From Rapid Growth to Slow Decline – History of IBM-Rochester
Rochester, MN (KROC-AM News) - A friendship forged in military service was responsible for bringing one of Rochester’s largest employers to the city over 60-years ago.
Thomas Watson Jr., the son of IBM founder Thomas Watson, often shared the story of choosing Rochester over Madison, Wisconsin to become the home of a new manufacturing and research facility because he wanted to honor his close friend from his service in the Air Force during World War II, Rochester native Leland Fiegel. According to the City of Rochester website, Fiegel was returning to his Pentagon job as Director of Training for the Air Force after visiting Watson in New York when he was killed in a plane crash in 1948.
That wartime friendship proved fortuitous for Rochester. In 1956, Watson Jr. made the official announcement that Big Blue would construct a 500,000 square foot complex on about 400 acres of farmland just northwest of the city. Construction began later that year, while IBM also started operations in Rochester in 1956 at a temporary site with fewer than 200 employees.
The workforce would grow to around 1,800 by the time the IBM plant was officially dedicated on September 30, 1958. The following video is from an interview with Ed Rauen, one of the first 174 people hired by IBM to staff the Rochester plant in 1956.
The announcement that IBM was coming to the city and the official completion and opening of the landmark blue color plant in 1958 sparked a massive building boom in Rochester. Residential and business developers reacted quickly as the computer giant ramped up operations and hired or transferred thousands of engineers, technicians, administrators and manufacturing employees from all over the U.S. to work at a state-of-the-art facility on the outskirts of a quiet little city of about 30,000 residents.
New schools, including John Marshall High School, were built and entire neighborhoods were created over the next decade as growth at the Mayo Clinic and IBM added over 20,000 people to the city’s population by 1970. The one-two punch provided by the
high-paying medical and technical jobs quickly made Rochester an economic powerhouse and created a misleading perception about the community’s wealth. Local lawmakers of that time period would often joke that their colleagues from other parts of Minnesota seemed to think Rochester’s streets were paved in gold.
IBM thrived in Rochester. Within 10 years of its opening, the size of the plant more than doubled to nearly 1.2 million square feet and the workforce exceeded 4,000. The plant became a hotbed for invention and its employees have played a key role in IBM’s quarter-century-long run as the nation’s number one producer of patents. The Rochester workforce is responsible for dozens of new patents each year and some of the products developed and built in Rochester were key to IBM’s rapid growth through the 1960’s, 1970’s and 1980’s.
The Rochester manufacturing plant produced dozens of business machines and its engineers helped develop IBM’s flagship System 360 computer system, but IBM’s history archives show it was in 1969 when the very first Rochester-designed and manufactured computer, the System 3, was unveiled. That led to the System 3740, which introduced the world to what would become known as the floppy disk. According to company records, the first version from 1973 had a storage capacity of just over 81 kilobytes. System 32 was rolled out two years later and System 34 was announced in 1977, which is also when the Rochester plant became the headquarters for IBM’s hard disk development and manufacturing.
By 1980, the plant had grown to 2.3 million square feet with over 6,000 employees responsible for creating and building a wide range of computer systems and business machines sold to governments and business customers. The workforce had grown over 7,000 in 1985 and exceeded 8,000 in 1990 when President George H. Bush presented the Rochester facility with the Malcolm Baldrige National Quality Award. It was the highest honor in the nation for quality. Rochester was at the center of the IBM universe when it rolled out the hugely popular AS/400 series. By 1996, the company had shipped 400,000 of the business computer systems to sites throughout the world.
For many Rochester IBMers, those were the “good old days.” In 1993, Big Blue announced the first layoffs in the 37-year history of the Rochester plant. A news story filed by the UPI wire service that year describes how the consolidation of IBM’s ADSTAR division would necessitate the elimination of 700 full-time and 1,200 temporary jobs in Rochester. The local workforce has been trending downward ever since.
The Rochester facility remains a top development center for IBM. Its scientists and engineers have played key roles in the creation of new technical marvels, including the Blue Gene Supercomputer. The Rochester staff also teamed up with Microsoft to build the X-Box gaming system and has collaborated numerous times with the Mayo Clinic on medical technologies. In recent years, many of those projects have involved analytics, which has become one of the main focuses of IBM.
Without manufacturing, the space needed by IBM for its activities in Rochester has shrunk steadily over the past two decades. Initially, the company mothballed entire buildings as its footprint at the complex declined but eventually, some of the unused space was leased out to other companies experiencing employment growth. That includes Charter Communications, which has established a large call-in center in Rochester.
The previously unthinkable happened in May of 2016. IBM dropped a bombshell by announced it intended to sell the entire sit, meaning IBM would become a tenant of about a quarter of the near three-dozen buildings at the massive 3-million square foot industrial property it developed in the over the half-century since Thomas Watson declared Big Blue was coming to the city. In February 2018 the entire property was sold to Industrial Realty Group of Los Angeles. The property management firm says it plans to aggressively market what’s now called The Rochester Technology Campus to high-tech and medical technology companies nationwide while maintaining a long-term lease with what remains of IBM-Rochester.
Sources: KROC-AM staff reports, Rochester, MN website, IBM Online Archives