COLUMBIA — Potential layoffs at Columbia's IBM delivery service center could lead to a loss or reduction of tax incentives IBM received from at least one state program.
Lee Conrad, national coordinator of Alliance@IBM, the employees union for IBM, said sources inside IBM's delivery service center in Columbia have said the company plans to cut 10 workers. He was unsure whether more Columbia layoffs might be in the works.
Cuts at the Columbia site are part of company-wide layoffs that began earlier this week. Alliance@IBM reported on its website that the company had cut more than 2,200 jobs in North America as of Thursday.
"These new delivery centers are not immune to job cuts despite all the promises that were made when they were being set up," Conrad said.
When IBM chose Columbia as the site for a new service delivery center in 2010, it received more than $28 million in tax incentives from the state, including $8.6 million from the Missouri BUILD progam, $14.7 million from the Missouri Quality Jobs program and $4.2 million from the New Jobs Training program, all three of which are Missouri Department of Economic Development programs.
A previous Missourian report indicated that under the BUILD program, IBM was required to create at least 600 jobs within three years of coming to Columbia in order to remain eligible for those tax credits.
"Many of the programs are performance based, meaning that if employment drops, the benefits also drop," said Jill Kline, spokeswoman for the Missouri Department of Economic Development. But she clarified that the BUILD requirements don't apply across the board.
"IBM’s negotiated job creation requirements are not the same for each incentive program. Therefore, any determination regarding action by Department of Economic Development is program specific."
Kline said that according to IBM's latest jobs report, the company had 529 employees at the Columbia site at the end of the 2012 tax year.
Mike Brooks, president of Regional Economic Development Inc. in Columbia, said IBM is required to have 600 jobs in place by the end of June.
IBM also received incentives from the city of Columbia to establish its service center here. The city bought a building at 2810 Lemone Industrial Blvd. for more than $3 million and is leasing to IBM for $1 per year.
Mayor Bob McDavid said Friday he doesn't expect the layoffs to change the city's lease agreement with IBM.
Brooks said that as part of the 10-year lease agreement, IBM also is paying back a $10 million loan the Columbia Area Jobs Foundation took out to cover the cost of improving the building.
Brooks said he was told by IBM's site manger that the company is on pace to meet its employment requirements.
"My understanding is that IBM remains very committed to the Columbia service center," Brooks said.
Fifth Ward Councilwoman Laura Nauser said that while it was unfortunate that people could be losing their jobs, it is understandable in the current economic environment.
"Even though Columbia has fared better than most communities across the country, when you have national and international companies in your market there are factors beyond your control," Nauser said.
Nauser also said she feels confident IBM will be hiring again.
"IBM is and will continue to be a good partner with our city," she said.
Supervising editor is Scott Swafford.