600 laid off, 3,000 lose a week's pay at IBM

By Lisa Rathke
Associated Press

ESSEX JUNCTION, Vt. — Weakness in the worldwide computer chip industry cost 600 IBM workers their jobs yesterday and 3,000 others will have to forgo a week's worth of wages next month as the company tries to right its struggling technology unit.

The company, the world's largest provider of computer hardware, laid off 500 workers at its Vermont plant, about three dozen at a factory in Endicott, N.Y., and others at facilities in Rochester, Minn.; Austin, Texas; and Raleigh, N.C.

IBM spokesman Jeffrey Couture said the job cuts would take effect immediately.

"Essentially we're doing this because we have not seen a turnaround in our industry," Couture said.

John E. Kelly III, senior vice president for the technology group announced the job cuts in an e-mail to the staff yesterday morning. Kelly said he would be among those losing a week of pay in September.

"The layoffs address long-term competitiveness," Kelly said. "The time off without pay addresses short-term demand and expense issues, and helps reduce the number of people we must lay off."

Although IBM posted profits for its second quarter, it lost money in its microelectronics business amid an industrywide downturn.

Many of those laid off were in higher-paying positions, the company said. The move does not affect the manufacturing force at the Vermont factory, where workers research, design and produce microprocessors and high-speed chips.

Employees were informed of the layoffs as they arrived for their morning shifts at the factory spanning the Winooski River in Essex Junction and Williston. They were instructed to pack up their desks and go home. Cars streamed from the plant, some packed with belongings.

The news was greeted with a mixture of anger, sorrow, disappointment and grim humor.

"After 26 years of feeling secure, you don't have a game plan for an alternative career," said Randy St. Amand, who had carpooled to work with his twin brother the entire time they worked at IBM. "It hit me out of the blue."

Rick Schwartz, laid off from the supply department after 24 years with IBM, took comfort in his severance package. "It gives me an opportunity to move to Florida," he said.

IBM directly employed just under 6,700 people in Vermont before yesterday's layoffs. Thousands of others rely on contracts and business from the company.

IBM shares were up $1.73 to close at $83.52 on the New York Stock Exchanger.