Business

Uncommonwealth: Remembering the impact of IBM in the midst of Lexmark layoffs

One of the first typewriters produced at the IBM plant on Newtown Pike in Lexington underwent a final inspection in December 1956. The 386,000-square foot plant off New Circle Road employed 1,800 people in the beginning.
One of the first typewriters produced at the IBM plant on Newtown Pike in Lexington underwent a final inspection in December 1956. The 386,000-square foot plant off New Circle Road employed 1,800 people in the beginning.

For those who grew up in Lexington when IBM was king, Lexmark's Aug. 28 announcement of more than 550 layoffs struck a particularly sour note.

IBM, Lexmark's industrial forerunner, was the dominant employer of its day. Lexington's oft-cited diversified economy — universities, hospitals, retail and some upper-level research, manufacturing and development — would have been missing a vital component if IBM had not decided in 1956 to build a 386,000-square foot typewriter plant off New Circle Road that employed 1,800 people.

Newspaper coverage of the time was encyclopedic and giddy. IBM representatives were sold on the productivity of the Lexington work force, said to be 30 percent to 50 percent higher than in other U.S. cities.

For Lexington workers, the IBM environment was glittering: substantial retirement pay, life insurance, health insurance, a commitment to having women in the work force.

Shortly after IBM settled into what was described as an "overgrown country town," other companies followed suit, among them Square D Co., Dixie Products and FMC Corp.

IBM already had a sterling reputation among employers: It established a minimum wage of 55 cents an hour during the Depression and borrowed money to manufacture parts it did not need at the time in order to keep its employees busy.

Lexington reacted as if it had struck a jackpot.

In 1950, Fayette County had a population of 100,700. By 1960, it was 131,906; by 1970, 174,323 and 1980, 204,165.

By 1985 IBM had 6,000 workers, second only to the University of Kentucky's 7,500. In contrast, by the end of 2013, Lexmark expects to employ 2,300 and UK has more than 13,000.

Lexington's reaction to getting on the industrial map was somewhat mixed, however.

John Wright, a history professor at Transylvania University and author of Lexington: Heart of the Bluegrass, said in 1985 that the city's leaders thought the announcement put the town "on dead center."

"Until that time we had not had any major industries," Wright said. "Not all the people welcomed this change. They were afraid the tradition and pace of life would be lost."

As one who grew up in north Lexington, I can testify that without IBM, north Lexington development might never have happened, or at least would have happened on a more modest scale.

Every other student in my north Lexington classrooms had a parent at IBM: The input of middle- to upper-class students and the emphasis their parents put on education made for a thriving set of communities.

Because of IBM, the neighborhoods of Deep Springs, Rookwood, Dixie, Winburn, Marlboro, Oakwood, Castlewood and Loudon Avenue thrived. It was the land of the ranch and split level, houses usually built with one bathroom (later covered by faddish wall-to-wall carpet) and no air conditioning.

Children roamed the streets to escape the heat, took swimming lessons at Castlewood Pool and visited bookmobiles in places such as Hi Acres shopping center. Families could walk to the grocery store, the kind of activity you rarely see today.

IBM's local dominance was felt in other ways: By 1990, IBM and its employees were the single largest contributor to United Way of the Bluegrass and paid more in property taxes than any other company.

The New York investment firm Clayton & Dubilier bought at least 80 percent of IBM's information products division in 1990. The resulting company was christened Lexmark, and there's a common misconception that the name is in honor of Lexington. Not so: "Lex" was inspired by "lexicon," with "mark" meaning marks on paper.

Lexmark retained the right to use the IBM brand through 1996.

In 1985, Robert Houlihan, a Lexington attorney who was involved with the land acquisition for the IBM plant, said that it changed the character of the city: "It just raised the population and capital value of Lexington. ... It still has its character, but it's a more rounded community. It has been better to grow with the times."

Jim Kemp moved to Lexington from Dayton to be an IBM troubleshooter and later a manager. He left the company in 1990.

"Lexington was so nice we decided to stay here," he said. "The years that I worked there were probably some of the best years for the company. It was a great place to work. ... IBM made a huge, huge difference in Lexington. The impression that I got was that there was a very small middle class in Lexington, and the IBM employees filled that gap."

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