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Iowa Spent $50M to Lure IBM. Then the Firings Started

• simonw 11y ago
  "Instead, Ross found herself toiling on what she described as a new-age assembly line -- each employee solving a narrowly focused part of a corporate customer’s technical problem and then passing the baton to the next person." Can anyone decipher the above and explain what kind of work IBM employees in these kinds of offices perform?
  • deleted 11y ago
    [deleted]
  • caleb3141 11y ago
    Call center?
  • wtbob 11y ago
    Mostly operations, I imagine: OS, database & storage administration. While other companies were investing in their employee base, IBM was cutting costs. Much like a farmer who eats his seed corn and then has nothing to plant while others steward their resources carefully and see a bumper crop, IBM is seeing the results of over a decade of underinvestment: who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode? While those companies were hiring smart people to design & implement well-crafted systems, IBM was cutting, cutting, cutting, using human beings to do work which is better scripted, underinvesting in automation and generally setting itself up for failure.
    • eropple 11y ago
      > who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode I'd pick CloudFoundry over any of those at a large enterprise shop, and BlueMix is a legit implementation. (As is Pivotal, if that's your bag.)
    • amyjess 11y ago
      > who here would choose an IBM cloud solution over AWS, Google, DigitalOcean or Linode? Why do you think IBM bought Softlayer?
      • brandonl222 11y ago
        Who?
        • amyjess 11y ago
          http://softlayer.com http://softlayer.com Surprised you haven't heard of them -- they're a pretty big player in the datacenter space. Also, I know for a fact that a good chunk of Linode's servers are actually hosted at Softlayer DCs (e.g. any Linode server hosted in Dallas is physically at Softlayer's DAL-2 location, which used to be called The Planet). My best friend is a tech there, he joined right after the acquisition, and he tells me that the word around the office is "IBM wanted to have a good cloud business, so they bought one".
          • eropple 11y ago
            Yup. Between Softlayer as an IaaS provider and BlueMix as a PaaS provider, IBM has top-shelf (not the best, but close) cloud talent and tooling. They aren't sexy, which is probably why they don't get much play on HN, but they're important and influential.
    • cmdrfred 11y ago
      With the 100% uptime I have with digital ocean (so far), i'd never go anywhere else.
  • thoth 11y ago
    I had a job once where I provisioned storage. As in, log into a filer/array (NetApps in my case), create a volume, hand it off typically to system admins that would then create a VM or use the volume for something else. That was it, my portion was mostly "create volume 500G" and sometimes a few extra configuration steps, like mirroring or setting up replication. I don't know what that IBM office was doing specifically, but I can easily imagine the situation described in the article! I looked into moving up the stack, so to speak, as soon as I could because that job was so hyperspecialized it was essentially non-transferable.
    • rrich 11y ago
      Astonishing. Did you realize what your responsibilities would be when you were hired? Could only imagine having to do a full blown tech interview to find out the position was mundane and could be scripted.
      • thoth 11y ago
        No, the interview was fairly vague and thus partly my fault for not getting a better description. To be fair, the other areas within that office were hardware related (setting up SANs, configuring and cabling them up) so had I stayed I would have learned that. I described it like this to friends who asked: what I wanted was "The Unix/Linux System Administrators Handbook", what I got was "Chapter 8: Storage" or even just the "Disk Partitioning" subsection of Chapter 8 of that book. ;)
• wtbob 11y ago
  > It’s a blow to Dubuque and Columbia, cities that spent a combined $84 million on tax breaks and other incentives to lure Big Blue in the hopes of attracting other technology firms and incubating a startup scene. Anyone who would pursue IBM in hopes of 'incubating a startup scene' is, not to put too fine a point on it, grossly incompetent. > Instead, Ross found herself toiling on what she described as a new-age assembly line — each employee solving a narrowly focused part of a corporate customer’s technical problem and then passing the baton to the next person. As a result, said some of IBM’s Dubuque workers, they became experts only in a narrow set of skills that weren’t easily transferable. That's exactly IBM's MO: try to solve problems with a smart process executed by low-skilled people. Never mind that a process can never execute judgement, and that low-skilled people executing a process never get the experience needed to develop their own judgement. Never mind that deep knowledge is necessary to solve complex problems. From IBM's perspective, it's good to have low-skilled people who can't easily find jobs elsewhere: it means lower wages and less turnover (and when there is turnover, imparting a few low skills to new hires is easy!). Never mind that if other places wouldn't want to hire them, then one probably doesn't have a reason to hire them either. Never mind that if one's company is composed of low-skilled employees, then customers don't have much reason to use one's services.
  • fennecfoxen 11y ago
    > Anyone who would pursue IBM in hopes of 'incubating a startup scene' is, not to put too fine a point on it, grossly incompetent. Indeed -- and just one of the most painfully obvious illustrations of why the "high taxes with favored big companies getting tax breaks" strategy is a lot less fair and efficient than the "medium-low taxes for everybody" strategy. (Of course, the latter doesn't give the politicians any chances to dole out favors and toot his own horn for getting his constituents jobs!!!, so expect ongoing cronyism well into the future. why capitalism gets a bad name...)
    • scarmig 11y ago
      There's a multitude of interpretations there, but to me the obvious(TM) takeaway is that corporate taxes should be zeroed out for everyone, and income/consumption/environmental taxes (take your pick of weighting) increased to make up for it.
• darkarmani 11y ago
  I can't believe no one mentioned this gem: "Grassley, a Republican, wrote to Rometty on April 16 to express concern about “reports of mass layoffs” even as IBM requested H-1B work visas to allow 5,800 foreign employees to be authorized to work for the company in the U.S."
  • nova22033 11y ago
    >reports of mass layoffs Whatever happened to the Cringley reported mass layoffs? http://www.cringely.com/2015/01/22/ibms-reorg-hell-launches-next-week/ http://www.cringely.com/2015/01/22/ibms-reorg-hell-launches-... IBM’s big layoff-cum-reorganization called Project Chrome kicks-off next week when 26 percent of IBM employees will get calls from their managers followed by thick envelopes on their doorsteps. By the end of February all 26 percent will be gone. I’m told this has been in the planning for months and I first heard about it back in November.
    • cwyers 11y ago
      http://www.forbes.com/sites/benkepes/2015/01/28/the-ibm-axe-starts-chopping-widespread-layoffs-begin/ http://www.forbes.com/sites/benkepes/2015/01/28/the-ibm-axe-... https://gigaom.com/2015/01/28/looks-like-those-ibm-layoffs-have-started/ https://gigaom.com/2015/01/28/looks-like-those-ibm-layoffs-h...
      • kjs3 11y ago
        Those articles are from January, and Cringley said 25% of the workforce would be gone by Feb. It never happened. There have been layoff, and one day in the future it might amount to 100k, but nothing like 100k people in a month, or 5. Typical Cringley "take this little fact, coat thickly with histrionics and invective to drive clicks, and declare yourself a genius insider when the little fact turns out to be true".
  • at-fates-hands 11y ago
    I saw that too and was going to comment on it. I'm starting to see a lot more companies who are starting to outsource their work to H1-B's and even moving a lot of their work to India. My sister worked at Cargill for 20 years and just recently found out her entire department (enterprise application development) with all her developers were being canned and the jobs sent over to India. Hell, the current project I'm on, we have a team of 23 people and myself and one BA are the only American born people on the team. The rest are all from India and have to go back in a few months when their H1-B visas expire. Two years ago, I found out Thomson Reuters were in the process of outsourcing 80% of their development in a combination of H1-B's and work going directly to India. I always thought as a developer my job would be relatively safe and I could work in a nice stable corporate environment - guess I was wrong.
• Killswitch 11y ago
  I live in Dubuque Iowa, and I'll say this, everyone knew IBM was only coming for a short period of time. This was expected from everyone here. Dubuque has a long history of trying to lure people here, and it's horrible. First it was luring blacks from Chicago with free housing and prepaid credit cards to up the minority count so the city could qualify for grants. Then it was IBM. Not much smart people here.
  • 15155 11y ago
    > Not much smart people here. I hate to break it to you..
    • Killswitch 11y ago
      Story of my life.
• kitd 11y ago
  It's the same for small suppliers as well, not just locations, depending on large companies for business. If the large company takes their business away, trauma normally ensues for the small supplier/location. I worked for an oil major who wouldn't do business with small suppliers for this reason.
• Geekette 11y ago
  If city officials bothered with a little research (assuming they don't already know), they'd find several examples of Big Co. entering and leaving small cities and towns without creating economic value equivalent to the huge incentives used to lure them in. Very similar to how officials chase Olympic hosting bids, even when history clearly shows that the legacy is additional debt and underutilized facilities (e.g. purpose-built stadiums/villages that only get used during the occasion). Everytime I read of such schemes, I can't help but wonder how much lasting value could have been created by using just a minute fraction of the money wasted to foster the local startup/small business scene instead.
  • scarmig 11y ago
    Or even just leaving the money in people's pockets. I'm not a person who thinks that all government destroys value, but this is a pretty clear example of a time when the government extracted millions of dollars of productive resources and poured it into an idiotic scheme. Everyone would be better off today (except IBM's investors) if the city officials responsible for this fiasco had just been given a free lifelong vacation starting the day they started planning it.
    • djrogers 11y ago
      Why do you think any money was actually spent on this? These were tax breaks - a reduction or elimination of tax payments that IBM wouldn't have made is they hadn't moved in anyway. How is that taking money out of people's pockets?
      • Geekette 11y ago
        Tax breaks are just some of the incentives. E.g. Dubuque also renovated a historic building for IBM, which cost money upfront. That said, I think tax breaks ultimately cost money, especially when the locals hired earn less than projected (thus, contributing less in income tax to city and less in spending to local industries) while company enjoys little to no tax, makes money and uses other municipal resources without adequate contribution.
• rrich 11y ago
  Motorola basically did the same thing in a Northern Illinois community. I think the massive site stayed open a little more than a year. It still today remains a huge empty space sitting in the prairie some fifteen year on.
  • 1123581321 11y ago
    Similar outcome, but happened for different reasons. The CEO lived in McHenry and, essentially, wanted work to be closer to his house. When the plant was closed, it was because Motorola had been fundamentally mismanaged, which is different from IBM's cost-cutting to maintain its successful strategy. I am in the Rockford area and saw a lot of friends suffer financially because of Motorola's missteps. Rockford also competed with Dubuque to get IBM, and for the same reasons (vague intentions to anchor a tech scene), but was disqualified early in the selection process because it didn't have a minimum threshold of college graduates.
• hharnisch 11y ago
  It was basically just a call center with sys admins that would remote into servers and give them a kick when needed. Oh an a handful of developers. It was clear as day they weren't going to stick around, since the more interesting positions were being held in other IBM offices. It's a bit of a shame really, there's plenty of smart/technical kids from Dubuque, they just go to Des Moines and Cedar rapids to work at places like John Deere and Rockwell Collins -- because even with IBM, there was no reason to stay.
• fredkbloggs 11y ago
  Still waiting for a state's voters to pass a ballot measure that constitutionally prohibits the state or any municipality within it from establishing preferential/discriminatory tax regimes. If you want to put this pandering to bed, it's surprisingly easy to do. Just be sure you're prepared for the corporate money flooding in from all points of the compass to defeat you with scare ads. Megalocorp knows it can't afford to let even one state do this; then their game will be up.
• discardorama 11y ago
  "cloud computing, which allows IBM’s corporate customers to fix problems online rather than deal with human beings" That's a new definition of "cloud computing". And you'd think that Bloomberg would have figured it out by now, since the term has been around for years.
  • stox 11y ago
    Cloud, as in Blowing Smoke.
• djrogers 11y ago
  'Spent' is an interesting word here, given that this was entirely done in tax breaks. It's not as if the state's coffers have $50m less than if they hadn't done this deal at all - in fact it was still likely a net + for them. If they hadn't given the tax breaks then IBM wouldn't have come at all - bringing zero dollars with them. At least this way there are hundreds of people employed, land being rented, utilities being used etc. Oh, and according to the article the tax breaks were suspended when the number of employees dropped too low - perhaps that minimum number could have been set higher? Obviously this didn't turn out as well as the state wanted it to, but it's not like it actually cost them any real dollars in the long run...
• gtirloni 11y ago
  incentives to lure Big Blue in the hopes of attracting other technology firms and incubating a startup scene Based on unsatisfied ex-IBM employees? :-) they surely have the numbers.
• jrmurad 11y ago
  > “Four years is light years in technology,” [the local official] said. I wonder whether the journalist purposely used this as the article's final sentence to demonstrate that politicians don't "get" science/technology... or maybe relating a length of time to a distance slipped past the writer and editor(s) as well.
  • jpg0rd0n 11y ago
    I thought that was a bit ignorant to throw in there too, but sadly, have gotten used to seeing nonsense like that in "serious" articles.