IBM scrutiny justly deserved
Deciphering what is going on at IBM and what it all means for the mid-Hudson Valley is a monumental, deeply important undertaking.
It’s also like hitting a moving target. There have been announcements of investments and partnerships with other high-tech heavy hitters. There also have been rumors of more downsizing and a possible sale of IBM properties, including in East Fishkill.
It’s a fluid situation that deserves the public’s attention and as much scrutiny as possible.
For decades and lately to its peril, the mid-Hudson Valley has relied heavily on IBM for well-paying jobs in the private sector.
But what was once a symbiotic relationship has become a profoundly different one. Decades ago, IBM employed more than 30,000 people in the mid-Hudson Valley; the Journal has now officially learned that the number is below 7,000 workers — and no one really believes the downward spiral will abate.
Area residents must certainly understand the ramifications can be profound, damaging the local economy, hurting the housing market, affecting just about every segment of life in the mid-Hudson Valley.
Through various deals, the state likely has been able to stave off even deeper cuts and/or entice IBM to keep partnering with New York and others to maintain a substantial presence in the area while undertaking new ventures in other parts of upstate.
But it is definitely disconcerting that while the high-tech sectors are growing elsewhere, the mid-Hudson Valley is struggling.
Elected officials of all stripes and economic development experts need a far more cohesive blueprint to market the area and bring about solutions.
Speculation has abounded for months that IBM is exploring selling its manufacturing side while keeping its research and development and design capabilities.
But IBM’s earnings report Thursday did not include any news about the reported potential sale of the microchip manufacturing business, which would include the East Fishkill plant.
And a rumored deal that would have IBM Corp. sell its chip manufacturing business to GlobalFoundries has apparently hit stumbling blocks, according to various reports.
Nevertheless, the Hudson Valley has to brace for and embrace change.
The area still has a significant high-tech presence, has many vibrant small businesses, and is particularly strong in the biotech, farming and tourism industries. The quality of life here is exceptional, but high taxes and energy costs are great impediments to luring business expansion and startups.
Two immediate, relatively easy steps should be taken to move things in a better direction:
• The state should obliterate the Metropolitan Transportation Authority payroll tax that, despite modifications, is imposing a 34-cent tax for every $100 of payroll if businesses, including nonprofits and some forms of government, have annual salaries totaling more than $1.25 million, regardless of the number of workers.
• The Federal Regulatory Energy Commission’s “new capacity zone,” which is causing electric rates to rise in the area to entice power plant construction to serve New York City’s energy needs, must be scrapped.
Overall, the continued diversification of business, in particular strategies to nurture smaller businesses, makes the area less susceptible to incredible setbacks that can occur in places too reliant on one particular company.
This latest round in the IBM saga apparently has not fully played out.
It is critical for those who care about the mid-Hudson Valley to know what’s in store for Big Blue and to keep working toward a business climate that mitigates that concern.