They have never met: Martin, 44 years old, lives in a village near the city of Schweinfurt in Germany, and István, 26 years old, lives in a village near the city of Székesfehérvár in Hungary. Probably, they will never become acquainted. Still, there is a connection between the German and the Hungarian. The computer company IBM has decided to move many hundreds of jobs from Germany to Eastern Europe. István now has Martin’s job.
Martin and Schweinfurt
Not unusually Martin used to work forty-five hours a week and more. He needed nothing more than his brain and his laptop. The World Wide Web connected him with his customers whose computer programmes he serviced. He resembled a modern company: it did not matter whether he was in Germany, Hungary or the Czech Republic, for, theoretically, he could have earned his money anywhere. Only in his private life does he need a base. Companies move from country to country as never before, and they seek the maximum in profit. But their employees have remained the same. They seek the security of a home. Martin is married and has three children. Five years ago he and his wife bought some property out in the country, borrowed some money and built a pretty house.
On September 30 he was sacked. The company paid him severance money, approximately a year’s salary, which helps, of course, but the family will not get very far on it. Only in his mid-thirties did Martin begin to earn good money, and up to now has put all of it into the house. In Schweinfurt IBM was the only large company for IT experts. Martin has applied for jobs in Munich, Nurnberg and Stuttgart, up to now in vain. At 44, he counts as old in his field.
Sometimes, Martin says, it all seems crazy. IBM sent him to a dozen training and refresher courses, sometimes a week at a time. Travel expenses, accommodations, course fees, the company paid for everything. “They invested a lot of money in me, and now they are simply throwing it away”.
The city of Schweinfurt has 55,000 inhabitants, and on the city hall’s 430-year-old walls hang paintings, and outside a fountain splashes musically while inside sits Gudrun Grieser, the Mayor. She says this IBM business stinks to high heaven.
For fifteen years she has been a local politician, and for fifteen years she has been a member of the CSU. Before that she was a teacher. She has threatened no one with mayhem, but she is nevertheless hot under the collar. Gudrun Grieser says she understands companies who have no choice but to go abroad, because they are about to go bust. “But IBM BS is very profitable, and when such a company eliminates a job, that is just cynical”.
She also said this to Johannes Nagel. The head of IBM Germany sat at a table with the Mayor in heavy chairs decked out in brown leather. Gudrun Grieser spoke about how university graduates were involved here, highly qualified people, and how important these jobs were for Schweinfurt. Johannes Nagel spoke about restructuring. Then they went their separate ways.
Gudrun Grieser said that a global company like IBM naturally was not dependent upon any one country. “But when this happens all over the place, what will remain here in Germany”?
István und Székesfehérvár
In reality István has another name. Newly hired IBM employees in Hungary are not permitted to speak with the press. At IBM István earns 100,000 Forint a month net, €400, and he says that is fine. With shift-bonuses he sometimes gets 140,000 Forint, and in a few years he hopes to make 200,000 Forint (€800); after all, he is no beginner. Every day for three hours he sits in a bus and for eight hours in front of a computer in an ergonomic chair in a large office, like Martin, but the desks in Székesfehérvár are not so old as in Schweinfurt. On his computer screen flash messages from companies in Spain, France and Germany experiencing software problems. István looks for mistakes, morning, evenings, all night long, depending upon his shift schedule.
Afterwards he sometimes watches television at home. István is a quiet person who avoids the limelight, just like Martin. It’s just that he is eighteen years younger and a few thousand euros cheaper.
István’s village looks like villages in Germany. People live in detached houses, and each house has a garden. At second glance the difference is apparent. The houses are old, the plaster facades are weather-beaten, in the gardens tomatoes and cabbages, instead of flowers, flourish. Here and there chickens scratch in the dirt and the odd pig roots about. Whoever lives off their own land makes do with little money. This is how people make ends meet here.
István’s parents are happy that their son has a good job. They are both retired, and the mother, formerly a secretary for Videoton, takes care of the vegetable patch, the father, formerly an engineer for Videoton, feeds the chickens and also does repairs on the house they built thirty years ago. By his own choice, István lives with them once again. A year ago after finishing the university, he had started work for a company in Budapest. He made good money there, but he wanted to return to his village, forty kilometres west of Székesfehérvár, where his parents and his girlfriend, a nurse, live. He wanted to return to his roots.
István did not ask why IBM suddenly needed new people in Székesfehérvár. Jobs today move around from one country to another within weeks. But who wants to know where a job comes from? Who cares who had it before? The main thing is that it exists, the main thing is that someone gets it. István hopes that one fine day he will own his own house, together with his girlfriend, preferably in his village, near his parents. Like Martin. “I will have to work a long time before I can afford it,” he says.
IBM boasts record profits, $8.5 billion last year alone, more than ever before. The German headquarters for IBM, a subsidiary of the largest computer company in the world, is in Stuttgart. The managers who are capable of providing answers to the questions posed for months by employees in Schweinfurt and Hannover work here. Who forces a highly profitable enterprise like IBM to move jobs? What in the business world can be relied upon when the profits made by a company are no longer a guarantee of job security? IBM shows little interest in answering these questions.
On March 4 the company provided an explanation for the closing of its operations, which in part read: “We are planning this step in order to take into consideration the changing needs of our customers as efficiently and as economically as possible.” Until today no other statement has been issued. The fact is that this spring Samuel Palmisano, the head of global IBM, announced in the United States a first-quarter profit of $1.41 billion. Nevertheless, on the New York stock exchange the value of IBM stock dropped sharply. Market analysts had expected a still bigger profit. Palmisano announced “aggressive measures”. Soon thereafter it was affirmed that 8,000 jobs in western Europe would be scratched.
The savings programme seems to be earning dividends. On July 19 IBM made known its new quarterly numbers. They were unexpectedly positive. The stock prices went up. The company plans on intensifying its reduction of jobs.
Székesfehérvár once again
Martin had been in Székesfehérvár once before, three years ago, for a week, where István now works, in the IBM building in the Videoton industrial area. The company had just set up the branch company. Martin came as an instructor whose job was to explain to the Hungarians how the various computer programmes work. He was supposed to help raise the standard to the German level. It was fun. The Hungarians and the Germans regarded each other as colleagues, and in the evenings they drank beer together. Martin did not suspect that he was working to make his own job superfluous.
It is the morning after the late shift. István got home about midnight, he slept for a few hours, and now he has a few hours until the bus takes him to work. He walks through the village with a friend. The friend is also an information technician and he too works in the Videoton industrial area for an American company. He is worried. A few Indians are visiting his department. They are learning the ropes, and then they will be doing the work from India. Now he fears for his job.
István Nagy believes that his job is secure. And when bad quarterly figures in American once again make aggressive measures necessary? “IBM has invested so much money in my education,” says Nagy, “they would not simply throw me out”.
Capital and work are very mobile in our time of globalisation. Capital walks to places where the highest return is expected. Jobs go to places where the labour costs are lower. Our report out of the famous German weekly paper Die Zeit describes an example for such a transfer of jobs.
1. Please discuss this case in the class:
Which interests and worries have
Martin and István as employees
IBM as an international group
the mayor of the city of Schweinfurt as a politician?
Who has a profit in this case? Who has damage?
Do you think that our case is single? Or is it typical for current developments?
2. Make an international recherché and a recherché in your country or in your region.
Which worldwide trends are actual? Websites like http://www.globalenvision.org may help you.
Do you know similar current cases in your countries (Germany, Turkey, Lithuania and Czech Republic)?
Are there examples for losses and gains of enterprises and jobs perhaps even in your region?
3. Summarize your results in a presentation (PPP or other).
We would like to adjust these presentations to the website of ECOLAB so that all participants of our work may inform themselves. One can compare and see what is in common and what is different. This would be interesting for all involved students and for other users too.