Gateway to Build New Custom Computer Plant in 2006

After slowly deteriorating and closing its Hampton plant in 2003 to make computers overseas, Gateway has decided to build a new East Coast custom computer manufacturing facility in 2006.

As it turns out, the company still owns its large manufacturing plant on Magruder Ave. in Hampton. Hampton Economic Development Director James Eason said his office has not heard from Gateway, which fought the city and state over returning incentive money it did not earn.

Gateway's plan to once again manufacture in the United States after closing its domestic plants is just the latest in a series of business model shifts the struggling company has undergone as it has lost out to bigger rivals over the last six years.

The irony of Gateway returning production to the United States will not be lost on its former Hampton workers. After reaching an employment peak of about 2,500 workers, Gateway slowly scaled back. The company finally laid off its last 450 workers in September 2003 and shifted computer manufacturing to Taiwan. Gateway's other domestic plants were all closed too.

Gateway decided it would compete by opening its own stores, but later closed all of them, including one in Newport News. The company stopped selling in international markets in 2001, but has since resumed that strategy. Gateway had decided it would try to become a consumer electronics giant in other areas like plasma televisions, but has retreated from that idea.

Gateway CEO Wayne Inouye said Gateway's "professional, education and government customers value predictability and localized services, and this new facility will significantly enhance our ability to meet their needs."

Inouye also cited quality and responsiveness as reasons to build the domestic plant. The company said it is negotiating with economic development officials in locations with good logistics and proximity to suppliers, and expects to announce a decision in the fourth quarter.

Gateway had three buildings in Hampton when it closed. It didn't own the two located on West Park Lane, which are now being leased for distribution space by Tokyo-based NYK Logistics.

Gateway's former 421,000-square-foot manufacturing building has been on the market since 2001 for $22.5 million. Since May, Eason has said the property is under contract, but hasn't closed.

"They had a contract with a group out of New York who was looking at it for investment purposes," said Eason.

If the city of Hampton were to try and attract Gateway again, both sides would need to forgive each other for long, contentious negotiations over re-paying millions of dollars in incentives. With pressure from the state, the parties came to an agreement right before the plant was closed.

(c)2005 Daily Press, Newport News, Va.