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Follow UsCaroline Humer
NEW YORK: International Business Machines Corp. on Monday said it is selling
an upstate New York microelectronics manufacturing division to a new company
backed by local investors in a state-brokered deal. Terms were not disclosed.
IBM said the move is part of the reorganization of its microelectronics
business that it announced last month. As part of that restructuring, IBM said
it would close some chip-making capacity and reduce headcount by 1,000 people.
The sale closed in June and the move will be incorporated into the $2.0
billion to $2.5 billion charge that IBM said it plans to take for
microelectronics and the sale of its hard-disk drive business, IBM spokesman
Michael Loughran said. The move wasn't exactly a surprise, coming at a time when
IBM is under pressure to cut costs in light of weaker demand for technology from
corporations and as its stock is trading at low levels it hasn't seen in four
years.
New York Gov. George Pataki announced the plan on Friday and said local
investors will put $100 million into the new company, called Endicott
Interconnect Technologies Inc. The company will take on IBM's 2,000 interconnect
division employees in Endicott and acquire its 4.1 million square feet facility,
where IBM makes packaging products for chips and the printed circuit boards used
in computers.
An IBM spokesman declined to comment on the sale price of the division and
the facility. IBM's Endicott facility has been the subject of sale speculation
for years, according to Rick White, 52, a 28-year IBM employee who lives in
Endicott.
"I'm still somewhat in a shock mode I guess, although this is something
that had been rumored to occur at some point in the future for two or three
years," White said.
White said the new company told employees it would be a couple of weeks
before they would find out about the timing and details of the transfer to the
new company, such as how the move will affect pensions, medical benefits and
salaries.
"I'm very apprehensive and skeptical," he said. IBM will lease for
10 years about 1.4 million square feet from the new company to use for other
non-manufacturing operations, such as global services. IBM had 19,000 employees
in its microelectronics division before announcing the sale of the business,
Loughran said.
Endicott Interconnect Technologies is backed by David and Bill Maines of
Maines Paper and Food Service and Jim Matthews of the MATCO Electronics Group,
Pataki said. Bill Maines will be president of the company. The company will be
able to apply for several different subsidies and grants from state agencies.
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