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8/25/2009
03:18 PM
Bob Evans
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IBM Adding 1,300 Iowa Jobs, But At What Cost?

IBM has hired hundreds of workers at its new IT services center in Dubuque, Iowa, to provide "advanced information processing" services to global corporations with IBM outsourcing contracts. At a ribbon-cutting ceremony today, IBM said it expects the facility to employ 600 workers by the end of this year and about 1,300 by the end of 2010.

IBM has hired hundreds of workers at its new IT services center in Dubuque, Iowa, to provide "advanced information processing" services to global corporations with IBM outsourcing contracts. At a ribbon-cutting ceremony today, IBM said it expects the facility to employ 600 workers by the end of this year and about 1,300 by the end of 2010.One of 80 such delivery centers IBM operates around the world to provide those advanced tech services to its outsourcing clients, the Dubuque facility will primarily support U.S.-based corporations, said IBM senior VP of Global Technology Services Mike Daniels.

The new IBM facility is certainly great news for the Dubuque community, particularly as the global economic downturn has eliminated millions of jobs around this country and many more millions around the world. But it also reflects some of the desperate measures local and state governments are willing to undertake to convince big companies such as IBM to select their locales for new operations.

As RadioIowa.com reported earlier today, IBM announced 17 months ago that it would make a $100 million investment in Dubuque to create the new global-services delivery center. But that $100 million investment would come with a significant cost:

The State of Iowa gave IBM a package of incentives, including a $12 million forgivable loan. Officials estimate state and local incentives for the project total more than $50 million. The IBM executive says his company also was attracted to northeast Iowa because of the supply of "top talent" graduating from universities in the region.

"At the end of the day, it's all about having the talent pool and being able to provide these services at a competitive rate," Daniels says. "So we appreciate all the work that the state and the city have done in working with us to make Dubuque a part of our delivery service."

IBM has every right to negotiate aggressively with public agencies for the best possible terms it can get, just as it would do with private-sector companies. At the same time, however, the public would be better served if local and state officials-as well as IBM-would be more forthcoming in disclosing up-front the full extent of the concessions and commitments each side is making.

No one should sneeze at the net investment of $50 million IBM is making in the Dubuque facility, which represents the announced figure of $100 million minus the estimated $50 million in concessions, such as tax abatements, that the city of Dubuque and the state of Iowa were willing to grant to IBM. And it's entirely possible that, in the final analysis, public officials will have kicked in what amounts to more than $50 million to lure IBM to the region.

Again, that's just good business on IBM's part. Yet, in these days of breathless talk of visibility and transparency, it would be refreshing as well as productive to see all parties be more clear about the details of the final financial package. Particularly when public officials, desperately trying to appear to be doing all they can to ease painful unemployment figures, use the sort of rhetoric that Iowa governor Chet Culver used 17 months ago when the deal was announced via this IBM press release:

"Today's announcement is about three things - jobs, jobs, jobs," said Governor Culver. "I want to welcome IBM to Iowa, and thank them for bringing these 1,300 high-quality, good-paying jobs to our state. Today's announcement is one more sign that people around the country are discovering what we have known all along - that with our highly skilled workforce, inviting business climate, and quality of life, Iowa is a great place for business. As Governor, I will not rest when it comes to bringing jobs like these to Iowa."

That's fine, governor, don't rest-but at the same time don't distort the truth, either, because the great people of your state need to know exactly what price you and other public officials are willing to pay to convince companies like IBM to do business in your state. If it all turns out to be a terrific deal for Iowa's citizens, then that's terrific-but if it turns out that you'll end up paying $20 for a $10 item, then the people of your state deserve to know that as well.

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