Since its formation in 1954 and successful recruitment of IBM to Vermont, the Greater Burlington Industrial Corp has worked with IBM executives and state and local leaders on growth, new investment and maintaining a competitive standing within IBM itself and across the world. Current IBM Vermont Operations directly affect the economic wellbeing of over 8,000 Vermonters. Moreover, many communities are positively impacted by IBM’s investments in people and innovation that have made the Burlington area and the State of Vermont a cluster of excellence in research, development, design and high-tech manufacturing.
Major media outlets are now reporting that IBM’s Microelectronics Manufacturing Division, including the IBM Vermont Operations, is being sold. GBIC sees imminent and adverse risks without the State of Vermont’s support of the current IBM Vermont Operations and Campus and for a successor enterprise should a sale occur. As a result, GBIC recommends a “Vermont Action Plan” for immediate consideration and action, commencing immediately and continuing until a legislative package is enacted next year, by Vermont’s government & community leaders.
RELATED STORY: GBIC proposes state action plan to save IBM jobs
GBIC has issued its IBM Plan on June 24, 2014, which followed its Situation Analysis on June 15, 2014. The Plan, Analysis and Community impact are copied in full below.
IBM Vermont: The Vermont Plan
Goals:
- Retain and support as many of the 4,000 jobs of the Vermonters who directly work at IBM Vermont as is possible.
- Protect the additional 4,000 Vermont families whose jobs and economic wellbeing rely on the investments and economic activity of IBM Vermont.
- Encourage IBM, and if the IBM Microelectronics Manufacturing division is sold, the new owners of the IBM Operations and Campus, to make ongoing investments by ensuring that the IBM operations and campus is a globally competitive asset for its owners and that the IBM Operations and Campus remains a most significant contributor to Vermont’s economy.
GBIC has long advocated for creating statewide “Strategic Employer Incentives” targeted towards existing regional economic driver employers. There is no other private employer in Vermont of the economic magnitude of IBM. For over 60 years, IBM has opened the world to Vermont and Vermont to the world. To accomplish the three stated goals, a globally credible and competitive package must be developed and presented before decisions on IBM workforce consolidation and capital deployment are finalized.
This is fundamental economic development policy in action.
Regardless of what company’s name is on the doors of the IBM Vermont enterprise, the State of Vermont must act immediately and convincingly to demonstrate its commitment to the success of the enterprise in recognition of its present and future value to Vermont’s economy and for the wellbeing of the Vermonters who work there.
Our belief is that the following framework positions Vermont for a better opportunity to retain jobs for Vermonters and will, in fact, expand economic opportunities for the people of our state.
Timeline for Actions:
The timeline for implementation of the following must be immediate until a Legislative package is enacted next year.
Immediate Recommended Actions:
- Grant $4.5M from the Vermont Enterprise Fund to IBM Campus ownership in full support of the local workforce impacted and campus infrastructure. (Requires Governor action and Legislative Emergency Board approval).
- Workforce Training Programs for IBM continued ownership: _Rebuild the highly successful manufacturing and technician training partnership between VTC and IBM.
_Utilize and provide supplemental funding to the Vermont Training Program, and Vermont Workforce Education and Training Fund for training of IBM employees.
_Utilize competitive, sector/skill targeted, job-centered training programs, like those offered by Vermont HiTec.
_Federally funded workforce programs must be fully utilized and deployed by the Vermont Department of Labor.
_Within the past 3 years the state studied ways to focus upon strengthening the Vermont’s advanced manufacturing sector. The recommendations following the study should be implemented.
- Identify a public entity buyer for the IBM Campus wastewater treatment facility and other campus infrastructure and develop a sustainable business and operational model using state and federal resources to acquire and subsidize operating costs and user payments. The infrastructure on the IBM Campus is the most significant in our state.
- A Statewide Action Team on IBM should be engaged immediately. Chaired by our Governor, the team must include Vermont’s most experienced economic development professionals and economic experts. Vermont Commerce Secretary Pat Moulton is perfectly experienced to lead for the Governor. GBIC’s President and other Economic Development Professionals and the Chair of the Governor’s Council of Economic Advisors and other Council members should be included. At the state level, we recommend involvement of Cabinet Secretaries from Commerce & Community Development, Administration, Transportation, Natural Resources, Agriculture, and Education. We also recommend involvement from extended Cabinet Commissioners from the Departments of Economic Development, Labor, Public Service, Housing and Community Affairs, Buildings and General Services, Tax. Also included should be the CEO of VEDA, the Executive Director of VEPC and the State Treasurer. The Lt. Governor, the Speaker of the House, the President Pro Tem of the Senate and the Emergency Board of the Legislature should be included. Governor Dean’s Husky Team model of statewide and regional composition is a good example of a successful and effective compositional structure.
- A Regional Level Action Team working with the State Team of the following should be included: the President of GBIC, the Executive Director of Franklin County Industrial Development Corporation, the Executive Director of the Chittenden County Regional Planning Commission, the President of the Lake Champlain Regional Chamber of Commerce, the Executive Director of the United Way of Chittenden County, Municipal Managers and leaders from Essex Jct., Essex, and Williston; and Board members of GBIC.
Recommended Actions should a change in IBM Campus ownership occur:
- Should there be a change in ownership of the IBM Vermont operations/business/real estate, then VT will need to utilize and maximize the Vermont Employment Growth Incentive (VEGI) program to sustain existing jobs and encourage growth. A successor to IBM VT would qualify for VEGI.
Recommended Actions commencing now until a Legislative package is enacted next year:
- Create a Vermont Research and Development Growth Incentive program, modeled on the successful VEGI format, to encourage ongoing investments in research and development for operation in the IBM, or future, enterprise in Vermont (requires Legislative action).
- Harmonize the Vermont Research and Development Tax Credits with the Federal ratios (requires Legislative action).
- Create a special electric rate zone of stable and low cost rates for IBM campus. GMP should not have to be the sole supporter of this initiative (may require Legislative action and Public Service Board action).
- Workforce Training:
_Utilizing and providing supplemental funding to the Vermont Training Program, and Vermont Workforce Education and Training Fund for training IBM employees is critically important (may require additional Legislative action).
- Creative property tax stabilization and corporate tax suspension should be developed and legislated (requires Legislative action).
- Suspension of other taxes and tariffs for strategic employers must be developed (may require Legislative action and Public Service Board action).
- Access to the IBM campus must improve via targeted transportation improvements using a combination of state and federal resources. The existing buildings, infrastructure and developable land offer the region smart land use practice with immense opportunity for new commercial and industrial economic activity. Without better transportation access, much of this IBM Campus could lay fallow. The campus is an industrial city and its present replicated construction value is billions of dollars. Utilizing the land and infrastructure while growing more square feet for manufacturing and enterprise is the perfect example of smart land use and effective infrastructure utilization (may require Legislative action).
- Create a “Strategic Employer Designation” program for Vermont’s existing value adding, dollar importing, goods and services exporting employers who anchor the economies of our regions and our state. Create special retention and investment incentives for these regional economic driver employers (requires Legislative action).
The Vermont Advantage:
Vermont’s greatest advantage is our people and our communities. The Vermonters who work at IBM are the best of the best in the industry. Their innovation, creativity and work ethic are unrivaled globally.
And our regional and Vermont community is one of our state’s strongest assets. People, innovation, work ethic and sense of the value of community are core to our state’s character and value proposition.
Our second greatest advantage is our Governmental and Community leadership. Vermont is the most accessible and nimble government environment in the United States. We are a small state but we are very agile and adept at moving forward in times of challenge and opportunity.
We are a small state, but we have incredibly talented and experienced governmental and community leadership. Our US Senators are highly respected and accomplished. Senator Leahy is the President Pro Tem of the US Senate and the most senior US Senator in the Senate. He has more legislative accomplishments than any other member of Congress. Senator Sanders is highly regarded for his work for veterans and as a passionate voice for working people everywhere. Congressman Welch is highly regarded as the go to person to forge compromise and get things done in the US House of Representatives. Governor Shumlin is highly regarded for his knowledge of Legislative process, business experience and an accomplished and skilled dealmaker. Lieutenant Governor Scott is highly regarded as the voice of Vermonters from all walks of life. VT House Speaker Shap Smith is regarded as the most effective Speaker of the House in our state’s history. Senator John Campbell is highly regarded as an accomplished legislative tactician and leader and Senator Dick Mazza is respected and highly regarded as the most experienced member of the Senate and House and the voice of common sense. The Chairs of our Legislative Committees are all incredible leaders who know how to move to consensus in the best interest of Vermont in times of challenge and opportunity.
We have hundreds of globally experienced professionals in business, education and industry who will volunteer to help Vermont. We have passionate environmentalists and some of the best land use planners in the country. We have a statewide network of economic development professionals. And we have municipal and community leaders in every county that make Vermont the best place to live, work and play in our nation.
We need to pull together and make opportunities and economic growth happen in a united manner. Vermont and Vermonters Can Do It.
IBM Vermont: Situation Analysis
The following is GBIC’s opinion of where we are regarding IBM VT as of 6/15/2014
IBM will sell the Microelectronics Manufacturing Division
The leading prospect appears to be Globalfoundries owned by the United Arab Emirates.
Globalfoundries has a state of the art microelectronics facility in Malta, NY.
Estimated at $8+ billion investment and responsible for creating 6,000+ jobs in the region.
It is the most advanced microelectronics cluster in the world.
IBM VT Facts:
600 acres 3.5 million sq ft (350,000 sq ft in Williston 3.1+ million sq ft in Essex Jct.)
Wastewater treatment facility of 4.4 million gallons per day capacity
Electric infrastructure and power use greater than the City of Burlington
IBM VT basically has 3 businesses:
- Semiconductor design and manufacturing Wafer Testing Photo Mask House
Even though our buildings are older and the equipment is older the technology that we use, because of the innovation of the VT R & D people (scientists etc), IBM VT technologies have been innovated to create huge value.
IBM VT has cornered most of the global markets for chips in the hand held (cell phone etc) manufacturers.
Singapore is the only place that can compete w/ what we do.
IBM VT business facts:
200 mm wafers Line width is 90 nanometers.
- Technology is: CMOS, SIGE & RFSOI
IBM VT Infrastructure:
Wastewater treatment facility of IBM VT is approximately 4.4 million gallons per day capacity.
Very good facility and capable of treating a significant waste stream:
hydraulic and BOD The facility has significant value and GBIC estimates that it could provide capacity for 500,000 additional sq ft of manufacturing in Essex Jct on a 60 acre vacant parking lot and 1 million sq ft in Williston provided that the Town of Williston zones accordingly.
GBIC thinks 400,000 sq ft of additional manufacturing space could be easily built on IBM land in Williston that is already zoned industrial.
If IBM wanted to sell the wastewater treatment facility and the Towns of Essex and Williston and the Village of Essex Jct.
wanted to own the facility then the state and feds must help the municipalities w/ capital $ to acquire, fit up and operate the wastewater treatment facility.
The facility could be a huge asset to the region and the state and it would eliminate the need to create a greenfields industrial parks elsewhere.
The sewer/water distribution infrastructure would need to be added to be placed on the lots but the treatment facility is there as is electricity, natural gas, water etc.
This is a huge asset and is VERY smart growth.
Competitors:
IBM East Fishkill NY:
300 mm wafers Line width is 90 to 14 nanometers Technology is:
GaaS Makes chips for servers and needs lots of volume
Very expensive to operate.
Globalfoundries in Malta NY:
The most advanced microelectronics in the world
Nano and going to 450 mm (the most advanced in the world)
Line width is 7 nanometers
Technology is GaaS
Their “fab” in Malta was about a $8 billion+ investment
Makes chips for main frames, server farms, cloud storage etc.
Globalfoundries operates in the most expensive and most advanced microelectronics technologies in the world.
Globalfoundries does not have the customers of IBM VT or IBM Fishkill.
NY State:
NY State is aggressively pursuing all existing and new businesses with huge incentives for retention and job creation and investment.
Community
IBM in Vermont
Over the past six decades, the most significant contributor to the expansion, diversification, and enrichment of our state’s economy has been IBM Vermont. No company has made a more prolific contribution towards enhancing the lives of generations of Vermont families and expanding our state’s capacity to innovate and grow. IBM opened Vermont to the world and opened the world to Vermont.
IBM is Vermont’s largest for-profit employer, providing quality jobs to approximately 4,000 Vermonters. We estimate that over 10,000 Vermont families are supported directly and indirectly by IBM. The company’s $200 to $250 million annual payroll and economic activity annually injects approximately $1 billion dollars into our state’s economy making IBM Vermont’s most significant and vital economic engine.
Whenever Vermont is recognized for its technological innovation, that distinction is likely to be attributable to IBM’s generation of knowledge and skills among its Vermont workers. IBM Vermont is a world leader in supplying complex electronic components to a wide range of global companies. Vermont’s high per capita state rankings for the creativity index, patent innovations, exports, and state rankings of workforce with higher education degrees are all substantially attributable to the contributions of IBM. Inventors at IBM are credited with 10 % of the company’s total U.S. patents issued each year, and IBM has led the world in patents issued for more than a decade.
Since coming to Vermont, IBM and its employees have set an unparalleled standard of excellence by their significant contribution towards enhancing our communities. The relationship between IBM, its employees and the Vermont community is grounded in IBM’s long-standing commitment to civic, social, and environmental responsibility.
Since its establishment in Vermont, IBM’s impact on our state has been truly unrivaled. However, its touch in the world has been just as remarkable. Semiconductors made at IBM, Vermont are used by leading global electronics companies. Across the world in 2014, virtually anyone using a smart phone, hand held and mobile device is using a product run on semiconductors made at IBM Vermont.
Sixty years after they came to Vermont, the innovation and creativity of the company and its employees remain as rugged, strong, and vibrant as our Green Mountains.
IBM Vermont: Economic and Community Significance
Economics:
- Workforce:
o GBIC estimates that approximately 4,000 Vermonters are employed directly by IBM.
o GBIC estimates that IBM Vermont employees live in 190 towns across all 14 counties in Vermont.
o GBIC estimates that payroll for the IBM Vermont campus workforce is between $200 – $250 million annually
- GBIC estimates that the multiplier of jobs based upon IBM direct employment translates to 10,000 jobs; meaning that 10,000 Vermont families are supported directly and indirectly through the wages, salaries, operating and capital investments of IBM Vermont.
- Property Valuation/Taxes:
o Property valuation and accompanying property tax revenues for Essex and Williston remains significant:
§ Essex: Two assessed parcels with a combined real value of $104,000,000
Taxes (combined municipal and state assessment):
o $ 2,219,587.60 (Essex Village)
o $ 6,668.90 (Essex Town)
o $ 2,226,256.50 (Combined Village and Town total)
§ Williston: One assessed parcel with a real value of $ 31, 627,060
Taxes (combined municipal and state assessment): $ 557,015.76
Utilities and Municipal Infrastructure:
- IBM has made very significant investments in infrastructure (roads, waste water treatment, electric infrastructure etc.) on its campus. Because of these investments, utility ratepayers have had lower rates and high quality energy and municipal and state taxpayers have had lower taxes.
o Without IBM’s demand, Vermont would lack the demand to provide the current level of infrastructure investments without significantly burdening residential and other commercial consumers
- Green Mountain Power:
o The entire site use is approximated at 65 megawatts, translating to more electric usage than the City of Burlington. Removing this portion of the GMP portfolio would require increasing rates to cover transmission and distribution costs on capital assets.
o The estimated purchase value of the IBM electric power usage is approximately $35,000,000 annually
- VT Gas:
o IBM has been a consistent and large VT Gas customer due to the high demand for baseload energy. IBM’s gas bill is approximately $4.5 million annually and their year round usage stabilizes the Vermont Gas distribution system.
- Champlain Water District:
o IBM has consistently been 34.2% of CWD’s daily usage (3.18 MGD out of a total 9.3 MGD). Their consistent usage and non-seasonal demand allows for price stabilization across the entire CWD supply portfolio.
o Without IBM usage, wholesale rates would increase 40%, from $1.84/1,000 gallons to more than $2.50/1,000 gallons.
- On-site Wastewater Treatment Facilities:
o IBM Owned Treatment Facility Value:
§ GBIC estimates the combined capital value of the IBM owned waste water treatment facilities and infrastructure, as constructed, at $200 million.
o Capacity:
§ Industrial waste treatment facility (4.4 million gallons per day).
§ Sanitary waste treatment facility (350,000 gallons per day).
Future Industrial Potential:
- During the ECOS report process it was revealed that Chittenden County lacks significant development opportunities for future industrial land sites. In 2013, GBIC retained the services of Champlain Consulting Engineers to determine potential future build-out of the IBM Vermont – Williston campus.
o Their conclusion was that more than 34 acres of developable land remained on the site, enough to house 387,500 sq. ft. of light industrial development potential.
o If development on IBM land could access the IBM waste water treatment facilities then there would potentially be very significant more square feet of new space, either of industrial, commercial or residential depending upon local zoning.
- In addition there is a 60 acre parcel of IBM land in Essex Jct that could potentially house 350,000 square feet of industrial space.
- The potential of industrial space on the IBM Essex and Williston campus conserves the need for Chittenden County to develop other greenfields, and has the added benefit of being located next to pre-existing infrastructure with current industrial use.
Educational Attainment – Chittenden County:
- Chittenden County has a significantly higher percentage of the population with completed post-secondary education than the rest of the state, a distinct advantage in technology and innovation based industries. IBM continues to maintain a significant demand of highly skilled and highly educated Vermont workers, adding to our regional advantage in educational attainment.
Innovation and Patents:
- In patents per capita (2012), Vermont ranks #4.
o IBM accounts for 70% of these patents. If removed from the equation, Vermont would rank #28.
o The Brookings Institution lauded the Burlington-South Burlington MSA as the second most innovative metro area in the United States due in large part to our per capita patent figures.
o In the past 10 years, IBM of Vermont employees have generated more than 1,200 patents, far and away the most of any organization in the state.
o IBM technology developed in Vermont is globally innovative and present in products like hand held and mobile devices used virtually everywhere in the world today.
- Innovation is the driver of job creation and retention in an industry with two year product cycles.
o Every IBM Technology Development job sustains 16 IBM Vermont jobs.
§ Jobs like: Manufacturing engineers, Technicians, Production Operators, Quality Control, Site Operations, Supply Chain are all sustained because of investments by IBM investments in Research and Development.
o These positions are strictly those counted within IBM Vermont; further benefits to the state and our communities occur because of their choosing to make personal investments from living in Vermont.
- Former IBM employees have gone on to create their own success stories in Vermont:
o IDX, Asic North, and ipCapital were all founded with former IBM employees.
Exports:
- IBM Vermont accounts for nearly 70% of all VT international exports, totaling more than $2.8 billion in 2012.
o Many of these exports are incorporated into higher level subassemblies in Asia, where they must be able to compete on price as well as performance.
Technical Expertise:
- IBM has utilized its expertise in water and wastewater management to support other Vermont employers to make technical and business decisions, free of charge.
o Additionally, IBM has shared their phosphorous reduction chemistry and techniques with wastewater treatment plants across the State at no cost to the plants.
- IBM has provided significant resources at no charge for Vermont’s Solar Research Test Center.
o This includes providing land for the project free of charge.
o Also free of charge, IBM has provided the technical work for the project:
§ Power engineering
§ Permit expertise
§ Construction management
§ Site design
§ Government contracting
- IBM has provided technical expertise, free of charge, to other Vermont businesses and organizations such as Vermont Technical College, Howard Center, St. Michael’s college, the Vermont Air Guard, Cabot Cheese, Sugarbush, Mount Snow, Central Vermont Medical Center, and Rock of Ages.
o These IBM employees help with energy management support, technical issues, and Smart Grid data analytics to help these Vermont employers run more effective and efficient operations
Charitable Contributions in the Community:
- IBM has extensive community impact through the Employee Charitable Contribution Campaign in 2013. Included :
o Greater than $780,000 pledged
o 4 Tons of Food delivered to 13 different food shelf locations across the state
o Greater than $2M in total contribution (includes pledges, volunteer hrs, grants.)
- IBM Continues to support Engineer’s Week:
o >140 volunteers
o >4000 students reached
o >40 schools across 6 Vermont Counties
- Excite Camp
o 14th Consecutive Year
o >40 volunteers
o 30 Seventh grade girls in attendance
- IBM Grants in 2013
o 39 non-profits/schools
o 19 different communities
o 85 IBM Volunteers