IBM is cutting pay by up to 10 percent for some manufacturing workers at semiconductor operations in Poughkeepsie and East Fishkill, as well as in Vermont.
The move rankles a company critic who sees it as unfair to New York taxpayers who recently granted Big Blue a $140 million incentive partnership deal. Â
In January, the company will discontinue premiums for shift employees who work seven 12-hour days over a two-week period, said IBM spokesman Jeff Couture. He did not return a phone call seeking more information about the pay cut, including why it was being instituted, and how much money IBM hoped to save.
But Les Conrad, coordinator for the Alliance@IBM, a labor group he founded after ending his 26-year IBM career in its Endicott facility, said the company was taking unfair advantage of state taxpayers and its own employees. Alliance is a local of the Communications Workers of America. Â
“Considering the fact IBM is making record profits, buying back billions in stocks and the CEO and top management are getting double digit raises, its pretty obscene to be cutting the wages of manufacturing workers,” said Conrad.
He noted that IBM Chief Executive Sam Palmisano, 56, received a pay package valued at $19.8 million in 2007, an 11 percent raise as the company posted record revenues and profit, according to regulatory filings with the SEC. Other top company executives also had multimillion paychecks, but the shift workers facing the pay cut make about $30,000 annually, Conrad said.
“Part of the problem here, too, is New York state is giving IBM tax breaks and state money,” said Conrad. “IBM is a very wealthy corporation; it doesn”™t need the money. It”™s a form of corporate welfare, especially while IBM is cutting the pay of employees, and these are employees paying New York state taxes,” said Conrad.
Couture did not return calls placed to IBM media contacts seeking comment. In announcing the pay cuts, IBM said it affects a total of about 3,500 employees from plants in Dutchess County, where about 11,400 IBM employees work in the two plants, and plants in Essex Junction, Vermont. IBM did not reveal how many workers at each facility would see pay reductions. Those workers have been earning a 20 percent premium over their agreed-upon wage, plus overtime pay. Workers would receive a base pay increase in January that would partially offset the cuts, Couture said, resulting in pay reductions of not more than 10 percent.
In July, IBM”™s System and Technology division that is being subjected to the pay cuts reported a decline in revenue of $191 million, or 2 percent, over the second quarter compared to last year. However, overall, IBM posted a 24 percent increase in net income since June 2007 to $5.1 billion.