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    Highlights—March 27, 2004
  • Wall Street Journal: IBM Tells Court Pension Payments Would Be Too Steep. Excerpt: International Business Machines Corp. has told a federal court it would be forced to pay exorbitantly rich benefits under a proposal by employees suing it in a landmark pension case. In a filing Tuesday, IBM urged the court not to approve a formula the employees put forward for making back payments to workers covered by a 1999 retirement plan. "Those formulas would have cost billions of dollars more than IBM was prepared to spend, and they would have severely undercut the company's human resources strategy," IBM said in the filing. ... Kathi Cooper, a lead plaintiff in the suit against IBM, challenged the company's positions. "It's hard for me to believe that IBM is hiding behind a curtain that says 'we can't afford this,' Cooper told Dow Jones. "Their stock buyback program, and the income that they make off of the employee pension trust, tells me that their statement is smoke and mirrors."

    In the long-running dispute over damages, IBM argued in an earlier filing that it shouldn't have to make back payments based on City of Los Angeles, Department of Water and Power v. Manhart, a 1978 pension case that involved the issue of age discrimination. IBM said that, like the City of Los Angeles, it was blind-sided by what it called a drastic change in the law. In the case of IBM, the change was Judge Murphy's contention that the company's plan had violated federal law. IBM said at the time that like hundreds of companies it had reasonably assumed that its pension plan was legal. Murphy countered last month that there had been no change in the law. All that had changed, he said, was "IBM's clever, but ineffectual, response to law that it finds too restrictive for its business model." If link is broken, view Adobe Acrobat version [PDF--25 KB].
    • Linda Guyer comments. Full excerpt: So, IBM announced with great fanfare in 1999 that the pension change would only save them $200K/year. Now they say $6 billion. Hmmm... I'd like to repeat what Gerstner said at the 2000 Stockholder Meeting to those of us not happy with the pension change. Now, IBM needs to take this advice. "Things change - get used to it, IBM!"

  • BenefitNews.com: Stock market returns lift DB pension plans. Excerpt: One fact has been lost amid the hand-wringing over the Pension Benefit Guaranty Corporation's (PBGC) $11.2 billion deficit: Defined benefit pension plans actually seem to be doing better than they have since the mid-1990s economic boom.

  • Forbes: Don't Bank On Health Savings Accounts. Excerpt: President George W. Bush and some conservative economists tout the "health savings accounts" created by last year's Medicare prescription drug law as a cure for runaway health care costs. And a long list of companies, including at least 33 health insurers and Fidelity Investments, are eagerly eyeing the HSA market. Yet there's a distinct possibility, benefits experts say, that these new accounts could fizzle out, just as their predecessors, Archer Medical Savings Accounts, did. Moreover, rules the Internal Revenue Service is expected to issue in the coming weeks could play a big role in determining HSAs' appeal.

  • CBS News: Prescriptions And Profit. Excerpt: It may come as no surprise that the pharmaceutical industry is the most profitable business in the country. Americans pay far more for their prescription drugs than citizens of any place on Earth. It will also come as no surprise that as a political issue, the high price of drugs has united both Republicans and Democrats. More than a million Americans now buy their medications in Canada. ... The United States is the only industrialized country without some form of control on the prices of drugs. The U.S. also accounts for more than half of the industry's profits. In order to keep those profits up, the drug companies have joined the FDA in trying to shut down imports from Canada, and Canadian pharmacies are feeling the pressure. ... Congressman Burton says the new Medicare act makes it clear the industry got its money's worth. He says billions of dollars are in it for drug companies in this new Medicare Prescription Drug Benefit. “In the new Medicare Act, the federal government is specifically prohibited from negotiating prices with drug companies,” says Safer. ...

    “That is unconscionable. The government of the United States negotiates prices in the Defense Department, in every area of government,” says Burton. “And here we are, going to spend billions and billions and billions and probably trillions of dollars on pharmaceutical products. And we cannot negotiate the prices with the pharmaceutical industry. That's just not right.” In December, surrounded by members of Congress, President Bush signed the new Medicare act. Since 1999, these legislators have accepted more than a million and a half dollars in campaign contributions from people working in the pharmaceutical industry. President Bush alone has received more than half a million dollars. But now, the new Medicare prescription drug benefit is being billed as a big victory for America’s seniors. “You gotta be kidding me,” says Burton. “Seniors, when they find out what's in that bill, are gonna be very angry. The problem is, they're not gonna find out about it until after this next election.”

  • Christian Science Monitor: More retirees in the red, not the pink. Excerpt: For many Americans, retirement isn't as rosy as they might have expected. The best-laid plans must be postponed or scaled back when budgets turn from black ink to red.

  • Washington Times commentary: ...and duplicity? Excerpt: In previous columns, I have warned that George W. Bush is in danger of appearing Nixonian — using Richard Nixon's political methods, such as a willingness to subordinate everything to his re-election, including abrogation of his own principles, punishing staffers with genuine policy disagreements for being disloyal, and keeping secret information that might undermine decisions he has already made. The clearest evidence yet of George W. Bush as Richard Nixon has arisen over the questions of what the White House knew about the cost of the recently passed Medicare drug bill, when did it know it and whether information was actively suppressed that might have defeated the measure in Congress.

  • This week's good news...kudos to Costco! Jim Hightower: A Corporation That Breaks the Greed Mold. Excerpt:Yes, says the conventional wisdom of greater CorporateWorld. The bottom-line dictates that wages and benefits be slashed and that offshoring be pursued with a vengeance. It's not personal, just business. "Look Ye to Wal-mart," boom the Market Gods, directing CEOs to follow the anti-labor, low-wage, no benefit, move-it-all-to-China ethic of this giant. The gods decree that no one can out-compete Wal-Mart, so best to imitate the beast. Apparently, Jim Sinegal has been going to the wrong church. He's CEO of Costco, the profitable warehouse club retailer that's fast growing across the country. He takes a shockingly heretical view of his job, boasting of his company's fair treatment of employees: "We pay much better than Wal-Mart," Sinegal says. "That's not altruism. It's good business." Indeed, Costco's pay is much, much, much better – a full-time Costco clerk or warehouse worker earns more than $41,000 a year, plus getting terrific health-care coverage. Wal-Mart workers get barely a third of that pay, plus a lousy health-care plan. Costco even has unions! Yet, Costco's labor costs are only about half of Wal-Mart's. How's that possible? One reason is that Costco workers feel valued, which adds enormously to their productivity, and they don't leave – employee turnover is a tiny fraction of Wal-Mart's rapidly revolving door.

  • Wall Street Journal: Costco's Dilemma: Be Kind To Its Workers, or Wall Street? Excerpt: Wal-Mart Stores Inc.'s parsimonious approach to employee compensation has made the world's largest retailer a frequent target of labor unions and even Democratic presidential candidate John Kerry, who has accused the Bentonville, Ark., chain of failing to offer its employees affordable health-care coverage. In contrast, rival Costco Wholesale Corp. often is held up as a retailer that does it right, paying well and offering generous benefits. But Costco's kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result. "From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company." ... Some longtime Costco fans say the company should stick to its generous wages and benefits. "Happy employees make for happy customers, which in the long run is ultimately reflected in the share price," says John Bowen, an investment manager in Coronado, Calif., who has held Costco shares for eight years.

  • New York Times commentary by Paul Krugman: The Medicare Muddle. Excerpt: It has become standard practice among privatizers to talk as if there is some program called Socialsecurityandmedicare. They hope to use scary numbers about future medical costs to panic us into abandoning a retirement program that's actually in pretty good shape. But the deteriorated outlook for Medicare says nothing, one way or another, about either the sustainability of Social Security (no problem) or the desirability of private retirement accounts (a lousy idea.) Even on Medicare, don't panic. It's not like a private health plan that will go belly up when it runs out of money; it's just a government program, albeit one supported by a dedicated tax. Nobody thinks America's highways will be doomed if the gasoline tax, which currently pays for highway maintenance, falls short of the system's needs — if politicians want to sustain the system, they will. The same is true of Medicare. Rising medical costs are a very big budget issue, but 2019 isn't a drop-dead date. The trustees' report does, however, give one more reason to hate the prescription drug bill the administration rammed through Congress last year. If deception, intimidation, abuse of power and giveaways to drug companies aren't enough, it turns out that the bill also squanders taxpayer money on H.M.O.'s.

  • The Times of India: Bharti awards IT management order to IBM. Excerpt: Bharti Tele-Ventures Ltd, India 's top provider of GSM-based mobile services, said on Friday it had awarded an information technology management order to the Indian unit of IBM. Based on the estimates agreed between Bharti and IBM, the total deal for the first five years is estimated to be in the range of $250-$275 million and for a 10-year period the total deal is likely to be in the range of $700-$750 million, a Bharti statement said.

  • Binghamton Press & Sun-Bulletin: Analysis: Signs suggest IBM working on settlement. Plaintiffs' attorneys refuse to discuss case. Excerpt: A number of signs indicate IBM Corp. is quietly negotiating a settlement with residents and business owners who claim pollution from the company degraded their property and in some cases made them seriously ill. If Endicott follows the course of a similar case in East Fishkill, a settlement would keep details of IBM's environmental housekeeping and evidence that it hurt health and property behind closed doors, and would prevent a trial. It would also come without an admission of guilt and prohibit the terms of the settlement from being disclosed.
Coverage on H1-B and L1 Visa and Off-Shoring Issues
  • Wall Street Journal: India's Light PR Touch; Naming Hot U.S. Markets. Excerpts: SOFT SELL: India is treading lightly when it comes to its outsourcing PR. The trend has been a boon to Indian companies like Infosys Technologies and Wipro, and U.S. companies, including International Business Machines, are beefing up staff in India to match the cost advantages. But amid weak job growth in the U.S., Indian firms and representatives don't want to appear to be gloating. ... WORDS ARE CHEAP: "Written by a Chinese person, this column would cost only 50 cents," writes the Washington Post's Art Buchwald. "It scares the heck out of me." ...

  • Computerworld: How to Prevent Offshoring From Taking Your Job. A guide for the thinking technologist. Excerpt: The offshoring of technical positions is on the upswing. According to Forrester Research Inc., offshore programming jobs have nearly tripled over the past three years, from 27,000 to an estimated 80,000, as reported in the March 1, 2004, issue of Business Week. This trend will probably continue.

  • WashTech News: WashTech Workers to Policymakers: Show Us the Jobs. Excerpt: Laid off last April, former tech worker Myra Bronstein recently exhausted her unemployment benefits. Although she holds two bachelor's degrees, one in electrical engineering and another in biology, she is still unemployed, without prospects and without a steady income. Worse yet, there is little on the horizon for job seekers like Bronstein to make her more hopeful. ... The "Show Us the Jobs" bus tour will carry the 51 unemployed workers, each of whom represents a state and the District of Columbia. The tour is scheduled to make 18 stops in Missouri, Iowa, Minnesota, Wisconsin, Ohio, Pennsylvania, and West Virginia before arriving in Washington D.C. Bronstein said many of those on the bus tour will post daily "blogs," or online journal entries, to the Show Us the Jobs Web site. She also plans to send regular updates to the Washington Alliance of Technology Workers Web site and TechsUnite.org.

  • Wall Street Journal: Offshore Outsourcing Will Increase, Poll Finds. Excerpt: Corporate executives in the U.S. expect to increase the amount of work they outsource to offshore locations despite a growing political backlash, according to a survey of more than 180 companies to be released today. According to the survey, 86% of the companies polled expect to send more technology jobs overseas in the next 12 months, compared with 32% two years ago. Executives are moving more slowly, however: The survey, conducted by Chicago consulting firm DiamondCluster International Inc., said 63% of executives say they are moving incrementally instead of rapidly, compared with 30% who were taking a cautious approach two years ago. ... The survey said 85% of the executives were concerned about legislation or political pressure against outsourcing, while 84% were worried about backlash from employees. And 62% said they were worried about negative corporate publicity that could be created by outsourcing

  • Rescue American Jobs: Protest at the HRO World Strategy Conference in New York City on April 14-16. Excerpt: This offshoring conference is billed as "the world's largest gathering of executives ever assembled to focus on human resources outsourcing". Executives from across America will gather to discuss moving your job offshore. Rescue American Jobs is organizing advocacy organizations and unions to protest the outsourcing of American jobs at this event.
Now on the Alliance@IBM Site:
  • Letter To Sam Palmisano - The CGT IBM France. Excerpt: We are part of a trade union called La CGT, standing for "La Confédération Générale du Travail", which is one of the 5 representative trade unions throughout all the French IBM sites as well as France. We received your short note entitled "Performance and IBM's values", and this note, plus the one received from Tim Stevens, entitled "Evolution du programme PBC et de la paie variable", are raising a legal issue with respects to the Labour Law in France, and which moreover, are starting some turmoil among the IBMers' ranks in France. ... We do not think that you heard us loud and clear, unlike you stated. You are rather strengthening the PBC process to justify the coming lay-offs of IBMers, thus letting you relocate jobs from the United States and Western Europe into other countries such as China, India and Eastern Europe where the workforce is cheaper and more docile (what justifies this analysis is that, on the one hand, as announced on 20 January, in eChannelLine USA, among the 15,000 jobs to be created, "4,500 of the new hires will be in the US[…]most of the rest will be joining Big Blue operations in China, India and Europe "and on the other hand, we are experiencing in France the Wagner project which aims at relocating French jobs into Czech Republic). We will not let you lead the IBMers who were noted 4 to the slaughterhouse.

  • Think Twice for March/April 2004 [PDF]. Articles in this edition include:
    • Tech Worker Job Crisis Starts Hitting Home
    • 2004 IBM Stockholder Meeting in Providence, Rhode Island
    • Stockholder resolutions challenge IBM on Executive Compensation, Offshoring and Pensions.
    • Offshoring Legislation In The Different States
    • IBM ordered to repay workers put on cash-balance pension
    • Outsourced to IBM: Broken Promises Plague New Hires
    • Cuts in incentive plans called “underhanded” by employees
    • Cut by IBM:“Dead Man Walking”

  • Call to Action! Join the Rally to protest Offshoring at the IBM Shareholders' Meeting - April 27 in Providence, RI.
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