IBM not fulfilling its responsibility to Poughkeepsie

In 1924, when a traveling salesman named Thomas J. Watson founded IBM in Endicott, N.Y., he cultivated what he called the "IBM family."

In its earliest years, the company steadfastly provided unrivaled health benefits and free daycare. Watson's biggest pride, however, was a company country club, which hosted family dinners three nights a week to relieve IBM wives of their cooking duties.

When IBM moved to Poughkeepsie in the early 1940s, Watson wasted no time getting cozy with his new workers, personally selecting the site for the IBM Country Club—complete with tennis courts, swimming pools and a clubhouse—on South Road. The company struck a deal with local schools to provide free technical training for employees. IBM even erected Spackenkill Heights—a sprawling subdivision exclusively for IBM employees—that offered options from a basic house with a carport to a four-bedroom complete with a garage.

It was bliss: IBM was stable and loyal; Poughkeepsie was home. The two were inseparable. The people of Poughkeepsie were part of the IBM family.

That's why it was such a low blow when IBM announced last week that they plan to invest $50 million in their Poughkeepsie site, which, in part, will settle a lawsuit with the Town of Poughkeepsie that will cheat its citizens out of millions of tax dollars.

In 2009, when IBM bombarded the Town with a string of lawsuits, alleging their property assessment was too high, they threatened to abandon the city IBM has called home for half a century: "The Poughkeepsie site is in competition with other sites for its ongoing mission," one IBM spokesperson threatened.

In an attempt to bully the Town into lowering its tax rate, company officials referenced the $6.3 million they paid last cycle compared to the $1.6 million for their Rochester, Minn. plant.

IBM executives called in the Dutchess County Industrial Development Agency to help cut a deal. They approved a PILOT—an acronym for payment in lieu of tax—agreement wherein the Town would essentially chop off $50 million from the property's assessed value of $159.8 million.  

Essentially, IBM sued Poughkeepsie to pay fewer taxes—and won.

And so the Town of Poughkeepsie was left with two options: either accept a cut of one third of its biggest source of revenue, or watch IBM pack up and leave Poughkeepsie with an abandoned plant, 5,000 unemployed workers and a broken budget.

Reader comments on The Poughkeepsie Journal website suggest that many Town of Poughkeepsie citizens, whose tax burden will undoubtedly increase as a result of the deal, feel betrayed by IBM. One referred to the company as "blood sucking." Another bitterly pointed to the hefty bonus of an extra 30 percent that IBM CEO Sam Palmisano took this year. Many residents questioned, ‘Where is my PILOT plan?' Another warned that "properties around here will soon turn into slums" if the Town does not "stop catering to greed." And another noted that IBM would deserve a tax break had they not wreaked "havoc" on Poughkeepsie, adding, "They should be put in prison."

The IBM spokesman offered a nauseatingly textbook, pro-business alibi: "High costs locally make it hard for Poughkeepsie when new missions are considered by IBM." He continued, "It's hard to get in the game to get that mission for the site." Despite his rambling prose, his message resounds loud and clear throughout the Hudson Valley: ‘Sorry, Poughkeepsie—business is business.'

This is not just business.

It wasn't just business—or so it must have seemed—when IBM came and wooed Poughkeepsie with their big ideas, rosy country club and folksy, annual employee barbeques. Not when it effectively wiped out the urban center of the City of Poughkeepsie by slicing it in half with an arterial highway for the ease of IBM commuters. And not when their presence drained the City of Poughkeepsie of commercial activity by attracting nearby strip malls.

Not when, in 2001, IBM received a $9 million government grant to build a new chip plant in the area, creating 5,348 jobs, before proceeding to significantly downsize their microelectronics division in 2003. Not when IBM enjoyed paying zero property taxes on their East Fishkill facility and $156 million in other tax exemptions in a span of 10 years. And certainly not when Dutchess County funded two thirds of a $23 million project to build a 13-mile pipeline that IBM needed to supply their plant with water needed for production.

No, this is deeply personal.

The relationship between IBM and Poughkeepsie is so much more than business. The two are inextricably linked.

Jim King, the Poughkeepsie plant manager, said it best himself when the site won the Assembly Plant of the Year 2008 award: "IBM Poughkeepsie has a strong history of heritage," he said, acknowledging Poughkeepsie as the "flagship of the IBM Corporation."

Some have suggested that when Watson moved IBM to the Hudson Valley, he put Poughkeepsie on the map. But, in truth, it was Poughkeepsie residents who assembled world-renowned mainframe computers. It was Poughkeepsie's women who built Browning automatic rifles, which were sent to Europe in the 1940s. It was Poughkeepsie's architects who designed the first-ever, fully functioning automatic production line for transistors. And it was Poughkeepsie's engineers who first conceived of today's world's fastest microprocessor.

Poughkeepsie put its hard work and faith into IBM. Now, IBM needs to do the same for Poughkeepsie.

At least, that's what family should do.

­—Hannah Blume '13 is assistant opinions editor of The Miscellany News. She is a sociology major.