Ibm Seeks State Help For New Headquarters Big Blue Looking For Handout Despite Financial Turnaround

IBM is on its way to completing a three-year, $8 billion worldwide cost-cutting program. It has included laying off thousands of workers, selling 20 million square feet of office and factory space and auctioning off $25 million in artwork.

Big Blue sold its Madison Avenue office building for $200 million and its Sands Point, N.Y., country club for $10 million. A 1928 Diego Rivera painting - “Baile en Tehuantepec” - valued between $3 million and $4 million, is among the art Sotheby’s will sell for the company this month.

Three weeks ago, IBM, rebounding from $15 billion in losses between 1991 and 1993, reported record firstquarter earnings of $1.3 billion.

Despite the turnaround, IBM has had its hands out for months, asking for state assistance to build a new $75 million headquarters next to its current 31-year-old home office - now considered technologically obsolete - on its 450 acre complex in Armonk, N.Y.

The state has agreed to buy two exIBM facilities upstate for $13 million and to lease space in a third building.

Gov. George Pataki’s IBM-friendly policies have peeved many taxpayers and upstate politicians, who believe the state is pandering to a powerful multinational corporation, whose shortsightedness was largely responsible for its dire financial straits.

“IBM didn’t keep up with the times. They considered themselves the Cadillac of businesses, but they got caught in the wrong end of the market,” said Assemblyman John McEneny, an Albany Democrat. “I don’t think the taxpayers of New York should have to subsidize that error.”

McEneny is mostly upset about the state purchasing two IBM buildings with plans to move about 4,000 data processing jobs out of Albany downstate to Kingston, East Fishkill and Endicott. He has proposed a bill that calls for a legislative task force that would study the economic impact of shuffling the jobs.

After rumors spread that IBM might be considering moving its headquarters to Connecticut, Pataki - in the days after his stunning election victory - reportedly met with IBM Chairman Louis Gerstner to assure him New York would do what was necessary to keep Big Blue in the Hudson Valley.

In February, Pataki announced IBM was staying put and that the state would consolidate its data centers in the three former IBM sites. While the state is still negotiating with IBM over the benefits New York will provide for the new headquarters, the possibilities include:

Issuing state bonds at low interest rates to help finance the project.

Exempting sales taxes of about $6 million on materials used to build the new headquarters.

Issuing low-interest construction loans from the state Urban Development Corp. and Job Development Authority.

Providing grants for water and sewer connections and road work.

“We believe any assistance we can give IBM to keep their $40 million annual payroll in the state is worth it,” said Caroline Quartararo, a UDC spokeswoman.