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IBM Burlington Cuts ALL Overtime
While Louis V. Gerstner, Jr. and top management continue to use what IBM employees like to call “IBM math” to paint a picture for stockholders and industrial observers of a company doing well, as a way of padding their stock options and paychecks, local IBM plants are having to admit to and deal with the fact that they are suffering financially right now. As such, payroll and asset expenses must be trimmed or cut. IBM MicroElectronics is laying off temporary help, contractors, and cutting out overtime, and uses creative ways to hold down employee bonuses and raises.
IBM’s Burlington plant (in Essex Junction, Vermont) manufactures logic chips for computers and electronic devices. IBM Management has watched as its competitors and customers layed off thousands of workers, due to a slow down in the economy, as well as a slow down in electronic and computer sales. A recent report indicated that companies are always laying off. That is the nature of business. That doesn’t help IBM any when it looks at its sales and the amount of product it is starting up and manufacturing, and realizes it really has no need for temporary help. And temporary employees and contract workers were laid off. Naturally there was no announcement that they planned to do this. This comes with the position of being a temporary employee.
As more of the orders are completed, the manufacturing tools have less running in them and management starts turning off unneeded tools. Eventually IBM realized that it could no longer justify demanding overtime from its manufacturing tool operators and maintenance personnel. IBM wanted to go one step further. IBM MicroElectronics was faced with only enough work for what management considered enough work for about 65% of its regular manufacturing personnel. IBM did not want to lay off any of its manufacturing personnel. IBM no longer has pay and benefits to be envied. As such, employees that are laid off probably would find jobs elsewhere and may not bother coming back, even if IBM ever offered them their own jobs back.
IBM management already has trouble getting temporary help, because of the nature and uncertainty that comes with the temporary position. With employment at IBM being less attractive these days and IBM already having trouble hiring for anything that looks like a temporary position, the last thing IBM needs, is to make its regular worker’s jobs look uncertain or like temporary positions.
When IBM’s starting pay, raises, and benefits were generous, there were more people trying to get hired as a temporary employee than IBM has use for. IBM could afford to be selective about who it hired, even with its temporary employees. People would work temporary positions over and over again, hoping to some day be made a regular employee of IBM, with good pay and benefits for light to moderate work.
As IBM persuaded “dead wood” employees to leave through “buy outs (or else get fired)”, IBM also started requiring manufacturing employees to run tools, AND perform extra curricular activities for the employer. For instance, one employee may be running five tools, while also keeping track of how new product are (or aren’t) running on other people’s tools in both fabrication buildings. This person will make sure the tool operator of the next tool set knows that the lot is coming to their tool set. By having the tool operators do these extra curricular activities instead of people that had been hired to do it in an office, you eliminate the overpaid office person; or, at least IBM management seems to see it that way.
Now that tool workers have to work moderately hard to get a good appraisal and raises aren’t so generous, IBM is starting to seem less attractive, even as a full-time permanent job. At one time, workers seemed to get a cost of living increase every year automatically. Your raise beyond that depended on your performance. Now, IBM appears to only give out cost of living increases to those that do really well on their appraisals.
IBM management knows it will be more difficult to ramp up manufacturing of computer chips, if they loose any regular full-time help.
In Endicott, where only 25% of the IBM plant is in the MicroElectronics division only 200 employees would be affected. Since they make modules, chips, and circuit boards, it was easy to simply decide to close the plant down on Sunday. So, all four 12-hour shift were told they would be doing 36 hours every week until business picks back up. So, the plant is now running 24 hours a day from Monday to Saturday. The plant sits idle on Sunday, which actually starts Saturday evening at 7 P.M.
IBM Burlington manufacturing workers started asking if Burlington would follow Endicott’s lead. Some employees started asking if Burlington would follow Endicott’s lead. Some employees were just curious. Others were concerned. Some families had budgeted and spent on credit, based on being required to work overtime 2 or 3 weeks a month during the summer months.
Every year, each manager will sit with each of their 3700 full-time manufacturing employees and spell out exactly what the employees can expect to earn that year. Some employees will get themselves in debt with loans and credit cards, based on what they believe they can afford for payments, which is based on what the manager told them what they can expect to make. And, in all fairness, that is the languages IBM management uses.
When the IBM Burlington manufacturing employees asked if we were eliminating over time by going to working three day per week, first, second, and third level managers were saying, “We can’t go to working three days per week. We would have to shut down the line on Sunday and there is no way we can afford to do that.” This is because of the amount of time it takes to shut down and start back up the line. Some operations take up to 16 hours to run, so you need to start shutting down tools early Saturday morning to have the line idled by 7 P.M that evening. Then, when the N1 (night) shift comes in Sunday evening at 7 P.M., (for what they call their Monday morning night shift), the tools must be qualified to run again, which can easily take until midnight. So, from management’s point of view, shutting down the tools for a day means an average of 36 hours of non-production out of the tools.
And, with all kinds of experiments going on (which IBM calls HOT LOTS), IBM can’t see loosing any time in getting out the HOT LOTS on account of any payroll issues. After all, IBM has to show its customers IBM can do new or different chips, before IBM’s customers will commit to any orders. And without orders, you don’t have the money coming in to keep the plant running. As management continued assuring the manufacturing employees there would be no cuts in their hours or pay, management started having “all managers meetings” to talk about what management might do.
On July 31st, 2001, the Superintendent of manufacturing announced to all manufacturing employees that he has come up with a way to keep the plant open while eliminating all overtime for manufacturing. On each day of the four-day weeks, ¼ of the shift will take an unpaid day off, so that ¾ of the shift is being paid for that day and everyone gets paid for working 3 of the 4 days. It was novel approach for IBM’s payroll problem, and most employees’ feel eliminating over time is probably the best and most humane solution.
Employee reaction is mixed. Some employees are outraged. Other employees say they appreciate the time off, but know they will miss the extra money. Some employees wish IBM started the policy back in May or June, so they could have enjoyed more of the summer.
Employees seeking to start a union at IBM took the opportunity to try to get more employees interested in the union. Many IBM employees would like their benefits in writing --- and without the famous IBM clause at the bottom that gives management the right to change its mind on a whim.
Ironically, the set of union meetings that followed brought in many people, but the union found people more interested in the premium cut from 20% to 9% than the unpaid day off. And the PBC issue came up as well. In one meeting the PBC issue ended up dominating the meeting and many signed the union cards in hopes the union can force IBM to fix its employee evaluation system.
Briefly put, PBC stands for Personal Business Commitment. Employees commit to achieve certain goals during the year. For manufacturing, that means put in your required extra curricular activity and sign on the dotted line. “We already have the rest of your commitment laid out.” The spelled out commitments are always things the employees have little control over, like “IBM will make at least as much this year as management predicted, based on the most optimist projections management can come up with.” (That is the wording of IBM employees, not IBM management.)
Employees like to refer to PBC as IBM’s “Personal Benefits Control”. In January of 2000, IBM Management put in writing that a “2” appraisal would be “Meets All Commitments,” but as it turned out, that was subject to change. And around August of 2000, IBM changed the rules for evaluating the employees for Year 2000. IBM had done so well, it exceeded managements’ wildest dreams. So the “2” went FROM “Meets All Commitments,” to “Meets ALL commitments and does something significantly beyond that.” IBM Managers would determine what would be considered “something significant extra”. That meant a costs savings of about $1000 in the variable bonus pay per manufacturing employee. Obviously the cost savings for office personnel would be higher. With IBM knowing it would be hurting this year, the new classification was left in tact.
This year most IBM Burlington employees are expecting management to say, “You’re a ‘3’, because we didn’t do as well as we thought we should have been able to on a good year,” so many employees have not bothered to sign off their Personal Business Commitments. Employees estimate nearly half of manufacturing are saying, “Why bother?” Not committing or doing their final evaluation makes the employee an automatic “3” rating. The “3” rating has gone from “Needs improvement,” to “meets some or most of their commitments,” to “meets all commitments” Rating “4” is given to those on their way out the door. Management had to create a “4” for the PBC system, so employees that are consistently rated as a “3” would have a lower rating to avoid. That’s what happens when you consistently under-rate your employees.
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IBM MicroElectronics management in Burlington and New York started to look at having employees work only three, twelve hour days every week instead of demanding a fourth 12-hour day every other week.
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Updates
Recently the union had a rally at Essex High School. The agenda was advertised as dealing with the elimination of overtime. Out of 3700 manufacturing employees affected by the cut in overtime, about 125 people showed up to the meeting. Maybe the union should have a PBC rally. More people would probably show up. More people showed up the Lincoln inn to express their concerns with PBC and the shift premium reduction than showed up for the Rally at Essex High School for an overtime elimination rally.
IBM management’s decision to cut the premium and screw IBM employees (as IBM employees put it), using the PBC (often referred to as the “Personal Benefits Control”) employee evaluation system, has angered most of the manufacturing employees. Many employees have quit for other jobs with comparable or better wages.
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| IBM Burlington Cuts ALL |
Mandatory ^ | Overtime |
Now employees are hearing stories of some managers being allowed to offer voluntary overtime at the reduced 9% premium rate. Under the scenario, the employees of the under-staffed departments are allowed to work all the days their shift is in, including the mandatory unpaid day off. Most of the employees that are being offered the overtime, are turning the overtime down. One of the union organizers told me that out of his whole department, only two accepted the voluntary overtime. He says those two are always kissing up to the manager, so everyone expected them to offer to help. Those two are always get good appraisals and like the manager.
The Missing Stuff
By Jimmy
The story omits mention of the fact that there was no need for any cut in pay or reduction in hours or shift premium or layoffs of temporary workers notwithstanding slowed production. The article omits mention of record IBM profits. It omits mention of the fact that Lou Gerstner by himself got ten times more in executive compensation in two days in May when he exercised some of his stock options and sold the stock than the entire amount saved by these measures in Burlington for a year. The article omits mention that employees lost 18% of pay. The artcle omits mention that the money saved by slicing that 18% pay for production workers is used to pay Lou and other top executives, not to help IBM. Years ago, IBM adamently defended full employment and a full pay check for all employees while providing reasonable pay for executives. Now IBM pays executives hundreds of millions of dollars and keeps on reducing the livelihood of production workers and all other employees and retirees. The unjustified massive reductions in pension and retirement medical in 1999, when IBM had record profits, are unmentioned, and undermine your thesis that reductions are related to financial circumstances. Your article needs work if it seeks to provide the unbiased facts. As it stands it selectively provides only those facts that make management look like they are doing a good job under difficult circumstances.
Jimmy
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