Crossposted at The Vermont Political Observer, and written late Monday morning.

On November 12, 2012, I wrote a piece on this very blog entitled:

And today comes the news that IBM is “selling” its semiconductor business, including its plant in Essex Junction, for negative $1.5 billion. Yep, it’s paying GlobalFoundries to take the business off its hands.

Allow me a little tiny bit of gloating here. Mmmmm, ahhhh.

Okay, get on with it.

That GMD post was inspired by the work of technology journalist Robert X. Cringely, who’d reported that IBM was in an all-out blitz to shed domestic workforce and basically cut itself into profitability. My point was that if IBM left Vermont, it’d be because of global corporate strategy. Not because we didn’t build the Circ Highway or our electric rates are too high or then-Senate leader Peter Shumlin once called an IBM lobbyist a “liar.” (Which, Republicans, just stop. It happened years ago. And if a lobbyist and his employer takes lasting umbrage at an offhand comment during the heat of legislative debate, well, they’re just way too damn sensitive.)  

So here we are, less than two years later, and IBM is on its way out.

My prediction was right on the facts — but wrong on the implication that IBM’s Essex plant was a goner. Fortunately, GlobalFoundries sees potential in the plant and/or its skilled workforce. In the short run, this is very good news, because the way things were going at IBM, it’s a relief not to have thousands of good jobs and the Chittenden County economy dependent on Big Blue.

However…  

While GlobalFoundries is saying all the right things  — it plans “to provide jobs for ‘substantially all’ IBM employees at both Essex Junction and East Fishkill who are part of the transferred business,” it assured Governor Shumlin that it “plans to continue employment, investment, and operations in Vermont,” and it told the Burlington Free Press that it is committed to Essex for the “foreseeable future” — this deal should not significantly reduce the concerns over the Essex plant’s future.

After all, it’s not like GlobalFoundries has a lot invested in Essex. It agreed to accept a boatload of money and the IBM chip business. And when you combine the GF and IBM chip capabilities, you’ve got two manufacturing plants in the Hudson River Valley — one of which is a brand-new $8 billion facility — and one up here in Essex. If there’s any consolidation in GF’s future, I’d have to guess it’ll lean to the south.

Aside from the fact that reassurances like this are worth approximately the toilet paper they’re written on, there are some obvious caveats in today’s crop.

GlobalFoundries says it “plans” to provide jobs for “substantially all” IBM employees at Essex “whoa re part of the transferred business.” That’s a lot of weasel words in a single sentence. “Plans” can change. “Substantially all” is a matter of definition. And how many in the Essex workforce are NOT “part of the transferred business”? Will they be cut by IBM? If given the opportunity to remain at IBM, will they have to relocate? After all, IBM won’t have a presence in Vermont anymore.

Governor Shumlin is meeting with GlobalFoundries officials later today. Color me cynical, but I’d expect GF to put the screws to the Governor. The corporation will provide generic promises and make very specific demands. And the Governor is in a weak bargaining position: he knows that the Essex plant means a lot more to Vermont than it does to its new owner. He might even come out of the meeting with a piece of paper in hand, proclaiming a new deal that’s good for Vermont and for GlobalFoundries.

Not that I could blame him. We’re over a barrel with the Essex plant. Its closure would be a huge blow to our economy. In the short term, the IBM/GF deal is good for the state — if only because I’d hate to continue depending on the good graces of IBM. But there’s a whole lot of worms in this apple, and the moral of the story continues to be “don’t put all your eggs in one basket.”

I grew up in Michigan, a state that grew and prospered with the domestic auto industry. The Big Three had its roots in Detroit. It did a lot of good for Detroit. But when the global winds shifted, they had to shift with the times, and Detroit was left to hang. The takeaway: it’s not healthy to be too dependent on one business or market sector. Sooner or later, it’s gonna bit you in the butt.

IBM’s departure should be a reminder, or a wake-up call: Vermont’s economy should be as diversified as possible. Eventually, the winds are going to shift again, and we need to be ready.