IBM Trims Its Sails

THE monumental changes under way at IBM - with the International Business Machines Corporation moving toward a federation of smaller and more-flexible operating units - is symbolic of the restructuring taking place within the American business community in general.Throughout corporate America, from firms as diverse as AT&T and McDonald's, the message is increasingly familiar. Eager to lower costs and boost profits at a time of economic stagnation, companies are slashing payrolls, eliminating duplication, holding managers more accountable, seeking to identify new product lines, and allowing workers maximum possible initiative. IBM is hardly unique. Entire industries, including banking, finance, insurance, and securities (what is called "Wall Street"), are now redefining their roles in what business historians say may be one of the most significant corporate realignments since World War II. If successful, United States firms should be far better poised to deal with global competition in the next century. Unfortunately, there is a downside: Many companies find that because of technological advances they don't need as many workers as they once did. More than 50,000 positions have been eliminated at IBM alone over the past several years, to a large extent through attrition and early retirements. Another 20,000 positions are expected to be lost in 1992. Thousands of professional jobs have disappeared on Wall Street and in New York's banking industry. Unfortunately, more job losses are expected. Two thoughts are relevant: First, the layoffs are a reminder to Washington that some practical long-range planning is necessary to alleviate the wrenching financial impact on families from the current economic pinch and corporate restructuring. Given industrial downsizing, many of the jobs that have been lost will not be restored. Washington needs to craft an economic policy - and business climate - that welcomes corporate restructuring and fosters job creation, particularly among smaller businesses. Most new jobs are created within smaller firms. Yet, small business leaders complain of red tape, of an inability to obtain bank loans, and of governmental indifference. Second, it is imperative that the restructuring of large firms, such as IBM, succeed. IBM, for all its problems, remains the premier US high-technology firm. If IBM is to ensure its primacy, it must be innovative; yet that's hard to do when the company is bogged down with the past. That's why IBM wants to get clear the decks so that "Big Blue" can once again set sail.

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