After days of speculation about impending layoffs at IBM Corp.’s campus in Research Triangle Park, the company put out some numbers: 334 of its roughly 10,000 workers there will be cut loose by the end of this month. It would be easy to blame the economy. The state jobless rate hit 10.7% in February, and with other companies downsizing, why should an information-technology research center be different?
But IBM spokesman Doug Shelton says the change is part of a routine realignment of skills and resources, not a response to the poor economy. “Our clients’ needs change over time, so it is a way of making sure that we have the right skills and the right resources in the right places to match what those clients’ needs are — now and into the future.”
That might be even worse news for a state economy that has shifted from manufacturing to knowledge-based jobs such as those provided by Armonk, N.Y-based IBM. Recession-related cuts would hold out hope that positions will be added when things pick up. But The Wall Street Journal, citing anonymous sources, says the company is laying off 5,000 U.S. employees and transferring many of those jobs to India.
If so, it’s reminiscent of what’s been happening to North Carolina manufacturing as companies try to lower their costs. From 1990 to the end of last year, manufacturing employment fell 39% to 491,400 in the face of technological change and increasing global competition. Economic-development officials touted jobs requiring lots of education as a way to keep the state economy rolling and assuage the pain of lost factory jobs. “There was this idea that in these new kinds of jobs — in computers, software, different types of professional or scientific services — the old rules didn’t really apply any more,” says John Quinterno, research associate at the North Carolina Budget & Tax Center, a Raleigh nonprofit. “Something about those kinds of jobs meant you didn’t have to worry about any of that stuff. What we’re seeing now is that really isn’t true.”
With the global economy evolving so rapidly, the state needs to keep encouraging the growth of small sectors with big potential as a hedge against mainstays that begin to wane, says Mike Walden, an economics professor at N.C. State University. “Technology may be a sector that has run its course, and we’ll begin to see a decline in relative importance in North Carolina. Hopefully, we’ve got things in the bullpen that we can bring up and develop to take its place.”
SAS grows in recession
While IBM is contracting, Cary-based SAS Institute Inc. is expanding, a beneficiary of businesses looking to cut costs with better data-mining software. It added 373 employees last year companywide — a 3.5% increase — and has broken ground on a 280,000-square-foot conference center, which will include 690 offices, two auditoriums, meeting rooms and a full-service cafeteria. Most recently, the world’s largest privately held software company announced a $70 million, 38,000-square-foot cloud-computing center to handle demand from customers for software they access long-distance instead of at their workplace. Both are in Cary and are expected to open next year. It’s not clear how many jobs will come with them.