Stress levels rise at IBM as word of job cuts swirls

Jan. 23 layoffs would skirt new state law
By Christine Young
Times Herald-Record
January 08, 2009

If reports of massive layoffs at IBM later this month turn out to be true, Big Blue will narrowly dodge a new law requiring three months' notice to the state and workers who will lose their jobs.

On Feb. 1, the state Worker Adjustment and Retraining Notification Act goes into effect, requiring private employers with 50 or more workers to give their employees and the state Department of Labor at least 90 days' notice before a plant closing or mass layoff. Businesses that fail to file the WARN notice face penalties of up to $500 per violation day and must pay back pay and benefits to each employee.

"We do not comment on rumors or speculation," IBM spokesman Fred McNeese said in response to questions about mass layoffs employees say are scheduled to be announced Jan. 23.

Under the radar

The law, which Gov. David Paterson signed in September, is more stringent than the federal WARN Act, which requires only 60 days' notice to workers and the state; the federal law also carries weaker penalties.

With Jan. 23 only weeks away, the state Department of Labor has not heard a peep from IBM.

"If it is coming out, they're keeping a big hush on it," labor analyst Johny Nelson said.

But workers at IBM are on pins and needles, with many posting messages on employee Web sites that the ax is about to fall.

"The stress level has gone through the roof," said Lee Conrad, national coordinator of Alliance@IBM, a group trying to unionize IBM workers. "People are left to guess because IBM is not forthcoming."

Big Blue filed federal WARN notices during massive layoffs in the early 1990s, Conrad said, but since then has managed to avoid it.

"They tend to do cuts under 500, so they don't reach the radar screen," he said. "They have many locations, so it diffuses the numbers."

Federal law defines a mass layoff as 500 workers at any one facility; the new state law, however, lowers that per-site threshold to 250.

Solid financial footing

Despite Big Blue's stellar third-quarter results — net earnings of $2.8 billion — announced in October, analysts say it is not immune to the credit crunch, making job losses inevitable and the rumors likely to be true.

"Where there's smoke, there's fire," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills. "IBM will likely make some cuts. We seem to be seeing it across corporate America."

IBM was to receive $90 million from the state's current budget to expand its East Fishkill chip-making facility and for research at the College of Nanoscale Science at the University at Albany, an investment that was supposed to create 325 jobs. The deal was signed by Gov. Paterson with a promise from IBM that it would not cut jobs in New York in 2008. That clause has since expired.

No return on investment

IBM is also slated to receive $50 million from the 2009-2010 budget toward an upstate packaging plant that the company has said would create 675 jobs.

In 2007, IBM employed about 20,000 workers throughout the Hudson Valley, including 11,0000 in Poughkeepsie and East Fishkill, but recent job postings indicate little or no growth in those numbers.

Of 959 full-time IBM positions posted during a recent 30-day period, only 1 percent were in New York. Two were in Poughkeepsie, and not a single job was posted in East Fishkill.

"Are these jobs being cut and the work shifted offshore?" Conrad asked. "That's the consensus among the employees, that the jobs are going to India, China and Brazil."

They might be right. Of the 959 IBM job postings, only 8 percent were in this country.

cyoung@th-record.com