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July 22, 1994

AUTONOMOUS GOVERNMENT OF VALENCIA TO HELP FIND NEW WORK FOR IBM ESPANA’s VALENCIA FACTORY

By CBR Staff Writer

Procova, an entity responsible for promoting the region of Valencia, and answering to the Ministry of Industry & Commerce of the Autonomous Government of Valencia, has signed a contract with IBM Espana to promote the activities of the latter’s factory at Pobla de Vallbona, Valencia, through the international offices Procova has in the US, Korea, Japan, Taiwan and Latin America. As a result of this agreement, which will last for a year but will then be open to further renewal, Procova will help to find new markets for the manufacturing division of IBM Espana. IBM has been cutting its staff at the factory, and some 500 workers will be left once the programme of voluntary redundancies has been concluded. The company has earmarked a total of $10.77m for the retraining of staff at the plant. At a recent meeting between the company and unionised workers, the employees agreed to a 5% wage cut, in addition to a substantial reduction in bonuses. Following the transfer of production of ES/9000 processors to IBM’s factory in Montpellier, France, completed last month, production at the Valencia plant has dropped considerably leading to a predictable fall in operating profits. The plant will continue to produce the 3480 and 3490 series of tape storage units, the 3174, 9454 and 6611 peripheral control units, point-of-sale terminals for department stores and small businesses, multimedia kiosks and cash dispensers. The main area of activity, which will represent 40% of the turnover generated by the plant, will continue to be the export of computer equipment to other IBM subsidiaries in Europe, while there will also be production of complementary products destined not only for the traditional information processing market, but also for sectors such as industrial and medical electronics, which forms 20% of turnover. Another 20% will be generated by manufacture of equipment not connected with the computing sector for multinationals, while 10% of turnover will be earned by offering professional company and systems engineering services in areas such as logistics, manufacturing, quality control and telecommunications. The total value of the operations at the factory in 1994 is estimated at between $385m and $462m.

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