McQuiston: Beyond IBM

Jul 2, 2015

In a conference room at the Greater Burlington Industrial Corporation last October, a grim-faced group of Vermont’s political and business leaders were trying to put the best possible spin on the sale of IBM’s semiconductor division.

Governor Shumlin told me later that IBM has kept governors awake at night since the second Snelling administration in the early 1990s. But last fall Shumlin and others did their best to say the sale of the plant to GlobalFoundries was good news for both employees and the state, even though IBM had to pay GlobalFoundries $1.5 billion to take the money-losing division off their hands.

The big question then was whether GlobalFoundries would simply take the patents and close the Essex Junction plant. And there was good reason to worry. IBM had been losing millions for years on the technology division and two recent rounds of worldwide layoffs in 2013 and earlier in 2014 had cut a total of about 600 workers just in Vermont.

Many of us knew that IBM had bigger problems than just those in the chip-making operation. The company overall was losing both revenues and the faith of investors. IBM wanted to focus less on manufacturing and more on high-profit business services.

But we also knew this plant had value. The plant has long been paid for. The low-end, high-demand chips they make here are in nearly every smart phone in the world. And no one thinks that market is going the way of the IBM Selectric typewriter.

On Wednesday, when GlobalFoundries took over, the head of the division confirmed all this. All 3,000 employees were kept, with many open positions to be filled. And GlobalFoundries will keep investing in the plant.

Governor Shumlin is sleeping better and the employees are undeniably happier.

Vermont Business Magazine ranked the decision by IBM CEO and Vermontophile Tom Watson Junior to bring Big Blue to Essex Junction in 1957 as the single biggest business development of the 20th century in Vermont – more important than the interstates, the airport or the ski lift.

All those developments worked together, of course, and collectively changed Vermont economically, demographically and politically. A poor state became more affluent and the reddest state became the bluest.

The closure of IBM Vermont could have changed much of that. The plant under GlobalFoundries won’t last forever, but for now it will continue to provide a stable, predictable future for a proven economic engine and its employees will continue in their roles as leaders in the community.