|Volume 1: No. 11|
IBM's workforce has been cut by 47,000 (10%) since 1986, mainly through early retirement and the sale of its typewriter and printer businesses. 65,000 employees were transferred to sales and marketing positions. The company is losing market share, and will ask 10,000 workers to take one-week unpaid vacations this July. Another 10,000 workers will leave voluntarily in the coming year, at a cost of $2.3 billion. Not to worry, though: IBM earned $6 billion last year, the most profitable of all U.S. companies. [Time, 5/20.]
IBM Japan's pretax profits were down 21% last year, to $1.1 billion. It now trails Fujitsu and NEC, although it has 30% of the mainframe market. The company will transfer 400 employees (of 25,000) and cut recruitment of college graduates by 50% (to 500). [San Jose Mercury, 6/9.]
Apple Computer has decided to lay off 1,500 people, 10% of its workforce. It isn't that sales are off or that Apple is forced to downsize. (The company has about $1 billion in cash.) Apple just wants to run lean now that its products are competitive and profit margins are slimmer. Remaining employees will be expected to maintain productivity. Business Week says that the reduction will cost Apple $75M, but may save $200M per year.
The SF Chronicle reports that 750 of the layoffs will be immediate (400 from Apple USA), the rest delayed a few months so that people can seek reassignment within the company. Executives may be given a 10% pay cut. (John Sculley's salary last year was $2.2M, not counting stock options.) The company may close 20-30 of its 70 leased buildings in Cupertino, and cuts have been proposed in day care, fitness centers, off-site conferences, and company cars.
Industry analysts tend to approve of downsizing to run lean and mean, but published statistics show very little effect on average productivity (across all industries). Employees who remain have low morale and distrust management. [Robert Kriegel.]
Alvin Toffler, in his new book "Powershift," claims that more and more companies are bringing manufacturing operations back to the industrialized nations. High-tech, low-volume products require increasingly sophisticated factories, educated workers, high-quality components, and just-in-time delivery. Less developed nations just can't meet modern standards and schedules. (Toffler cites one warehouse in China that held 40% of the nation's steel during a recent critical shortage. The steel was unavailable because the warehouse makes deliveries only twice a year.) [Christian Science Monitor.]
Toffler's migration doesn't mean that jobs are coming back, though: factory automation has become a fact of life. Perhaps secondary or tertiary suppliers will use hand labor, but such jobs may well be done in the less developed nations. Software production has not yet been automated, but commercial or proprietary software libraries and object-oriented development might have that effect. If salaried programming ceases to be an important industry, what happens to computer science departments?
"Employees of electronics companies ought to save more and prepare themselves psychologically for interruptions in their careers. In the 1990s, they're likely to be hard to avoid." [James J. Mitchell, San Jose Mercury, 5/26.]