Newspaper article THE JOURNAL RECORD

IBM to Consolidate Operations, Expects 40,000 Job Cuts

Newspaper article THE JOURNAL RECORD

IBM to Consolidate Operations, Expects 40,000 Job Cuts

Article excerpt

NEW YORK (AP) _ International Business Machines Corp. plans to consolidate manufacturing to cut costs and expects about 40,000 employees to accept voluntary job buyouts or early retirement this year, double the original forecast.

The leading computer maker said Tuesday it would reduce earnings by about $4.2 billion to pay for the actions, resulting in a loss in the current quarter.

IBM said this accounting charge against earnings would be reduced by a $1.9 billion tax benefit, but it would not predict what the impact would be on overall 1992 profits.

IBM said it did not expect to close any plants outright, but that manufacturing would be reduced at some sites and some plants given new, nonnufacturing tasks.

Some employees will be required to move or to learn new skills to keep their jobs. No layoffs are planned, keeping with IBM's longstanding tradition.

The company said it had not yet determined which plants would be affected, but that it primarily would involve those that make computer chips and, secondarily, mainframe computers.

IBM's principal domestic chip plants are in East Fishkill, N.Y., and Burlington, Vt. Mainframe plants are in Kingston and Poughkeepsie, N.Y.

The company said the action was worldwide, and that many of its 30 plants around the globe would be affected.

IBM has been attempting to cut costs for several years as it contends with a slowdown in the computer industry and increased competition from smaller, lowerst competitors.

In July, IBM announced that its voluntary jobduction efforts were attracting more workers than expected. It said at the time that it expected at least 35,000 employees would take the lucrative buyouts, up from its original estimate of 20,000.

It further said at the time it would reduce its earnings this year by $1.2 billion to pay for the job buyouts. That figure has now grown to $2.1 billion with the additional 8,000 employees it believes will leave.

IBM said it would account for $1.1 billion of this charge in the current quarter, and the rest in the fourth quarter.

In addition, the plant consolidations and a new way of accounting for software will result in a further charge against earnings of an additional $2. …

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