As IBM cuts jobs in Vermont, others hire

Burlington officials, tech execs explain a shifting employment landscape

The shrinking of IBM's U.S. workforce is particularly worrisome in Burlington Vt., which has long counted on the company to provide many good jobs for area residents.

A decade ago, IBM employed about 8,000 people in the region; city officials believe the IBM workforce has since declined to approximately 5,000.

IBM doesn't provide headcount data for specific sites, but an IBM spokesman said demand for the types of chips produced in its Burlington-area plant is increasing.

"We are starting to see increased customer demand for the products and technology produced at our IBM facility there," said Doug Shelton, an IBM spokesman. "The site designs and manufactures semiconductor chips for a wide range of consumer electronics products, including cell phones, TVs, digital video recorders [and] GPS systems and the communications networking equipment that supports them. The demand reflects the growth in the mobile Internet -- portable devices using the network for video, text, Web browsing, phone and more," he said.

A search on IBM's job site for positions open at its Essex Junction, Vt., facility produced 19 ads.

City officials and business leaders say that the IBM job losses are being somewhat offset by employment opportunities at new types of tech companies that are either new to the Burlington area or have been around a while and are growing. Many of those companies focus on e-commerce and software-as-a-service offerings.

One of those, Dealer.com, provides a range of marketing and Web development services to automotive dealers. The 12-year-old company now has about 400 workers and says that it's on track to add about 100 employees a year. Officials say there are usually about 30 openings for a range of positions, including Java developers, graphic designers, IT applications managers, support technicians and network administrators.

Burlington-based Dealer.com works hard to keep its employees. It pays all benefits costs and contributes to employees' 401(k) plans. The company provides its workers with a gym, tennis courts, a heavily-subsidized organic food cafe, ski passes and other things that help keep the staff healthy and happy, said Chief Operating Officer Mike Lane, who is one of the company's founders.

The local IT labor pool has its limits, and the company has to recruit nationally, but it isn't difficult to convince good workers to consider a move to Vermont, said Lane.

The state is "one of the most beautiful places you can live in," and the active, outdoor-oriented lifestyle complements the "work hard/play hard," attitude of many people in the IT industry, said Lane.

Burlington's population of 40,000 makes it Vermont's largest city. And IBM, with facilities in nearby Essex Junction, population 10,000, may be the state's largest employer.

Dealer.com has hired ex-IBM employees, and among the locals in tech, "a lot of people have IBM on their resume," said Lane.

Dealer.com isn't the only are tech company that's growing, which makes the high-tech business and employment trend in Burlington particularly interesting.

For example, the area includes other businesses offering e-commerce and marketing services that are similar to Dealer.com's, but in different markets. Those include MyWebGrocer.com in Colchester, a provider of e-commerce and e-marketing tools to the grocery and consumer packaged goods industries, and Kea Group in Williston, which provides e-commerce services as well as physical warehousing, shipping and inventory control systems for businesses.

Alec Newcomb, an executive vice president at 11-year-old MyWebGrocer, which counts some major grocers and manufacturers among its clients, said the company has just crossed the 100-employee mark and sees itself growing to 200 employees in the near future.

The growth of these e-commerce-type services companies in Burlington area is also giving rise to a local "digital culture" fueled by growing combination of employees from these companies who get together at networking events and at local Web marketing summits -- "which you typically don't find in a community our size," said Newcomb.

The local colleges, Champlain College, the University of Vermont and Burlington College are also responding with programs and training.

Seamus Walsh, chief marketing officer at 15-year-old Kea, said one of the best things going for Vermont is the lower living and labor costs compared to the Boston and New York metropolitan areas. "We want to become the order capital of the world," said Walsh. "Don't go to India, come to Vermont."

Kea Group is also in hiring mode; it now has 30 full-time employees and five part-time workers and it expects to employ 100 people in 2011. Walsh said Kea's Vermont location has an extra benefit for Kea, namely the Port of Montreal, which is easier to reach and less costly than some other ports in the Northeast.

Newcomb acknowledged that there are some critics of the area's support for business -- the tax benefits lag behind those of some other areas, and the permitting process can be difficult. However, he added, "there are challenges everywhere you go."

Larry Kupferman, the director of community and economic development office in Burlington, noted that the city has a municipally operated fiber network and generates its own electricity, which allows it to offer business users comparatively low rates and plenty of bandwidth.

The new business won't be replacing the jobs that IBM has cut anytime soon, but they have given hope that this area can adapt itself to changing economy and draw people with the right skills.

"People don't move here primarily for work," said Kupferman, "They move here for lifestyle as well as work."

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feedĀ . His e-mail address is pthibodeau@computerworld.com.

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