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for week ending January 11, 2003
- Poughkeepsie Journal (September 10, 2002): Man
sues; says IBM axed him in retaliation. Poughkeepsie Journal (January
8, 2003): Big
Blue settles with former employee over age-discrimination claim.
Excerpt: "IBM Corp. and an ex-employee who sued the company, alleging
that it fired him for making complaints of age bias, have come to terms.
Just what those terms are, neither will say. But federal court officials
in Florida confirmed that the case, Mark D. Cring vs. International
Business Machines Corp., has been settled. One of Cring's charges was
that the company tolerated a hostile atmosphere by keeping in its employ
a manager who brought guns to work in violation of company policy."
- New York Times: Hi,
I'm in Bangalore (but I Dare Not Tell) Excerpt: "With frosted
glass and funky amber lights playing off the turquoise walls, the offices
of Customer Asset look more like a Santa Fe diner than a telephone call
center in southern India. The cultural vertigo is complete when employees
introduce themselves to a visitor. 'Hi, my name is Susan Sanders, and
I'm from Chicago,' said C. R. Suman, 22, who is in fact a native of
Bangalore and fields calls from customers of a telecommunications company
in the United States. Ms. Suman's fluent English and broad vowels would
pass muster in the stands at Wrigley Field. In case her callers ask
personal questions, Ms. Suman has conjured up a fictional American life,
with parents Bob and Ann, brother Mark and a made-up business degree
from the University of Illinois."
- CNET News: IBM
to outsource server manufacturing. Excerpt: "Just a year after
outsourcing the manufacturing of its NetVista desktop PCs, Big Blue
will do the same for its X-Series servers and IntelliStation workstations
sold in North America and Europe. The contract will go to San Jose,
Calif.-based Sanmina-SCI, which also took over the manufacturing of
IBM's NetVista desktop and purchased IBM facilities in the United States
and Scotland last year, sources said Tuesday." ... "Sanmina-SCI
will handle configuration of some of the servers, which will be manufactured
in China. IBM will continue to handle configuration of some servers
as well." ... "Despite outsourcing desktops and some servers,
IBM plans to keep its ThinkPad notebook line in-house. But the company
has also streamlined manufacturing there. It is expected to announce
that all of its ThinkPad manufacturing has been consolidated in Shenzhen,
- After being absent for a few years, IBM returns this year to Fortune's
list of "100 Best Companies to Work For" at number 38. See
the list. See
the entry for IBM. Fortune's "Summary" for IBM: "IBM
employees have access to 67 day-care centers worldwide (61 in the U.S.).
And since 1984 the company has invested more than $200 million in dependent
care, including child- and elder-care subsidies."
- TechsUnite.org: AFL-CIO
unions, CWA propose H-1B reforms. Excerpt: "The H-1B program
is completely disconnected from the realities of the U.S. labor market.
While spot shortages in certain professional occupations may exist from
time to time, H-1B fails to address these specific needs. Instead the
program floods the marketplace with the potential of 200,000 or more
professional guest workers each year. It is estimated that there may
be as many as a half million H-1Bs in the U.S. today."
- The Vault
IBM Business Consulting Services (BCS) Employee Message Board has
been busy lately with reports of "resource actions" in BCS,
especially among former PriceWaterhouse Cooper consultants. Some particularly
interesting posts include:
point is simply...
e-mail from Mike Collins, Americas Leader, Business Consulting
Services sent to selected BCS employees. Excerpts: "The purpose
of this note is to inform you of a resource action in the US, which
will take place by mid-January." ... "Overall, we expect
to reduce the size of our total US Business Consulting Services
workforce by slightly less than 2%." ... "These actions
are never easy to undertake, particularly at this time of year.
We will move quickly in January to individually inform those who
are part of this action. I appreciate your understanding as we take
these difficult but necessary steps to maintain our competitiveness
in the marketplace and better serve our clients."
- A surplused BCS employee suggests that IBM may want to remove
"surplused people from these kinds of mailings since we no
longer have a career with IBM." Read
employee's comments along with the mailing from Ginni Rometty, Managing
Partner, IBM BCS. Excerpt from Ms. Rometty's mailing: "In
my note last week, I promised that I would be stepping up my communications
with you. Here then is the next step: I invite you to spend 10 minutes
with me to consider your career potential with IBM Business Consulting
Services. We've already talked plenty about the impact that BCS
will have in the marketplace; now it's time to focus on what it
all means to you."
- Wall Street Journal: Div
Tax Cut Is No Bone For Retirement. Excerpt: "Plans to make
dividends tax-free to individual investors will not help investors where
they need it most, and in fact, it may hurt them. That's because a good
chunk of individual investor assets are locked away in tax-sheltered
retirement plans, like the 401(k) and the IRA. These plans are already
exempt from paying taxes on dividends, so making them tax-free changes
nothing. In fact, the plan could hurt American's nest eggs if the price
of dividend paying stocks rise due to the new tax-free aspect, because
then investors would be paying a premium for a benefit that they don't
receive." If link is broken, view
Adobe Acrobat version [PDF--23 KB].
- Orlando Sentinel: Changes
may shrink nest eggs. Excerpt: "When Marilyn Bowden began her
career at Delta Air Lines more than two decades ago, she didn't think
much about retirement. But with all the problems facing the airline
industry today, the 44-year-old Bowden has given plenty of thought to
life after Delta. And now, on top of just keeping her job, she worries
that the income she counted on in retirement will be slashed. Late last
year, Delta announced it would phase out its current pension plan and
replace it with a so-called cash-balance plan. The move will save the
beleaguered carrier $500 million over the next five years, but it will
reduce retirement benefits for an untold number of employees."
IBM Corp. was the poster child for criticism of such plans. It announced
its intention to convert its existing pension to a cash-balance plan
in 1999. Workers rallied to oppose the effort. Some sued the company.
The computer maker relented and allowed older employees to remain in
the conventional pension. Concerns about age discrimination sparked
the Clinton administration to impose a moratorium on cash-balance plans
three years ago. Companies can still adopt the plans, but they do not
receive the approval of the Internal Revenue Service -- meaning they
could be subject to back taxes or penalties. The Bush administration's
new proposal, which could take effect by mid-year, would lift the IRS
moratorium and make it legal for companies to offer cash-balance plans
even if older workers' benefits are reduced. The proposal also gives
companies the right to temporarily stop contributing to the pensions
of older workers so younger workers in cash-balance plans can 'catch
up.' 'I think this will be a huge raid on the pensions of millions of
workers, who will end up receiving 30 percent to 50 percent less than
what they anticipated,' said U.S. Rep. Bernie Sanders, I-Vt., who has
been a leader in Congress criticizing the plans. 'Unless we stop this,
a whole lot of middle-class families are going to be hurting big time.'"
- Congressman Bernie Sanders: Drug
Giant Glaxo Moves to Cut Off Supplies to Canadian Pharmacies Selling
to Americans. Excerpt: "In a move that is sure to re-ignite
the battle in Congress over Americans’ ability to purchase lower
price prescription drugs from Canada, pharmaceutical giant GlaxoSmithKline
has informed Canadian pharmacies and wholesalers who sell into the U.S.
that they will no longer be able to buy Glaxo products after January
21, 2003. Rep. Bernard Sanders (I-VT) -- the first member of Congress
to take constituents across the border to highlight the disparity in
prescription drug prices between the United States and Canada -- responded
sharply to Glaxo’s threat, calling it a “direct attack on
the health of American prescription drug consumers.”
- Congressman Bernie Sanders editorial: Don’t
Steal Our Pensions. Excerpts: "And now, new regulations proposed
by Bush’s IRS threaten to destroy one of the most valuable benefits
that working men and women, through their unions, successfully fought
for in the 20th century, namely the traditional defined benefit pension
plan. For millions of workers, traditional pension plans were the key
to a secure retirement. Once they reached retirement age, they were
to receive a monthly pension benefit based on a formula that included
their longevity on the job and the compensation they received. But about
ten years ago corporate America decided that it was 'too expensive'
to keep the promises they made to older employees. They preferred to
give out hundreds of millions in stock options to their CEOs. So, some
high-paid pension consultant came up with a gimmick that would lower
the amount corporations have to pay for their workers’ pensions
by cutting benefits by as much as 20-50 percent. These new plans, called
cash balance plans, were designed specifically to prevent employees
from being able to figure out what they were getting, and to avoid federal
age discrimination laws that protected older workers. I first became
involved in this issue when hundreds of IBM employees in Vermont notified
me that the pensions they had been promised were going to be slashed
because IBM was converting to a cash balance plan."
This week on the Alliance@IBM
War Against Older Workers (from BuzzFlash). Excerpts: "The
Bush Administration has recently proposed IRS regulations that
would allow corporations to undertake a major raid on the pension
benefits that older workers have accumulated. These new proposals,
if adopted, would allow companies to avoid federal anti-age discrimination
laws, and convert traditional defined benefit pension plans into
so-called "cash balance" plans. Under the Bush proposal,
the promises made to older workers about pension plans that increase
retirement benefits based on longevity would be undermined. While
corporations would save billions in pension expenditures, some
8 million older workers could see their benefits reduced by 30-50
percent. Cash balance payment plans have rightfully been condemned
by a variety of groups, including the AARP, the Pension Rights
Center and the AFL-CIO, because they target the benefits of older
workers in violation of current federal law. The Equal Employment
Opportunities Commission (EEOC) has received over 800 complaints
related to cash balance conversions. And, since September 1999,
the IRS has withheld approval of these plans because of concern
about their age discriminatory effect. Now, however, the Bush
Administration wants to allow these conversions to go into effect."
- Updated retirees'
page. Excerpt: IBM Breaks Promises to Retirees. Those promised
medical benefits for life are now told, 'Pay Up'. ' "My family
gave their life and blood to IBM, but always with the knowledge
that, in the end, our benefits would take care of us -- that IS
what we were promised, and also what kept us loyal to IBM. They
tossed us aside...'"
Urgent Action, from Linda
Guyer, President, Alliance@IBM/CWA Local 1701:
Stop the outrageous Treasury Proposal! Write your reps now; tell
them NOT to legalize cash balance pension conversions! This anti-family,
anti-worker proposal must not go through.
An outrageous development has just occurred that brings back the
pension scandal of 1999 all over again—for ALL employees.
The U.S. Treasury has just issued proposed regulations that ELIMINATE
all possibilities of claiming age discrimination when companies
switch to cash balance pensions plans.
If you recall, IBM changed its mind in 1999 for fear of age discrimination
claims, granting the older defined benefit to those over 40 with
10 years of service.
Anyone with the older pension plan is now in danger of losing it.
You could lose up to 65% of the money you are expecting. Our pension
lawsuit will likely be thrown out if these regulations are put into
We absolutely must fight this. I urge all of you to immediately
write the Treasury and your congressional reps and SAY NO to this
horrific possibility. IBMers worked for 20 or more years at lower
than market salaries, expecting a fair deal by getting a decent
pension. Older workers cannot make up those 20 or more years in
Don't let this happen. Go immediately to www.allianceibm.org
and check out how to write your letters. Then, please ask your friends
and families to do the same.
From the editor of this site, www.ibmemployee.com:
Why you should care if...
- You're a young employee: The new Treasury Department
rules allow IBM and other employers to change financial assumptions
multiple times throughout your career to retroactively reduce
your "cash balance". Read
Dave Finlay's analysis of how companies can do so.
- You're a "second choicer": IBM relented
and gave you the choice to stay with its traditional pension.
Some have speculated they did so since the legality of cash balance
pension plans was not clear. The Treasury Department proposal
makes it clear that such conversions are legal, and indemnifies
corporations against charges of age discrimination. Given a green
light from the Treasury Department, IBM could easily force all
employees into a cash balance plan.
- You're a "first choicer": As with
"second choicers", given a green light from the Treasury
Department, IBM may force all employees into a cash balance plan.
- You're already retired: As Janet Krueger stated,
a class-action lawsuit, Cooper v. IBM asserts that "the hybrid
plan IBM converted to in 1995 was age discriminatory, based on
the ERISA laws. If the Treasury is allowed to issue regulations
declaring that cash balance formulae are not age discriminatory,
the court could conceivably leap to the conclusion that the government
no longer intends to enforce the age discrimination rules in ERISA.
While this would not reduce the pension you are currently collecting,
it might eliminate any chance of Cooper v IBM of resulting in
a settlement that would amend your pension upwards."