Steller: Let's end Old Businessmen's Tale about IBM

There was the construction of the baseball stadium on East Ajo Way, not downtown, that may have led to our losing Major League spring training in 2010.

There was the misplay in 2013 of our attempted recruitment of Grand Canyon University, which instead plans to build a new campus in Mesa.

And there was the granddaddy of them all, the Rio Nuevo fiasco, in which $250 million were spent without much result.

But the original failure — the one that led to the others — is the way the city pushed IBM and 2,000 jobs out in 1988.

That is, if you believe the story.

Which you shouldn’t.

Here’s how local radio talker Chris DeSimone described the dastardly deed in an August 2013 column in Inside Tucson Business:

“At that time, then-Mayor Tom Volgy and the City Council threatened to impose an output tax on manufactured goods that were shipped outside of Tucson. Despite IBM’s promise to shut down and move operations if the tax was passed, it was passed anyway. It took a few short years for IBM to move almost everybody and everything away from Tucson.”

DeSimone and his talk-show partner Joe Higgins have stated this claim at least three times in that same publication, as has Roger Yohem, who now works for the Tucson Association of Realtors.

And of course they’ve talked about it on their show, Tucson’s Daily Complaint, or whatever it’s called.

The story has become accepted truth in local business circles. I asked Mike Varney, president and CEO of the Tucson Metropolitan Chamber of Commerce, who arrived here in 2011, what he knows about Tucson losing IBM’s local manufacturing operations in the late 1980s.

“I heard that the city did not exactly roll out the welcome mat and took a take-it-or-leave-it approach to IBM,” Varney said. “The prevailing wisdom seems to be that with a little more effort, a little more of a hug, they’d still be here.”

What are the facts? I asked Higgins, Yohem and others, tracing the claim that Tucson imposed a manufacturing, output or related tax on IBM, thereby pushing them out. Even those who were deemed original sources did not actually have first-hand information, but all thought it had happened.

Except it didn’t. By email I asked Volgy, who is out of the country, about the output-tax claim.

“That’s all made up,” he said. “First, we never had the authority to create such a tax and we didn’t. Second, why would we have!”

I also checked in with Ruben Suarez, who was budget director at that time and later city manager. He knew all about our property tax and sales tax but had not heard of this other tax.

To clinch the case against the phantom output tax, all you have to do is take a look at a Tucson map. The massive facility built by IBM near I-10 and South Rita Road, now called the UA Tech Park, is not and never has been in the city of Tucson. It’s just outside the city limits in unincorporated Pima County.

So why did IBM really close its Tucson manufacturing operations? A look through local and national newspapers in June and July 1988 confirmed the understanding explained to me this week by John Carter, who was general manager of IBM in Tucson until 1987.

“IBM had this huge expansion for 20 years, including building Tucson,” said Carter, who went on to be a top executive for Burr-Brown. “IBM started to have surplus capacity at many locations around the world.”

Indeed, the shakeout went on for years, with tens of thousands more layoffs and a major restructuring of the corporation in 1991. But IBM did keep storage-system development in Tucson, and it still employs around 900 people here.

So, it’s true the Tucson area’s governments have made plenty of mistakes that merit criticism in helping create our plodding local economy. And there’s nothing acceptable about our 25 percent poverty rate or our slow creation of new jobs.

But none of that justifies inventing and passing around Old Businessmen’s Tales about how we got into this position.

Refugee family donations

Back in December I wrote about the plight of a refugee family from Eritrea after their sole breadwinner, Rusom Okubamichael, was struck by a car and killed.

His wife, Atsede Shishay, was pregnant at the time with the couple’s sixth child. On March 3 she gave birth to a girl named Tsiniat.

Tucson donors have helped out to such an extent that the family’s rent is covered through 2015.

Friends in
high places

Sen. Steve Smith, who represents much of the Tucson metro area’s northwest side, has run into a roadblock in an effort to save a wealthy man about $146,000.

Smith sponsored SB 1071, which would cap at $500 the fees counties may charge buyers of tax liens who file deeds that transfer 10 or more properties to them.

Phoenix attorney and real-estate investor Wayne Howard is facing a $146,100 bill in Pinal County for buying thousands of tax liens.

The Arizona Republic reported the background to the bill after the counties cried foul, saying that the $50 fee they are allowed to charge per filing now doesn’t even cover their costs.

After the bill sailed through the Senate, it was rejected by the House Wednesday on a 30-28 vote.

However, it could be resurrected.

Streetcar company shuttered

United Streetcar, the Oregon-based company that built Tucson’s streetcars, has all but closed, Portland’s Oregonian newspaper reported this week.

Business has shriveled since Portland, Tucson and Washington, D.C., bought streetcars, often receiving them late.

While the company was supported by the Oregon and federal governments, it never met its projections of 300 manufacturing jobs.

The factory is being converted to make speedboats.