IBM: Behind the Monolith

Endicott, N.Y., IBM's Hometown, Shaped its Values

By John Marcom Jr.

Apr 7, 1986

Endicott, N.Y. -- This is about as far from Silicon Valley as you can get and still be in the computer industry.

Endicott is IBM's hometown. Headquarters has always been 200 miles downstate, first in Manhattan and now in suburban Armonk, but until World War II most of the real work was done here at IBM's main factory. Tom Watson Sr., then chairman, "spent 25% of his time in Endicott, walking out along the lines and putting his foot up on a guy's drill press, saying, 'What's your rate, and how do you make out on that, and when was your last promotion?'" recalls Tom Watson Jr., his son and successor.

IBM built its first product-development lab here in 1933, in a red brick building with a cupola and the famous motto, "Think," carved in a frieze on the facade. Next door is IBM's first school for customers. In the years just before and after World War II, salesmen in the Hundred Percent Club bivouacked each spring in thousands of carpeted tents pitched here. Under one big top, they gathered for several days of banqueting and singing. Every salesman there made a speech.

These days the club meetings are indoors, often in plush hotels, and the schoolhouse has been turned into a museum. Endicott remains a major IBM manufacturing and development site, though today it's just one of dozens scattered from Boca Raton, Fla., to San Jose, Calif., and abroad.

But while IBM has outgrown Endicott, it is still influenced by the wholesome conservatism that seems to pervade the air here. In other high-tech towns, engineers and executives jump from company to company, and industrial parks are dotted with the look-alike headquarters of infant companies with sound-alike names. Endicott, however, is an older, more stable place than most of those other cities. And here, IBM is the only name that counts.

Loyalty is strong, both to the company and to this pretty stretch of the Susquehanna River Valley, which is home for the 200,000 people who live in Endicott and neighboring cities. The Endicott IBM Quarter-Century club has just over 5,000 members, including 3,500 retirees and more than 1,500 of the 11,000 active IBM workers in town.

Endicott's values shaped IBM from the start. In 1914, when Tom Watson Sr. took charge of Computing-Tabulating-Recording Co., later renamed IBM, down the street from the Endicott plant stood a powerful model of shrewd management-labor relations: Endicott-Johnson Co., then one of the world's largest shoe makers. E-J at its peak employed 20,000 workers, comparable to total IBM employment in the area today.

The legend of George F. Johnson, who ran E-J in those days, looms as large around here as Mr. Watson's. George F, as he is known locally, tried to treat employees as family -- practicing the kind of paternalistic policies that IBM still uses with so much success. At both ends of Main Street, which runs through Endicott and nearby Johnson City, stand arches, built by E-J workers in 1919, marking the entrance to "the Square Deal towns."

George F built thousands of houses, sold them to workers at cost and carried the mortgages, letting the owners skip payments if need be. Mr. Watson in the early years couldn't afford to match E-J's largess but strived to offer his workers an equally square deal. The two men shared many personal values as well. Both, for example, were teetotalers. "Tom Watson and George F became very, very good friends," says Frank Johnson, George F's grandson and the last family member to head E-J. "He admired what George F did, and I think he did pattern a great deal after the worker benefits that E-J offered."

E-J practiced an open-door policy, encouraging employees with gripes to go over supervisors' heads; IBM does too. E-J avoided layoffs through the Depression by paring everybody's hours and pay; IBM also disdains layoffs. E-J managers and workers regularly gathered at "family" dinners; IBM workers still do. Most IBM sites have busy intramural sports programs, capped by annual dinners where victors receive Watson Trophies. In Endicott the Family Day picnic every other summer attracts tens of thousands to the Country Club.

E-J built libraries, swimming pools, recreation centers, golf courses and parks with carrousels; IBM built its Country Club in 1931. The clubhouse hasn't changed much. It isn't posh -- the dining facility is a self-service snack bar overlooking the golf course -- though with dues of $4 a year, it is a bargain.

In the long run, E-J wasn't much of a match for IBM. E-J began to lose out in shoes decades ago, burdened in part by the cost of medical benefits as its work force aged and growth slowed. Employment is now down to 2,000, and the company belongs to Hanson Trust PLC, the British conglomerate. Many of E-J's facilities have been torn down, given away or sold.

IBM itself has swallowed several old E-J buildings. Where tanneries once stood now stand computer testing labs. IBM is building some sleek additions, but the core of the factory complex that sits astride the train tracks running through town is a group of older concrete buildings stitched together with bridges and underground steam tunnels. Slowly, IBM is buying adjoining blocks, and sometimes the streets and alleys between. Last fall it paid town fathers a modest $17,510 for a block-long stretch of North Roosevelt Avenue and two alleys.

Today, Endicott is looking a little less like a town and more like a suburban office campus. If local businesses aren't ready to move, IBM just paves parking lots around their buildings. But no one is organizing protest marches. As a local paper put it in an article last year: "By most accounts, the loss of the houses may be an inconvenience for some residents, yet a plus for the village because it is good for IBM, the major employer in Endicott."

Nearly everybody seems to be a neighbor or a relative of at least one IBMer. IBMers themselves are a little remote, sometimes because policy prohibits them from discussing their jobs but more often just because the company is something of a clan. "All IBM workers seem to have the old-school tie," says David Patterson, a longtime area businessman. "An IBM employee is different from other employees. IBM really seems -- going back to the ways of the old E-J -- to take care of the people who work for it."

Most people here feel that what's good for IBM is good for Endicott. That has less to do with IBM's charitable contributions -- last year IBM and employees provided $1.4 million of the $4.3 million raised by the area United Way campaign -- than with its role in sheltering Endicott from the ups and downs that buffet other industrial areas.

When IBM in 1979 transferred several hundred employees to a new plant in Charlotte, N.C., it bought and held their houses until they could be sold, cushioning the impact on the local housing market. IBM has since more than replaced those jobs in Endicott, and it plans its employment needs carefully to avoid wide swings. In 1984, it offered early retirement to 1,000 workers. In 1985's slump, IBM held to its longstanding no-layoff policy while other high-tech companies in the area -- some of them IBM subcontractors and suppliers -- cut hundreds of jobs.

Still, Endicott's history also serves as a cautionary footnote. Visitors here were once wowed by another big company in town, and books of the era extolled its happy work force, shrewd management and dazzling prospects. "Fear for the future is unknown among Endicott-Johnson workers," wrote William Inglis in a 1935 book about the shoe company.