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IBM Reassures Workers After Milestone China Deal

None of the workers asked about the deal here would speak for the record, but some said privately they had feared significant layoffs were in the offing. IBM and Lenovo officials said Wednesday that the deal will not result in job cuts at either company. That news brought relief for now, but some remain worried about the ultimate outcome.

"We're concerned about the long-term situation for the employees. When deals like this go through, there are usually job cuts that follow," said Lee Conrad, national coordinator for Alliance@IBM, which advocates for worker rights at the company. "IBM employees are finding themselves working for a Chinese corporation. And that's making a lot of people nervous."

Lenovo Chairman Liu Chuanzhi and John Joyce, senior vice president and group executive of IBM Global Services, at a Beijing news briefing. (Lenovo Via AP)

_____In Today's Post_____
IBM Stops Offering Cash-Balance Pension (The Washington Post, Dec 9, 2004)
IBM Sells PC Business to Chinese Firm in $1.75 Billion Deal (The Washington Post, Dec 8, 2004)
IBM Deal Puts Lenovo on Global Stage (The Washington Post, Dec 8, 2004)
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In meetings with workers Wednesday, IBM executives reassured those who are about to become Lenovo employees that their jobs are secure and that their pay and benefit levels will remain roughly the same.

"Things really aren't going to change," said Fran O'Sullivan, who is general manager of IBM's PC division and slated to become chief operating officer of Lenovo. "I'm going to stay here. And I'm going to continue to manage the PC business out of Research Triangle Park."

IBM's PC division doesn't actually make computers, since the company outsourced those functions to Chinese factories several years ago. But workers here -- who are spread across a vast, wooded campus -- do perform research and development on IBM laptops and desktops. They also do sales and marketing.

O'Sullivan said there's "very little overlap" between the two companies, and therefore no reason to cut jobs following the acquisition.

Lenovo has until now focused on the Asian consumer market, while IBM stopped retailing to consumers five years ago. Instead, IBM put its energy into winning large business clients, an area where Lenovo has been comparatively weaker.

Lenovo has not said for sure whether it will enter the U.S. consumer market under the IBM brand, though that remains a strong possibility. Despite the power of the IBM label, it would face tough competition, especially from industry leaders Dell Inc. and Hewlett-Packard Co.

Perhaps the primary reason IBM opted to recoil from the personal computer market is that, less than a generation after it pioneered the field, PCs have become largely commoditized; many consumers now decide which computer to buy based solely on price, assuming performance will be essentially the same regardless of the brand.

But O'Sullivan said Lenovo plans to beat the competition not on price, but on quality, emphasizing that she anticipates new products and ideas coming from North Carolina and Beijing.

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