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IBM To Eliminate 3,000 Jobs in U.S.

September 9, 1994

NEW YORK (AP) _ IBM will eliminate 3,000 jobs, mostly through layoffs, in U.S. headquarters and regional offices during the next few weeks, the company says.

The move, announced Thursday, is one of the largest single job-cutting actions by the computer company this year. It has a goal of having 215,000 employees by year’s end, down from about 250,000, though IBM’s top financial officer has said other cost-saving targets will be achieved if it doesn’t make all the job cuts.

IBM employees learned of the latest cut in a electronic mail note from Robert LaBant, senior vice president of North American marketing.

Most of the cuts will occur to positions that support IBM’s sales staff. For instance, as IBM pulls together financial review groups, it needs fewer accountants.

″We made these decisions based on the affordability and benefit of the work being performed, not a headcount objective,″ LaBant said in his memo. ″We analyzed whether the work supported our business model, and if so, whether the cost of it was affordable.″

The cut represents 7 percent of the 43,000 people in the U.S. marketing division. Individual employees will be told if they lose their job during the next two weeks.

LaBant said IBM will consolidate finance and planning, customer support, information technology, human resources and support functions for its marketers on a national basis. Those operations previously had separate hierarchies in each of IBM’s regional sales offices.

The change is made possible by a regrouping earlier this year of IBM’s sales force on the basis of industry expertise rather than geographic location. Industry specialists cross the boundaries of IBM’s regional offices. For instance, a sales rep in New York who knows banking rather than one in Denver may be selling IBM computers to a financial institution in Idaho.

″This is a difference in style of doing business,″ said Bob Djurdjevic, analyst at Annex Research in Phoenix. ″It shows that IBM is indeed getting leaner, even cutting the old geographic entities, and not just starting over with lean industry-focused business units.″

IBM’s U.S. marketing operation employed more than 100,000 people in 1986. The company that year began cutting jobs to respond to changes in the economics and demand for computers. It relied heavily on retirement incentives and buyouts, resorting to layoffs only last year.

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