Thousands of IBM Workers Expected to Be Redeployed : Manufacturing, Administrative Workers to Shift to Sales Jobs
International Business Machines is expected to disclose, possibly as early as this week, a major redeployment that would move thousands of workers into new jobs, according to industry analysts and former company executives.
The move is intended to cut payroll expenses and shift personnel from manufacturing and administrative positions into revenue-producing sales jobs.
It comes at a time when the Armonk, N.Y., company, despite strength in its mainframe computer business, is generally suffering from sluggish domestic sales. Especially hard hit are sales of its mid-range computer systems, where its chief competitor is Digital Equipment, and in the scientific workstations field, where IBM has lost ground to such companies as Sun Microsystems and Apollo Computer.
To bounce back, IBM recently has taken various steps to bolster sales. Earlier this month, IBM unveiled seven new personal computer models to shore up its product line and disclosed a trade-in program for owners of older IBM machines. In another major announcement, it introduced six new models of mid-range computers, machines that range in price from $15,000 to $1 million.
The expected redeployment is viewed by some analysts as a way for IBM to cut its staff without breaking its longstanding promise not to lay off workers. Some workers probably will quit rather than move to a new job, they said.
Decentralized Management
“To me, it’s tantamount to a layoff. You have to expect a large number of people won’t want that kind of disruption in their lives,” said William D. Easterbrook, an analyst with Kidder, Peabody & Co. in San Francisco.
Since 1986, IBM has trimmed its payroll largely through early retirement plans. It also has cut back on temporary employees and reduced hiring. In addition, IBM has decentralized its management and reorganized its businesses.
At the end of last year, the company employed 389,348 people, down 3.5% from 403,508 a year earlier. About 11,000 workers have been transferred in that time from manufacturing and administrative positions to sales and support jobs.
In the first quarter, IBM’s profit increased 16% to $913 million from a year earlier on revenue that rose 18% to $11.75 billion.
IBM would not comment on the reports, except to say that its longstanding “full employment” policy remains in force.
Meetings Indicative
“We haven’t laid off people for almost 50 years. We are fully committed to that practice,” said IBM spokesman Justin Fishbein.
News reports, which first appeared Monday in the Wall Street Journal, suggested that the company could go so far as to shut its personal computer manufacturing facility in Boca Raton, Fla., where it employs about 6,000 people. The reports mentioned that the number of employees affected could be as high as 10,000, although some analysts said the number is probably too high.
But those familiar with IBM said they strongly doubt the company will close that operation because of the large amount of money it has invested there and because its personal computer business, despite strong competition by computer makers such as Compaq, remains relatively healthy.
“I would be amazed if they did it with all they have invested into that manufacturing system and automation down there,” said Dan H. Wilkie, who ran the Boca Raton operation until late 1985, when he became president of Tandon Corp. in Chatsworth.
Ulric Weil, a consultant in Washington, agreed, but said that IBM may choose to “change the mission” of the personal computer operation and move some parts of it to other plants.
Wilkie said his contacts at IBM in Boca Raton told him that meetings are scheduled at the plant all week, usually a sign that something important is coming up. He noted that a meeting of managers was scheduled for this week in an auditorium at nearby Florida Atlantic University.
“Generally, if there is a big management meeting there, they’ve got something cooking,” Wilkie said.
