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Dell opens controversial plant

Lawsuit challenging generous tax breaks didn't stop $100 million North Carolina production facility. Photo: Dell's new N.C. plant

A correction was made to this story. Read below for details.
Dell on Wednesday opened a controversial $100 million manufacturing plant in Winston-Salem, N.C., despite a lawsuit that claims a $300 million state incentive package was not legal.

The 750,000-square-foot facility, now the largest of Dell's three U.S. plants, drew fire from critics who are angered that North Carolina taxpayers are subsidizing the plant with tax credits and property tax abatements.

New Dell plant

The North Carolina General Assembly authorized a record $242 million in tax incentives for Dell in November 2004. This was followed by an additional $37.2 million in subsidies from Winston-Salem and Forsyth County. The incentives were provided to Dell as a motivation to open its plant in North Carolina rather than elsewhere.

Dell Chairman Michael Dell and North Carolina Governor Mike Easley were on hand for the ribbon-cutting ceremony, but neither mentioned the subsidies. Dell said he expects the plant to be able to assemble a computer every five seconds by the end of the year.

Gov. Easley said the Dell project will provide more than $700 million in net revenue to the state over 20 years.

Despite promises that the plant will create 1,500 local jobs, the North Carolina Institute for Constitutional Law filed the lawsuit on behalf of seven small business owners in Forsythe County. The nonprofit group, led by former North Carolina Supreme Court justice Bob Orr, charged that construction of the plant violated state law because officials spent public funds on a record-setting tax package to benefit an individual private business.

Orr said at the time that he and his group were not against Dell moving in, but that they questioned the methodology.

Dell, the state of North Carolina, the city and mayor of Winston-Salem, Forsyth County, and three nonprofit organizations are named in the suit. The North Carolina Institute for Constitutional Law is now awaiting a response from Dell, the state and the city to an amended complaint filed on Sept. 9, according to staff attorney Jeane Doran Brooks. A court date is pending.

A representative for Dell declined to comment on the litigation.

As a goodwill gesture, Dell said it had donated the first systems from the initial test production run to local science and technology museum SciWorks and to regional and local governments in the state.

The Winston-Salem facility--Dell's third in the United States--will produce Dell's OptiPlex and Dimension desktop computer products for eastern parts of the nation.

Dell's new plant currently has 300 employees, with 700 more expected to punch in by this time next year. Dell expects to have 1,500 workers at the plant within five years.

The No. 1 computer maker has opened new customer-contact distribution facilities in Oklahoma and Ohio and enhanced operations in Austin, Texas and Nashville, Tennessee, over the past year.

CNET's Michael Singer contributed to this report.

Correction: This story incorrectly reflected the status of tax credits Dell is expected to receive. Dell would get the credits over the next 15 years if it meets certain job creation quotas.