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IBM Workers in Europe, Japan Wonder Where the Axe Will Fall

August 1, 1993

PARIS (AP) _ IBM workers in Europe and Japan are wondering how heavy the ax will fall after the company’s top executive last week said international operations will be hit harder than in the past by job cuts.

″Our biggest worry is, how will it happen?″ said Gerard Taponat, secretary general of the labor union at an IBM semiconductor plant in Corbeil, a Paris suburb.

IBM last week announced a record quarterly loss of $8.04 billion, largely to pay for a restructuring that includes early retirement incentives for thousands of workers.

About 50,000 employees have taken incentives so far this year and chairman Louis V. Gerstner Jr. said an additional 35,000 will have to leave by the end of next year.

And he added, ″There will be a higher percentage (of cuts) in non-U.S. operations than we’ve had in the past.″

He was not more specific.

Prior to the announcement, IBM Europe had undertaken steps to reduce its staff of 90,000 by 10,000 to 11,000 over the next two years.

The new cuts ″will mean a substantial number in Europe,″ said Alan Gillings, a spokesman for the Paris-based IBM Europe. ″We’re not ready to give any specifics for any countries.″

IBM Japan, while not shedding jobs outright, has encouraged retirement and cut back recruiting.

″Because of the so-called lifetime employment system in Japan, our employees don’t believe they will be affected,″ said IBM Japan spokesman Takafumi Nagabuchi.

IBM Japan on April 1 employed 25,235 workers, up from 25,123 the year before. But its profit fell last year 45 percent, leading to a change in its top management.

IBM Europe lost $1.73 billion last year due to one-time charges that hid an operating profit of $1.5 billion. Four plants in Sweden, Spain, Britain and Montpellier, France, have been ordered to improve operation by the end of the year or face accelerated job reductions.

IBM Europe is considering channeling its factories toward other kinds of production, including contract manufacturing on behalf of other companies.

″They would still make products for IBM, but they could sell elsewhere too, offering their high-tech expertise,″ company spokesman Gillings said.

The company’s workers in France and the Netherlands were given the opportunity to leave for up to three years on partial salary to explore other careers.

But at the Corbeil plant, IBM’s biggest in Europe with 3,500 workers, only two employees have chosen that, union official Taponat said.

″The leave program is a fiasco,″ he said. ″Most people just take the severance package.″

Taponat estimates that 300 people will quit the factory this year and 400 in 1994. But he said the new incentives could double that.

The company laid off workers for the first time in the United States this spring but has not yet done so in Europe.

IBM Japan has sought to slim down by offering early retirement to 3,000 employees older than 50. Of the 1,632 people who applied, 845 moved to about 90 IBM-affiliated companies, 384 started new careers and another 380 moved to IBM’s competitors.

The search for volunteers to leave will probably occur again this year, Nagabuchi said.

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