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    Highlights for week ending November 16, 2002
  • Binghamton Press & Sun-Bulletin: EIT lays off 200. Two weeks after taking over Endicott site, IBM successor slices managers, engineers.
  • Excerpt: "Friday was the first and last pay day for 200 workers at Endicott Interconnect Technologies. The successor to IBM announced Friday that it laid off 10 percent of its work force -- primarily in management and engineering -- to streamline operations and improve profitability. Cuts had a minimal impact on production workers, said James J. McNamara Jr., Endicott Interconnect president and chief executive." ... "Many community members say they've lost trust in state officials as a result of the Endicott Interconnect layoffs. 'I believe the politicians knew this was happening and did nothing to stop it,' said Lee Conrad, an Endicott-based organizer for Alliance@IBM, an effort to unionize IBM workers. 'We need to hold all of them accountable because jobs are being lost, not being created, after all of their numerous promises and electioneering grandstanding.' In July, Gov. George E. Pataki told hundreds of IBM employees and community leaders that 4,000 Endicott Interconnect and IBM jobs at the Endicott plant would be protected and would remain in Endicott for at least the next 10 years." If link is broken, view Adobe Acrobat version [PDF--164 KB].

  • Binghamton Press & Sun-Bulletin: 'We were never really given a chance'. Decision shatters good feelings at fledgling company
  • . Excerpt: "Joseph Sanderson had heard so many rumors about possible layoffs at Endicott Interconnect Technologies that he didn't even bother to pack a lunch or punch into work Friday. David Askew came out of the facility with box in hand, waved goodbye to his workplace, and walked two miles to his home on Hill Avenue in Endicott, as he'd done for many of the 26 years he worked for the company. And only a week after Vic Furman told the Press & Sun-Bulletin that EIT would prosper, the newly laid-off employee said he doubts the company will survive. While rumors about the impending cuts circulated among Endicott Interconnect employees in recent days, the news was still hard to accept. 'We were never really given a chance,' Sanderson said. 'This was really hanging in the air.' Sanderson had a feeling that it would be his last day with the newly formed Endicott Interconnect, after two weeks with the company and almost 29 years with IBM Corp. If link is broken, view Adobe Acrobat version [PDF--144 KB].

  • Binghamton Press & Sun-Bulletin Editorial: Unpleasant 'surprise'. Excerpt: "A 10 percent cut in its work force was not what the community was expecting from Endicott Interconnect Technologies -- especially not just two weeks after the company opened for business at the former IBM site. Company officials said the 200 layoffs, primarily in management and engineering, are necessary to streamline operations and improve profitability. The rhetoric is familiar -- it's been used here and in communities across the nation many times -- and may indeed be accurate. But the timing stinks, in two ways."
  • ... "If the work force was too large or expensive to begin with, why the charade? The answer is distressingly obvious: Politics. The company leaders obviously didn't want to give Gov. George E. Pataki -- or any of the other state or local officials who took part in the Grand Announcement when the company was formed -- a black eye before the Nov. 5 election. None of those state or local officials was visible at EIT on Friday when the discarded employees were leaving. They never are around when the news is bad." If link is broken, view Adobe Acrobat version [PDF--54 KB].

  • Binghamton Press & Sun-Bulletin: Platsky: Cut of mid-level managers streamlines operation. Excerpt: "Those affected by Friday's action are not in a forgiving mood. They are unwilling to accept that the cutbacks are in the best interest of the company. Many feel a sense of betrayal in their enthusiasm for a new start with this IBM successor company. Other workers believe they were fed a line of false promises when the deal to sell the IBM-Endicott site to local investors was announced in July. 'This is greed with a capital G,' said Mike McKercher, who spent 26 years with IBM and two weeks with Endicott Interconnect. 'I walked by Thomas Watson's picture and you can see tears running down his (face)'."
  • If link is broken, view Adobe Acrobat version [PDF--62 KB].

  • Linda Guyer comments "There were about 200 people unwillingly shuttled out the door in Endicott on Friday. Right away the Alliance office phone begins ringing with ex-employees wanting a reference for a lawyer to sue IBM for age discrimination. This has been happening all year. I cannot tell you how many emails I've received with the same question, from all over the country" Read more...


  • Wall Street Journal: Information Technology Moving Toward 'Commoditization'. Excerpts: "Information technology experts say consolidation forced by ever-cheaper products and the adoption of industry standards are coming as their industry struggles to redefine itself in the midst of its two-year depression. Douglas Elix, a senior vice president at International Business Machines Corp.'s (IBM) Global Services unit, said Friday that 'it's time for our industry to grow up' and adopt standards much as other mature industries have done to the benefit of businesses and consumers. He told several hundred corporate information officers at Forrester Research Inc.'s annual Executive Strategy Forum that about 40% of all IT spending now is wasted on integration of disparate manufacturers' hardware components and software." ... "In addition, Forrester analysts estimate that 3.3 million IT jobs will leave the U.S. to foreign countries by 2015, as companies find it cheaper and just as efficient to have a variety of IT work done offshore - such as software programming done in India, China and Russia. Forrester, a Cambridge, Mass., a technology-research firm said that 'a growing base of companies are shifting a range of IT, back office, customer service and sales operations offshore to cut their costs by upwards of 50%.' The lost wages associated with those positions will go from $4 billion in 2000 to $136 billion in 2015, Forrester said in a new report. The huge cost savings are the motivation. 'The cost of an entry-level programmer in China is 30% to 50% less than one in Tokyo, London, or Chicago,' said Forrester. Low cost bandwidth and a huge increase in capacity means that firms can ship huge volumes of scanned documents overseas cheaply, while standardized business software applications make it easier to hand work off to workers in other countries, Forrester said."


  • New York Times: When Options Rise to Top, Guess Who Pays. Excerpt: "Joseph R. Blasi and Douglas L. Kruse, professors of human resource management at Rutgers, examined stock option grants and shareholder returns at the 1,500 largest American companies from 1992 to 2001. They found that companies dispensing significantly larger-than-average option grants to their top five executives produced decidedly lower total returns to shareholders over the period than those dispensing far fewer options. As for the notion that options are primarily a rank-and-file perquisite — and that abandoning them would hurt lower-level employees — the study instead confirmed what many investors have suspected: in recent years, most options have gone to top executives." ... "Carol Bowie, director of governance research services at the Investor Responsibility Research Center in Washington, says investors have rapidly become wary about stock options. 'At the very least, options tended to promote a short-term focus,' she said, 'and at worst, they promoted fraudulent activity to manipulate earnings.'" ... "'Anyone who claims there hasn't been a systematic corruption of business as usual using the legal system as a front, compensation consultants as handmaidens and corporate human resources staffs as lackeys doesn't understand what's gone on'."


  • "carolina_puerto_rican" speaks of a rumor he's heard about Hitachi's benefits versus IBM's. Excerpt: "Rumor has it the IBMers who have been exposed to the proposed retirements benefits offered by Hitachi are stunned by how good they are. Allegedly the medical is MUCH better, the other bennies are about the same, and the retirement benefits are extremely good, much , much better than IBM. "


  • USA Today: Above-it-all CEOs forget workers. Excerpts: "But for all of the truly selfish examples of CEO behavior, the worst offense is how out of touch many corporate leaders have become with the people they purport to lead. It is especially galling that it comes as the economy scrapes along, earnings lag and firms lay off workers and reduce operations. The real challenge for CEOs today is to close the gap that increasingly separates them from their employees. From 1985 to 2001, workers' pay rose by 63%. CEO pay rose by 866%. In 1985, CEOs were paid about 70 times what the average worker was paid. By 2001, CEOs were making 410 times what the average worker made. It's hard to name a newspaper or business magazine that hasn't produced a roll call of CEO shame, top dogs who paid themselves top dollar while their companies have gone to the dogs." ... "If you work for a living, here's a question you should ask yourself: Do you think of yourself as a 'headcount'? Even the term is an insult. 'Headcount reduction' is the kind of phrase CEOs use to avoid looking the truth in the eye: To cover up for their own performance, they're willing to sacrifice others. It happens all too often -- but not at the great companies.
    Organizations such as Southwest Airlines will do whatever it takes to keep from laying off their people, because they genuinely believe that their workers set them apart. Loyalty is a two-way street: Employees who feel valued work harder, are more productive and give better service to customers, who come back for more. The strong loyalty that Southwest Airlines shows to its people is only one of the reasons the airline has not only weathered the current economic downturn, but also has managed to turn hard economic times into a strong competitive advantage. While the other airlines are battling bankruptcy, Southwest is profitable.


  • Reviews of Lou Gerstner's book Who Says Elephants Can't Dance?:
  • "rosiethemba" writes to Money Line's Lou Dobbs asking why he didn't ask Lou Gerstner some "tough" questions. Read Rosie's questions... (highly recommended)


  • "ibmmike2005" provides his own assessment of Lou Gerstner's tenure as IBM CEO. Excerpt: "Gertsner gleaned $120,000,000 million Stock Options in 2001 alone. An example of his methods is in 2001, that year, he announced to IBM employees how difficult a year it was going to be for the company and that he would not take a salary increase along with his 20 executives. He sent a message to the employees to NOT expect a wage increase. His salary and bonus in the shareholders report were listed at $12,000,000 and the combined salary and bonus of his 20 executives about the same. Combined, in 2001, Gerstner and his executives cashed in $240,000,000 million in stock options. A really tough year for IBM executives, NOT, but for the employees with Sweat Shop mandatory 10% plus Overtime for Exempt employees, it was a tough year."


  • Debunking the Myth of a Desperate Software Labor Shortage. Testimony to the U.S. House Judiciary Committee Subcommittee on Immigration. By Dr. Norman Matloff, Department of Computer Science, University of California at Davis.


  • Washington Alliance of Technology Workers: Supreme Court refuses to hear appeal of Microsoft ‘permatemp’ settlement.


  • Washington Post: R.J. Reynolds Accused Of Money Laundering. Suit Also Alleges Smuggling of Cigarettes to Iraq. Excerpts: ""The lawsuit alleges a vast conspiracy in which R.J. Reynolds Tobacco Holdings Inc. and its subsidiaries set up special operating units to help launder money for criminal organizations, using special accounting methods, offshore tax havens and false invoicing. In exchange, the suit says, the criminal groups pushed Winston and Camel cigarettes into markets the company was seeking to penetrate and helped RJR increase its profit margins by accepting sales and credit terms that paid far more than those for legitimate customers. The 144-page complaint, filed on Oct. 31 in the Eastern District of New York, alleges that RJR executives 'at the highest corporate level' made it 'part of their operating business plan to sell cigarettes to and through criminal organizations and to accept criminal proceeds in payments for cigarettes by secret and surreptitious means.' In a statement, RJR called the lawsuit 'absurd' and said the company and its subsidiaries 'operate their businesses in a legal, responsible manner. The plaintiff's allegations that any of these companies were either involved in or aware of money laundering, conspiracy or any other illegal activities are unfounded.' ... "The suit also alleges that Iraqi President Saddam Hussein and his son, Uday, reaped millions of illicit dollars from the sale of cigarettes in Iraq by RJR, as did the Kurdistan Worker's Party (PKK)..."

This week on the Alliance@IBM Site:



Politics:

  • New York Times Editorial by William Safire: You Are a Suspect. Excerpt: "If the Homeland Security Act is not amended before passage, here is what will happen to you: Every purchase you make with a credit card, every magazine subscription you buy and medical prescription you fill, every Web site you visit and e-mail you send or receive, every academic grade you receive, every bank deposit you make, every trip you book and every event you attend — all these transactions and communications will go into what the Defense Department describes as 'a virtual, centralized grand database.' To this computerized dossier on your private life from commercial sources, add every piece of information that government has about you — passport application, driver's license and bridge toll records, judicial and divorce records, complaints from nosy neighbors to the F.B.I., your lifetime paper trail plus the latest hidden camera surveillance — and you have the supersnoop's dream: a 'Total Information Awareness' about every U.S. citizen. This is not some far-out Orwellian scenario. It is what will happen to your personal freedom in the next few weeks if John Poindexter gets the unprecedented power he seeks." If link is broken, view Adobe Acrobat version [PDF--15 KB].
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