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IBM Has Laid Off Over 3,000 Workers; Union Reacts

By - Source: Tom's Guide US | B 26 comments

IBM labor union Alliance@IBM reports that the company has laid off over 3000 U.S. and Canadian IBM employees since June 12. The union claims that none of the IBM executives have sent out messages of regret or explanation to workers terminated in their divisions. Thus, these workers were given a notification that they were no longer needed, and shown the door.

"The leadership only cares about money," the union states. "In the drive to reach the goals of Roadmap/Roadkill 2015 CEO Rometty has neglected and disrespected IBM's greatest asset--its employees."

The union's Web site reports that the Software Group Marketing department has received the most cuts, letting 222 employees go. The company's Systems and Technology Group (STG) Semiconductor Research and Development division comes in second with 165 job cuts, followed by Software Group Information Management (137), Software Group Industry Solutions (126) and GBS AMS IBM Global Account (123).

Five other divisions have seen job just over 100 including STG Storage Systems Development (121), GPS Solutions and Delivery (116), Software Group Collaboration (115), STG Advanced Microelectronics Solutions (114) and STG Electronic Design Automation (106). Several divisions that are reaching the 100 threshold include Software Group Tivoli (98), STG Server & Storage Engineering System Test (97) and SWG Application and Integration Middleware (86).

IBM CFO Mark Loughridge hinted to the layoffs in April after reporting a miss on revenue and profit in 1Q13. "Given our first quarter performance, we now expect to take the bulk of our workforce rebalancing actions for the year in the second quarter, as opposed to last year when it was distributed across the quarters," he said. "Now, remember last year we had about $800 million in workforce rebalancing charges spread across the year. This year we expect the workforce rebalancing charges to be closer to $1 billion and concentrated in the second quarter."

An analyst told Bloomberg last month that the $1 billion figure likely amounts to 6,000 to 8,000 job cuts globally. The labor union currently reports that 128 jobs have been cut in Denmark, 250 in Italy, and 700 in Germany. Around 500 jobs are expected to be cut in China and up to 1,000 in Australia.

"IBM promoted great leadership in the last decades," one former IBM worker told the union. "The senior leadership team obviously did not attend these leadership classes. Instead they attended the class 'how to become a perfect coward'."

Ouch.

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  • 4 Hide
    LordConrad , July 2, 2013 8:20 PM
    "The leadership only cares about money," the union states.

    Pot.. Kettle.. Black
  • 5 Hide
    Yuka , July 2, 2013 8:28 PM
    "The leadership only cares about money"

    Shocking... A company that cares only about money... Shocking I tell you!

    Cheers!
  • 3 Hide
    wildkitten , July 2, 2013 8:33 PM
    The job of any business is to care about money. Why is any business started? To make money. No one ever started a business with the desire to lose money.

    Business's do not exist to provide jobs. They exist to make a profit. If that hurts someone's feelings, welcome to life. Without money, there is no business, there is no job.

    And let's also be honest, the only thing the employee cares about is money. If they don't, why not volunteer to work for IBM for free so you can say you're still employed.
  • Display all 26 comments.
  • -1 Hide
    stingstang , July 2, 2013 8:49 PM
    How the hell do you need more than 220 people to market your products? I can't even remember the last time I saw an ad for IBM..
  • -1 Hide
    Martell1977 , July 2, 2013 9:08 PM
    Who wants to bet this union pushed its members to vote for obama?
    Well, welcome to obama's economy. Everything is going up: taxes, food, gas, electric, clothes....everything. When people have to pay more to get less, non-essential products don't get bought, when companies pay higher costs, they buy less product. When this all happens if you are not working for a company that provides an essential product, sales drop, jobs get cut, fewer union members, lower dues income. But I guarantee you the union itself wont have any layoffs and the union's execs wont be getting any pay cuts.
    Good going, shot yourselves in the foot.
  • -4 Hide
    thor220 , July 2, 2013 9:28 PM
    Using the "businesses only exist to make money" argument is flawed and yet very common. Tell me how is it that businesses start? By providing a product or service that is better than the competition. Therefore it's safe to say that businesses exist to do just that and the result is money. When a business puts profits first it only hurts itself. Case in point, EA.

    I also believe that the union has a right to complain. These employees were not provided enough notice, especially considering how hard it is to get into IBM and the length of their training program.

    @Martell
    Generalizing a mass firing isn't concurrent with any one president, while placing blame on the incumbent one may seem like the lazy way out. In reality, mass firing could occur during any presidency as it's an unsubstantiated circumstance. What you could say is that as a result of the poor economic conditions in the united states, IBM has to lay off some of it's workforce. Although according to the article, other countries have had a more substantial hit in workforce. In fact that tid bit is a hit against your theory that obama's administration is bad for business.
  • 1 Hide
    Martell1977 , July 2, 2013 9:47 PM
    Thor, please explain how raising taxes, increasing regulation and passing bills that increase costs of living can be good for business. If people have less money to spend or spend more for less, demand drops (for non-essentials first) and business' cut back.

    Yes, this can happen under any president, but the current one has been increasingly destructive. No president is anywhere near perfect, but you would hope that when evidence that their policies are damaging, that they would reverse course. (i.e. who can afford a new computer when their health insurance premiums have risen by over 200%)
  • 2 Hide
    slofat1 , July 2, 2013 9:59 PM
    at last a company that knows what they are in business to do.. I paid dues into a union and its a scam run by crocks trying to steal from employees. I must just buy me some IBM stock.
  • -1 Hide
    shiitaki , July 2, 2013 10:12 PM
    Business exists to make money. The fact is Money makes the world go around, it is what enables the trade of goods and serves. Money replaced bartering, it's a stand in for work. There are 2 reasons for laying people off, these people simply were not needed, which means management should have layed terminated them when they were no longer needed. The second is a reactionary move to reduce short term losses. Employees are what perform the work, generating the value to sell to customers. Cutting staff that provides that work will reduce your supply of product, and hurt the future bottom line. Management is paid by certain benchmarks, and they wan't their bonus like everyone else.

    Unions were pivotal in forming the large middleclass America used to have, and the middle-class has fallen on hard times, because unions have been under attack since Reagan. It's a cycle. Fewer good paying jobs, less demand, less demand, fewer jobs. It's a race to the bottom, the Wal Mart effect.
  • 2 Hide
    Afrospinach , July 2, 2013 10:22 PM
    Stingstang, IBM probably does a lot more business to business selling than it does direct to the consumer which is why you won't see a lot of ads around the place like other companies.
  • 3 Hide
    wildkitten , July 2, 2013 10:30 PM
    @ Thor

    Yes, business do provide products. But what is the underlying reason to sell a product? To make money. No one starts a business with the idea of "I want to sell something and money is secondary". No, making money is the REASON they want to sell a product and you make more money selling a product people want and fewer businesses provide.
  • -1 Hide
    thor220 , July 3, 2013 1:09 AM
    @Martel
    While obama's other policies may be unfriendly to business, that wasn't the point of my post. I was trying to convey the fact that not only do obama's actions have an effect but a multitude of other variable must be counted as well. For example, many policies were in place before obama took office and still play an active roll in the economy. World wide conditions haven't been too generous either. Now I can't say I'm an obama support with all the crap that has gone down but I will say that blaming just him isn't the answer. At least a portion of the blame should be on the house of representatives. Over obama's term, this house has passed the least amount of laws in american history.

    @shiitaki
    Actually goods and services make the money go round. You can interchange the dollar for any other currency or go back to bartering but in the end it's worthless without something to spend it on. Here is a good example of why this is so. When people start a company, they are passionate about a product/service. They want to enhance everyones lives by providing something that currently does not exist or make it better. It's true they need money but money is just the vehicle to achieve that goal. In reality its people and ideas that make the world run.

    I would also have to agree with you on unions. Reagan was an asshat puppet and something needs to be done. DId you know that rich tax was 90% pre-reagan era? Apparently that kind of tax discouraged companies from paying top execs exuberant amounts and give employees are larger cut.
  • -1 Hide
    jungleboogiemonster , July 3, 2013 4:26 AM
    Actions like this may make it harder for IBM to recruit qualified employees in the future. Who would you rather work for? Google, who is known to treat employees well, or IBM, who makes up for profit misses by cutting its workforce in the manner it did. And from an investor standpoint I have to question the tactic of cutting jobs. IBM did the same last year and it didn't solve their profit problem, so, why are they continuing on the same course? Perhaps the issues are strategic and IBM is on the wrong course?
  • 1 Hide
    dgingeri , July 3, 2013 4:59 AM
    "IBM promoted great leadership in the last decades,"

    Not in my experiences there. My experiences with IBM have always been horrible. I hate that company. Back in 2003, I worked for them in their government call center for 3 months. In those three months, they reduced the pay of all contractors five times. I started at $11/hour and ended up quitting when it got below $9 per hour. $9 per hour for computer helpdesk work is just not worth the stress. Any decent computer support tech is worth $15, and they shouldn't accept less. When paying $9 per hour, the company gets $9 per hour worth of work. IBM managers certainly did not understand this, at all. They were the dumbest management I have ever worked with.
  • 0 Hide
    sulanis , July 3, 2013 5:32 AM
    Thats all anyone cares about is money. Money drives this world. For example, where i live, they want to make a new plant to turn household garbage into electricity. A great idea, there is only so much land we can dump all our crap. However, the city denied the plan because its too expensive. Keeping in mind that one of the main by products is electricity. I know there is pro's and cons for everything, but my god. If there is no planet there is no money. (I am not a tree hugger, but I don't think anyone can argue that we need this blue marble to survive haha)

    IBM thinks just like any other corporations. $$$$$$$ if that is not in there heads, they simply just don't care.
  • 0 Hide
    kingssman , July 3, 2013 6:00 AM
    Unkown to the full state of IBM's cash affairs, there's 3 levels of business money making. There's making a consistent growing profit (making little more each quarter), making less in profit but still in the black (made 50mil instead of 100mil but still profit) and there's in the red (0 or negative profit. where 3 years in a row of in the red means company goes bankrupt).

    Not fully knowing IBM's affairs, I wonder if they decided the growth in profits is not where they like, hence the decision to gut themselves. Hopefully these changes are not the crippling kind that the spiral of a company producing a mediocre product as they race to the bottom wondering why their product is crap and nobody is working for them.

    I’m all for a company making money but sometimes these public traded companies only serve their short term numbers as they throw everything great about themselves out the window just to chase down every $ they can which eventually ends up killing a multi-generational company. (then they’ll blame the politicians for not cutting taxes enough)
    Honestly I can see IBM doing this even if their tax rate was 0. (see GM)
  • 0 Hide
    hragarand , July 3, 2013 6:17 AM
    If and when a CEO has his or her compensation package tied directly to customer and employee satisfaction and retention then you will see fewer layoffs. Publicly traded companies are not so interested in that. But I would suspect there are a number of private companies that value customers and employees #1a and #1b.
  • 0 Hide
    kingssman , July 3, 2013 7:37 AM
    Situations like these is why I dislike the world of publicly traded companies. Almost clockwork reaction based upon quarter results. It’s almost prehistoric how predictable some companies are when it comes to cutting themselves in pursuit of numbers. Rather than rely on tried and true methods of sales, quality, customer retention, they instead appeal only to the bottom denominator which is maximum profit for lowest cost. When Dell decided to go private I see will become a good thing, no longer shackled by investors they are free to pursue larger market shares. Google and other companies who detached themselves from quarter revenues end up becoming powerful movers in the market by focusing solely on their product, not stock price.

    There’s a reason why the housing collapse killed industries that weren’t even remotely related to housing. When companies only exist for their stock index, it’s no surprise they buckle under whenever a market crash happens.
  • 0 Hide
    rodney_ws , July 3, 2013 8:34 AM
    I thought tech companies were saying there weren't enough qualified Americans to fill all of the open tech positions and that we need more H1-Bs coming into our country? This seems to run counter to that notion.
  • 0 Hide
    bhaberle , July 3, 2013 10:19 AM
    @Martell1977 republicans are equally responsible. They should've produced a more likeable presidential candidate or done more in congress. Both sides parties are awful. Blaming the opposing party is just an easy way out. You'll see when we get our next republican president, its going to just be more finger pointing. Our whole issue is how our entire government wastes money and then taxes more to make up for it. The more they waste, the more they tax. Republican and Democrat alike. All corrupt. For an extremely obvious example look at both Republican and Democratic states groups trying to block Tesla Motors from selling straight to customers.
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