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IBM Europe Workers Strike
csimoes writes "IBM employees in Europe are on
strike today. This is in response to the 10,000-13,000 job cuts that IBM is planning, most of them in Europe. Strikers will be wearing black and blue to signify their struggle. Here is their main union web site. Now I can't say I'm big union guy, but they do make some interesting points on their site. Such as: "IBM is a wealthy and successful company. Its first quarter profit for 2005 was $1.4 billion, and $9 billion for the whole of 2004. It increased the dividend to its shareholders, recently bought back $5 billion in IBM stock, and acquired 19 companies in 2004." The union also questions if other cost cutting mechanisms could achieve the same effect without cutting so may jobs."
Corporations don't give you vacation days in Europe, governments do. It's regulated by law. I know the word "law" is a difficult one for Americans to grasp. :-)
If you mod me down, I *will* introduce you to my sister!
Isn't their job to be certain they can provide profit in the future for their shareholders (the owners of the company). Why would a company want to keep 10~13K employees that are obviously not necessary in the daily business? Simply because they are making a profit?
I'm not a fan of layoffs either but a company is there to make money, nothing else. If these 10~13K people banded together and started a competing company maybe they could make IBM pay in that direction. In the end employment is voluntary. I don't hear people screaming about someone quitting IBM when they take their experiences there and help another company use that knowledge. What about all the training and investment IBM made in those people, do they think it was free?
Seems like every time I'm in Europe there is a major strike happening.
"The union also questions if other cost cutting mechanisms could achieve the same effect without cutting so may jobs.""
Give upper-managment a pay cut.
The limbs on a tree can always come up with a reason why they shouldn't be pruned.
If IBM thinks they don't need these workers, they should be able to eliminate them. If IBM is wrong then the company will suffer and the worker will find a better job. If IBM is right they will benefit and the worker will need to get their sorry ass in gear or work at a crappier job.
After being through a half-dozen jobs in my life I realized that a capable person losing a job is an opportunity, not a tragedy.
Corporations should have some social responsibility attached to their privilages - after all they are granted permission to exist by the people.
No 'make work' jobs should be encouraged, it's just a waste of economic resource, but strongly suggesting to such companies that they should look into retraining and redeploying their workers rather than just firing them en mass would be a good idea as the shock of such large events can permanently damage communities and economies.
That and I seriously hope the board of IBM is taking a huge pay cut. Lead by example and all that.
Beep beep.
It's a sad thing these days but cutting executive salaries often hurts the company in the eyes of the economic elite. I suppose it's for two reasons:
Even though cutting back executive salaries just a tiny bit would suddenly make up for all the workers laid off...
To say that "IBM is a wealthy company" with "$9 billion in profit in 2004 is completely misleading. What IBM made in absolute dollars is not really relevant.
Let's say I offer you an investment. If you give me $X, I'll give you $X + 100 a year from now. What a great deal - you are guaranteed a profit. How could you possibly turn that deal down?
Sure, it's great if X = 100. Then you'll make a 100% return in one year. Cool.
What if X = 1,000,000,000. You give me a billion today, and I'll give you 1,000,000,100 in a year. Suddenly it doesn't sound like such a good idea, does it?
IBM made about $4.87 per share last year. At the current share price ($76.51), that means IBM's return was about 6.4%. Not too shabby, but not really all that great when risk-adjusted.
In fact, IBM's share price has gotten RIPPED in the last few months. A year ago it was trading ~90, which gives us a return of only about 5.4% - not very impressive.
Sure, $9 billion seems like a lot, until you realize how much capital is being employed to generate that $9B. And how many shareholders need to divide that up. Shareholders like pension funds, university endowments, and widows and orphans.
I'm not saying the workers are wrong here, I'm just pointing out that it's completely fallacious to call IBM a "rich company" just because it made a large number of absolute dollars last year. That money comes from or goes to someone - to everyone who holds an indexed mutual fund, for example.
http://www.marketwatch.com/tools/quotes/insiders.a sp?symb=IBM&vc=0&siteid=mktw&dist=dropmenu
$13 million in the proceeds of a stock grant sale and options exercize to J. Bruce Harreld alone.
Bruce Harreld came from Boston Market several years ago where he also helped drive that company straight into the shitter.
Most IBM employees got no annual increase last year and variable pay e.g. bonuses which is what most people count on, were cut to the bone - average awards were half what they were the year before and about one fifth of the people got them. This year IBM suspended annual increases to executives but stock and other equity awards were not frozen. In the meantime the employees are bracing for another year of no increases and no variable pay. Simultaneously, benefits cost were increased about 15-20% to employees. Moreover any employees sitting on options that were awarded after 1998 have worthless paper - priced around $132 which is where the stock was headed in 1999 before it had its relentless crash since then ($76 as of today). And there is a strong push to force employees to work from home so IBM can sell their real estate. Employees are expected to give up one room of their house to for a home office and the reimbursement of their office supplies to the employee is now imputed income.
There may have been some dead wood in the company that needed to be culled, but quite a lot of those people are brown nosers who have figured out how to misrepresent their skills to managers who have no technical experience. Laying off massive amounts of people, hoping to cull these folks is like playing a shell game. It ain't working. It's demoralizing the employees that are left and the people with real talent are jumping ship...fed up with over work, pathetic management, endless meetings, and not enough talent left to actually implement designs.
So...if that's the results of appeasing stock holders here in the states, why in the world would you want to do the same thing in Europe? Yeah, there's a lot of peple just getting by; never really doing anything. But if management is not competent to figure that out and the en masse layoffs to get rid of them are failing and demoralizing...then you're possibly causing more harm than good by doing it.
IBM is too full of processes, too top heavy (duh as if y'all didn't know that already), and people are constanty job hopping in the company every year or two (or being restructured) with the result that no one know how the hell to do their job.
IBM just wants to make it's profit even bigger. By employing Indian's and sacking European's, they are doing just that. Sad but true.
Sad if you're a European. Excellent if you're an Indian.
How should a poor country try to get richer? By building up skills and capital to attract industry, which is exactly what India has done. More power to them. TANSTAAFL.
I find it amusing that many self-avowed liberals decry economic inequality, but then they complain when the market starts to shift wealth away from their own rich countries.
"The danger is not that a particular class is unfit to govern. Every class is unfit to govern." - Lord Acton
Any tech worker, employed or not, should care when 13,000 tech workers get laid off. No, I'm not talking about moral sympathy, I'm talking plain old self-interest.
Because 13,000 more unemployed will be 13,000 more competing for what open jobs there are. Knowing that there are 13,000 more desperate workers, companies will adjust the salaries they offer at whatever openings there are.
Furthermore, the same amount of work, or more, is going to be done at IBM Europe (unless they are closing a division, which I'm not aware of in this case). That means the standard job at IBM will either be that more intense or require more of that wonderful unpaid overtime. That also changes the job market, as other companies will begin to expect that same work load out of you.
Even if you work over here, as I do, better believe that conditions in other countries effect the job market here. Can you say India?
It's the prisoner's dilema. Remember your game theory? You succeed together, or you both fail. That's what the job market does when it's moved by the invisible hand job. Said invisible hand job being the result of decisions like these by IBM management.
. This sig unintentionally left blank. I meant to put something here, but I'm busy.
Actually unions are important, otherwise we will run again into manchester capitalism at its worst, but the main problem is that unions used to be effective, but are not anymore because they only act on a local scale, they need to act globally nowadays, companies do, unions do not. A local strike only causes a laughter, a global strike really could hurt.
By comparison Google had a gross profit of 1.73B last quarter, with a couple thousand employees.
While IBM is doing fine, it's NOT very efficient these days.
The Raven
Believe it or not, most people do not take jobs based simply on salary. They consider the benefits package, location, and a host of other factors. It's very common - in the States anyway - for someone to take a lower-paying job because it doesn't require him to move or because it has a better health insurance program. The employee says, "It'll cost me $X to move and get insurance on my own, and that's more than the amount I'm 'losing' by taking the lower-paying job. So this is the best job to take."
It helps out the employee by letting him choose the best job for his unique situation; it helps the employer by giving it the freedom to offer the package it can afford. Thus people who are maybe "marginal" applicants can get jobs where otherwise they couldn't (because nobody could afford to take a chance on them). That's how I got my job. No severance package, retirement, or anything else, but in exchange I got a job, with zero experience, that usually needs five years of experience.
Note that I'm not saying our way is better than the European way. But many Europeans don't seem to understand that there are some advantages to the free(r)-market approach, and I wanted to explain some of them.
In the spirit of comparing european salaries to US, one must consider the current strength of the euro in relation to the dollar. European jobs are more advantageous to cut for an american firm simply by virtue of the exchange rate.
Your opinion might change if you ever work 20 years at a company and actually become an executive.
The percent of money the average worker makes versus an executive has drastically shrunk in the last 20 years.
In 1980, the average CEO made 42 times the average salary of the regular workers at his company. In 2000, the average CEO made 419 times the average salary.
The pay gap between executive and regular workers has drastically gotten out of hand. We're at the point where nearly 40% of an entire company's payroll is going to one person.
This is a classic anti-union argument, and can be quote verbatum back to the "robber barron" days of the late 1800s. On its face, it assumes that the union leadership dictates, and the rank-and-file follow like sheep, being too stupid to consider their "best" interests. If true, then one might as well eliminate the middle man since management is already perfectly capable of dictating.
On the other hand, it just might be that the rank-and-file are as capable of recognizing their best interests as a stock market is at allocating capital resources.... that is to say, usually they can, occasionally they lack 20/20 vision to think through new circumstances, and sometimes a small clique can fool everyone for a while.
Circumstances since the end of the Cold War shows that you can only count on management (and stockholders) to look after their own interests. Now that there's not even the mirage of "another way", w/in the US at least quite a few of them seem to feel that putting the screws to their employees isn't only possible, it's a mandate from the Almighty.
I'm sure that a portion of the labor pool doesn't want to work in a union shop. The size of that portion is difficult to assertain, given the tread towards smaller work sites (you're easier to single out) and legal roadblocks (in legislatures, executive branches, and courts).
Luke, help me take this mask off
Yes, sympathy is justified. And I say this as my brother in law was just laid off. But just because we feel sorry for them - and I do - doesn't mean IBM is wrong to let them go. The unionists point to the fact that IBM is making a profit to justify their jobs. But that's irrelevant - should IBM wait until they're in the red overall to reduce their payroll? Is the situation of the overall company more important than individual divisions? What if IBM is okay but they have a division hemhorraging money? Can they get rid of that division or not?
Bottom line, there comes a time when a company needs to change direction, and unfortunately that means bad things for people. And yes, we should feel sorry for them. And yes, IBM should provide them with decent severance. But it doesn't mean that IBM has to keep them on forever.