[E]SSEX JUNCTION — The former IBM semiconductor plant, which now belongs to GlobalFoundries, has completed $55 million in upgrades that will increase chip production by 15 percent, company officials said Wednesday.
The upgrades, which took place over the past nine months, will allow the company to make 50 “long-term temporary” manufacturing jobs permanent, they said. That should be taken as a sign that the company is committed to keeping operations humming in Essex, Gov. Peter Shumlin said at a Wednesday news conference — a message echoed by company officials.
The investment project was planned before GlobalFoundries’ purchase of the plant in July, but its completion was part of the sale, and it “shows (GlobalFoundries) is willing to invest in scale and capacity” at the Essex plant, said Dale Miller, director of operations.
With roughly 3,000 employees, GlobalFoundries is one of the largest employers in the state and an economic anchor for Chittenden County.
For years, IBM indicated that its focus would shift away from its chip business, prompting fears that it would shutter the plant. After GlobalFoundries purchased it, the company offered a voluntary buyout program that spurred anxiety that production might decline in Essex.
Shumlin said the GlobalFoundries deal was “the best possible outcome” for Vermont, because the state now has an employer that wants to be leader in the chip-making industry, and kept former IBM employees at the same pay and benefit levels — something many were skeptical could happen.
Approximately 100 employees took the buyout option, which was said to be a necessary cost-cutting and efficiency measure. In addition, a “handful” of non-manufacturing employees were laid off last week, said company spokesman Jim Keller.
Buyouts and layoffs were a companywide initiative for GlobalFoundries in response to a downturn in the global chip market, but the diminished demand was not for the primary type of chip made in Essex, which go into smartphones and tablet computers, company officials said.
The buyouts and layoffs in Essex were done in order to cut costs and create greater efficiency at the plant, something GlobalFoundries needs to make a constant focus in order to keep pace with its competitors in Asia, where labor costs are much lower than in the U.S., said Janette Bombardier, senior location executive.
“Regardless of how full we are, regardless of making this investment, we always have to watch our costs and we have to be smarter,” Bombardier said. Still, the outlook for the Essex plant is good, she said, and the company would not have invested $55 million to fill a “temporary gap” in its production capacity.
Shumlin said that when discussing whether jobs at the plant are up or down, it’s important to understand that “you will not find a company in the world who is competing in any manufacturing sector” that isn’t looking to do more with less workers. The days of companies adding hundreds of new manufacturing jobs are gone, he said, and “that’s just the way the world works today.”
The nine-month project involved purchasing and installing 30 new tools, relocating 14 others and refurbishing nine more, said Miller, the production director. Those were not “power tools,” he said, but massive pieces of equipment that had to be handled delicately.
As a result of the increased capacity from the project, the Essex plant will crank out 5 million more chips per day, enough to supply between 500,000 and 1 million smartphones and tablets, Miller said. All told, the plant is expected to make 10 billion chips annually.
