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Stimulus IBM Style: Take the Jack, Ship Out the Back
February 4, 2009: On January 28th, IBM CEO Sam Palmisano was in the East Room at the White House taking part in the stimulus show. Standing shoulder to shoulder with President Obama and an all-star cast of CEOs representing entities such as Xerox, Kodak, Google, Motorola, and Applied Materials. (Applied is a supplier to the semiconductor industry.) All agreed that a massive taxpayer investment in tech infrastructure projects is needed to save workers from unemployment. President Obama invoked “those who live in fear that their job is next” and Sam Palmisano gave a stirring speech about the need to “reignite growth in our country” and “undertake projects that will actually create jobs”. Word has it Palmisano's performance may shoehorn him into a late Oscar nomination for supporting actor. Roll over Heath Ledger, a bigger joker could best you.

As Palmisano waxed pious in the White House, heat-seeking a $30 billion stimulus of projects that would benefit IBM, his company was laying off thousands of workers. Calling the firings a “resource action”. Doing it on the down-low at facilities in several states. Such tactics make the exact number of fired employees difficult to ascertain. IBM has a history of being secretive about job losses. Federal law requires companies to report mass layoffs (also called “material events”) to the Securities and Exchange Commision (SEC) but IBM claims that a few hundred here and a few hundred there are all in a day's non-work. And given the SEC's record of oversight on Wall Street, it's easy to believe they might miss any number of material events. Layoffs are being more reliably tracked by Alliance@IBM, an affiliate of the Communications Workers of America. Alliance@IBM has been trying to unionize Big Blue for almost ten years. A tough job, but somebody has to do it.

In this recent round of firings close to 5000 workers have lost their jobs at IBM facilities in New York, North Carolina, Minnesota, and Vermont. Laid off employees plus those “who live in fear that their job is next” have been burning up the comments section at the Alliance@IBM website. Further layoffs are said to be looming. Posters who are still employed use pseudonyms. Some even post from libraries, out of concern their IP address will be traced. IBM has a rep for retaliation and for being rabidly anti-union.

That IBM should expect a generous slab of stimulus is no surprise. Federal, state, county, and municipal governments have been funneling corporate welfare to IBM for decades. Think tax breaks, public utility deals, real estate shuffles, low interest loans, etc. The rationale has been development and job creation-- even as IBM was pulling out of the USA in favor of cheap global labor. Not that they've disappeared completely; in areas where IBM once employed thousands the threat of losing the last few hundred jobs has a powerful effect on pols who pull purse strings. And IBM has even expanded in some states-- while simultaneously reducing overall employment. The primary focus of IBM development and job creation is offshore, not stateside. Nowhere has that fact been made more clear than in Endicott, New York.

Endicott was the birthplace of IBM. Where IBM flourished and grew into an industry giant. Endicott was a true blue company town and IBM was seen as a benign, if somewhat authoritarian, lifetime employer. IBM encouraged (almost demanded) employees to trust the company's commitment to the social contract. By 1980, 14,000 people worked at the Endicott IBM facility. By 2005, IBM had reduced that number to 1600. The town was devastated. Economically and socially. Meanwhile, the number of IBM employees in India rose from 9,000 in 2003 to 74,000 by 2007.

If IBM could jettison its own hometown why should taxpayers believe the company gives a fig about the need to “reignite growth” in the country at large? Cynics ask if the real deal is the need to reignite IBM. They also ask where profits from stimulus projects will be invested.

No doubt CEO Sam Palmisano would answer “here”.

Palmisano claims that a $30 billion stimulus injection would enable IBM to do what supporters of global sourcing (aka offshoring) declare to be impossible. Create large numbers of tech jobs in a country where the workers are just too darn greedy and lack high-level skills. And oh yeah-- where government doesn't do enough to help business.

Big Blue Slumdogs

Whether IBM gets stimulated or not, its recently laid off workers need not despair. They can sign up for IBM's “Project Match” and do a tour of duty in the Big Blue Foreign Legion. According to an IBM internal memo Project Match is for “satisfactory performers who have been notified of separation from IBM US or Canada”. IBM will provide immigration assistance; possible outposts include India, Nigeria, China, Turkey, Mexico, and the United Arab Emirates. Only folks excited at “the prospect of contributing to a developing economy” and “potentially taking on different job responsibilities” need apply. And applicants must be “willing to work on local terms and conditions”.

Back in the 1950's, comic and jazzman Jimmy Durante recorded “Dollar A Year Man”. The song's refrain goes: “I'll work for the government for a dollar a year, but I have to get paid in advance”. Substitute IBM for government, make it a dollar a day, and you get the picture of what those terms and conditions could be. However, the Project Match memo makes no promise about being paid in advance. Better wait before taking out a mortgage on a McHovel or making a down-payment on a pallet. Then there are the “different job responsibilities”. Could this mean hauling CEO Sam Palmisano and other IBM mandarins around in a rickshaw? If so, would IBM provide the rickshaw gratis? Or would employees foot the cost of leasing?

Finally, after serving for a set period (say 10 or 20 years) in a developing economy under local terms and conditions, will Project Match vets be rewarded with an H-1B visa so they can re-enter the USA as foreign guest workers for IBM? As H-1B workers the vets would make less than the skilled employees they replace. But they'd enjoy their jobs more. Anything beats hauling cans through a traffic jam.

Taxpayers shout “I hear ya!”

In 2007, Sam Palmisano made $24.35 million; $5.8 million of which was in bonuses. The better IBM does, the more Sam makes. The song “Dollar a Year Man” takes its title from the manufacturers, bankers, and other patriotic professionals who volunteered to serve in the federal government for a dollar a year during World War One. Imagine how much more credible Sam would seem when seeking stimulus if he offered to do likewise! Also imagine how much more compelling IBM's job creation fever would be if they hadn't been shipping out the back and keeping mass layoffs secret.

Carola Von Hoffmannstahl-Solomonoff

Sources include but are not limited to:

IBM Still Mired in Layoff Spiral, Darryl K. Taft, eWeek/IT Infrastructure, 02/03/09

Update: Applied Materials Warns Of Weaker Results As Sector Swoons, Dow Jones Newswires, 02/02/09

As IBM layoffs mount, company eyes government billions, Christine Young, Times Herald-Record, 01/30/09

President Decries 'Shameful' Bonuses For Wall Street CEOs, Michael D. Shear, Washington Post, 01/30/09

IBM workers group seeks changes, Dan McLean, Burlington Free Press, 01/29/09

Obama says workers 'need help right now', USA Today, 01/28/09

IBM layoffs now 4,200-- may go higher, Patrick Thibodeau, Computer World, 01/27/09

IBM Silent About Layoffs, Jeff Kiger, Post-Bulletin, Rochester MN, 01/23/09

I.B.M. Has Tech Answer for Woes of Economy, Steve Lohr, New York Times, 11/06/08

Cutting Here, but Hiring Over There, Steve Lohr, New York Times, 06/24/05

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Copyright (c) 2009 by Carola Von Hoffmannstahl-Solomonoff. This material may be freely distributed subject to the terms and conditions set forth in the Open Publication License. This license relieves the author of any liability or implication of warranty, grants others permission to use the Content in whole or in part, and insures that the original author will be properly credited when Content is used. It also grants others permission to modify and redistribute the Content if they clearly mark what changes have been made, when they were made, and who made them. Finally, the license insures that if someone else bases a work on this Content, that the resultant work will be made available under the Open Publication License as well.


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