IBM President Says Company Has Too Much Capacity

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(Host) Sam Palmisano, IBM’s chief executive, told stock analysts in New York Wednesday that the company has too much capacity at its computer-chip plants. His report to the analysts took place while Vermonters waited for word on possible job cuts at the IBM plant in Essex Junction, but there were no specifics yet.

VPR’s John Dillon reports.

(Dillon) IBM President Sam Palmisano paints a rosy picture of IBM’s future. He says the company is a major player in a $1.2 trillion industry and that it will achieve double-digit growth in earnings.

That may be good news for IBM’s shareholders. But Palmisano didn’t shed any light on employment in Vermont – or at other places around the country where IBM makes semi-conductor computer equipment. Stock analysts have warned that IBM will lay off workers in Vermont and sell its Essex Junction computer plant.

Palmisano says the high tech semi conductor operation – like the Vermont plant – is a key part of the company’s business. But he also says the company may have too many people working at too many plants:

(Palmisano) “Let’s not lose sight that this is a great business for IBM, for our own internal needs. Now, at the same time … there’s too much capacity in the industry and we have too much capacity. Here, we don’t have a broken business. We have kind of a short-term economic problem.”

(Dillon) One analyst asked Palmisano specifically if the company would cut 20,000 employees. Palmisano didn’t answer directly. He says 150,000 people work in manufacturing and those numbers are constantly adjusted:

(Palmisano) “It’s a very big labor pool … and they ebb and flow with the demand.”

(Dillon) A member of IBM’s employees union says the company has postponed job cuts until next week. The company says it won’t comment on the reports of pending lay offs.

For Vermont Public Radio, I’m John Dillon.

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