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IBM quietly cuts thousands of jobs
2009-01-27
SAN FRANCISCO - With the recession forcing tech companies to announce thousands of layoffs, IBM Corp. is joining the fray Ñ but not advertising it.The Armonk, N.Y.-based company has cut thousands of jobs over the past week, including positions in sales and the software and hardware divisions. IBM says the cuts are simply part of its ongoing efforts to watch costs, and the company won't release specific numbers, even as reports of firings stream in from IBM facilities across the country. Workers have reported layoffs in Tucson, Ariz.; San Jose, Calif.; Rochester, Minn.; Research Triangle Park, N.C.; East Fishkill, N.Y.; Austin, Texas; and Burlington, Vt. Meanwhile, other tech companies such as Intel Corp., Microsoft Corp., Texas Instruments Inc., Sprint Nextel Corp. and Google Inc. have all publicly revealed job cuts as part of their strategies for riding out the economic crisis. More than 20,000 jobs will be lost from those companies alone. One of IBM's biggest rivals Ñ Hewlett-Packard Co. Ñ is also laying people off. HP is shedding 24,600 jobs, nearly 8 percent of its 320,000-employee work force, as it digests the acquisition of Electronic Data Systems Corp. IBM says it doesn't have to reveal the number of jobs it is cutting, since the Securities and Exchange Commission requires companies to disclose only "material" events. And IBM considers its job cuts a regular part of the company's business model, since thousands of jobs are cut every year but are usually added back in other places. Because of that, IBM contends it doesn't have to break out its layoffs in regulatory filings unless it suddenly changes course and makes substantially more or fewer job cuts. That's why while IBM's head count keeps growing, topping 400,000 at the end of 2008, laid-off IBM workers have flooded online job boards with complaints about the company's stealth cuts. One estimate of IBM's recent cuts put the number at more than 4,000 jobs lost since IBM's fourth-quarter earnings announcement last week. Those earnings contained an unexpected surprise: IBM forecast at least $9.20 per share in profit in 2009. IBM shares are up more than 10 percent since then. To get the cost savings that will help spur the higher profits, IBM appears to have acted quickly. The estimate of at least 4,000 jobs cut comes from AllianceAtIBM, a union that is affiliated with the Communications Workers of America and represents a small number of IBM workers. The Associated Press reviewed one document sent to laid-off workers that identified some of the positions that were cut. Employees weren't identified by name, but positions and the workers' ages were listed. The document listed nearly 3,000 jobs. In Vermont, IBM remained tightlipped about layoffs at its Essex Junction facility, but state Labor Commissioner Patricia Moulton Powden said the total number would be less than 500. IBM recently employed 5,300 workers at the Essex Junction plant, down from 8,500 in 2001. Jim Gallo, 48, who said he worked in IBM software support for 27 years, was among those let go from that facility. Gallo, drinking a Grey Goose and ginger ale at nearby Lincoln Inn on Tuesday, said he hadn't told his four children yet. He said he has until Feb. 26 to find another job in IBM, but he put his chances at "slim to none." Gallo said he gets six months' pay as part of a severance package. "It's too bad they're not doing what they were doing before. They offered some sweet packages for people to jump out," he said. IBM's ongoing labor adjustments have led the company to add bodies in cheaper and higher-growth parts of the world, like India. In 2007, the last full year for which detailed employment numbers are available, 121,000 of IBM's 387,000 workers were in the U.S., down slightly from the year before. Meanwhile, staffing in India has jumped from just 9,000 workers in 2003 to 74,000 workers in 2007.
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