Iowa Spent $50M to Lure IBM. Then the Firings Started

http://www.bloomberg.com/news/articles/2015-05-19/iowa-spent-50-million-to-lure-ibm-then-the-firings-started

by forgotAgain • 11 years ago

64 69 11 years ago

simonw• 11 years ago

"Instead, Ross found herself toiling on what she described as a new-age assembly line -- each employee solving a narrowly focused part of a corporate customer’s technical problem and then passing the baton to the next person."

Can anyone decipher the above and explain what kind of work IBM employees in these kinds of offices perform?

caleb3141• 11 years ago

Call center?

wtbob2• 11 years ago

Mostly operations, I imagine: OS, database & storage administration.

While other companies were investing in their employee base, IBM was cutting costs. Much like a farmer who eats his seed corn and then has nothing to plant while others steward their resources carefully and see a bumper crop, IBM is seeing the results of over a decade of underinvestment: who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode?

While those companies were hiring smart people to design & implement well-crafted systems, IBM was cutting, cutting, cutting, using human beings to do work which is better scripted, underinvesting in automation and generally setting itself up for failure.

amyjess2• 11 years ago

who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode?

Why do you think IBM bought Softlayer?

eropple2• 11 years ago

who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode

I'd pick CloudFoundry over any of those at a large enterprise shop, and BlueMix is a legit implementation. (As is Pivotal, if that's your bag.)

cmdrfred• 11 years ago

With the 100% uptime I have with digital ocean (so far), i'd never go anywhere else.

thoth2• 11 years ago

I had a job once where I provisioned storage. As in, log into a filer/array (NetApps in my case), create a volume, hand it off typically to system admins that would then create a VM or use the volume for something else. That was it, my portion was mostly "create volume 500G" and sometimes a few extra configuration steps, like mirroring or setting up replication.

I don't know what that IBM office was doing specifically, but I can easily imagine the situation described in the article!

I looked into moving up the stack, so to speak, as soon as I could because that job was so hyperspecialized it was essentially non-transferable.

rrich2• 11 years ago

Astonishing. Did you realize what your responsibilities would be when you were hired? Could only imagine having to do a full blown tech interview to find out the position was mundane and could be scripted.

wtbob2• 11 years ago

It’s a blow to Dubuque and Columbia, cities that spent a combined $84 million on tax breaks and other incentives to lure Big Blue in the hopes of attracting other technology firms and incubating a startup scene.

Anyone who would pursue IBM in hopes of 'incubating a startup scene' is, not to put too fine a point on it, grossly incompetent.

Instead, Ross found herself toiling on what she described as a new-age assembly line — each employee solving a narrowly focused part of a corporate customer’s technical problem and then passing the baton to the next person. As a result, said some of IBM’s Dubuque workers, they became experts only in a narrow set of skills that weren’t easily transferable.

That's exactly IBM's MO: try to solve problems with a smart process executed by low-skilled people. Never mind that a process can never execute judgement, and that low-skilled people executing a process never get the experience needed to develop their own judgement. Never mind that deep knowledge is necessary to solve complex problems.

From IBM's perspective, it's good to have low-skilled people who can't easily find jobs elsewhere: it means lower wages and less turnover (and when there is turnover, imparting a few low skills to new hires is easy!). Never mind that if other places wouldn't want to hire them, then one probably doesn't have a reason to hire them either. Never mind that if one's company is composed of low-skilled employees, then customers don't have much reason to use one's services.

fennecfoxen2• 11 years ago

Anyone who would pursue IBM in hopes of 'incubating a startup scene' is, not to put too fine a point on it, grossly incompetent.

Indeed -- and just one of the most painfully obvious illustrations of why the "high taxes with favored big companies getting tax breaks" strategy is a lot less fair and efficient than the "medium-low taxes for everybody" strategy. (Of course, the latter doesn't give the politicians any chances to dole out favors and toot his own horn for getting his constituents jobs!!!, so expect ongoing cronyism well into the future. why capitalism gets a bad name...)

scarmig2• 11 years ago

There's a multitude of interpretations there, but to me the obvious(TM) takeaway is that corporate taxes should be zeroed out for everyone, and income/consumption/environmental taxes (take your pick of weighting) increased to make up for it.

pacaro2• 11 years ago

The city should just embrace sunk costs, I mean, double down, and invest in helping the laid off workers create a startup scene. That at least has a hope in hell of achieving something

clord• 11 years ago

Anyone who would pursue IBM in hopes of 'incubating a startup scene' is, not to put too fine a point on it, grossly incompetent

Could be they are geniuses: banking on IBM laying off tech workers in order to get the startup scene going in the wake. Scratch that. Having seen some of these legislative bodies at work, that's too advanced.

A_COMPUTER• 11 years ago

They were trying to create a tech ecosystem, of which IBM and startups would be parts of. Not creating startups from luring IBM. But yes, this was totally predictable.

marpstar2• 11 years ago

Dubuquer here. This was totally the City of Dubuque's attempt to grow (establish?) a tech scene. Dubuque doesn't have enough computer science graduates to support it. I'm at the biggest "software" company in the city, and we can't find quality talent within an hour commute.

As others in the thread have stated, this place was a glorified call center. No research or development going on. I have friends who still work there, and I've watched their careers completely stagnate.

In Dubuque, IBM was where you went when you couldn't get a tech job elsewhere in the city. Not anymore. The article says that the average pay at IBM was $46,000 but I don't know anyone who actually made that much. IBM said they'd bring 1300 jobs, but they barely cracked 1000.

Anyone who thinks they'll still be here in 10 years is kidding themselves.

beambot• 11 years ago

I'm at the biggest "software" company in the city, and we can't find quality talent...
the average pay at IBM was $46,000

I think I can solve your talent problem, and I won't even charge you for the insight: Pay more.

Presumably you're in a high-margin (software!) industry. If revenues are reasonable, then you can afford to pay higher salaries. Given the untethered lifestyle of younger generations, you're effectively competing with the entire nation. Even SFBA, with its absurd cost of living, offers a better pay-to-living situation than $46k in Iowa.

But there's good news! With housing in Mountain View at all time highs (yes, a 2 bdrm home runs ~$800k)... there's lots of good software engineers who spend a few years here and then look to the MidWest. The classic relocations are to Austin TX and Boulder CO. Pay up, and you might have an easier time recruiting people heading back to the MidWest. (BTW: I'm from Nebraska.)

tjr2• 11 years ago

I'm at the biggest "software" company in the city, and we can't find quality talent within an hour commute.

This is your company?... http://www.cartegraph.com/careers

Had I stumbled upon your website on my own, I would get the distinct impression that you are presently NOT looking for any developers, since the only jobs listed are in sales.

If you'd consider hiring someone to work remotely 3-4 days a week and drive in to Dubuque 1-2 days a week, I'd think you'd get some hits from Cedar Rapids, which might be enough to broaden your options.

darkarmani• 11 years ago

I can't believe no one mentioned this gem:

"Grassley, a Republican, wrote to Rometty on April 16 to express concern about “reports of mass layoffs” even as IBM requested H-1B work visas to allow 5,800 foreign employees to be authorized to work for the company in the U.S."

nova22033• 11 years ago

reports of mass layoffs

Whatever happened to the Cringley reported mass layoffs?

http://www.cringely.com/2015/01/22/ibms-reorg-hell-launches-...

IBM’s big layoff-cum-reorganization called Project Chrome kicks-off next week when 26 percent of IBM employees will get calls from their managers followed by thick envelopes on their doorsteps. By the end of February all 26 percent will be gone. I’m told this has been in the planning for months and I first heard about it back in November.

cwyers• 11 years ago

http://www.forbes.com/sites/benkepes/2015/01/28/the-ibm-axe-...

https://gigaom.com/2015/01/28/looks-like-those-ibm-layoffs-h...

at-fates-hands2• 11 years ago

I saw that too and was going to comment on it.

I'm starting to see a lot more companies who are starting to outsource their work to H1-B's and even moving a lot of their work to India.

My sister worked at Cargill for 20 years and just recently found out her entire department (enterprise application development) with all her developers were being canned and the jobs sent over to India.

Hell, the current project I'm on, we have a team of 23 people and myself and one BA are the only American born people on the team. The rest are all from India and have to go back in a few months when their H1-B visas expire.

Two years ago, I found out Thomson Reuters were in the process of outsourcing 80% of their development in a combination of H1-B's and work going directly to India.

I always thought as a developer my job would be relatively safe and I could work in a nice stable corporate environment - guess I was wrong.

imaginenore• 11 years ago

H1B is not outsourcing. They are full time local workers by definition.

It's amazing companies can get away with firing people and then hiring H1Bs, who, by the government requirements, can't take a citizen's job place.

Yhippa2• 11 years ago

This sounds like Cargill warped back to 2004.

Killswitch2• 11 years ago

I live in Dubuque Iowa, and I'll say this, everyone knew IBM was only coming for a short period of time. This was expected from everyone here.

Dubuque has a long history of trying to lure people here, and it's horrible. First it was luring blacks from Chicago with free housing and prepaid credit cards to up the minority count so the city could qualify for grants. Then it was IBM.

Not much smart people here.

15155• 11 years ago

Not much smart people here.

I hate to break it to you..

Killswitch2• 11 years ago

Story of my life.

kitd• 11 years ago

It's the same for small suppliers as well, not just locations, depending on large companies for business.

If the large company takes their business away, trauma normally ensues for the small supplier/location.

I worked for an oil major who wouldn't do business with small suppliers for this reason.

Geekette2• 11 years ago

If city officials bothered with a little research (assuming they don't already know), they'd find several examples of Big Co. entering and leaving small cities and towns without creating economic value equivalent to the huge incentives used to lure them in. Very similar to how officials chase Olympic hosting bids, even when history clearly shows that the legacy is additional debt and underutilized facilities (e.g. purpose-built stadiums/villages that only get used during the occasion).

Everytime I read of such schemes, I can't help but wonder how much lasting value could have been created by using just a minute fraction of the money wasted to foster the local startup/small business scene instead.

scarmig2• 11 years ago

Or even just leaving the money in people's pockets. I'm not a person who thinks that all government destroys value, but this is a pretty clear example of a time when the government extracted millions of dollars of productive resources and poured it into an idiotic scheme.

Everyone would be better off today (except IBM's investors) if the city officials responsible for this fiasco had just been given a free lifelong vacation starting the day they started planning it.

djrogers2• 11 years ago

Why do you think any money was actually spent on this? These were tax breaks - a reduction or elimination of tax payments that IBM wouldn't have made is they hadn't moved in anyway. How is that taking money out of people's pockets?

rrich2• 11 years ago

Motorola basically did the same thing in a Northern Illinois community. I think the massive site stayed open a little more than a year. It still today remains a huge empty space sitting in the prairie some fifteen year on.

1123581321• 11 years ago

Similar outcome, but happened for different reasons. The CEO lived in McHenry and, essentially, wanted work to be closer to his house. When the plant was closed, it was because Motorola had been fundamentally mismanaged, which is different from IBM's cost-cutting to maintain its successful strategy.

I am in the Rockford area and saw a lot of friends suffer financially because of Motorola's missteps. Rockford also competed with Dubuque to get IBM, and for the same reasons (vague intentions to anchor a tech scene), but was disqualified early in the selection process because it didn't have a minimum threshold of college graduates.

hharnisch• 11 years ago

It was basically just a call center with sys admins that would remote into servers and give them a kick when needed. Oh an a handful of developers. It was clear as day they weren't going to stick around, since the more interesting positions were being held in other IBM offices. It's a bit of a shame really, there's plenty of smart/technical kids from Dubuque, they just go to Des Moines and Cedar rapids to work at places like John Deere and Rockwell Collins -- because even with IBM, there was no reason to stay.

fredkbloggs• 11 years ago

Still waiting for a state's voters to pass a ballot measure that constitutionally prohibits the state or any municipality within it from establishing preferential/discriminatory tax regimes. If you want to put this pandering to bed, it's surprisingly easy to do. Just be sure you're prepared for the corporate money flooding in from all points of the compass to defeat you with scare ads. Megalocorp knows it can't afford to let even one state do this; then their game will be up.

discardorama• 11 years ago

"cloud computing, which allows IBM’s corporate customers to fix problems online rather than deal with human beings"

That's a new definition of "cloud computing". And you'd think that Bloomberg would have figured it out by now, since the term has been around for years.

stox• 11 years ago

Cloud, as in Blowing Smoke.

djrogers2• 11 years ago

'Spent' is an interesting word here, given that this was entirely done in tax breaks. It's not as if the state's coffers have $50m less than if they hadn't done this deal at all - in fact it was still likely a net + for them.

If they hadn't given the tax breaks then IBM wouldn't have come at all - bringing zero dollars with them. At least this way there are hundreds of people employed, land being rented, utilities being used etc.

Oh, and according to the article the tax breaks were suspended when the number of employees dropped too low - perhaps that minimum number could have been set higher?

Obviously this didn't turn out as well as the state wanted it to, but it's not like it actually cost them any real dollars in the long run...

gtirloni• 11 years ago

incentives to lure Big Blue in the hopes of attracting other technology firms and incubating a startup scene

Based on unsatisfied ex-IBM employees? :-) they surely have the numbers.

jrmurad• 11 years ago

“Four years is light years in technology,” [the local official] said.

I wonder whether the journalist purposely used this as the article's final sentence to demonstrate that politicians don't "get" science/technology... or maybe relating a length of time to a distance slipped past the writer and editor(s) as well.

jpg0rd0n2• 11 years ago

I thought that was a bit ignorant to throw in there too, but sadly, have gotten used to seeing nonsense like that in "serious" articles.

Iowa Spent $50M to Lure IBM. Then the Firings Started

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