Posted on 08/21/2003 9:44:06 AM PDT by ZeitgeistSurfer
Veteran IBM-watchers know how testing it is to read one of the company's financial statements. In the early days of the cold war, Churchill described the Soviet Union as "a riddle wrapped in a mystery inside an enigma". But compared to earnings releases from companies such as Apple and Sun - who provide terse and lucid declarations - you can be forgiven for thinking of IBM's announcements as a cloud wrapped in a fog containing a temporary heat-haze.
However, this much is clear: IBM has shed 15,000 jobs in the past quarter: 1400 from the microelectronics division and a staggering "14,213 Global Services personnel" in response to "the recent decline in corporate spending on technology-related services". To balance the books, IBM also bunged its recent acquisition, PwC, by almost $400 million.
In an SEC filing posted last week, IBM maintained that demand was strong. So strong, it had to conduct a private pogrom in its own services division. Clearly, something doesn't add up - even by IBM's own admission.
Perhaps an email from a soon-to-be redundant HP employee to The Register sheds some light on the situation. HP announced earnings this week that fell below expectations and added that it would make 1,300 "unexpected" human sacrifices to cover the shortfall. In contrast to previous "sheddings" of fluff in the "labor market", the middle class now feels the pain.
"Sorry but I'm due in early Sunday to train my replacement in Bangalore," the (almost) ex-HPer explained. "It's because of the time difference."
Offshore drilling
Hidden beneath the already hard-to-find news of job cuts is a massive transfer of IT resources to India and China. While only a few years ago we were promised a "Long Boom" of infinite prosperity, by "gurus" such as Wired executive Kevin Kelly, it now appears that every tech job can be cut or outsourced with impunity. Kelly is never happier, by his own admission, than when he's lying down in Pacifica dreaming of insects.
For the rest of us, needs are rather more pressing.
Not to appear to be picking on IBM or HP in particular, there doesn't seem to be a tech job left that's safe.
This has yet to emerge as an election issue, although it represents an assault on middle class expectations that's unparalleled in peacetime. But it is important and needs some context.
As the world's largest democracy, and with a philosophical and scientific tradition that (outside the Muslim world) is second to none, India has every reason to look upon the recent occidental outbreak of what we call "capitalism" as a temporary aberration.
It's worth nothing that in common with his fellow Victorian political economists, Marx found the oriental model so strange that he excluded it from his theories entirely.
But outbreaks of tech independence abound. The People's Republic of China has shown both a cavalier disregard for Western IP (aka "intellectual property") and boasts a proud confidence that its own homegrown talent can transform a pay-for "IP" import into an indigenous social resource. [See Trade Wars II: China shuns Qualcomm - no CDMA tax! - EU frets over China's 3G plan and Motorola gambles big on Linux, Sinocapitalism for more details].
Given China's astonishing historical legacy of engineering excellence, this is far from foolish. Dammit, weren't our kids supposed to bring home the bacon?
On this side of the Gulf, we're sure to hear cries of anguish, as the parents of expensively educated middle-class kids learn that their investment (and, in the US, this can be upwards of $120,000 per child) has gone offshore.
Which brings us to a particularly anxious conundrum. The prosperity that we felt was assured, and by rights, ours in the West no longer belongs to us. Those college dollars look like a poor investment, when a cleverer Indian can perform the same task for a tenth of the salary. So why did we spend all that money? Who, at what point, added enough "value" to justify the investment?
It's a good question. In a historical perspective the Indian, Muslim and Chinese engineers whose forefathers created so much of this intellectual infastructure are only reaping their due rewards. For Western kids, however, this does seem a bum deal. "Weren't we supposed to be clever[-er] than everyone else?" a recent graduate asked me recently. Well, er, actually no.
Smarts is as smarts gets.
Forget your O'Reilly PERL course, and follow the money. A course in Mandarin or Arabic is probably the shrewdest investment a parent can make right now.
Go west, my son... and then keep going
The inexorable logic of digital capitalism has rewarded companies such as Dell, which add no value, and pare costs to the bone, and ruthlessly punished systems companies such as Sun and Apple, which invest in R&D. For reasons best known to themselves, these companies invest in the hard stuff that can't easily be commoditised. Logic suggests that such companies are the bulwark against copy-cat Oriental opportunism.
While you might think much of the above is facetious, the West faces a very real problem: we have a surfeit of well educated kids who, if we accept the orthodoxies of asset-stripping capitalism, simply can't compete with foreign competitors without tilting the playing field.
When capitalism went digital, the first casualties were manual laborers. Now that skilled engineering jobs are being transferred offshore, the middle class is in the firing line, and this poses a very real crisis for a large and not-entirely unimportant section of society. Go to college, learn tech skills and - oops, sorry - you're job has just gone offshore. Please accept this redundancy slip and some small token that your worthless (hard-earned) contribution has enriched the global economy. Or as the creepier types insist, the global "eco-system".
Technology once promised us vistas of endless prosperity, and saw itself aloof from the obligations of political economy or globalisation. Now these pigeons are coming home to roost, and "technology" is more of a liability than it is a blessing.
It's dry, academic stuff to be sure. But when jobs are being lost on such an extraordinary scale, scarcely reported, is there a politician bold enough even to raise the issue?
Yes... I was doomed by my refusing to hear about Japan in 1990, Mexico in 1994, and now India and China for the past 3 years. I'm all doomed.
An infant was born at a hospital, and he was set in his little hospital bed after being united with the mother briefly. He was put on his side, and was facing another infant. They just lied there, staring quietly at each other.
80 years passed. The now-grown man was admitted for a fatal illness. He was placed into his room, in his bed, on his side, and by some amazing coincidence, facing him was the VERY SAME (now grown) man who had been staring at him in the infant ward, 80 years ago.
They lied there for a while, quietly staring at eachother.
Finally, the man piped up: "So, how was it?"
I guess we'll have to do the same.
Angry at Democrats for making life so hard on businesses?
"Do you want to biggie size that?"
You might be right. I still believe national security issues will dominate 2004. However, my deepest fear is that the RATs will demagogue this issue and start wining more political battles. Their "solution" can be characterized by "The poison isn't working. More poison!"
I need to schedule an appointment at the Patrick Buchanan ReEducation camp, ASAP.
If any one of the Dem candidates were to make an issue of the invasion, the loss of jobs (both to non-citizens at home and to outsourcing), the lack of attention to the environment and the infrastructure at home, and the assault on our cultural values by people in the US who don't respect our values, they'd win. Everyone seems to be skirting the real issue, which is our future as a nation, and economy, and a culture. Maybe one of them will wake up.
"The best is the enemy of the good" - Voltaire
Considering the source (an email supposedly from an employee, not an HP statement), this announces layoffs due to cost. But where in the article does it say that HP is hiring 1,300 employees in another country for the same jobs they just cut? Or was that your personal spin in the title??
Might consider correcting the title so as not to start a needless battle on a thread based on one persons *cough* interpreatation.
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