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6, 2000 April, 2000

Highlights—March 14, 2009

  • New York Times: Big Blue’s Contrarian Manifesto. By Steve Lohr. Excerpt: By now, much of corporate America is humbled and hunkered down, hoping to survive an economic crisis that seems to become worse day by day. That is certainly not the posture at I.B.M.’s headquarters in Armonk, N.Y. In a spirited message in the annual report sent to shareholders on Monday, Samuel J. Palmisano, I.B.M.’s chief executive, writes, “We entered this turbulent period strong, and we expect to exit it stronger.” Later, Mr. Palmisano adds: “We will simply not ride out the storm. Rather, we will take a long-term view, and go on offense.”
  • CNN/Money: IBM Chairman Issues Upbeat Message To Stockholders. Excerpt: Palmisano's letter stresses IBM's global exposure - nearly two-thirds of the company's business comes from outside the U.S. - and its investment in cloud computing as two trends which it believes will help the company keep its edge over peers and prosper not just in the current environment but after economic growth returns.
  • Associated Press, courtesy of Forbes: IBM chief's 2008 pay valued at nearly $21M. By Jordan Robertson. Excerpts: IBM Corp.'s chairman and chief executive, Sam Palmisano, received a compensation package valued at nearly $21 million in 2008, only slightly higher than the year before, according to calculations by The Associated Press. In describing the pay package in a regulatory filing Monday, IBM's board praised the Armonk, N.Y.-based technology company's "very strong" performance despite the rocky economy. IBM's profit jumped 18 percent to $12.3 billion in 2008, helped by better margins in software and services. Those are two areas where IBM's corporate customers continue to invest as a way to save money, by outsourcing or automating some of their tech chores, like managing payroll. ...

    Palmisano also got an award of performance-based stock that was valued at $12.2 million when it was granted in May. The number of shares he actually gets will depend on IBM's performance, and they won't be handed out until Feb. 1, 2011, the company said in its filing. ...

    Separate from the compensation Palmisano was awarded in 2008, he exercised 350,000 options worth nearly $15 million during the year, and had 59,764 shares worth a total of $6,610,537 vest during the year.

  • Wall Street Journal Digital Daily by John Paczkowsk: Will This New “Long-Term View” Approach Also Include Layoffs? Excerpts: Whatever does not kill us will make us stronger. That’s the view of IBM CEO Sam Palmisano, who says the recession will not do to Big Blue what it is doing to so many others. In an exuberant letter to shareholders today, Palmisano wrote that IBM will not cower before the current economic turmoil. “Many companies are reacting to the current global downturn by drastically curtailing spending and investment, even in areas that are important to their future,” he said. “We are taking a different approach. Of course, we must continue to improve our competitiveness. But while we maintain discipline and prudence in the near term, we also maintain the discipline to plan for the future. We’re not looking back, we’re looking ahead. We’re continuing to invest in R&D, in strategic acquisitions, in growth initiatives–and most importantly, during these difficult times, in our people. In other words, we will not simply ride out the storm. Rather, we will take a long-term view, and go on offense.”

    Ignoring for a moment the irony of a company that’s laid off 4,600 employees in the past few months professing to invest in its people, Palmisano’s remarks are quite interesting. Certainly, they’re anomalous to much of what we’ve been hearing lately. No gloom and doom from ol’ Sam, only contrarian bluster. Perhaps just enough to justify that 14 percent pay increase he accepted in 2008….

  • eWeek: IBM in Layoff Crosshairs. By Don Sears. Excerpts: Is IBM deliberately scaling back American jobs for foreign ones? Is Big Blue trying to keep news of layoffs out of the press and away from stockholders who might look to invest elsewhere? For a number of reasons, one arguably being to keep IBM's stock a consistent darling of the market, it appears IBM is in a bit of a public relations pickle with how it is handling layoffs and how it may be trying to weasel around the notification laws regarding employees by doing layoffs in dribs and drabs instead of all at once.

    It doesn't help that the day after reporting strong quarterly earnings on Jan. 20, IBM's CEO Sam Palmisano publicly said that while other companies are making cuts, IBM would "invest in its people," and yet the very next day layoffs were announced. Weeks after the earnings call, the company has eliminated or will be eliminating nearly 4,600 jobs in North America. That's not a number easily dismissed as normal cost-cutting activity. ...

    IBM isn't alone in this layoff predicament. Many companies, technology or otherwise, try and avoid press that can be construed as negative when it comes to labor relations and the elimination of jobs. But if the CEO is going to tell investors one thing, then take actions that show the opposite, it's no surprise that the spotlight is on the company right now, and perhaps IBM needs to spend some more time explaining its strategy. I imagine stockholders want a better understanding of what is going on here, as do employees who feel the company may be taking advantage of a downturn to boost numbers for the year.

  • ABS-CBN (Philippines): IBM, Sara Lee ink 7-year outsourcing deal. Excerpts: A seven-year business transformation outsourcing agreement was recently signed by IT giant IBM Philippines and consumer goods firm Sara Lee Corp. to provide finance and accounting services for the latter's global back office operations. In a statement, IBM said it will manage a portion of Sara Lee's transaction processing in North America and Europe for seven years, as well as the company's applications development and maintenance groups and global indirect procurement activities.

    As a result of the collaboration which was signed last December, IBM will be increasing the capabilities of its Manila Delivery Center, whose multilingual workforce provides services in German, French, and Spanish, in addition to English and local dialects. In turn, Sara Lee said it is will look to "drive additional cost and efficiency improvements" through the deal.

  • BusinessWeek: IBM's Global Mentoring Program. By Steve Hamm. Excerpts: IBM has started up a new global mentoring program that I think is really smart. It links employees in emerging markets with those in developed nations. The program was tested in China, South Africa, and India, and this year is reaching Russia, Dubai, Malaysia, Brazil, Vietnam, and the Philippines.

    It’s starting to pay off. Example: Taiwanese software programmer David Lin paired with Danny Chen, an engineer who was born in Taiwan but works in Austin. Chen taught Lin how to develop ideas that were patentable, and Lin set up an invention team in his office and began publishing a newsletter full of tips for new inventors. Last year the Taipei lab got five patents, up from one in 2005. For his part, Chen got valuable advice from Lin on how to do business in China. ...

    This program is part of the company’s strategy of creating what it calls a globally integrated enterprise. Multinationals used to operate separate businesses in each country or region. IBM now assigns work to employees all over the world, relying on widely scattered teams to collaborate. But tight collaboration doesn’t happen on its own. You have to create experiential glue to bring and keep people together.

    Selected reader comments for this article follow:

    • Mentoring or training your offshore replacement? IBM is shifting work offshore at a record pace. Say goodbye to IBM US jobs.
    • This bit of PR is just a "cover" for people training their offshore replacements. It's just a matter of time before the American worker loses his/her job to the cheaper worker in India, China, Brazil, Ethiopia or elsewhere.
    • After the "mentoring" is done you're unemployed
    • Take it from some one who is caught in the middle of this now. We are training our offshore replacements. This has caused nothing but a loss of core knowledge and a major increase of responce times. IBM may be making a smarter planet by offshoring the knowledge to other countries but they are only hurting the companies they are suppose to be supporting. Wake up IBM. You're degrading your reputation to protect your short term bottom line.
    • Mentoring? Pah! It's the (soon to be ex) wife teaching hubby's hot new girlfriend how to cook his dinner. Why do people fall for this? It's like lambs to the slaughter.
    • Well, that's an interesting article. Ask most IBMers what is really happening--they're training their replacements. How do I know--because I did it myself!
    • This is all about spin. IBM doesn't care about mentoring. It's all about Global Resourcing US working. They are tasked to get rid of highly paid US professionals and send those jobs to other countries like Argentina, Brazil, India, et al. Just ask Joanne Collins-Smee...she's the driving force behind the GR movements.
    • How innocent & positive mentoring sounds. Providing expertise that's not currently available offshore, makes it sounds so ... hmm.. realistic. I'm tired of hearing how IBM & other companies are off-shoring because they want to take advantage of cheap off-shore talent. They just want the cheap. The talent is still mostly in the US and Europe. The cheap is in India, Brazil, China, South Africa, etc.
    • This story is a paid endorsement for IBM. IBM really uses employees to transfer knowledge to developing countries and then severs the US employee. What a joke of a story BusinessWeek!
    • The example cited in the article is probably in the minority of cases where there are benefits both in the US and abroad. When you actually work within the company, you hear of far more stories of US employees training others who are overseas, only to be eventually laid-off via the process of a bad evaluation.
    • What a joke! I was told in Feb. that the job I have been doing above and beyond (with 20% unpaid forced OT so they can charge the customer) for the past 24 years is being gr'ed (global resourced). It all has to do with getting cheaper resources. IBM doesn't care about experience, respect for the individual, or customer satisfaction.
    • This is just IBM spin masters at work again. Global Mentoring Program = Train your replacement in a lower labor market so we can let you go and improve our bottom line. It is below BusinessWeek's to fall for this hog wash without doing it's due diligence to find out what is really going on.
    • Let's see if Danny Chen still has a job in a year. Or maybe he will - back in Taiwan! See Project Match
    • Does seem that IBM's not internally trusted, doesn't it?
    • American companies are getting fooled too. Ask any one of them if their outsourcing costs have gone DOWN since their contract services have moved offshore using cheap labor. Nope. They are still charged the same as if outsourcing done onshore by Americans. Guess who benefits.
    • Hey I actually know Danny Chen, he is a very good friend of mine here in Austin. He is a very bright and talented guy. Everyone on here seem to be against training others due to fear of being replaced. I really don't think IBM will replace a talented individual like Danny. I will ask him how he feels about this subject.

  • ABC News: Unemployment: Companies Cut Pricey Older Workers. High Health Care, Salaries, Pension Trump Experience and Wisdom, Say Experts. By Susan Donaldson James. Excerpts: Barbara Polahmius said she devoted 13 years to a small California health care agency -- getting rave reviews for her performance, mentoring other employees and taking on extra tasks that weren't part of her job description. But when the nonprofit was taken over by a large conglomerate eager to cut costs, she was the first to go.

    In October, at the age of 58, the Santa Cruz medical information analyst was laid off, replaced by a co-worker -- "a lovely girl," half her age -- whom she had trained. "I absolutely believe it was my age," she told ABCNews.com. "We were the ones who know about hard work and have accumulated a lifetime of knowledge. ...

    Finding ways to shed older employees -- who are at the top of the salary food chain and cull expensive medical and pension perks -- is nothing new, according to experts. "It's not surprising if it's happening now," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. "What you might see in any time when there are large-scale layoffs, is the fudge-ability increases."

    "Let's face it," he told ABCNews.com. "To the extent a company may feel that it is to their advantage -- and I am not saying it's the right or wrong thing to do -- when they are making small-scale cuts, it's more difficult than when they are making large cuts. But, in the worst economy since the Great Depression, corporations have more cover to practice what some believe is outright discrimination. ...

    After 25 years in the financial field, Stuart Floyd of Succasuuna, N.J., soon faces a lay-off as a project manager at a major global bank. He said he "knows for a fact" that his job is being outsourced to India. Even at 43, he is worried that he won't find comparable work. "It's my age as well as the cost," he told ABCNews.com. "The key issues are the health costs, but much more comes into play. ... It's mostly the age, even though I can't prove it.

  • Yahoo! IBM Employee Issues message board: "Re: Quiet Layoffs Sting Workers Without Notice" by Bob Sutton. Full excerpt: Remember that the genesis of IBM was in the developed (high labor cost) countries and that there was little money elsewhere.

    When Globalism got traction in the mid 90s with the last building block (the Internet) that all changed as good paying jobs where shipped to the third world. So now the master of the universe think that their capital will get better return there than the developed ones and so far so good.

    So with IBM almost out of the product business and into the intellectual services they are shifting the center of gravity of IBM jobs to developing countries too to arbitrage those low wages where in India you can hire five engineers to one in the USA.

    Leveraging the shift in cost reduction IBM is not even half way to complete that cycle and so IBM can continue to promise returns higher than most but take note that revenue is really not growing much at all just profits from this cost reduction.

    At some point in the future that transition will be over and then the fundamental problem of growing the business i.e. revenue will take over again. Actually when you look at IBM today its more like a financial company than a true services one as it "manages itself" into a higher profit margin...

  • Yahoo! IBM Employee Issues message board: "Re: Quiet Layoffs Sting Workers Without Notice" by "bits_bytes_and_bugs". Full excerpt: I believe that the movement to offshore to low cost countries will eventually cause IBM's demise. The issues with IBM's strategy are many, but the biggest are the following:
    • The offshore labor in low cost countries is extremely inexperienced.
    • IBM is not hiring the best and brightest in these countries, they're hiring the cheapest.
    • The vast majority of these offshore resources are not employees, they are contractors.
    • IBM is not investing in long enough training and mentoring for these resources - 6 months tops.
    • Turnover is incredibly high because IBM does not pay enough to retain them.
    • IBM is gutting the experienced and skilled personnel that now fix the many problems the inexperienced create.

    Here's the takeaway - After 2012, there will be no experienced product designers and developers left in IBM, just the low cost (and low value) country based developers who due to turnover, lack the maturity, experience and skill to make quality hardware and software products, leaving IBM with extremely poor products or perhaps no products to sell at all.

    Having nothing to sell, with customers leaving in droves due to poor quality and a huge number of lawsuits filed for non-performance/fraud, the IBM Corp will go bankrupt by 2015.

  • Yahoo! IBM Employee Issues message board: "Re: Quiet Layoffs Sting Workers Without Notice" by "anon4mail". Full excerpt: I agree with barbienys. I believe that the arbitrage plan is smoke and mirrors, and that IBM's getting by on creative accounting and nearly illegal business practices. (Perhaps the January profits were assisted by more than a few servers going for their annual, December ride around the block before returning to the warehouse? ;) ) I believe that IBM is sacrificing the goose (customer satisfaction, core competencies, employee loyalty) for immediate golden eggs (lower cost "resources"), and that it will eventually catch up with it. Only in the accounting world are any two "engineers" equivalent and interchangeable ... repeatedly. I believe that experience isn't transferable and that a diploma isn't a substitute. I believe that successful companies develop synergy through collective knowledge and experience, and that employee stability is necessary to maintain synergy. Just like Lehman Brothers, IBM has highly leveraged its resources ... um, I mean its employees, and has gambled that the market wouldn't turn and leave it exposed.

    Only time will tell whether IBM's strategy is successful. Personally, I've got s'mores ingredients in my cupboard, ready for roasting, for the day when IBM finally implodes into a massive, global bonfire. I will celebrate the day when this disciple of Jack Welch's "Rank and Yank" management style, with an added arbitrage twist, proves to the world that the philosophy is a complete and total failure.

    No one will step up to save IBM. IBM has no country. It has been as disrespectful to its disposable homeland as it has been to its disposable employees (resources … whatever). Even shareholders, who'd been appeased with profits, will turn on IBM. Their loyalty is fleeting when profits are nonexistent. There is a grass roots swell of loathing for IBM's practices. It exists and is entrenched, regardless of the media's reluctance to report on the issue, and it will be heard ... just like it was heard with Barack Obama's "surprising" victory.

  • Yahoo! IBM Employee Issues message board: "Less than 4 months short of being able to bridge to full retirement" by "cspolski23". Full excerpt: I'm curious as to what options I have, if any, to argue/fight/beg for the less than 4 months I need to get to 29 years with IBM so that I can bridge to retirement and receive full retirement benefits. The difference in monthly pension payments is a loss of $380/month in my monthly pension. If I start collecting at age 55 (I'm currently 50), and live for at least 25 years, that adds up... ($114K). I'd give up the severance pay if I could get that bridge.

    There are no jobs in BTV site right now and I guess a move to another location for 4-5 months is not worth the upheaval to myself and family. I would not move my family and do not want to separate for them. I am not hopeful of finding another job within IBM where I can stay in VT.

    I have read on this site that i can sign the papers, get the severance pay and then file an age discrimination complaint. I'm just wondering if anyone else has been in this situation and thought of something that helped them get this bridge that I haven't thought of yet. Thanks. Carol P.

  • Yahoo! IBM Employee Issues message board: "Re: Less than 4 months short of being able to bridge to full retirement benefits" by "ibmmike2006". Full excerpt: I think that any company that would lay you off with only 4 months to to go to your 30th year is IMMORAL. If IBM Human Resource VP Randy McDonald is allowing someone who has worked for them nearly all their working life to be forced from IBM for theft of pension, then he will answer to a higher authority when he vacates this earth.

    First of all, there are laws that were written to prevent age discrimination. I saw the video about how 59% of the laid off Rochester employees are over 50 years old. IBM knows that when you are over 50, if you had the old retirement plan, the pension maximizes in your late 50's. If IBM can force you out the door early, then that is less than they have to pay you in your pension. I figure I lost 50% of the pension figure that were used to keep me employed during my 10th, 15th, and 20th year by forcing me out. I believed the managers when they told me of the great benefits of IBM. When I was a manager, I told the people I was responsible for, how great it was to be an IBMer even though the pay was 15% less than the industry.

    Since Gerstner was CEO, he took the "low road" to get to the pension fund money to boost profits and give him the 20 million IBM shares he gave himself in 1998 and cashed in before 2008. He made billions from you and the other 150,000 he forced out the door with pension dollars. Remember, Randy McDOnald and the others were right there with him as the instruments of forcing people out. I am not sure how they sleep at night.

    During the Gerstner years and after, some of the illegal age discrimination was challenged. The government and the courts were pretty much anti worker and pro corporations thanks to the billions of dollars annually funneled into Congress and the appointed federal judges. It was not a "worker friendly" era and the money flowed to Congressional districts where the corporations like IBM had a litigation issue with a former employee or business enterprise. All it would take is to make a phone call to the right person, a large donation or grant to a IT school and the deal was sealed. The corporations had an edge.

    Today, the change in Washington is a different game. IBM might feel they are confident enough to "lay off 50 year old IBMers" with age discrimination immunity, because they have been successful in "beating the rap" before. I don't think they should be so cocky. With 59% of those laid off being over 50, they might think because they got away with it before, that they can do it again.

    Well, if you think about how much money you lost in your pension IBM is taking away by forcing you out before your pension maximizes, you might rid your mind of guilt and shame and fight back perhaps. If there are more than 20 of you, over 50, and laid off, it is ripe for class action and you need to see an attorney before you sign anything. Look in the yellow pages for an employment lawyer who is NOT a corporate employment lawyer (the bad guys).

    I wish you well, sorry to hear that IBM is continuing to age discriminate like it was 10 years ago. You will feel better if you fight back rather than accept the immoral activity of IBM that has been placed upon you.

  • Poughkeepsie Journal: IBM chief paid $21 million. Excerpts: The chairman and chief executive of Dutchess County's largest private employer, IBM Corp.'s Sam Palmisano, received a compensation package valued at nearly $21 million in 2008, only slightly higher than the year before, according to calculations by The Associated Press. In describing the pay package in a regulatory filing, IBM's board praised the Armonk, Westchester County-based technology company's "very strong" performance despite the rocky economy. ...

    The local picture isn't as positive: Hardware sales took a hit as corporations put off buying new servers and mainframes. IBM has facilities in East Fishkill and Poughkeepsie that work with chip manufacturing and mainframes. According to employees, the company cut as many as 900 jobs locally in January. IBM has not provided specific numbers. ...

    Lee Conrad, national coordinator for workers' group Alliance@IBM, pointed out IBM workers in East Fishkill took a 15 percent pay cut in January and many are worried their jobs will be moved overseas soon so IBM can cut payroll expenses. "I'm sure the IBM employees aren't real happy seeing Sam Palmisano get [an] increase and a similar increase last year while employees are getting very little in terms of their own salaries," Conrad said.

  • Poughkeepsie Journal: Comments for IBM chief paid $21 million. Selected comments follow:
    • In today's economic climate and by the fact that IBM is laying off hundreds of people in the Hudson Valley, this is despicable! People are losing their homes because they are getting laid off and this man has the audacity to accept a bonus like this? If he is worth his own salt, he won't accept this and reinvest the money in the people who actually work and make IBM what it is!!! I guess the $1.8M + the $20M from last year isn't enough to get through to 2010 or 2011!
    • Palmisano is a thief. Is he blind to what is going on in the country and in the company he works for. It is sad that the executive compensation system is run by greedy, corrupt, insensitive individuals for the betterment of greedy, corrupt insensitive individuals.
    • How can this guy sleep at night? Does he not have a conscience? I think we all might have felt better NOT knowing what he got this year! I'm a believer of ..."WHAT GOES AROUND COMES AROUND"!!.... we'll see!
    • Every year the company posts gains based on savings from outsourcing jobs to China, Brazil and India. How will it continue to grow when there are no more american jobs to cut? Why should the government give IBM and tax breaks or incentives when they are the ones hacking away at the US economy.
    • And we wonder why we have a crisis of epic proportion in our country. Does this make sense? A guy plays a game and gets $25 million dollars a year. A guy sings a song and makes $ 10 million, a guy acts in a movie and makes $10 million. A CEO lays off thousands of US Workers, making them homeless, destitute and in financial distress while raising the Standard of Living in India, China and Brazil. He gets $21 million. He gets rewarded for lowering the standard of living in the US, putting American workers on unemployment. Small wonder our country is in trouble.
    • I've never worked for IBM but I have worked for other big corporations and I wish someone could explain to me how ANY SINGLE LIVING BEING on this earth can possibly make a decision or decisions that are worth that kind of money.
    • Here's the thing, lay off the entire fishkill site? Workers who barely make anything, right and this guy takes all the money. That's insane! This has got to be stopped here in america. This guy is off the charts. Making every one do this so called PBC and it's all a bunch of junk. This guy sam literally took jobs and pocketed the money. This should be a crime and I hope there will be a law passed to stop these companies from doing whatever they want with peoples lives. I worked for IBM for 13 years and basically told them to stick it where the sun don't shine because of a 20% salary cut, oh yeah and the years before raises were, nothing, was a 5% increase in 5 years and then a 20% pay cut? Means I never got anything. Never had an increase and sam took all of it the lousy SOB!
  • Forbes: Layoffs Are Cooling Down, At Least For Now. By Klaus Kneale. Excerpt: Last week, the Forbes.com Layoff Tracker counted a mere 6,000 layoffs announced at the 500 largest U.S.-based public companies, a far cry from the 20,000 to 90,000 in previous weeks. Maybe it's time for some cautious optimism. Companies are still unloading thousands of employees. Many of the layoffs already announced won't be completed until months or even years from now. But it's still cheering news when the layoff storm lets up, even a little.
  • Michigan Office of the Governor: Governor Granholm Joins Rep. Steve Bieda to Keep State Contracting Jobs in Michigan, U.S.. Excerpts: At an event at Macomb County Community College to illustrate the impact that outsourcing of jobs has had on a community, Governor Jennifer M. Granholm today signed two executive directives designed to keep jobs related to state government contracts and services in Michigan. Joining Granholm at the event was State Representative Steve Bieda (D-Warren) who is sponsoring legislation to address outsourcing in the Michigan House of Representatives.

    “Today, I have signed two executive directives that will ensure that Michigan taxpayers are not subsidizing the export of jobs,” Granholm said. “I commend Representative Bieda and his House Democratic colleagues on their efforts to focus on how we can stop the practice of outsourcing jobs at this critical time when our economy needs every job we can provide or create for a Michigan resident.”

  • Workforce Management: Top-Exec Pay Train Runs Full Steam Ahead. Excerpt: Amid the deepest economic collapse in generations, corporate America is coming up with a novel way to justify extravagant executive pay: Ignore the bad news.

    Companies that sank into the red last year are looking past a host of business expenses, ranging from asset write-downs to higher-than-expected operating costs, to rationalize paying brass even more than they got in flush times. Others appear to be reducing pay but continue to bestow extraordinary perks, such as “golden coffins.”

  • BusinessWeek: India: Worries Grow About Obama Outsourcing Policies. If Obama makes it difficult for U.S. companies to send jobs overseas or hire using H-1B visas, India's huge IT sector could suffer. By Mehul Srivastava. Excerpts: After a decade of outsourcing helped transform India into much of the world's back office, Indians are worried that President Obama's new Administration—and the slowdown in the global economy—will cast a shadow over one of the fastest-growing sectors of their economy. Obama's $787 billion stimulus plan will make it increasingly difficult for U.S. companies receiving bailout money to hire foreigners on temporary work permits known as H-1B visas. The budget the President recently presented may also make it harder for U.S. companies that send jobs overseas to receive tax benefits. ...

    At a time when nearly 5 million Americans have applied for unemployment benefits and another 1.7 million are working part-time jobs because they can't find full-time work, immigration and outsourcing have become key political issues in the U.S. As he did during his campaign, Obama has made clear during the first weeks of his Presidency that he intends to pursue policy changes to discourage outsourcing and the use of U.S. work visas—especially H-1B visas—that could cost American jobs. At no time has he made the exact policies clear, says Altshuler. Even within the government, the changes remain a mystery. Edward Kleinbard, the chief of staff for Congress' Joint Committee on Taxation, was forced to offer up a guess about the cryptic item in the budget during a meeting with a group of international lawyers last week. "Deferral will certainly be at play," he said, according to a report in Tax Notes, a publication of the Tax Policy Center. He was referring to how corporations are able to defer paying tax on income earned overseas until they bring that money back to the U.S.

  • Yahoo! IBM Pension and Retirement Issues message board: "Form 5500 for January 2007" by Art Vandalay. Full excerpt: I received the latest Form 5500 and have passed it along to Janet to be posted in the file section. A couple of observations. Employee (ones with a pension or cash balance) headcount for the US continues it decrease:
    2001 147,861
    2002 137,826
    2003 135,809
    2004 135,060
    2005 127,380
    2006 119,723* (127,000 to 130,000 estimated US IBM headcount)
    2007 111,001* (127,000 to 130,000 estimated US IBM headcount)

    These dates are based on employees working in the US on January 1st of that year. (Officially the data is two years and two months old when we get it.)

    * This is also the first full year we have had employees that had no pension plan at all (Cash Balance or the Prior Plan.) This would have been employees hired in the calendar year of 2006.

    I believe 2005 was when the removal of pension plans took place, since only 140 employees were listed for that first year.

    At this point in time, the number of employees on the cash balance plan are 80,460. There are 862 employees not accruing any time on the PPP. That leaves 29,679 who should still be on the prior plan as of January 1st 2007.

    I think this is close, but might not be exact for the number of employees on the old plan in 1999 and then in 2007:

    • 1999: 64,945
    • 2007: 29,679

    I also estimated(roughly) that the employees still with a cash balance plan accounts for $4.4 billion.

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Century Foundation Health Beat: Broadcasting Misinformation: Planting Seeds of Fear. Excerpt: Inevitably, the debate over healthcare reform will inspire some to try to broadcast misinformation, sowing seeds of doubt, false hope or fear in the public mind. I will try my best to rebut some of the more flagrant attempts, on both sides of the issue. In the past, I have complained that progressive single-payer advocates sometimes exaggerate just how much could be saved if we eliminated private insurers’ administrative costs from the nation’s healthcare bill here (For an excellent, even-handed analysis of administrative costs for private sector insurers compared to public sector insurers, see this Urban Institute report).
  • Bloomberg: No Reason to Demonize U.S. Single-Payer Health. By John F. Wasik. Excerpt: It’s time to stop kicking sand in the face of single-payer health care. It may be the strongest solution around to insure every American at a lower cost. After decades of industry campaigns against this model -- dubbed by its critics as “socialized” medicine -- it’s important to stop whining and evaluate the many economic benefits. Health care is a fundamental human right.

    If President Barack Obama wants real change in American health care, he will have to get over the fear of even mentioning single-payer concepts. At his health-care summit last week, only the threat of a demonstration garnered late invitations for Oliver Fein and Congressman John Conyers, two leading proponents of the single-payer plan.

    Health-care costs have become a crippling personal-finance burden for 45 million uninsured and 25 million underinsured Americans. Those outside of the fractured employer-based system are only one illness away from financial ruin. Lose your job and most likely your health coverage will disappear unless you want to pay exorbitant rates. And it’s getting worse. Because of the growing jobless rate, some 14,000 Americans are losing their coverage daily, according to the Center for American Progress Action Fund.

  • New York Times: Bad Economy Leads Patients to Put Off Surgery, or Rush It. By Kevin Sack. Excerpts: As the recession deepens, doctors and hospitals are reporting that hard-pressed patients are deferring elective surgery, like knee replacements and nose jobs, even as others are speeding up non-urgent procedures out of fear that they may soon lose their jobs and health insurance. ...

    Delaying elective procedures can have serious medical consequences, as when a detectable polyp develops into a tumor because a patient skips a colonoscopy. Some hospitals said their emergency rooms were already seeing patients with dire conditions that could have been avoided had they not deferred surgery for economic reasons. “We’re probably seeing five or six of those a day at each of our hospitals,” said Zeff Ross, a senior vice president at Memorial Healthcare System, which operates six hospitals in South Florida. “Someone gets an attack of diverticulitis, but they wait. They get it a second time and the doctor tells them to get the surgery done now, but they still wait. The third time, it perforates and that’s a much tougher surgery, much more dangerous for the patient and with a longer length of stay.”

    That is the case for Jane Bagwell, a 60-year-old legal secretary in Atlanta, who has chosen to delay surgery to repair a torn rotator cuff in her left shoulder, even though she rates her pain as an 8 on a scale of 1 to 10. In a less terrifying economy, Ms. Bagwell said, she would not hesitate to schedule the operation. These days, however, she finds herself pinching every penny, including the ones that would help her pay the 20 percent share of surgical costs not covered by insurance. And given that her law firm is laying off staff members, she worries that if she took three weeks off to recuperate, her job might be eliminated before she could return. Instead, she pops ibuprofen. “I feel like I live off them,” she said.
News and Opinion Concerning the U.S. Financial Crisis
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • New York Times op-ed: Two Americas, Two Tax Codes. By Dorothy Brown. Excerpts: Warren Buffett knows there’s something very unfair about the American tax system. He’s often complained that while his 2006 tax rate (for federal income taxes and Social Security withholding) on $46 million of income was 17.7 percent, his secretary’s combined tax rate was 30 percent.

    There are effectively two tax systems in America: one for the very rich and one for the rest of us. Income from stock dividends and capital gains, which makes up a disproportionate amount of the earnings of the very rich, is taxed at 15 percent. But the bulk of what the rest of us earn — wages and interest from savings accounts — is taxed at up to 35 percent. Though President Obama’s recent tax proposals are progressive and comprehensive, his reforms don’t do nearly enough to address this significant disparity. ...

    The gap between the tax rates for the rich and the rest of us is relatively recent. Until 1921, capital gains were taxed at the same rate as ordinary income. Then Congress enacted a law that taxed capital gains at 12.5 percent while ordinary income was taxed at as much as 58 percent. In the decades since, the tax rate on capital gains varied — sometimes it increased, sometimes it decreased. But with the exception of a brief period in the late 1980s, it was always lower than the tax on ordinary income. That was not the case for stock dividends, which were taxed like wage income and savings account interest — that is, until President George W. Bush and Congress in 2003 gave dividends the same preferential treatment as capital gains. The Bush tax cuts moved our tax system too far in the wrong direction.

  • New York Times op-ed: Reviving the Dream. By Bob Herbert. Excerpts: Working families were in deep trouble long before this megarecession hit. But too many of the public officials who should have been looking out for the middle class and the poor were part of the reckless and shockingly shortsighted alliance of conservatives and corporate leaders that rigged the economy in favor of the rich and ultimately brought it down completely.

    As Jared Bernstein, now the chief economic adviser to Vice President Joseph Biden, wrote in the preface to his book, “Crunch: Why Do I Feel So Squeezed? (And Other Unsolved Economic Mysteries)”: “Economics has been hijacked by the rich and powerful, and it has been forged into a tool that is being used against the rest of us.”

    Working people were not just abandoned by big business and their ideological henchmen in government, they were exploited and humiliated. They were denied the productivity gains that should have rightfully accrued to them. They were treated ruthlessly whenever they tried to organize. They were never reasonably protected against the savage dislocations caused by revolutions in technology and global trade.

    Working people were told that all of this was good for them, and whether out of ignorance or fear or prejudice or, as my grandfather might have said, damned foolishness, many bought into it. They signed onto tax policies that worked like a three-card monte game. And they were sold a snake oil concoction called “trickle down” that so addled their brains that they thought it was a wonderful idea to hand over their share of the nation’s wealth to those who were already fabulously rich.

    America used to be better than this.

    The seeds of today’s disaster were sown some 30 years ago. Looking at income patterns during that period, my former colleague at The Times, David Cay Johnston, noted that from 1980 (the year Ronald Reagan was elected) to 2005, the national economy, adjusted for inflation, more than doubled. (Because of population growth, the actual increase per capita was about 66 percent.) But the average income for the vast majority of Americans actually declined during those years. The standard of living for the average family improved not because incomes grew but because women entered the workplace in droves.

    As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher, Mr. Johnston pointed out, than in 2005. ...

    It may seem like ancient history, but in the first few decades following World War II, the United States, despite many serious flaws, established the model of a highly productive society that shared its prosperity widely and made investments that were geared toward a more prosperous, more fulfilling future. The American dream was alive and well and seemingly unassailable. But somehow, following the oil shocks, the hyperinflation and other traumas of the 1970s, Americans allowed the right-wingers to get a toehold — and they began the serious work of smothering the dream.

    Ronald Reagan saw Medicare as a giant step on the road to socialism. Newt Gingrich, apparently referring to the original fee-for-service version of Medicare, which was cherished by the elderly, cracked, “We don’t get rid of it in Round One because we don’t think it’s politically smart.”

    The right-wingers were crafty: You smother the dream by crippling the programs that support it, by starving the government of money to pay for them, by funneling the government’s revenues to the rich through tax cuts and other benefits, by looting the government the way gangsters loot legitimate businesses and then pleading poverty when it comes time to fund the services required by the people. The anti-tax fanatic Grover Norquist summed the matter up nicely when he famously said, “Our goal is to shrink the government to the size where you can drown it in a bathtub.” Only they didn’t shrink the government, they enlarged it and turned its bounty over to the rich.

  • New York Times op-ed: A Tsunami of Excuses. By Willam D. Cohan. Excerpts: It’s been a year since Bear Stearns collapsed, kicking off Wall Street’s meltdown, and it’s more than time to debunk the myths that many Wall Street executives have perpetrated about what has happened and why. These tall tales — which tend to take the form of how their firms were the “victims” of a “once-in-a-lifetime tsunami” that nothing could have prevented — not only insult our collective intelligence but also do nothing to restore the confidence in the banking system that these executives’ actions helped to destroy. ...

    Harvey Miller, the bankruptcy lawyer who is representing what remains of Lehman, has been working hard to absolve Mr. Fuld. In a brief responding to a motion made by lawyers for the New York State comptroller, who has joined a class-action suit against the company, he wrote, “The comptroller fails to recognize that Lehman was a victim of a financial tsunami that was beyond its control.”

    Now, wait just a minute here. Can it possibly be true that veteran Wall Street executives like Messrs. Cayne, Schwartz and Fuld — who were paid an estimated $128 million, $117 million and at least $350 million, respectively, in the five years before their businesses imploded — got all that money but were clueless about the risks they had exposed their firms to in the process?

    In fact, although they have not chosen to admit it, many of these top bankers, as well as Stan O’Neal, the former chief executive of Merrill Lynch (who was handed $161.5 million when he “retired” in late 2007) made decision after decision, year after year, that turned their firms into houses of cards. ...

    Could these Wall Street executives have made other, less risky choices? Of course they could have, if they had been motivated by something other than absolute greed. Many smaller firms — including Evercore Partners, Greenhill and Lazard — took one look at those risky securities and decided to steer clear. When I worked at Lazard in the 1990s, people tried to convince the firm’s patriarchs — André Meyer, Michel David-Weill and Felix Rohatyn — that they must expand into riskier lines of business to keep pace with the big boys. The answer was always a firm no.

    Even the venerable if obscure Brown Brothers Harriman — the private partnership where Prescott Bush, the father and grandfather of two presidents, made his fortune — has remained consistently profitable since 1818. None of these smaller firms manufactured a single mortgage-backed security — and none has taken a penny of taxpayer money during this crisis.

    So enough already with the charade of Wall Street executives pretending not to know what really happened and why. They know precisely why their banks either crashed or are alive only thanks to taxpayer-provided life support. And at least one of them — John Mack, the chief executive of Morgan Stanley — seems willing to admit it. He appears to have undergone a religious conversion of sorts after his firm’s near-death experience.

  • New York Times editorial: $100 Billion the Country Could Use. Excerpt: Senate investigators estimate that Americans who hide assets in offshore bank accounts are failing to pay about $100 billion a year in taxes. In good times, that’s grossly unfair and bad for the country. In times like these, it should be intolerable. The government not only needs the money, but closing down such tax scams is essential for President Obama’s rescue effort to retain public support and credibility.

    Some of the banks at the center of the global financial meltdown are prominent purveyors of evasion services. UBS of Switzerland has acknowledged that as of Sept. 30, it held about 47,000 secret accounts for Americans. It has refused to disclose the names of all but a tiny number of the account holders, arguing that it would be a breach of Swiss law. But last month — after UBS got caught soliciting business in the United States — it admitted to breaking federal law by helping Americans hide assets, and the bank agreed to pay $780 million in fines and restitution.

  • New York Times: High Noon on the Set: Cramer vs. Stewart. By Alessandra Stanley. Excerpt: It wasn’t “Brawl Street” or a thrilla in vanilla. It wasn’t a “Daily Show” friendly feud or even much of a discussion. Mostly, the much-hyped Thursday night showdown between the comedian Jon Stewart and Jim Cramer, the mercurial host of “Mad Money” on CNBC, felt like a Senate subcommittee hearing. Mr. Stewart treated his guest like a C.E.O. subpoenaed to testify before Congress: his point was not to hear Mr. Cramer out, but to act out a cathartic ritual of indignation and castigation.
  • Consumerist: Daily Show VS CNBC: "They Burned The F-ing House Down With Our Money And Walked Away Rich As Hell". By Meg Marco.
  • New York Times: The Computer Will See You Now. By Anne Armstrong-Coben. Excerpts: For 20 years, I practiced pediatric medicine with a “paper chart.” I would sit with my young patients and their families, chart in my lap, making eye contact and listening to their stories. I could take patients’ histories in the order they wanted to tell them or as I wanted to ask. I could draw pictures of birthmarks, rashes or injuries. I loved how patients could participate in their own charts — illustrating their cognitive development as they went from showing me how they could draw a line at age 2 and a circle at 3 to proudly writing their names at 5.

    Now that I’ve been using a computer to keep patient records — a practice that I once looked forward to — my participation with patients too often consists of keeping them away from the keyboard while I’m working, for fear they’ll push a button that implodes all that I have just documented.

    We have all heard about the wonderful ways in which electronic medical records are supposed to transform our broken health care system — by eradicating illegible handwriting and enabling doctors to share patients’ records with one another more easily. The recently passed federal stimulus package provides doctors and hospitals with $17 billion worth of incentive payments to switch to electronic records. The benefits may be real, but we should not sacrifice too much for them.

New on the Alliance@IBM Site
  • Survey Question: If you were resourced from IBM, in the 24 months prior; were you ever on a medical or personal LOA? Please provide your answers in your comment message to Job Cuts... we will post them.
  • RA's employees needed to talk to media. Anonymous if you wish. Send email, name and phone number to ibmunionalliance@gmail.com Alliance@IBM (2/9/2009)
  • Job Cuts Status & Comments page
    • Comment 3/10/09: Word has it that in the last layoffs 1st lines had no say in who was terminated .. in one instance a young employee was terminated with a bunch of older employees .. and the young employee was hired back the next day after the layoffs .. if that isn't helping hide the fact they are targeting older workers I don't know what is ... -watchyerback-
    • Comment 3/11/09: "rumors,again. of mfg. being sold in Rochester, MN.. Celestica, Geodis, or ???? May be a good thing at this point ??" I worked for Celestica in Rochester. IBM gave Celestica a three year guarantee of business. Things were great for the first two years, but at the end of the three years (almost to the day!) all of the work was shipped to Celestica Italy. Celestica Italy did most of the heavy lifting to shut down Celestica Rochester and re-qualify the processes, only to have all of the work get transferred to the Celestica run plant in the Czech Republic. Before Celestica Rochester closed, the Celestica Italy management figured out that they had been used. Celestica Rochester closed and Celestica Italy later got sold. The strategy IBM used was simple, they told Celestica that IBM was cutting the price paid for everything Celestica Rochester made by a large percentage and that "we don't care where it is made, but this is all we'll pay". If the Rochester Systems Line gets sold, I expect the same strategy. (As a side note, even though the Celestica Rochester's newly built plant closed and over 1150 were laid off, Celestica still has a tiny "Supplier Mall" operation in Rochester with perhaps 25 employees. -Ex-RochBeamer
    • Comment 3/11/09: There is life after IBM! Was going to be kicked out at the end of March, but found a new job, locally, no travel, in my field with a raise. Hold on, keep the faith, and give to the Alliance!! BTW, management was an a@# to me to try to force me out. Please copy your attorney and the Alliance on all the email you send to IBM. This is just CYA. -j-ibm-gone-
    • Comment 3/11/09: I claim the shortest IBM career ever! ... My job is being transferred to IBM on 16th May at 00.01 ...I have just been told that IBM is making me redundant on 16th May at 00.02 ... my work is going to be done from South Africa instead. -Wow!-
    • Comment 3/12/09: Been talking to my manager. Telling me that management has been put on notice to make sure that each member of their teams have a back-up resource in case they get axed so that productivity doesn't go down. Next round of global job cuts is scheduled to be completed by either April 17th or May 1st. -I-ve-B-een-M-ade-
  • General Visitor's Comment page
    • Comment 3/11/09: Sounds like Sam is far beyond the 100 million dollar man with 22 million salary ,13 variable pay and stock receipts of over 80 M. With additional incentives of letting its own US employee's go ! (blood money) Why didn't he donate a million or so to keep its valuable employee resource working at IBM East Fishkill NY.. Greed ! One, of the seven deadly sins ... -Crying Shame-
    • Comment 3/12/09: Sam is paid what the Board of Directors feel fit to pay him. Like all CEO's he only answers to them. The President has no say in the matter. Get that through your heads. The President does not cap salaries of Baseball Players, Football Players, Basketball Players, Ceo's or janitors. Stop waiting for anyone else to solve your problems. Organize your coworkers. Vote for a union. Negotiate your contract including raises and bonuses for performance just like Sam. Join him at the dinner table instead of eating the crumbs that fall from his mouth. Lets have our own version of guess whose coming to dinner. A fair contract with fair benefits will eat up a lot of his bonus money and redistribute the wealth so to speak without Government involvement. Its like the people sitting in a circle at Roswell waiting for the aliens. They are not coming and neither is help from the Government to organize IBM. You must do it yourselves. -Exodus2007-
  • Pension Comments page
  • Raise and Salary Comments
    • Comment 03/11/09: Salary = 84K; Band Level = 7; Job Title = Software Eng; Years Service = 9; Hours/Week = 40; Location = RTP, NC; Message = Hanging on -Still breathing-
    • Comment 03/12/09: Band Level = 6; Years Service = 3; Hours/Week = 40; Message = Just got my bonus notice in my pay stub - 3.2% and I had a PBC of 2. The thing that stinks is the higher level of taxes that came out. Oh well, I'll get those extra taxes back next year. -Tulsa-slave-
  • PBC Comments
    • Comment 3/08/09: Band Level = 8; Years Service = 20+; Prior Yr PBC = 2+; This Yr PBC = 2; This Yr Bonus = 3.3%; Prior Yr Bonus = 6%; Message = Was told range was 2-5% and mine was average. If this is record profits sharing, we got screwed. -Demotivated-
    • Comment 3/11/09: Band Level = 7; Years Service = 13; Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 3500; Prior Yr Bonus = 3400; Message = I am satisfied with what I got...could be worse and no one gets anything!! -my input-
    • Comment 3/11/09: Band Level = 7; Years Service = 9; Prior Yr PBC = 2+; This Yr PBC = 2+; This Yr Bonus = 5.5%; Prior Yr Bonus = 5.5%; Message = Got 2 years straight with 1's then bust my butt and got a 2 .I scaled back and seen 3 straight 2+'s. PBC's are broken and really only shows that your report-2-chain likes you. Yell that you are doing work at the level of a band higher ...an the PBC's go up. -Helping Hand-
    • Comment 3/12/09: Band Level = 6; Years Service = 3; Prior Yr PBC = 2; This Yr PBC = 2; This Yr Bonus = 3.2%; Prior Yr Bonus = 2.9%; Message = Nothing too exciting - just extra money that I didn't have before. Just more to stash away in savings. -Tulsa-slave-
  • International Comments
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.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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