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IBM starts layoffs
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November 14, 1997: 10:00 a.m. ET
Hundreds to lose jobs as part of sales, distribution restructuring
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NEW YORK (CNNfn) - International Business Machines Corp. reportedly plans to lay off hundreds of employees as part of a restructuring of its North American sales and distribution operations.
The Armonk, N.Y.-based computer giant on Thursday circulated a memo notifying employees of the pending layoffs.
A company spokesman confirmed layoffs are imminent, but refused to identify exactly how many employees would be affected.
In a letter sent to 20,000 White Plains, N.Y., employees, general manager John W. Thompson said the company resorted to layoffs because a voluntary job-reduction program would not generate enough savings.
Just weeks ago, IBM said it would seek to curb costs by offering voluntary job buyouts to employees in various divisions throughout the company.
As of Jan. 1, sales and distribution between product and consumer groups will be consolidated, eliminating the current geographic structure.
Among the reasons for the restructuring, Thompson told employees, was that customers had complained the current structure is "too slow and too difficult to do business with." He also said a move to lower-margin products meant the company could no longer afford its current structure.
Another factor in the decision, Thompson said, was a combination of IBM's AS/400 minicomputer and RS/6000 midsize-computer divisions. Under the reorganization, IBM will continue to market these computers as distinct brands, but will group sales specialists into two distinct units: one for high-end servers, storage products and software and the other for mid-range products.
Some of the unit's employees told the newspaper they were upset by the news because their unit has already seen more reductions than others, yet they were not being offered voluntary buyouts.
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IBM Corp.
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