Group says IBM job cuts could come this week

IBM's executives have confirmed that more restructuring is planned this year. Now a workers' group is saying they expect job cuts will probably come soon, perhaps in this quarter.

Tuesday, a worker group said that there are signs the "resource action" could be even sooner, perhaps this week. And signs are clear Wednesday morning that an action has started.

Lee Conrad, national coordinator for Alliance@IBM, said, "Reports have been coming in from employees today that point towards Wednesday as the start of the resource action/job cuts. Employees have told us they have been sent emails with urgent requests for one-on-one meetings with their managers on Wednesday."

Read this report from earlier this week on IBM jobs being safe in the restructuring.

He said it is unclear how many will be in the US/Canada..

The company's overall poor performance, seen in the quarterly report issued Jan. 20, adds some urgency to the management's planning, Conrad said in an earlier announcement sent to members.

"The job cut season is almost upon us, and with more urgency due to the abysmal running of the company," he said.

Monday, the Journal's Albany bureau learned from a source that New York jobs would be safe in the forthcoming downsizing.

Conrad said that there is another path for people to be cut from the payroll, however, which is by giving them poor performance evaluations, a "3" on a three-level scale.

"We have been hearing from workers inside that those 3's will be terminated, but it won't be part of a resource action," Conrad said.

IBM has not commented on the timing of a downsizing.

But there is reason to watch, given what Chief Financial Officer Martin Schroeter said in a Tuesday conference call with brokerage analysts, after reporting a fourth-quarter 12 percent drop in revenue from even those operations IBM kept and a 6 percent drop in operating earnings per share.

"I expect less spending in workforce rebalancing," he said. That's a term that means job cuts for some employees. And saying it will be less is a way of saying that there will be some.

No specifics were given. But in the call, Steve Milunovich of UBS asked Schroeter to "talk about what you're assuming for restructuring since restructuring is part of your reported EPS." EPS is earnings per share of stock. IBM says reducing headcount costs money in the short run but saves it in later quarters.

"We are not going to replicate the same level of restructuring that we had last year. It will be a lower mountain," Schroeter said. But he did not give a dollar number, or a headcount, or say where such actions would occur, or in which quarters. But back in the first quarter, Schroeter did note that a big downsizing then "will pay back within the year." The earlier the downsizing, the more quarters there are for the savings to be realized.

Such moves matter for the mid-Hudson economy, and to plenty of IBM families. The last time IBM filed a report counting heads in early 2014, it employed close to 7,000 people in Dutchess County. But it doesn't answer questions about current headcount.

For 2014, IBM confirmed charges against earnings of $870 million in the first quarter and $580 in the fourth, for a total of nearly $1.5 billion. That translates to payments made to thousands of employees who are terminated. So, Schroeter's talk about a lower level of cuts could still cost thousands of IBMers their jobs globally.

Conrad said many IBMers are receiving low performance ratings in the company's Personal Business Commitments system, or PBC, a trend that has "serious ramifications."

"People are getting their PBC's lowered, which is standard operating procedure this time of year, but it always shocks people when it happens to them," Conrad said.

He said he wasn't sure about how many job cuts are coming and declined to comment on rumors citing specific numbers.

Tom Midgley, president of the Alliance@IBM, a local of the Communications Workers of America union, said the low ratings, "3s" on a 1 to 3 scale, mean "a good chance of being resourced." A "resource action" is IBM's term for a large-scale job reduction. "Not all 3s get fired, but it's like a foot on the banana peel type of thing," he said.

"It's creating bad morale," Midgley said. "There are a lot of bad PBC's, and people are really worried."

Constant downsizing is not the answer, he said. "You get some quick savings, but in the long term, I don't see how this is helping the company or the employees."

Craig Wolf: 845-437-4815, cwolf@poughkeepsiejournal.com, Twitter: @craigwolfPJ