A speculative look at how the effects of Dell's cost trimming on the Austin economy echoes the outsourcing woes of other American cities.
If you walk into any side café or food shop, you hear the same chatter amongst the local townsfolk. It seems the biggest factory around, where all the highest paid workers till and toil, is still laying off employees more than a year after begrudgingly announcing the loss of thousands of jobs. Despite trimming the head count, the recession is sure to bring harder times. A lot of working people fear for their livelihoods.
You aren’t in Youngstown, Ohio. Nor are you in the midst the steel crisis of the 1970s. It is
Austin, Texas, home of the Longhorns, thousands of IT workers, and unbridled economic prosperity.
On June 1st of 2007, Dell, the computer manufacturer that has become synonymous with direct-to-customer PC sales, laid off more than 8,800 employees. The layoffs were an attempt to become more competitive with rival manufacturers. Few doubted it was a move towards outsourcing and taking advantage of the global economy. Though Dell has increased earnings and rebounded from its financial slump, the layoffs continue. Citing the need to create production facilities in “emerging markets” such as Brazil and India, Dell is making no qualms about following other manufacturing companies into the global abyss.
The company’s position within the Austin economy is what makes its transition notable. While Dell’s technical support and sales department have garnered a quasi-infamous reputation for outsourcing without remaining attentive to consumer culture or needs, these layoffs were a surprise throughout the Texas city. For years Dell stood as a beacon for the burgeoning metropolis, superseding Advanced Micro Devices (AMD) and Motorola as the big-daddy tech employer in a decidedly IT town. Support departments within the tech landscape are the bottom tier of technical work and their outsourcing was to be expected. When a slew of high-paying jobs were let go, the reverberation through a still prosperous city was felt by many. The bleeding has yet to stop, leaving many to question if other local manufacturers are sure to follow.
Though Austin remains a thriving city, one can't help but conjure visions of a Detroit-esque downfall waiting in the wings. The local economy has been surging for more than two decades. It remains to be seen if the city can survive the same global economic shift that has decimated grander cities in decades past.
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