Since the Wall Street Journal reported in April that California-based GlobalFoundries had become the leading candidate to buy IBM’s chip-making operations, Vermont politicians and economic development officials have been sweating bullets over the fate of IBM’s Essex Junction plant.
But whether and when a deal might go down — and what that might mean for IBM’s estimated 4,000 Vermont jobs — has been anything but clear.
“The media keeps reporting that the IBM campus is rumored to be sold. None of us know this,” Greater Burlington Industrial Corporation president Frank Cioffi said Monday during a press conference at GBIC’s Burlington headquarters. “These are public corporations, and none of us are going to know anything until it really happens.”
So what exactly prompted Cioffi to convene the media to discuss steps the state might take to keep IBM, or at least its workers, in Vermont?
“Just rumors are abounding everywhere,” he said.
Asked again, Cioffi tipped his hand a little more.
“I can tell you, from my standpoint, it’s June 23 — and earnings reports come out really soon,” he said. “So if you understand public corporations, then actions one way or the other sometimes happen after earnings reports.”
IBM is scheduled to announce its second-quarter earnings on July 17.
Pat Moulton, the state’s newly-minted secretary of commerce, said that she, too, had heard nothing concrete since Bloomberg reported nearly two weeks ago that IBM “is nearing a deal” with GlobalFoundries for its chip business.
“No, there isn’t anything new that any of us are aware of that I can see… that’s triggered today’s press conference,” she said, after leaving her seat in the audience and stepping up to the podium to address the speculation. “So I don’t think there’s any heightened level of concern, certainly. But also, secondly, we could hear news that’s actually positive for Vermont. We don’t know yet.”
What exactly would constitute good news, given Bloomberg’s reporting that GlobalFoundries is “primarily interested in acquiring IBM’s engineers and intellectual property, rather than manufacturing facilities?”
“Status quo and continued growth at IBM, partnerships — strategic partnerships — I don’t know,” Moulton said. “Any of our imaginations could go wild with this. But there could be a buyer who says, ‘We want to keep things just as they are.’ Who knows? And the speculation is difficult, because there are so many scenarios.”
Moulton said that her boss, Gov. Peter Shumlin, has been preparing for a variety of scenarios and is ready to spring into action as soon as the situation becomes more clear. She pointed to the creation of a $4.5 million Vermont Enterprise Incentive Fund, which the governor proposed this spring and the legislature approved shortly thereafter. The fund can be used in “unforeseen or extraordinary circumstances” to encourage a Vermont business to create or retain jobs.
“The governor has been in touch with the leadership of IBM and at GlobalFoundries to say, ‘We’re ready for a dialogue when you are.’ They are very candid that they know the door is open with Gov. Shumlin, with his administration, but that they’re not in a position to talk,” Moulton said, adding later, “Our CEO, our governor, is in touch with their CEO, and that’s the best communication we can ask for.”
Asked if that meant Shumlin had spoken directly with IBM CEO Virginia Rometty, Moulton walked her statement back, saying, “Well, I don’t know exactly who, but our CEO is trying to reach out to their CEOs, if you will, to say we’re ready for a dialogue. I don’t have exact names of who he’s spoken for.”
A spokeswoman for Shumlin did not immediately respond to a request for clarification.
Nevertheless, Moulton sounded remarkably optimistic that the news out of IBM’s Armonk, N.Y., headquarters would not be dire for Vermont.
“I’m just going to say, my personal opinion is there’s a heck of an asset in the facilities and the people there that I don’t — I would be shocked if there was a complete announced closing of that plant,” she said.
Asked whether the the state should have a contingency plan prepared for such an outcome — just in case — Moulton said the administration would be ready.
“But I sincerely doubt we’re going to hear that announcement. I sincerely doubt that 4,000 people are going to get pink slips overnight,” she said. “And so I believe there will be time to prepare if, in fact, there is a decision to close that plant. But here again, I just don’t see it.”
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The meteor that will bring IBM Chips in VT extinction is in the state’s orbital path; I hope government officials do not blindly try to make us believe it is not going to happen.
Once the company is transferred to a partner/buyer (my bet is on GF) and the IP resources are sucked dry (see the beginning of the that end in this story: “IBM to send up to 200 workers to GlobalFoundries” http://bit.ly/1jcd8JU), I envision the end of the plant within this decade.
On one hand, however, I commend the thought leaders of GBIC for their pragmatic thinking.
But wow – what a barrel corporate America has taxpayers over. Despite no confirmations or denials of an impending sale, a multi-national, multi-billion profit generating corporation has groups lining up suggesting to hand over checks and line up other support for taxpayer dollars to take care of retraining (potentially) off-loaded resources (AKA: people) – just like the state of Vermont has had to do with other previous “Resource Actions” (RA).
And all for what and who “wins”? IBM minimizes their costs of closing down a fab and Singapore who will most likely pick up off-shored jobs (as noted here: “Analyst, economist weigh potential of IBM sale to Globalfoundries” http://bit.ly/1nBaiz6).
I work on the floor at IBM. It’s been interesting lately, since none of us have any idea what’s going on. There’s constantly rumors about an announcement coming at some date, which passes with no word. It’s a little nerve-wracking at times.
The latest rumor was that someone recently was hired by Global (depending on who’s telling the story, this is either a friend of an IBMer, a former IBMer hit by a recent “resource action” or a current employee leaving the company) fully expecting to work in one of their upstate NY locations, and was asked if they’d be willing to work in Essex Junction. Of course, that could mean in any context, from transferring technology/IP resources, to the fab continuing to function under new ownership.
I get a little sick to my stomach wondering what’s going to happen; I hope news comes soon. Shumlin and others (like the recent VPR commentator in their editorial piece) comment about how these are highly skilled employees with the knowledge to succeed and other such platitudes, and certainly, even if it requires moving, a lot of the engineers and technicians are going to be able to find other work. It will effect Vermont drastically if many of them end up having to move, but they can likely continue onwards. Managers, even lower-level non-technical managers, have a decent resume and skill set to fall back on. But even after years of layoffs, the truth is there’s still a lot of folks, like myself, who work the factory floor. Yes, many of us are highly skilled, but highly skilled at a very particular set of jobs that don’t necessarily translate well. I made some poor life choices and didn’t avail myself of opportunities to further my career when I was younger, and only blame myself. But I like my job, and I know if it goes away, there’s nowhere else I’m going to make nearly as much (or earn nearly as much vacation time, something Big Blue has been pretty generous with) as I’ve accumulated since I started in 98. I know there are plenty of other folks in similar positions. The only upside I can think of is that I also know that a lot of the people in these same base-level positions as myself that would find themselves in a similar pickle are close enough to retirement that it may just be a viable option, even if a severance package is not part of the plan.
So long to IBM in Vermont!
For over fifty years IBM has been a great neighbor asking little in return its being Vermont’s premier employer and providing constant flow of charitable and community generosity. IBM asked for very little in return – their main request was the construction of a circumferential highway VT Rt. 289 to ease traffic around their Essex Junction plant.
First discusses in 1967 and funded by the 1987 Surface Transportation Act with $50 million in Federal monies, the “Circ’s” construction languished until 1997 when four miles of the proposed 15.8 bypass were constructed. The balance of the proposed highway has not been constructed as of 2014, and probably never will be. http://www.interstate-guide.com/i-289_vt.h… As a result IBM and its employees have struggled through tough traffic for commuting with deliveries to and shipments from the plant suffering the same fate – for over forty years.
During the last ten years or so, IBM has continued to manufacture computer chips at its two Vermont plants and continued research and development of new products, however it appears that they have not invested in production improvements and upgrades. In the “high tech” business, ten year old production facilities are considered obsolete and the products IBM produces here are nearing the end of their life cycle.
Like so much the Shumlin administration does, their last minute “play” to save IBM is too little too late. IBM’s decision as made years ago and the “noise” in the media today is merely the final death rattle of yet another venerable employer giving up on Vermont as a viable place to do business. The four million Shumlin has to offer IBM or its successor GlobalFoundries (hereafter “Global”) is mere “pennies” compared with the $2+ billion Governor Cuomo has ponied up to persuade Global to build their 8 billion facilities across the lake in Malta, NY.
(http/www.bizjournals.com/albany/print-edition/2014/04/11/glo.balfoundries-boosts-capacity-in-ny-to-meet.html)
Global’s interest in the IBM-Vermont operation is acquiring the valuable R&D personnel and products now under development – even if this aspect of the operation were to remain in Vermont, which Is unlikely, it would represent about 10% of the current staff.
The Shumlin administration’s efforts are reminiscent of the fire drill in an old Three Stooges flick – lots of activity without any useful action. Too bad that Shumlin hasn’t worked to make Vermont friendlier to businesses old and new – every day Vermont’s business situation looks more like some historic industrial museum rather than a vibrant evolving business environment.
Thanks to IBM for being a great neighbor for over fifty years, you will truly be missed when you’ve gone!