Job creation at Baton Rouge IBM facility falls short of 2016 target

The Baton Rouge IBM Client Innovation Center fell 67 jobs short of the 500 full-time-equivalent positions it was suppose to create by June 30 under the terms of its 2013 cooperative endeavor agreement with the state.

Nevertheless, IBM remains in compliance with the agreement because the state allows the company to carry forward jobs created in previous years that exceeded the requirements for those years. During its first two years in operation, IBM created a total of 104 more full-time jobs than was required.

According to figures provided to Daily Report by Louisiana Economic Development, IBM had 433 full-time-equivalent jobs at its local facility as of June 30. On paper, however, the company finished the year with 537 FTE jobs because it was able to count for the 2016 year 71 extra jobs created in 2014 and 33 extra jobs created in 2015.

LED spokesman Gary Perilloux says based on that metric, the company meets the requirements of the agreement, adding that LED will continue to monitor the company and other clients for specific performance in accordance with their agreements.

A spokesman for IBM declines to comment on the jobs report, which was filed with LED earlier this fall.

The company’s job performance is important because when state officials announced in 2013 that IBM was coming to Baton Rouge, the deal was touted as a huge economic engine and a game changer that would create new jobs, both directly and indirectly through other tech companies that would supposedly flock to the area.

Under the terms of the deal, IBM agreed to create 100 jobs by the end of June 2014, 300 by the end of June 2015, 500 by the end of June 2016, and 800 jobs by the end of June 2017. It also agreed to maintain those 800 jobs through 2023.

In return, the state ponied up $14.8 million in state funds, plus $12.7 million in federal hurricane recovery dollars to build IBM an office tower and adjacent apartment complex on the downtown riverfront. LED put up another $29.5 million over 12 years in a performance-based incentive package that included $1.5 million from the city-parish.

While IBM remains technically in compliance with its agreement with the state, its 2016 hiring numbers raise questions about whether the company will meet its target of 800 full-time jobs by June 30, 2017.

In other midsized U.S. markets where Big Blue operates similar facilities, the track record hasn’t been very good of late. At IBM’s Client Innovation Center in Columbia, Missouri, the company’s payroll fell below 300 active employees earlier this year, significantly fewer than the 800 that were promised when the center opened in 2010. As a result, Missouri’s economic development department recently suspended the company’s tax credits.

An IBM spokesman attributed the jobs decline to a $600 million corporate restructuring.

Former LED Secretary Stephen Moret, who helped land the IBM deal for Baton Rouge and now runs the LSU Foundation, says he does not anticipate a similar situation here and that he believes the Baton Rouge center is part of the company’s growth plans.

“Everything I have heard from IBM officials over the last couple years is that they have been very happy with their technology center in Baton Rouge, as well as their computer science collaboration with LSU,” Moret says. “I expect IBM will follow through on its commitments to Baton Rouge and Louisiana. I don’t know whether they will hit 800 jobs on schedule, but I don’t think it would be the end of the world if they were to hit the target a few months later than originally planned.”

—Stephanie Riegel

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