IBM, which has set a goal of boosting per share earnings from $13 to $20 by 2015, aims to do so by a 78% reduction in U.S. employees, says IBM critic Robert X. Cringely, who has
published a six-part series entitled, “Today’s IBM, Rotten to the Core.”

Cringely, who has been following IBM 35 years, says he obtained access to an “internal plan” that describes the U.S. staff reduction.

New York Times
columnist Steve Lohr on Jan. 1, 2012 rapped IBM for withholding U.S. employment figures since 2008. U.S. staff declined 11% to 120,589 from 2003-07 while worldwide total grew 21% to 386,558. It is now 444,000.

He writes that the company “nearly collapsed” in the mid-1990s when low-cost computers challenged its mainframe business. Employment fell to a low of 217,000.

“Offshoring” jobs has become a hot button issue with U.S. labor groups. They have created the website “Job Tracker” which follows which jobs are going where.

IBM, which generates $106 billion in sales, is eyeing Apple, whose 60,400 employees generate $142 billion in sales. Apple products are mostly made in China and other countries by contract laborers.

IBM has cash and investments of $27B but debt of $32B while Apple has $110B of cash and no debt.

Iwata Gave False Image at IPR, PRS Foundation

The picture of IBM employees as marching together in unison singing the IBM tune and serving as “brand ambassadors” of the company, drawn by SVP Jon Iwata at the Institute for PR in 2009 and the PRS Foundation in 2011, is at odds with the portrait drawn by Cringely, who says U.S. employees are “heartsick” at the planned shift of most of their jobs abroad.

Iwata at the PRS Foundation event in 2011.  Photo: Jon Gurinsky
Cringely, who has a lot of contacts in numerous plant cities of IBM, says IBM is going about this shift in a furtive manner, bringing in a few foreign workers here and there to evade the Worker Adjustment and Retraining Notification (WARN) Act.

Astounding to Cringely is the “deafening silence” that has greeted this sea change at IBM in the U.S. business press. He feels biz papers are afraid to offend a major advertiser.

Iwata, by withholding IBM’s U.S. employment figures, is not living up to the “Principles” of the Arthur W. Page Society which he heads as chair. “Tell the truth” and “Prove it with actions” are Page’s main principles.

NYT Should Hire Cringely, Bartz, O’Dwyer Co.

The NYT has not totally ignored this subject, as indicated by the Jan. 1 Lohr column above, but it could use the immense knowledge of IBM history and contacts with IBM employees in numerous plant cities that Cringely possesses.

He should be able to post some bone-rattling articles about IBM in the NYT. Another hire, even if as a contract worker, should be Scott Bartz, whose 619-page "The Tylenol Mafia" has far more details on Johnson & Johnson than any reporter could ever dig up. No reporter could match the nearly eight years that Bartz worked at J&J.

The O’Dwyer Co. should be retained by NYT for our expertise on PR and especially (PR) Seminar, which Iwata headed in 2007 (the year “PR” was removed from the title after 55 years). We have 40 years of programs, membership lists and coverage of many of the presentations made. An 80-page booklet on Seminar was published by the O’Dwyer Co. in 1998.

NYT has no regular coverage of PR, which has a large influence on the flow of information, but it could rectify this by hiring the O’Dwyer Co.

The paper has successfully employed David Pogue as its tech columnist since 2000. Pogue continues to run his own thriving business while writing for NYT. It’s time that major media recognized the expertise of specialists that can never be matched by their own reporters.

IBM’s Interest in PRS Is for Its Awards

IBM, which currently only has six employees who are members of the PR Society, has been actively courting PRS honors and awards to publicize its “Smarter Branding for a Smarter Planet” ad/PR campaign and its “IBM at 100” campaign.

The “Smarter Branding” campaign won a Silver Anvil in 2010 and this year IBM has the most finalists (six) for Anvils that will be awarded June 7. Five are for the “IBM at 100” campaign which a PRS release says “was conceived to define its place in the past and present in ways that reinforced its brand as an innovator shaping the future.”

Iwata, last year was honored with the Paladin Award of the PR Society Foundation which recognizes those who have been outstanding “advocates for PR.”

Iwata, as head of PR Seminar in 2007, led the move to drop “PR” from its title. Paladins, in medieval times, were “heroic champions” who were “determined advocates of a noble cause,” the Foundation says. Many Page members are also in Seminar.

"Ginni" Rometty Is New CEO

Palmisano, Rometty
Cringely traces the history of how IBM products changed to meet the needs of clients. CEO Sam Palmisano, 60, was succeeded in January by veteran IBM executive Virginia “Ginni” Rometty, 54, the first woman CEO in its 100-year history.

Palmisano had built IBM’s worldwide business but also sold the personal computer business and ended production of printers and hard drives.

Cringely says Palmisano is “safely out to pasture with $127 million for his trouble, though at the cost of a shattered IBM.” His total compensation in 2009 was $21.1 million and included salary of $1.8M, cash bonus of $4.75M and stocks granted of $13.5M. There were no options. “Other” compensation totaled $1,091,888.

Palmisano has led the shift of production and service to other countries including India, Brazil, Argentina, Russia and China. The NYT’s Lohr says “some estimates” are that the IBM workforce in India is more than 100,000. Communities that could be hit with heavy job IBM job losses include Raleigh, Lexington and Rochester.

Offshoring is creating severe problems for the firm, according to Cringely, who writes: “The language barrier for IBM’s Indian staff is huge, for example. Troubleshooting, which was once performed on conference calls, is now done with instant messaging because the teams speak so poorly. Problems that an experienced person could fix in a few minutes are taking an army of folks an hour to fix. This is infuriating and alarming IBM’s customers.” He says some companies have left IBM including Amgen, the State of Texas and Walt Disney Co.

Global Services, the biggest employer of the company, is where most of the jobs are being shifted overseas, says Cringely.

IBM Asked for Comment

E-mails and phone calls have been placed to Iwata, who heads IBM’s marketing, communications and citizenship organization, and Edward Barbini, VP of external relations, who “heads strategies for dealing with the media, analysts and key influencers worldwide.” No response has been received by press time from either.

Cringely says “today there’s little difference between IBM, AOL or Yahoo except that IBM has better PR.”

One manifestation of IBM’s PR power was its ability to get the government and others to use the initials ICBM for intercontinental ballistic missiles when the initials should have been IBM since intercontinental is one word.

Current PR strategy includes giving Iwata a high profile in the PR community.

His biography notes that he is the 2012 chair Page, described as “a professional association dedicated to strengthening the management policy role of chief communications officers,” and was chairman of Seminar in 2006-07, described as “a professional group consisting of chief communications officers.” He is not a member of PRS.

Mention of Seminar a Rarity

This reporter knows of no other company that has mentioned the existence of the highly secretive Seminar.

The organization, which has featured as speakers editors and publishers from at least 25 major print and broadcast media without such media ever mentioning the existence of Seminar, has been criticized by Peter Sussman, a founder of the Ethics Board of the Society of Professional Journalists.

The secret annual meeting at America’s finest resorts, with attendance, program and speeches all off-the-record, puts the journalist speakers in the position of violating at least ten articles of the SPJ Code, Sussman said.

About half of the board of Page are also members of Seminar and half of those at Seminar meetings are members of Page, a tax-free 501/c/3 “charity.”