This week in NYS IBM news

On Monday, Governor Cuomo lauded IBM for keeping 3,100 jobs in the Hudson Valley and adding 500 in Buffalo. On Thursday, IBM carried out yet another round of lay-offs in the US, including Poughkeepsie and Endicott NY. No speeches from the Governor on that.

Endicott, the birthplace of IBM, is just across the Susquehanna from me. In a perverse twist on decimation, IBM now employs less than 10% of the people it once did in Endicott. Decimation would be knocking out every tenth person; instead, IBM has knocked out nine, (usually) keeping the tenth.

It’s happened over time. Sometimes, IBM sold a division to another company. The workers get transferred to the other company, but their employment there doesn’t tend to last very long because the new company wants the contracts, not the experienced workers whom they deem too expensive. Other times, IBM off-shored the jobs. It adds insult to injury to have your last weeks of work spent trying to train a new grad in India to do the job for which you spent years developing your skills. In recent years, it seems to be that corporate America’s answer to everything is to cut costs to drive up the earnings per share, regardless of what this does to your ability to deliver quality products on time. There are only so many cuts you can make before you run into difficulties with not having enough skilled people to complete the job, even though the remaining workers do lots of (unpaid) overtime.

In Endicott, the situation is exacerbated by the fact that IBM has not done much hiring here in the past 20+ years. Most of the cuts now involve workers with over thirty years of experience, who wind up being bridged into retirement. What goes with them are critical skills and knowledge base which haven’t been able to be transferred to younger workers because there aren’t many around.

IBM’s mantra for decades was THINK. The corporate leaders seem to have forgotten that. IBM made its name because it was loyal to its workers and they were loyal to IBM. IBM invested in their training and well-being and the employees innovated, obtained record number of patents, and made great products. IBM on a corporate level is making itself into just another company chasing some number for the next quarter and not thinking about the long-term future for themselves, their employees, the communities, and their customers. Will they remember their heritage before it is too late?

IBM

My relief over the last minute legislation from Congress last night is being tempered by two things. First is fear that the Republicans still have not learned their lesson that their job is to cooperate in governing, not obstruct it. I’m trying to develop hope that the budget conference committee will finally arrive at a more just and equitable budget by December, so that sequestration ends and other badly needed legislation can be debated and enacted, but I keep thinking about the Supercommittee that was supposed to have solved this because sequestration was too horrible a threat and didn’t.

The second is that, on a day when I expected the stock market would be trending up in relief at last night’s deal, IBM is tanking, down twelve points at the moment, after earnings fell short of expectations. IBM is very important in my area, which is its original birthplace. Virtually everyone who lives here has a connection to IBM, personally or through family, friends, and/or neighbors. For decades, employees here were loyal to the company and the company was loyal to them. That all changed when Gerstner became CEO. Instead of being valued assets to the company, employees became expenses, to be gotten rid of to cut costs or replaced by lower-wage workers overseas. In our area, workers retained their traditional loyalty to IBM longer than in other parts of the country, despite sale of divisions, offshoring, “resource actions” AKA terminations, buy-outs, the dissolution of the pension program, cuts in benefits, continual monkeying around with the salary plan, sale of IBM properties, and other indignities. Now, the last vestiges of that loyalty have crumbled, even here in IBM’s birthplace. Wall Street didn’t help, cheering every time more lay-offs were announced or more stock bought back. Instead of the traditional long view that IBM took, everything became about the next quarter and projecting a year ahead became long-range planning.

Today, the pigeons came home to roost.

Analysts are finally realizing how much of IBM’s gains have been from “financial engineering” rather than from the traditional strength of the company, its superior products, backed by the exceptional training, intelligence, and dedication of its committed workforce. The question is has IBM gone so far away from its traditional core values that it will not be able to regain its footing and continue as a driving technology force in the coming years. IBM workers here will continue to work hard for their customers, despite being overburdened with work as more and more workers are laid off with no reduction in the amount of work that needs to be accomplished. Will upper management finally notice?