It's Day One as GlobalFoundries for ex-IBM plant
WICCOPEE — It's "orange is the new blue" for about 5,000 former IBMers who now work for GlobalFoundries either here or in Burlington, Vt.
As newly transferred workers tried on the corporate color of their new employer and celebrated with parties at the plants, executives said that this company is one that is clearly focused on semiconductors and making chips for everything from smartphones to IBM's Corp.'s big computers.
It was the other side of the coin that IBM had flipped. Big Blue has exited the chip-making business. But it continues to maintain research and design divisions that will work closely with GlobalFoundries, which has a 10-year deal to supply high-end chips to IBM.
In a press conference Wednesday afternoon, Mike Cadigan, formerly head of IBM's Microelectronics Division, is now now head of the Product Management Group, explained that chips were just one part of IBM, which moved into other areas like services.
"There were many facets," he said. "But clearly, going forward, as you look at the industry at large, the industry challenges are growing significantly," especially in the huge investment needed in plants and equipment. So, IBM sought a relationship so that "we could ensure that our technology would still be provided by a very focused engagement with GlobalFoundries.".
GlobalFoundries executives also said the strong role that IBM has played in the community will continue under Global.
Most of the talk on the conference, staged at the Burlington site, was about that plant's role, which is strong in chips that go into mobile devices. There was also reference to continued investment in the equipment
An agreement last October for IBM Corp. to transfer its semiconductor manufacturing business and facilities in East Fishkill and Vermont to GlobalFoundries officially closed Wednesday, GlobalFoundries and IBM announced.
With the closing of this deal, GlobalFoundries has becomes IBM's exclusive semiconductor processor technology provider for the next 10 years.
But there was some reference to the other end of the spectrum, the one that East Fishkill focuses on, which is digital processors that are steadily shrinking the size of internal features through different "nodes" that are now measured in nanometers. That development work goes on at Global's Malta, Saratoga County, plant, and at the SUNY Albany NanoTech site, he said.
While not addressed in the conference, executives have previously said that future nodes of technology process will be developed at Malta. Under IBM, that work was done historically at East Fishkill and in Westchester County labs and in more recent times, in Albany.
“This announcement is the next step in our long-standing relationship with GlobalFoundries. IBM continues to invest in systems leadership, innovation and talent for the long-term,” said Tom Rosamilia, senior vice president, IBM Systems, in a news release. “IBM is designing and developing IT systems for the digital era -- including servers, storage and middleware that will empower our clients to drive new workloads and new business models.“
The closing end months of required regulatory approvals and will move an estimated 5,000 IBM workers — split between the East Fishkill, Dutchess County, and Burlington, Vt. plants — over to the payroll of GlobalFoundries.
The new name, ownership and future are being celebrated by the company with an employee party at the East Fishkill site.
Impacts abound as IBM Corp. transfers its semiconductor manufacturing business to GlobalFoundries. Some key points:
-- An estimated 5,000 IBMers — split between the East Fishkill and Burlington, Vermont plants — have shifted over to the payroll of GlobalFoundries, most of them without leaving their workplaces. In the conference, Janette Bmbardier, who manages the Burlington and East Fishkill plants, said 3,000 IBMers came over to work for Global there. She also said there are several hundred people sited there who still work for IBM.
-- Ownership of the two complexes has passed to GlobalFoundries.
-- IBM's employee population in Dutchess has dropped as the workers at East Fishkill shifted over to GlobalFoundries, but their economic impact is likely to be comparable. It's not clear whether IBM will still be the largest private employer in Dutchess.
-- Dutchess will add a new large employer, GlobalFoundries, one that has established its record for community outreach and charity in its existing plant in Malta, Saratoga County.
-- IBM's era as a leading-edge maker of microchips here for its own computers ends after 52 years. It continues to invest in research and chip designs.
-- The site could be a major jobs generator with new companies, assuming GlobalFoundries actively markets the excess space there, which IBM had at one time stated as 1.1 million square feet.
For now, the outlook is upbeat.
"What I've seen is pretty positive," said Earl Mongeon, a 36-year IBMer who works at the Burlington plant and has been outspoken in his concerns about Big Blue's path. He has been serving as vice president of the Alliance@IBM, a union-backed worker group, a post he's leaving since he'll no longer be an IBMer.
The transferred workers are getting the same rate of pay as they did with IBM and the health benefits look better, he said. The out-of-pocket payments he's looking at are about half of what they are under IBM, he said, and, "The premiums are much lower."
He said, "(GlobalFoundries) wants to run it as a business and wants to invest in it and keep it going." IBM, which was known to be planning an exit from the business, had trimmed back its investing and was experiencing difficulty hiring or keeping new recruits on board, he said, attributing that to uncertainty about IBM's future in the business.
In East Fishkill, having a player dedicated to staying in the chip business will be a welcome sight, said the town supervisor, John Hickman.
"I think it's going to be a big thing," Hickman said. "I think this is a new chapter and I'm looking forward to it."
It's not clear yet what will happen with the taxes paid by the town's largest taxpayer. A "payment in lieu of taxes," or PILOT deal, is in effect that sets a negotiated level of payment to the town, Wappingers Central School District, Dutchess County and special districts. That was part of a settlement reached after IBM brought a lawsuit challenging its assessment.
"When the IBM-East Fishkill site transfers to GlobalFoundries, the existing PILOT we have with IBM regarding that site will lapse," said Sarah Lee, director of business development for the Dutchess County Economic Development Corp., which staffs the county's Industrial Development Agency. So far, GlobalFoundries has not approached either agency about a new deal, she said.
Hickman said, "It's up to them if they want to come in and continue the PILOT. We're flexible."
IBM had hired nationally active realty advisers to market space at its site, but no major deals were announced. Then, IBM turned to the sale scenario and on Oct. 20, 2014, announced that GlobalFoundries would acquire the chip-making business and along with it, the two plants.
So, marketing of the property's spaces has effectively been on hold, said Ron Hicks, Dutchess County's deputy commissioner for strategic planning and economic development.
He's looking forward to a new green light for marketing once GlobalFoundries is ready. "They’ve engaged the community on a couple issues relating to the site," Hicks said, "which is positive." One is getting spaces either redeveloped or occupied by others. And another is a potential offering of the site's sewer and water treatment facilities for use by others.
For years, IBM has had its own facilities for its own use and for tenants on site. "We understand they are interested in working with the community to share services, which would be great for that corridor," Hicks said.
On Monday, the final federal OK was received when the Committee on Foreign Investment in the United States gave clearance for the Abu Dhabi-owned GlobalFoundries to acquire IBM's commercial chip business.
IBM's statement: "This transaction, once final, enables IBM to further focus on systems innovation and fundamental semiconductor research and development to power future cloud, mobile, and big data workloads. GlobalFoundries will have access to the research resulting from this investment through the companies' collaboration with other industry leaders at the Colleges of Nanoscale Science and Engineering, SUNY Polytechnic Institute, in Albany."
Craig Wolf: 845-437-4815; cwolf@poughkeepsiejournal.com; Twitter: @craigwolfPJ
BY THE NUMBERS
$1.5 billion: What IBM pays to GlobalFoundries to take over the business
10: Years GlobalFoundries is to supply chips to IBM
5,000: Total employees in two states changing from IBM to GlobalFoundries
464: Acres at IBM's East Fishkill site, which is being sold
ONLINE
For more on IBM, see www.poughkeepsiejournal.com/business/IBM
IBM:
Hudson Valley Research Park
Where: Route 52, Wiccopee, near Hopewell Junction, Town of East Fishkill
Role: This has been IBM's principal site for semiconductor manufacture as well as some chip packaging and some research and development of chip-making processes.
History: Opened in 1963 on a 464-acre former farm. Bought land for West Campus in 1983 and built most of it by 1986, nearly 1 million square feet. Later discontinued, sold, now empty but owned by Linuo Solar. IBM built more than 5.5 million square feet of space on the two campuses. Prior to negotiations with GlobalFoundries, IBM had 1.1 million square feet on the market for lease.
Jobs: Not disclosed, but believed to be in the low thousands. IBM also owns a major plant in the Town of Poughkeepsie, which is not part of this deal.
GLOBALFOUNDRIES
Plan: Take over IBM's semiconductor manufacturing business.
Where: Deal includes East Fishkill and Burlington, Vt., facilities. GlobalFoundries has a new complex in the Luther Forest Technology Campus, Malta, Saratoga County. It employs about 3,000 people and an executive has reportedly said it plans to hire 600 more.
Role: GlobalFoundries is an international producer of microchips with plants in Germany and Singapore.
Who: GlobalFoundries is owned by Mubadala, an investment arm of the government of Abu Dhabi, United Arab Emirates.