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IBM, Lenovo deal opposed by China employees

Posted: 07 Mar 2014 ?? ?Print Version ?Bookmark and Share

Keywords:IBM? Lenovo? China?

Over 1,000 IBM workers in China have launched a protest against the company's plan to move them to Lenovo, who earlier announced its $2.3 billion bid to acquire IBM's x86 server business that includes System x, BladeCenter and Flex System blade servers and switches, and NeXtScale and iDataPlex servers among others.

Workers from the International Systems Technology Company are objecting to offered terms, which, at least according to IBM, give employees a choice between a job with terms that are comparable to what they are receiving or an "equitable severance package."

To date, the strike has suspended business at the Shenzhen factory for four days, but so far it has done little to change the decision of the technology behemoth. Workers, all dressed in blue factory smocks, have gathered in front of the factor with homemade signs and banners, with slogans that included "Workers are not a commodity," and "Give us back our respect," the New York Times reported.

"So far, we've heard nothing from the management or the government in response to our demands," said Hou Hongbo, a 10-year worker at the factory, according to one Reuters report. "The company's attitude so far is to ignore us, but the entire production remains shut down."

The workers plan to continue the strike, the report said. The strike points to an emerging trend in China around workers embracing protests and factory shutdowns in an outcry against worsening labour conditions or poor terms offered during an international takeover. A February 2014 report released by the China Labour Bulletin has recorded 1,171 strikes and worker protests in the period from mid-2011 until the end of 2013.

For example, in November of last year, more than 3,000 workers at a Nokia factor in Dongguan, China, launched a series of rolling strikes and sit ins in protest of changes made in the wake of Microsoft's takeover of the company's mobile phone business. The issue was finally resolved with a combination of carrot (in the form of bonuses for those who did not participate in the strike and a new contract offering for employees) and stick (a threat of firing for those who did not return to work).

Further, economic, population, and business changes in China have strengthened the position of workers. For example, the country's well-known One Child program has created a decline in available workers, while at the same time a substantial increase in college enrolment has further eroded the availability of workers. A report from the International Labor Organization titled Global Employment Trends 2014 said it this way:

China's potential pool of workers for the manufacturing sector is not growing any more. This decrease in the potential workforce is narrowing the production base, which has led China to forge a growth model that is based more on technological upgrading, productivity enhancements and the development of stronger domestic consumption.

At the same time, the cost of manufacturing in China is on the rise, which is causing some manufacturers to look for greener pastures in other parts of the world. In the past decade, China enjoyed strong growth of more than 10 per cent annually, but now that growth has decelerated to an average of just 7 per cent, the report said.

This current upheaval, meanwhile, is just one element in IBM's ongoing labour challenges as the company rebalances its product and manufacturing portfolio. "The restructuring process could see as many as 15,000 jobs being cut globally, including India, Brazil, and the European region," EE Times reported. Earlier in the month, for example, IBM started cutting jobs in India, with an estimated layoffs of 1,000 workers in its Bangalore factory, according to an EE Times blog.

Clearly, labour force challenges for Big Blue, as well as for China, have only just begun.

- Hailey Lynne McKeefry

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