WINSTON-SALEM, NC – Dell Inc. (Nasdaq:DELL) is closing its computer manufacturing operation in Winston-Salem in January, North Carolina and will lay off all 905 workers at the facility, the company said Wednesday. Controversial state and local incentives worth $279 million helped lure the plant to North Carolina in 2004.

Dell said it will lay off about 600 workers in November. Employees will receive severance pay, incnetive payments, benefits continuation and out placement services, the company said.

A Dell official said the closing was due to the falling demand for the desktop computers the plant makes.

NC Gov. Bev Perdue said, “The Dell plant closure shows why we must continue to fight for economic recovery here in North Carolina – the effects of the global recession are far from over.”

She added that the state will continue “to pursue new business and job opportunities aggressively.”

Some critics of the original Dell incentive deal thought the state acted too aggressively to get Dell to build the desktop manufacturing plant in the state. Others have suggested the state would be wiser to invest in home-grown entrepreneurial ventures to create more lasting job growth.

Since many of the incentives offered Dell are linked to job creation, the company will not receive all the incentive funds.

Dell will repay at least some incentive money it received, such as the $15.5 million the city of Winston-Salem paid to the company.

The company originally said it would invest $100 million in the facility and create 1,500 jobs by 2020.

Bob Orr, who leads the North Carolina Institute for Constitutional Law and is a former NC Supreme Court Justice, challenged the Dell incentive package in court but lost. In a statement Orr said he was sorry to see the plant close but that it shows “the folly of the incentive game.”

Orr said, “No matter how big the incentive package, operational decisions by businesses headquartered out-of-state will be driven by corporate financial considerations and not by any sense of loyalty to the community being left behind.”

He added, “To the extent North Carolina state government and local governments feel compelled to invest in businesses through the use of incentives, those investments should be in smaller, local businesses and not in multi-billion dollar interstate and international businesses.”

The closing is the latest money-saving move by Dell. It retains U.S. facilities in Miami, FL, Nashville, TN, and Austin, Texas.

© 2009, TechJournal South. All rights reserved.