The number of people employed by IBM (NYSE: IBM) has shrunk in recent years by some 30 percent both in the Research Triangle area and across North Carolina, according to data gathered from internal directory information leaked to Alliance at IBM when compared to previously published IBM information about North Carolina jobs.
IBM, one of the key tenants in RTP and a widely acknowledged essential factor to its success over the past five decades, no longer discloses employee numbers by location or country, citing competitive reasons. The company also rarely acknowledges layoffs, although so-called “resource action” notices provided to workers are often provided to the union.
The union, which is seeking to represent IBM workers, says the data shows 7,470 regular employees and 265 executives at its Raleigh-Durham locations as of the end of 2012. The numbers do not include layoffs made in June, which the company said cost over $1 billion. WRAL News was told at the time that “hundreds” of jobs in North Carolina were affected in what was described as a “broad-based” restructuring.
Statewide, the number has dropped to just over 9,400.
Based on estimates from Alliance at IBM, IBM’s North Carolina presence remains one of the largest among its U.S. operations, representing some 10 percent of its U.S. headcount. But the number of U.S. workers has plunged in recent years to some 88,000 from 105,000 in 2009.
The local headcount still would qualify IBM as the third largest private sector employer in the Triangle behind Duke University and WakeMed, according to data contained in the Triangle Book of Lists 2013. The Triangle Business Journal publication estimated IBM’s Triangle employment at 10,000. IBM also has more local employees than other large technology companies such as Cisco and SAS. Each has more than 5,000 local workers, according to the Book of Lists.
However, as late as 2009, IBM’s senior state executive Bob Greenberg said IBM employed 13,000 people statewide. In 2008, IBM acknowledged having 12,000 workers in RTP. For years, RTP was cited as one of IBM’s largest operations.
The 2012 totals do not include contractors and do not reflect a round of layoffs that IBM made earlier this year.
“IBM does not comment on the authenticity of any alleged documents provided by unnamed sources, and we do not disclose employee headcount of our IBM locations, for competitive reasons,” said Doug Shelton, who is director of corporate communications, when asked about the Alliance numbers.
He did say that North Carolina and RTP “remain an integral part of nearly every facet of business.”
In June, Shelton described the layoffs as necessary to deal with changes in technology.
“Change is constant in the technology industry, and transformation is an essential feature of our business model. Consequently, some level of workforce remix is a constant requirement for our business,” Shelton said.
“Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans. IBM is investing in growth areas for the future: Big Data, cloud computing, social business and the growing mobile computing opportunity.
“The company has always invested in transformational areas, and as a result, we need to remix our skills so IBM can lead in these higher-value segments in both emerging markets and in more mature economies.”
According to Lee Conrad, the national coordinator for the Alliance, the North Carolina numbers were provided by “internal sources.” Information gathered from the IBM directories also was used to report job numbers at IBM’s operations in Minnesota after a recent round of layoffs.
Conrad provided the following numbers for IBM in North Carolina:
Regular non-management employees:
• For all of North Carolina: 9,050
• For Research Triangle Park: 5,620
• For Durham: 1,850
• For all of North Carolina: 457
• For RTP: 210
• For Durham: 55
The reductions in North Carolina reflect a trend stretching back several years as IBM has cut U.S. jobs, begun to shift to software and services away from manufacturing, and to grow its headcount overseas.
Using the directory data, the Alliance says IBM headcount in the U.S. has declined to 88,150 from as high as 153,587 in 2000. IBM stopped disclosing its U.S. employee number after 2009 when the count was 105,000.
“They are doing it to save costs,” said Conrad, noting that a programmer in India “makes $17,000 a year whereas a programmer (in the United States) makes several times as much money.”
Overall, IBM employs 434,246 worldwide today, according to its website.
“IBM is abandoning the United States,” Conrad said, noting the continual drop in numbers. “Even with new centers like one in Louisiana, these jobs are for far less money.”
Post-Lenovo sale reductions
The reductions of IBM’s work force in North Carolina came after IBM sold its Raleigh-based PC unit to Lenovo in 2005 for $1.75 billion. That deal included the transfer of some 2,100 employees to Lenovo. An unknown number of those workers were laid off in 2006. Since that time, Lenovo has expanded its Triangle area work force above 2,000.
One transaction that did help lower the Triangle job number came a year ago when the company sold its Retail Store Solutions business to Toshiba for $850 million. Some 500 employees were affected.
The latest major IBM expansion announced in the Triangle came in 2010 when it announced plans to build a $360 million data center and to create 10 jobs. That facility is operating. IBM received $750,000 in tax incentives from Durham County as part of the decision to build in the Triangle.
Executive: NC remains important to the company
Shelton, the media relations executive, stressed that the Triangle and the state are important to the company.
“IBM RTP represents one of the world’s largest investments in information technology,” he said. “For more than 40 years, we have worked with North Carolina’s business, government and educational communities and participated in the growth of a world-class research and development park called RTP.”
As a creative center, IBM workers were credited with 802 patents in last year.
“Today, the Triangle area is home to one of the largest and most dynamic locations within IBM,” he added. “Our products and people are an integral part of nearly every facet of business at IBM. From chip design, RFID Tracking, software, gaming, servers and managing the IT infrastructure for some of the world’s largest companies – it’s all there.”
He also pointed out IBM and its workers’ contributions to education as well as philanthropic efforts.
“IBMers are active outside the workplace, donating their time – over 27,000 volunteer service hours in the state this year – their money – $2.7 million in charitable giving – and their company’s money – $1.7 million investment in corporate service grants to non-profits and matching grants for colleges and universities – within North Carolina,” Shelton said.
Fallout? Not much, says economist
Dr. Michael Walden, an economist at North Carolina State University, said the lower numbers did not surprise him.
“As I stated in my 2008 book, ‘North Carolina in the Connected Age,’ tech manufacturing would likely not be a growth industry in N.C. once it became standardized,” Walden said. “Indeed, data indicate a 20 percent drop in tech manufacturing in the state since 2008. But the same drop has not occurred in the nation. So this may indicate a re-distribution of production to outside of N.C.”
Walden also pointed out that “9,400 jobs with one company is still big.”
From an economic point of view, Walden said the biggest impact on the Triangle from a lower employee number is lost spending.
But when considered against the size of the Triangle economy, he sees the impact as minimal, noting “not in a Triangle economy of 800,000 jobs.”
Durham chamber CEO: IBM making investments
Casey Steinbacher, chief executive officer at the Greater Durham Chamber of Commerce, said IBM is making investments in other areas beyond jobs and acquiring companies.
“The article appears to be focused on jobs. For most large businesses across the US, the last five years have not been ones of significant job growth. In the technology sector, this was not only due to the recession, but to significant advances in operating efficiencies which decrease the need for increased jobs,” Steinbacher said.
“What your story is overlooking, is IBM’s capital investment and business acquisition strategies. In the last five years, IBM has invested over a quarter of billion dollars in improvements in their RTP campus, constructing a state of the art data center, in addition to upgrades to other existing operations in the Park.
“These facilities are very large physical improvements that service data operations around the world, but do not require significant increases in employment … the cost of efficient technology! In addition, IBM has acquired a significant number of businesses over the last five years in many of their core competency areas that bring greater expertise to their service offerings. With the increased number of startups and spinoffs playing in technology application, IBM has found a pretty constant and deep talent pool to acquire rather than hire.”
Steinbacher also pointed that IBM “has continued to stay committed to Durham as a community.”
“IBM is an international organization with offices and employees in most every country. Durham is seeing its percentage of international companies increasing dramatically, and with that comes different and unique deployment strategies for their assets, including human capital,” she explained.
“IBM has continued to stay committed to Durham as a community, providing the city access to its international expertise in a variety of capacities, most notably their Smartest Cities initiative. They provide service expertise grants to dozens of organizations in Durham.
“While I will not argue that their head count, like most companies of their size and sector has decreased,” she added, “their engagement and financial investment in Durham has continued.”
Raleigh Chamber of Commerce: IBM remains “important brand”
Harvey Schmitt, chief executive officer at the Greater Raleigh Chamber of Commerce, said IBM remains important to the Triangle and that a lower jobs number could indicate a number of things. He also said he had “not heard anything that would suggest a lack of commitment to the state or region.”
“I suspect head count does not mean as much as it once did,” Schmitt said. “The business world is dynamic and head counts are constantly changing.”
He stressed that IBM “is an important brand for the region and its personnel (current and former) have a significant impact on the economic success of the region.”
Asked about the IBM numbers, both the North Carolina Technology Association and the North Carolina Chamber – the state’s two largest pro-business lobbying groups – declined comment.