IBM Corp.’s rosy earnings report this week didn’t translate into good news Friday for some 100 contract workers at its campus in Research Triangle Park.
Fred Chastang, 53, a contractor who tested IBM (NYSE: IBM) servers in a lab, was among scores of workers who were let go – on Hawaiian shirt day. Told at 9:30 a.m. that his job was being eliminated, Chastang left the an hour later along with several other workers. Chastang had worked at IBM for a year and a half.
"It was a bit of a shock, there’s no doubt about it," Chastang said. "It’s the economy, you know. Companies all over the Triangle – all over the country – are cutting back, trying to keep that profit margin, and unfortunately, I was (a cutback)."
Cutbacks in recent months have left North Carolina with its highest unemployment rate in seven years at 7 percent.
Although the state added 6,688 jobs in September, they weren’t enough to offset the growing ranks of people seeking unemployment benefits. Also, officials with the state Employment Security Commission acknowledged that most of the new jobs were lower-paying retail positions and not well-paid manufacturing positions.
IBM spokesperson John Buscemi in New York confirmed that “about 100” RTP contractors were cut.
IBM is reportedly also thinning the ranks of Systems and Technology Group, laying off an unknown number of so-called “long-term supplemental” employees, sources tell WRAL.com.
IBM had no immediate comment on those reported cuts.
The employees, who are called LTS, were told their positions would end by Oct. 31. They were given the opportunity to apply for other jobs within the high-tech giant, an employee affected by the decision said.
LTS employees work directly for IBM under contract and do receive some benefits. After three years, some LTS workers are able to covert to full-time IBM employee status.
“The (layoff) rumor has been flying around since Monday afternoon that there might be cuts in the budget,” an IBM LTS worker who was told his position would be eliminated told WRAL.com. He spoke on the condition of anonymity.
“I was officially informed (Friday) morning by my manager, and the rest of the team was notified this afternoon,” he added. He also noted that he wanted to stay at IBM and “my management is working hard to get me transferred within the company.”
The job reductions are due to a cut in the Systems and Technology Group budget and are not being outsourced, the employee said.
The System and Technology Group works with IBM clients to provide services and support for new technologies and what IBM calls “niche offerings.”
Specific services include implementation, development and integration of various IBM products as well as data migration and storage, application development, network traffic analysis and systems management.
Chastang was placed at IBM by , which is based in Cary. A spokesperson for CTG said he had no information about the layoffs.
While disappointed about losing his job, Chastang also was not angry.
“We were treated very nicely,” he said. “We also received a letter of recommendation and a letter about our layoffs to help us get unemployment benefits.”
However, since the workers were contractors, they received no severance pay. Chastang, who lives in Smithfield, choked back tears as he thought of some of his co-workers who also were laid off.
"I saw a lot of people (Friday) that I worked with for the last couple of years that I know have kids, a lot of one-income families, and they’re going to have tough times – and it’s Christmas coming, you know," he said.
IBM employs some 11,000 people across the Triangle region. It’s IBM’s largest campus.
Lee Conrad, a spokesman for , a union representing IBM workers, wasn’t surprised by the layoffs.
“They have been going more for contractors because that way they don’t have to pay the wages or benefits – the contract firm does – and it’s easier to let them go,” Conrad said. “It also doesn’t make as much news. It’s not IBM throwing people out the door. It’s the contractors.”
Chastang, who has worked with computers since his high school days, has been through layoffs before. He lost a tech-related job in Houston in 2004 and later moved to Smithfield to be closer to family.
He said it took him more than a year to land the IBM job, and he’s praying he won’t be unemployed nearly that long this time.
"It’s not like you’re just competing against five or 10. The pool’s a whole lot bigger these days than in the past," he said.
On Thursday, IBM reported a near 20 percent jump in profits for the most recent quarter compared to a year ago. Profits per share exceeded Wall Street expectations by 2 cents.
IBM released partial third-quarter results last week to try to reassure investors who had been driving down the company’s stock price.