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COLUMN: IBM likely to have a hard time living up to hype

Thursday, May 20, 2010 | 12:01 a.m. CDT

IBM, welcome to the middle of Middle America. I like the idea that you are coming to town. It is a little like an early Hanukkah present.

The promise of up to 800 new jobs is exciting and wonderful and follows what I have been preaching in this column for years: We need new businesses other than retail.

Thank you, Darwin Hindman, the old City Council and REDI, for your hard work winning the bid. Thank you, Gov. Jay Nixon, for your resolve to make Columbia the new technology center of Missouri.

Mayor Bob McDavid, good announcement.

Now, as we lower ourselves from the mesosphere, let us take a good look at the reality of the situation. This is IBM, and it is not putting in a manufacturing facility. The news release tells us Columbia is home to a new "technology service delivery center," joining those in Dubuque, Iowa; Lansing, Mich.; and 80 other centers worldwide.

So, what is a technology service delivery center? Big banks, manufacturers and other giants of industry sometimes find it cheaper and faster to “outsource” their information technology departments. The technical service center in Columbia is one of three outsource centers in the United States. Jobs are not going to Pakistan or India.

But it's time for a reality check. IBM has been in Dubuque for nine months and has hired close to 60 percent of the expected contingent. Mike Blouin, president of the Greater Dubuque Development Corporation, cannot praise IBM enough for meeting or exceeding the city’s expectations. Of Columbia’s expected experience, “You will need to hold on to your hats,” he said. But there are some drawbacks.

1) Blouin predicts we will have a shortage of middle and upper-end rental units in Columbia. In addition, Dubuque’s rental contracts are not on a “university” schedule, and Blouin suggests that we look at that “problem” very seriously. It is time for the owners of apartments, condominiums and home rentals to think in a different box, that of real employees moving here on their own timetables.

The city should consider writing a “Renter’s Bill of Rights” as more professionals move to Columbia.

2) Very few job offerings will be blue collar. This means Columbia residents who do not work at the colleges, the city, the insurance companies or the hospitals; who do not have a college degree; and are not computer savvy will remain isolated.

REDI and the city need to remember this segment of our population and work to get another employer (read “manufacturing”) in town who does hire high school grads and is willing help those who do not have that degree get their GEDs. Now that’s community service.

3) IBM’s commitment is for 10 years, same as in Iowa and Michigan. This is a good thing. Columbia and Boone County know what should happen through 2020.

This also means the whims of economics will play a large part in whether IBM expands or reduces its facilities in the next decade or remains after 2020. Now is the time for REDI and the City Council to get out their crystal balls and rewrite the long-term economic plans for Columbia. With contingencies.

4) IBM could not tell me the percentage of local hires to expect, and it is my belief that the 80 percent being bantered around is way too optimistic. This means many of the Columbia technical and management positions are likely to be transfers.

5) Finally, Columbia should not overestimate the number of new public school students and increases in tax revenue. Many of Dubuque’s new IBM residents are single or young couples with no children, Blouin said. Most are renting, not buying. Retail is improving, however, Dubuque’s tax revenues have not seen an increase, Blouin said.

Now, back to daydreaming: Headline for May 1, 2032 – “Big Blue expands to 5,000.” We can dream.

David Rosman is an award-winning editor, writer, professional speaker and college instructor in Communications, Ethics, Business and Politics.  You can read more of David’s commentaries at InkandVoice.com and New York Journal of Books.com.


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Comments

Robert Jones May 20, 2010 | 8:52 p.m.

This is my fear for this new Columbia/IBM venture. There are 103,000 people in this town. How many of these jobs are transfer jobs? Yes it will bring money in taxes to the city and school districts but that would mean new people coming to town wouldn't it? This means our town has to grow and spend more money on roads and maintenance of those roads. Back to my fear, it will only lead to more spending and cut into the "new" taxes coming in.

(Report Comment)
Ellis Smith May 21, 2010 | 5:43 a.m.

A further comment on Dubuque, Iowa: it is also a college town (private schools) and a tourist destination of sorts*. The number of students in Dubuque would be far less than here in Columbia.

I can believe that Dubuque's rental contracts are not on a university schedule, as it's likely that most college students in Dubuque live on their respective campuses.

*- Because of its unique architecture it has become a preferred location for shooting outdoor scenes in commercial motion pictures.

(Report Comment)
George Ingram May 24, 2010 | 2:00 p.m.

I know that IBM has evaluated these parameters in their selection process. They simply put "know what they are doing". I think that the cost cutting measures that are now being faced by the Columbia schools, needs to be revisited with the new expected employment base. The Columbia Transit System must prepare now for the expansion and get on the ball for a higher service levels around town, i.e., like incorporating a “student ridership program that is not in place now, to reduce the carbon foot print of the school districts.

The employees of IBM will insist on this kind of proactive move by the city, county and state government to the betterment of the populace as a whole.

George Ingram
Computer Scientist (Ret.)

(Report Comment)
Ellis Smith May 24, 2010 | 3:33 p.m.

One also assumes that IBM "knew what they were doing" when they closed their operations in Columbia some years ago. Perhaps I am more sensitized to that situation since several times a week I drive by one of their former facilities, on Park de Ville Drive. The facility has since been remodeled inside and is home to several entities, federal, MU and others. Some readers may recall that the building became temporarily the Columbia library while the present public library building was being constructed.

I have nothing against IBM: I own a significant number of shares. But like other IBM stockholders I expect IBM to also make sound FUTURE business decisions, including closure of any facilities that fail to make a profit.

(Report Comment)
a b May 29, 2010 | 11:10 a.m.
This comment has been removed.

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