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    Highlights for week ending October 26, 2002
  • Letter to Commissioner of the IRS and National Taxpayer Advocate, from Congressman Sanders and 116 members of Congress, sent 10/24/2002 regarding Enforcement of Pension Laws on Books. Excerpts: "We are writing to urge the Internal Revenue Service (IRS) to take immediate action and issue guidance to enforce all of the pension laws, regulations and notices that are on the books to prevent companies from illegally slashing the pension benefits of American workers and retirees as a result of cash balance conversions." ... "This amendment passed in light of a disturbing report published by the Department of Labor’s (DOL) Office of Inspector General (OIG). The report found that a number of companies are illegally slashing the retirement benefits of their employees by between $85 million and $199 million each year by shifting to cash balance pension plans. Even worse, the OIG found that the federal government was not enforcing the pension laws and regulations that are on the books pertaining to cash balance pension conversions. It is our understanding that corporations are lobbying the IRS behind the scenes to gut or even eliminate altogether federal regulations designed to protect the pensions of workers. We urge you not to give in to these corporate lobbyists and stand up for workers and retirees who have seen their pensions slashed by as much as 50% as a result of cash balance conversions."

  • CNET Tech News: IBM cuts 2,800 jobs. Excerpt: "IBM is cutting 2,800 positions in its hard drive and Global Services businesses, the technology giant confirmed Tuesday."
    • Len Camp, a 50-year old IBM employee from Colorado Springs that was recently let go, provides details on his separation package. Excerpt: "From the package I received, it looks like 162 are being let go from the "Business Innovation Services" ... they aren't even calling it Business Consulting Services, which tells me it probably was decided before October 1st." ... "I was fully billing up until 27 September. Others I know were pulling in more than 100% billable time, and they were let go too, while others not actively billing were retained. It's a weird climate to expect employees to live in."

  • BBC News: IBM shuts Hungarian operation. Excerpt: "Computer giant IBM has said it will close its hard disk drive company in Hungary because of falling sales. The closure will mean the loss of up to 3,700 jobs, the largest one-off redundancies by a foreign investor in Hungary since the post-Communist rise in the economy."

  • "survivor_too" provides a chart that makes it easy to see the costs (and substantial cost increases) for employees' 2003 medical and dental plans. (Costs to employees for two adults and two children have increased about 45%).
    • "survivor_too" provides a similar chart for coverage of two adults and three children. (Employee costs for this coverage have increased about 70%).

  • Reuters: Company Pension Funds Hit by Shortfalls. Excerpts: "The first full week of the third-quarter earnings season brought a torrent of nasty disclosures, as company after company reported huge shortfalls in their employee pension funds. To make up for the shortfalls, executives are being forced to divert billions of dollars to their company's pension plans in moves that will lower earnings, limit spending and choke expansion plans. 'Everyone knew the drop in the market would affect the value of the pension funds, but people weren't familiar with what the ramifications were, said Robert Willens, accounting analyst at Lehman Brothers. In the last week, heavyweights like International Business Machines Corp., Motorola Inc., General Motors Corp., Ford Motor Co., Ingersoll-Rand Co. Ltd., Whirlpool Corp., Continental Airlines Inc. and United Technologies Corp. all reported their pension funds, which provide guaranteed benefits to retired workers, were underfunded."

  • New York Times: Pension Accounting Whoppers. Excerpts: "For all of this year's accounting scandals, one of the most perilous financial minefields may still lie ahead — corporate America's management of traditional pension plans covering some 45 million Americans. The fate of these funds in the boom-to-bust financial cycle is at once a glaring accounting scandal and a looming threat to the economy. First, the scandal. Accounting rules allow companies to estimate their pension funds' average annual return over time, and report that amount as profit, regardless of what actually takes place. This has provided an artificial means for companies to pad their reported earnings — the bottom line that determines top executives' bonuses. Many blue-chip companies' financial statements continue to assume 9 or 10 percent returns, even now in the middle of the most severe bear market in decades. Over all, it is estimated that 50 of America's largest companies counted $54.4 billion of pension fund gains as profits last year, when they in fact lost $35.8 billion. The accounting rules made it very easy for corporate managers to legally distort their numbers, to their benefit and to the detriment of shareholders."

  • Washington Post: Pension Funds' New Realities Drag Profits Down. Excerpts: "Back in 2000, in the excitement of the bull market, hardly anyone took notice of the footnote in the year-end report from International Business Machines Corp. -- the one that disclosed that around 10 percent of its $11.5 billion in pretax profits came not from selling more computers but from investment income earned by its employee pension fund. They're noticing now. IBM, like many other companies, was following an accounting rule that allows it to count expected pension gains as income regardless of how its fund's investments actually perform. Even as its pension fund began to shrink with the dramatic plunge in stock prices, IBM continued to report pension gains: more than $1.4 billion in 2001 pretax earnings, for example. Now the technology giant says it may scale back its expected rate of return on pension investments, which IBM said would reduce its profit by around $700 million next year."

  • Annex Bulletin: Analysis of IBM’s Third Quarter Business Results. On a Wing and a Prayer. Facts and Reason Do Not Support IBM CFO's Bullish Outlook for Fourth Quarter and 2003.

  • "rosiethemba" writes a letter to Steve Mills. Excerpt: "Steve, in January of this year, you hired about 800 new SWG employees, and you turned around and laid off 720 in May! We are currently acquiring the names, ages, and titles of all these people, both hired and laid off, through a grassroots effort. We are almost complete with this effort, and will let you know the findings. From our initial findings, the ages of the people you hired are significantly under the ages of the people you dismissed."
    • "i_be_mad_as_heck" comments on Rosie's posting. Excerpt: "You wrote another great note. In addition to almost 50% of the employees having less than 5 years of tenure, I can provide the following data. Below is a chart showing the effectiveness of the long-term plan to reduce the number of older employees, AKA drain on the pension/medical/retirement medical plans." View the chart...

  • Poughkeepsie Journal: IBM faces lingering union issue. Excerpt: "The summer of 1999 seems like a long time ago for the activists among IBM employees. For Peter Plavchan, it seems even longer, because he's no longer with the company he worked for IBM 21 years and tried to organize for the last three. IBM fired him the day after Labor Day."

  • AFL-CIO: Union Workers Have Better Benefits. Excerpt: "Union workers are more likely than their nonunion counterparts to receive health care and pension benefits, according to the Bureau of Labor Statistics. In 1999, 73 percent of union workers in private industry participated in medical care benefits, compared with only 51 percent of nonunion workers. Union workers also are more likely to have retirement and short-term disability benefits."
    • Linda Guyer comments. Excerpt: "Not all union members get medical for free but a lot of them do. And so then who should pay for it? Maybe Gerstner could forgo using the
      company jet now and then, or perhaps give up 1 of his numerous palatial homes. Or gosh, maybe he could even pay for his own medical coverage, now there's an idea! He gets his FOR FREE."

  • San Francisco Chronicle: Tough talk, soft walk. No teeth in Bush's promise to strengthen retirement security. Excerpt: "The hype: President Bush announced Saturday 'tough new rules' his administration is taking 'to help strengthen the retirement security of America's workers.' The reality: Bush simply told the Labor Department to implement a relatively insignificant rule ordered by Congress in the Sarbanes/Oxley bill. 'The rah, rah, rah that the Bush administration is putting forth is a big nothing,' says Karen Friedman of the Pension Rights Center. 'All they're doing is what they're supposed to be doing. They're making a lot out of it because they haven't done anything to address the real issues.'"

  • San Jose Mercury News: Slowdown sending tech jobs overseas. Excerpts: "The U.S. economy might be stalling, but at least one niche is hot: shipping technology jobs offshore. The economic slowdown is speeding up the export of jobs, experts say. As executives face smaller budgets and more pressure for profits, they find it much cheaper to send work to contractors overseas. More U.S. companies are following Silicon Valley's lead by shifting engineering and other technology-related jobs to places such as China, Ireland, India and the Philippines to cut costs." ... "U.S. tech services companies are also in on the game. Tech consultants such as IBM Global Services; Accenture, a Bermuda-based Arthur Andersen spinoff; Electronic Data Systems; Computer Sciences; and PricewaterhouseCoopers are all racing to set up overseas operations. Many go to India. Other hot spots include Ireland, the Philippines, Eastern Europe and China." ... "The jobless rate for all engineering doubled in the second quarter of this year, from 2 percent to 4 percent, and increased even more for computer scientists and electronics engineers, according to the IEEE-USA, the U.S. arm of the Institute of Electrical and Electronics Engineers."

  • IBM Retirees: The Retiree Medical Planner is now available on IBM's "AfterIBM" site,

  • Motley Fool: SEC Fights for Funding. Excerpts: "The mission of the Securities and Exchange Commission, in its own words, is: 'to protect investors and maintain the integrity of the securities markets.' That might give us comfort in this year of the scandal, but remember that the SEC can only do what it can afford to do -- without adequate funding, the agency can't provide adequate protection. As it stands, the SEC is far outpaced by many companies' legal coffers, and it has an outdated computer system and an underpaid, insufficient staff." ... "It's hard to understand what the president and Congress are thinking in not quickly allocating some big bucks to the SEC. In 2001, national defense discretionary spending totaled an estimated $292 billion, some 16% of our national budget. That's 376 times more than the proposed $776 million for the SEC. Just today, President Bush signed an increase in military spending of more than $34 billion over the previous fiscal year. Of course our national defense is important -- but so is our financial defense."

  • Charlotte Observer: BofA is sending more work abroad. Excerpts: "Bank of America Corp. plans to cut technology and operations jobs through the end of 2003 and, in the process, replace some employees with lower-cost labor overseas. The Charlotte-based bank has already slashed 12.7 percent of its nationwide technology and operations work force to 22,000 this month from 25,200 in 2001." ... "Since last October, 75 positions at the bank have been cut, she said, because the bank is sending to India software programming that is now done in-house. Some employees say they are worried about their future and are upset that foreign firms are taking their jobs." ... "A recent survey of Fortune 1000 chief information officers showed that the number of companies outsourcing more than 3 percent of their information technology budget to India increased to 62 percent in 2001 from 32 percent in 2000. The practice of outsourcing to India is also becoming widespread within the financial industry, with Fidelity Investments and First USA Bank being just a couple of the many outsourcing with Infosys, according the company."

  • "ibmscrewedme2": "We lost A Protector of the Pension Champion Yesterday. I was very sad to hear that Senator Paul Wellstone had died in a plane crash yesterday. I remember when IBM started their Cash Balance Conversion Theft.. He stood behind the employees of his state as well as IBMers of other states while others were slow to come to or aid.. in fact a lot did not even partially come to our aid until 2nd choice had already occurred. The Late Senator Paul Wellstone, was regardless of his other stances, a true champion of fairness in regards to Pension conversions, DB, and CB plans."

  • Lee Conrad: "This was a shock to all of us in the Alliance. We can only echo what you posted. A true working class hero. He has left a void that will be hard to fill. His standing with IBM employees in the fight for pension fairness and justice will always be remembered."

  • From the Minneapolis Star-Tribune:
  • From the February 23, 2002 edition of these highlights: "On February 21, Janet Krueger testified at a HELP Senate committee meeting held by Senator Wellstone in St. Paul. Excerpt: 'I would like to remind you that thousands of employees in this country have lost significant portions of both their promised pensions and promised retiree medical coverage, long before their employers filed for bankruptcy. In fact, companies like IBM, with massive surpluses in their pension funds, are slashing and withholding employee benefits seemingly only so they can pad their quarterly earnings reports and generate higher bonuses for the executives. IBM failed to grant retirees COLAs during the 90s when the returns on their pension funds were soaring. IBM is now charging high health insurance premiums to retirees who were promised lifetime noncontributory benefits when they left the company; some of our IBM retirees now receive monthly health care premium bills in place of their pension checks! And IBM drastically reduced promised pensions for active employees through cash balance conversions. Clearly, Congress needs to focus on what corporations are doing with their pension plans LONG before they file for bankruptcy.'

This week on the Alliance@IBM Site:

Dear coworkers, friends and supporters,

Nearly 13,000 IBM employees in the Storage Division are being sold to a new company, a joint venture of IBM and Hitachi. IBM made this announcement in June, however the sale will not be complete until the end of November.

These employees are being treated as "captive" -- they are not permitted to look for other positions in IBM. Nor are they being told what will happen to them when they become employees of the new company. Will some jobs be cut? What will happen to salaries, seniority, and benefits?

We have already seen one plant closing in Hungary, will there be others?

Please support these employees in their effort to ask management what will happen to them. They deserve to be treated with dignity and respect and to know what is in plan for their futures.

The petition also asks IBM management to recall any employees who have been laid off, back to their jobs when business picks up again. Skilled and experienced employees deserve a chance to return to work.

Please sign this petition, which will be delivered to IBM and Hitachi management. Thank you very much.

The petition is here online: http://www.allianceibm.org/sanjose.htm.

"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.