officials has to work to tempt Dell. For his effort, North Carolina Governor Mike Easley received an autographed copy of a book from Michael Dell. All citizens should be so lucky. ®

Related stories

Foreigners gain thousands of jobs on Dell US staff
Dell ships (almost) unleaded desktop
How Dell made North Carolina beg for business
Dell gets meagre $240m package for North Carolina plant

Boost IT visibility and business value

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.