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    Highlights—September 17, 2005

  • Durham (NC) Herald-Sun: IBM feels changes of time. By Anne Krishnan. Excerpts: While the past 40 years have been a story of growth for IBM in the Triangle, the past five have been a time of dramatic changes for the company's largest site in the world. The site, which originally focused on manufacturing and became the company's PC headquarters 11 years ago, has shed both of those operations since 2002. Today, half of IBM's employees in RTP work in software development and business, technology and consulting services and the others are spread among nearly 30 other divisions.
    And as the site's focus has changed, sales and layoffs have taken IBM from a peak of more than 14,000 employees in 2001 to 11,000 today -- its employment level in 1994. [...] The company also has reduced its local work force through periodic "skills rebalancing" efforts, an IBM term for layoffs, including 600 in the first half of 2002 and 300 this summer.
  • Yahoo! message board post by "whydo1lovemycats". Full excerpt: Sorry to be late on this thread. I work in SO and I can tell you from first hand experience that the only way Customer IT people keep employed anymore in an outsourced situation is if the Customer keeps their employees in-house. Many deals are for stewardship of the hardware assets, etc. and do not include making the people into IBM employees. Some Customers used to believe the Bullshit Dance that more and better careers existed in IBM than in Banc One or JP Morgan or American Express. But the truth is that the past two-three years IBM just lays off the poor bastards as soon as their individual knowledge has been squeezed out of them. Former AMEX employees may nod in agreement now.
    The IBM lawyers have been beefed up recently as well to fight back when Customers complain about poor service once their former employees have been axed. Getting hard nosed. SBC is a terrible deal from a IBM business perspective, the Sales force shaved the price below expected costs so I expect extra sharp focus on firing many SBCers ASAP.
  • Yahoo! message board post by "minkin_08701". Full excerpt: In making my choice of medical plan for this year (IBM or not) I compared the Medco price with that of Costco on the basis of what each would charge me after the Medco Limit was reached. I was shocked to find that on 3 of the 5 comparisons the Medco price was substantially higher (between 31% amd 136%) than Costco. On Nov. 10, 2004 I wrote to IBM asking them to explain why I could get these drugs cheaper on the street than on the plan. After spending a good amount of time trying to convince IBM that they didn't have to be a wizard to do the math, they agreed that they should use this information to negotiate better rates next year. Whether they were serious or just trying to get me out of their hair, we will see next year. The full 90 day price of the 3 drugs in question were Cartia (240mg, 1 a day) $131.92@MEDCO vs. $100.09@COSTC, Lisinoprl (5mg, 2 a day) $48.50@MEDCO vs. $20.49 @COSTCO, and Flecainide (150mg, 2 a day) $385.62 vs. $226.89.
  • Yahoo! message board post by "ibmaccountant". Full excerpt: Could it be possible that Medco charges an amount (a la IGS) where the base cost and their profit is once again uplifted to pay back IBM a profit margin? As a simple example (without margins, etc.) I wouldn't be surprised that a $10 drug charge to you is uplifted to $15 just to give IBM $5 out of your money. Has anyone started putting together a table of costs and comparing IBM's costs against the industry to see if it really makes sense? Is it possible that IBM has found a way to subsidize their active employee costs with a captive retiree revenue stream?
  • Forbes: IBM to Encourage Employees to Be Teachers. Excerpts: International Business Machines Corp., worried the United States is losing its competitive edge, will financially back employees who want to leave the company to become math and science teachers. The new program, being announced Friday in concert with city and state education officials, reflects tech industry fears that U.S. students are falling behind peers from Bangalore to Beijing in the sciences. Up to 100 IBM employees will be eligible for the program in its trial phase. Eventually, Big Blue hopes many more of its tech savvy employees - and those in other companies - will follow suit. [...]
    The company expects older workers nearing retirement to be the most likely candidates, partly because they would have more financial wherewithal to take the pay cut that becoming a teacher likely would entail. The workers would have to get approval from their managers to participate. If selected, the employees would be allowed to take a leave of absence from the company, which includes full benefits and up to half their salary, depending on length of service. In addition, the employees could get up to $15,000 in tuition reimbursements and stipends while they seek teaching credentials and begin student-teaching. (Editor's note: Kudos to you, IBM, from the editor of www.ibmemployee.com for offering this program.)
  • New York Times: Still Eating Our Lunch. By Thomas L. Friedman. Excerpts: Being a tiny city-state of four million, Singapore is obsessed with nurturing every ounce of talent of every single citizen. That is why, although its fourth and eighth graders already score at the top of the Times international math and science tests, Singapore has been introducing more innovations into schools. Its government understands that in a flattening world, where more and more jobs can go anywhere, it's not enough to just stay ahead of its neighbors. It has to stay ahead of everyone - including us. Message to America: They are not racing us to the bottom. They are racing us to the top. [...]
  • PBS Wide Angle with Bill Moyers. 1-800-India. Excerpts: CLYDE PRESTOWITZ: Well it's good news, but the problem is that the structure of the current global economy is unbalanced. You have right now in the global economy one consumer. It's the United States and the Americans are the greatest consumers of all time. They're consuming 7 percent of GDP -- $700,000 a year more than they earn. Think of a family that spends $130,000 a year and only earns $100,000. That's essentially what the United States is doing. The rest of the world, particularly Asia, is producing, saving like crazy. Singapore has a 50 percent savings rate; China has a 45 percent savings rate. They're saving, they're investing, they're producing and they're exporting to us.
    The difficulty here is that because we're buying more, spending more than we earn, we have to borrow money. And we're borrowing it, essentially, from the central banks of China and Japan. We're borrowing at the rate of $700 billion a year, and this has to keep increasing in order for global growth to keep rising. The difficulty is we are now, as a country, soaking up about 80 percent of the available savings in the world and obviously if you hit 100 percent the music stops. So that's why I'm saying this is an unstable situation. [...]
    CLYDE PRESTOWITZ: Here in the United States. So the way this works is that some jobs are outsourced. That creates the threat of outsourcing, which means that the next time you come around for a salary review and a salary increase, you know that it's possible that your job could be outsourced, and therefore your demand for a raise might be mooted. So, this operates at the margin in such a way that whether the number of actual, concrete number of jobs outsourced is high or low, the potential of outsourcing puts a downward pressure on income levels and disciplines you the worker and disciplines, you know, the entire workforce.
    CLYDE PRESTOWITZ: Here in the United States. So the way this works is that some jobs are outsourced. That creates the threat of outsourcing, which means that the next time you come around for a salary review and a salary increase, you know that it's possible that your job could be outsourced, and therefore your demand for a raise might be mooted. So, this operates at the margin in such a way that whether the number of actual, concrete number of jobs outsourced is high or low, the potential of outsourcing puts a downward pressure on income levels and disciplines you the worker and disciplines, you know, the entire workforce.
    BILL MOYERS: You know, just the other day -- well, this summer -- the government's new figures about income said that people at the top are still doing very well and in fact, income is slightly up across the country. But for the 80 million people who live paycheck to paycheck, [income] is down almost 9 percent since 1999. Do you think outsourcing is a factor in that?
  • Los Angeles Times: Rising Premiums Threaten Job-Based Health Coverage. By Debora Vrana. Excerpts: The average cost of health insurance for a family of four has soared past $10,800 — exceeding the annual income of a minimum-wage earner, according to a survey released Wednesday. For some, this year's survey by the Kaiser Family Foundation and the Health Research Educational Trust was the latest sign that a relentless rise in premiums threatens to collapse the central pillar of America's health insurance system: job-based health coverage. Since 2000, premiums have gone up 73%, while wages have grown 15%, Kaiser researchers concluded. [...]
    Drew E. Altman, president of the Kaiser Family Foundation, said the cumulative effect of rising costs was that "we are seeing a slow deterioration of our employment-based health insurance system, which is the backbone of healthcare in this country." As the Kaiser report was being released Wednesday, Starbucks Corp. Chairman Howard Schultz said his company would spend more on health insurance for its employees this year than on raw materials needed to brew its coffee — a sign, he said, that American businesses face a healthcare crisis. "It's completely nonsustainable," he said, even for companies such as his that "want to do the right thing." [...]
    Extending the comparison to trends in retirement plans, Snyder envisions a time when most employers will give defined contributions instead of defined benefits — putting responsibility for finding insurance on the workers. He believes that healthcare plans will eventually be similar to self-directed 401(k) plans that workers control and take with them when they leave. The trend "is very exciting for us," Snyder said. "Employers are going to be saying, 'Here's so much money, you go pick the plan that is best for you.' "
  • Workforce Management: Large Companies Want Employees to Share Health Care Burden. With participation low, consumer-driven plans have failed to bring down costs. Excerpts: Efforts to make employees shoulder more of the health insurance burden by managing their own health care spending and becoming tougher consumers has not yet resulted in significantly reduced costs, according to a new study. The annual survey of employer health benefits found that premiums for employer-sponsored health insurance rose by 9.2 percent in 2004, a lower increase than the two previous years but a rate at which health costs outpaced inflation and wage increases. The average annual premium for a worker with single coverage is $4,024, with the employer contributing $3,413; for family coverage, the premium is $10,880, with the employer paying $8,167. [...]
    But companies don’t think that making employees more market-oriented through higher deductibles, premiums and co-payments will be a panacea. “We expect the prevalence of these consumer-driven approaches to grow, despite the fact that only 16 percent of employers say that they believe that these plans will be ‘very effective’ in controlling health care costs,” the report states.
    One expert who contributed to the Kaiser study warned that consumer-driven health care may result in unintended consequences. “Long-term costs for resulting acute care could rise if preventive care or other chronic disease management is delayed or avoided by those individuals who have high out-of-pocket costs,” says Mary Pittman, president of the Health Research and Educational Trust.
  • Yahoo! message board post: FHA - A week makes a $579 per month difference. By "brizmoydm". Full excerpt: When the retirement plans were changed in 1999, I missed the "within 5 years of retirement window" by 7 days. My 25th service anniversary was July 8 1999 (Service Start Date - July 8, 1974). As a result, I'm stuck with the FHA.
    I went to the net benefits site and got an estimate of my healthcare benefits costs. The result was $1,203 per month for Medical, Dental and Vision for me and my wife. My FHA has a $23,000 balance. It will last two years if I am lucky. I asked a co-worker who has a service date of hire of July 1, 1974 to obtain an estimate of his health care costs from net benefits since he is under the old retirement plan and retirement medical plan. His estimated monthly costs for the exact same coverage was $524.
    The changes to the pension plan were both illegal and show the low level of moral and ethical values that now have become the norm for corporate america.
  • Yahoo! message board post by "fhawontcutit". Full excerpt: Not to nitpick, but isn't the difference $679?
    As I have stated many times, the retiree medical plan changes are a bigger threat to retirement security for most people than the pension plan changes. When your FHA runs out, you will have to pay over $14,000 per year at those rates (assuming you can buy into the plan at those rates and they don't go up).
    And there are those who have been fired prior to FHA eligibility, who get nothing.
    Yes, we have a healthcare crisis in this country. Yes, it's time for everyone to admit it.
  • Yahoo! message board post by "madinpok": "Then and Now". Full excerpt: On Friday, IBM's newest mainframe processor, the z9, started shipping to customers. Over the next year or two, this product will bring in billions of dollars of revenue for IBM and thus it represents a major achievement.
    In the distant past, IBM would hold a celebration and reward the employees in the development lab by providing a special, free lunch such as prime rib, steak, or even lobster. In more recent years, the fancy lunch fell by the wayside along with so many other things.
    Our site executive sent out an e-mail on Friday inviting all employess to come celebrate today and pick up a complimentary treat in the cafeterias. People were speculating on what it would be. A free ice cream? A piece of cake? No... A candied apple.
    It's sad how far IBM has fallen when it comes to thanking the employees.
  • Yahoo! message board post by "d00dle42". Excerpts: IBM had an agreement with me to provide certain compensation for my work. This compensation included a pension with full medical benefits for life. They've already enacted a HUGE retroactive pay cut by taking away my medical benefits, but luckily the pension is protected by law. (somewhat and so far). In return for this compensation, I've worked my fingers to the bone for 25 years. I've missed critical family events, I've given up any hope for a life outside work, and I've sacrificed nearly everything to meet my (sometimes ridiculous) work commitments. My marathon is nearly over and it's almost time for me to collect all that deferred compensation.
    Now they're trying to get out of paying it. I'd like the feds to hold them to their promise. It's only fair.
    Can you explain to me exactly how this is "stealing from the poor?"
    I can give you at least 10 other legitimate places to aim your wrath when it comes to worrying about what your children and grandchildren will be paying for. None of them have anything to do with cheating the American working class out of their pensions.
  • New York Times: Whoops! There Goes Another Pension Plan. By Mary Williams Walsh. Excerpts: ROBERT S. MILLER is a turnaround artist with a Dickensian twist. He unlocks hidden value in floundering Rust Belt companies by jettisoning their pension plans. His approach, copied by executives at airlines and other troubled companies, can make the people who rely on him very rich. But it may be creating a multibillion-dollar mess for taxpayers later.
    As chief executive of Bethlehem Steel in 2002, Mr. Miller shut down the pension plan, leaving a federal program to meet the company's $3.7 billion in unfunded obligations to retirees. That turned the moribund company into a prime acquisition target. Wilbur L. Ross, a so-called vulture investor, snapped it up, combined it with four other dying steel makers he bought at about the same time, and sold the resulting company for $4.5 billion - a return of more than 1,000 percent in just three years on the $400 million he paid for all five companies. [...]
    Now Mr. Miller is at Delphi, the auto parts maker that was spun off by General Motors in 1999. If past is prologue, one of the most powerful turnaround tools at his disposal will be his ability to ditch Delphi's pension fund. He did not return numerous telephone calls seeking his views for this article, but in the past he has said that his first priority at Delphi was to "resolve" its "uncompetitive labor cost structure." That includes the roughly $5.1 billion gap between the pensions it has promised employees and the amount it has put aside to pay for them.
    If the obligation to make good on Delphi's pensions eventually lands, in whole or in part, at the door of a governmental guarantor, few should be surprised. The Pension Benefit Guaranty Corporation has become an increasingly popular option for private-capital funds and other investors who are seeking to spin investments in near-bankrupt industrial companies into gold. The key is to shift the responsibility for pensions, which weigh as heavily as bank loans on a company's balance sheet, to the pension corporation.
  • Los Angeles Times: Strike Is About More Than Pay and Benefits. Boeing's increasing reliance on foreign suppliers for jetliner parts is resulting in the loss of skilled manufacturing jobs at home. By Evelyn Iritani. Excerpts: For Luark and other members of the International Assn. of Machinists and Aerospace Workers who voted to go on strike two weeks ago, the global economy is an increasingly powerful presence at the negotiating table. At issue in this contract dispute is more than just pensions and healthcare. Boeing workers, union leaders and their supporters now wonder whether even the most sophisticated U.S. manufacturing jobs can survive in an increasingly brutal global economy — and what, if anything, can be done to protect what remains.
    Two decades ago, most of the parts for Boeing's aircraft were produced in the United States, primarily in the Seattle area. But 60% to 70% of the airframe of the company's next-generation 787 Dreamliner will be made overseas, including key parts such as the fuselage and wings, analysts say. Only one part, the vertical fin, will be manufactured in the Puget Sound area. [...]
    Much of the concern about outsourcing has focused on the threat of U.S. jobs fleeing to low-cost locations. But less attention has been paid to the effect global competition has had on the wages and working conditions of those workers left behind, who face growing pressure to increase their productivity or risk seeing their jobs disappear. "What's new about the global economy is First World productivity combined with Third World wages," said Harley Shaiken, a labor economist at UC Berkeley. "That can create some real downward pressure on high-wage countries."
  • New York Times: Not the New Deal. By Paul Krugman. Excerpts: Now it begins: America's biggest relief and recovery program since the New Deal. And the omens aren't good. It's a given that the Bush administration, which tried to turn Iraq into a laboratory for conservative economic policies, will try the same thing on the Gulf Coast. The Heritage Foundation, which has surely been helping Karl Rove develop the administration's recovery plan, has already published a manifesto on post-Katrina policy. It calls for waivers on environmental rules, the elimination of capital gains taxes and the private ownership of public school buildings in the disaster areas. And if any of the people killed by Katrina, most of them poor, had a net worth of more than $1.5 million, Heritage wants to exempt their heirs from the estate tax.
    Still, even conservatives admit that deregulation, tax cuts and privatization won't be enough. Recovery will require a lot of federal spending. And aside from the effect on the deficit - we're about to see the spectacle of tax cuts in the face of both a war and a huge reconstruction effort - this raises another question: how can discretionary government spending take place on that scale without creating equally large-scale corruption?

Vault Message Board Posts
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. The following are a few sample posts:
  • "Amazing" by "livelife17". Full excerpt: You know what is truly amazing? IBM's reputation for being a good employer. I have to admit the name did get my foot in the door in a lot of companies. The truth is top talent is recruited there. But I have since moved on from IBM and I can't tell you how many people have asked me why I left such a good employer. I fail to get into lengthy conversations with them on the topic but just mention the turnover rate and the horrific hours. I wonder when this "big blue" reputation will change to reality. I guess their sponsoring laid off people to teach in schools is part of their reputation building. I've often been tempted to do a dissertation on this place. It's almost frightening how the perception and reality are opposite extremes. Thank you for presenting the truth on this site. As far as lawsuits, I agree with you, the truth is what it is.
  • "Congratulations One Opinion" by "Dose of reality". Excerpt: Turnover for the last 2+ years has been 25-30% in BCS. The stats are not much better in IBM at large. Back in January or February there were some statistics published on the IBMemployee.com website that showed the turnover history in the 20%+ range. IBM voluntary turnover hasn't been in the mid single digits since the Great Depression. Of course, if that was your reference point, that would explain a lot about your current point of view on the company!
  • "Statistics derived from IBM documents" by "IGS_Consultant". Full excerpt: IBM's turnover statistics (mentioned above) on www.ibmemployee.com are derived from documents IBM submitted to the federal government. Details are available at http://www.ibmemployee.com/Highlights050122.shtml.

New on the Alliance@IBM Site:
  • Binghamton Press & Sun-Bulletin: Data: More heart defects in Endicott spill zone Neighborhood's babies have double normal rate. By Tom Wilber. Excerpts: A thick purple scar separates Deron Every's tiny ribs where surgeons repaired his malformed heart days after he was born on Nov. 3, 2003. it's a mark of a medical miracle -- and a distressing fact. Babies born in a polluted neighborhood on the south side of Endicott have an alarming rate of heart defects: The state Department of Health documented at least 15 cases over a 17-year period ending in 2000 in a neighborhood of about 2,600 people -- more than double the norm. And, there are more. [...]
    Deron's old neighborhood, where scientists documented the high rates of heart defects, is tainted by a subterranean plume of chemical vapors leaching from the former IBM Corp. campus on North Street. Near the time of Deron's birth, after testing showed vapors were wafting into basements to the south, IBM had begun installing systems to divert the fumes from more than 430 properties.
  • Binghamton Press & Sun-Bulletin: EIT ordered to reinstate fired union organizer. Company considering appeal. By Jeff Platsky. Excerpts: The National Labor Relations Board is telling Endicott Interconnect Technologies Inc. to reinstate Rick White to his former position or equivalent, and make him whole for nearly three years of salary and benefits lost since the company fired him.
    In a 2-to-1 ruling, the board affirmed a ruling by an administrative judge in favor of the engineering technician who was discharged after making what EI claimed were disparaging comments about the company in two public forums. The commission ruled that White's public comments about the company were protected in his capacity as a union organizer, and the company could not use his opinions as basis for firing him. White had transferred to Endicott Interconnect after 28½ years with IBM. [...]
    Meanwhile, White is awaiting word on the company's next move. He has been working part-time for the Alliance@IBM, the union movement, since early 2004 after winning his battle with Endicott Interconnect to collect unemployment benefits after his termination.
    The company dismissed White in December 2003 for "insubordination," claiming his statements questioning management's decision to lay off 200 people shortly after taking over the company from IBM Corp. undermined the new company's credibility. White, an active member of an organization attempting organize both IBM and Endicott Interconnect, said the statements were made to present the union's side of the argument against management's action.
  • Alliance@IBM: Attention IBM employees: IBM is blocking e-mail to and from the Alliance@IBM e-mail address endicottalliance@stny.rr.com from inside the company. Please send your job cut information and other correspondence from your home e-mail. You can also contact us the following ways: Phone 607 658 9285 or Fax 607 658 9283.
  • IBM Pension Lawsuit FAQ about Cooper v IBM, Updated 6-21-05. Excerpt: Below is a list of frequently asked questions about the class action lawsuit against IBM's 1995 and 1999 pension plans. The answers are my personal opinions, have not been verified with either IBM or plaintiffs’ counsel, and should not be construed as legal advice. On July 31, 2003, a federal district court judge ruled in favor of the employees in this case. IBM will appeal portions of the ruling. On September 28, 2004, IBM and the legal team on Cooper v IBM announced that an agreement had been negotiated that settles some of the claims and set the amount of damages that IBM will pay to the class if IBM's appeal of the district court's age discrimination rulings is unsuccessful. Click on any question to jump to the answer. Or scroll down and read them all.
  • Job Cuts Status & Comments Page. Excerpts: Job cuts are coming. Information needed: What is Your location? How many job cuts at your location? What locations are cutting jobs? Name of Division and Business Unit? Some sample posts follow:
    • Comment 09/13/05: Well I don't know about in the US, but in the UK we only had a team of around 90 people (sales, admin, technical, management). We had a round of voluntary redundancies in June which saw 13 people leave (mostly technical)! This was at a time when the company knew we had a ton of work in the pipeline for the following quarters. So the technical workforce is severely stretched with far more work than hours in a day to do it.
      Then the company announces a huge (by Rational standards) services contract with a bank in London. There is simply not enough resource to cover it, but there is no recruitment either. If that wasn't bad enough,
      I was talking to a guy who is an IBM manager. He told me that there would be virtually no pay raises this year (we have our reviews in November). The 'pot' has only been funded 1% and even then they have set a coverage on that to ensure managers can't give 1% to everyone.
      The manager guy is expecting the excrement to hit the fan when he has to tell his team. I found it hard to believe until the UK management team sent out a mail stating that pay reviews were being limited to only the very top performers in light of a challenging business environment. This was just after the line about how good Q2 and most of Q3 have been. Priceless. Then to make matters worse my contact then told me there will be more redundancies later in the year. Probably a nice Xmas present for us all! Ho Ho Ho! -Anonymous-
    • Comment 09/14/05: I agree with the previous comments that you work only for your manager. I worked in an engagement team in AMS and won several groundbreaking deals last year; revenue was also coming in from renewals of contracts I had won. A few of my peers won no deals, but because they lived in the same city as my manager (I don't) they regularly went fishing together at each other's cottages. Although I got a good appraisal, team award and bonus (decided by the sales team) I was let go 2 months after. My ex-colleagues and other senior management were shocked and sad that I was "downsized" and told me so in writing. My advice is: TRUST NO ONE especially those who are your most friendly peers. -Anonymous-

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