IBM Corp. said Wednesday it will move three manufacturing operations from its Rochester campus to New York and Mexico, a move that could cut up to 200 Minnesota jobs by next year.
The technology giant will transfer manufacturing of its Power Systems, PureSystems and PureFlex Systems servers to Guadalajara, Mexico, and relocate its operation that refurbishes used and leased machines to Poughkeepsie, N.Y., said spokesman Scott Cook. The moves will begin later this year and finish in mid-2014.
IBM, based in Armonk, N.Y., has an estimated 2,800 to 3,000 workers on its Rochester campus. City and state officials estimate that 160 to 200 positions will leave the state as a result of the move, but IBM officials declined to cite a specific number of losses Wednesday.
“This is a long process. People are already trying to guess the numbers. But we are still planning, guys. So everybody slow down and take a breath,” Cook said. “Rochester remains an important location as relates to hardware, service and a host of other functions.”
Cook said IBM’s Rochester campus will retain its customer solutions center, Blue Gene supercomputer technology center and a solutions technology division that specializes in design and prototypes.
Still, news of the cuts comes on the heels of a strong state jobs report Tuesday that said employers added 12,100 jobs in January and that Minnesota has recovered nearly 90 percent of the 16,100 jobs lost during the recession.
Lee Conrad, national coordinator for the local union Alliance@IBM, said the transfer of operations could stifle a more robust comeback in Rochester. “These are 200 jobs that should not be moved. We’ve got a weak economic recovery, and moving jobs to Mexico is outrageous,” Conrad said.
Fortunately, Rochester sports a large and diverse employment base. While IBM is considered a high-tech economic powerhouse in the southern part of the state, the Mayo Clinic is a much larger force with 33,500 employees. There are also several other large employers in the region, including McNeilus Truck and Manufacturing, Crenlo Cab Products, Seneca Foods, Reichel Foods Inc., Benchmark Electronics, and Kemps, which employ 3,500 people total.
Already, the state has reached out to IBM and requested a list of workers facing layoffs, said Anthony Alongi, director of the Minnesota’s dislocated workers program. The state’s workforce center in Rochester is available to affected workers who wish to tap the state’s job-counseling, training and job-matching assistance.
But word of IBM’s factory relocations was so new that the company had not yet filed a federal WARN notice with the state. WARN notices are usually required when companies plan 50 or more job cuts.
Gary Smith, president of Rochester Area Economic Development Inc., said Cook’s predictions of muted pain may prove accurate. Losing a job is bad. But the overall changes should not destroy IBM’s presence in town.
“This is not new. IBM does these resource actions all the time,” Smith said. “In this case, they are talking about taking only their manufacturing away. The truth is that there is not a lot of [IBM] manufacturing left in Rochester. Now it’s mainly services.”
Still, IBM’s plans could offset job gains brought to the area about two years ago when IBM added a finance division to the region for the first time. That probably added about 200 jobs, Smith said.
IBM opened its Rochester operations in 1956 with 174 employees. Employment increased to about 4,200 before falling to about 2,800 during the recession. IBM stopped disclosing its employment figures about four years ago.