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Closures & Layoffs (Jan. 25-31): Caterpillar, Microsoft, Home Depot Layoff Tally Tops 32,000

A Weekly Report on Future Corporate Downsizings
January 29, 2009
In this week's issue:

Caterpillar Levels 20,000 Jobs

In another sign of the global weakening of construction, Peoria, IL-based Caterpillar Inc. plans to eliminate 20,000 workers.

Worldwide demand propped up the heavy-equipment manufacturer for most of last year. But the bottom fell out of demand in December and company reported fourth-quarter results that fell far short of Wall Street predictions and moved Monday to lower production and capital spending to preserve capital.

Caterpillar employs 112,000 employees worldwide.

"While 2008 was our sixth consecutive year of record sales and revenues, it was an extraordinarily challenging year," said Jim Owens, Caterpillar chairman and CEO. "Through the first three quarters we experienced booming demand from key global industries, notably mining and energy and most emerging market countries."

"Then we were whipsawed in the fourth quarter as key industries were hit by a rapidly deteriorating global economy and plunging commodity prices. In anticipation of lower demand we encouraged dealers to align inventory with declining volume and they responded with significant order cancellations, particularly in December."

As a result, Caterpillar is rapidly executing strategic "trough" plans and implementing actions throughout the company, including cutting about 20,000 workers.

Actions include:
  • Voluntary and involuntary separations and layoffs of about 4,000 full-time production employees. Depending on business conditions more layoffs may be required as the year unfolds.

  • Sharp declines in overtime work. Factory overtime is a key element of volume flexibility and many facilities were working high levels of overtime through most of 2008.

  • Several facilities have shortened workweeks and thousands of employees have been, or will be, affected by temporary layoffs and full and partial plant shutdowns.

  • Elimination of almost 8,000 temporary, contract and agency workers. While these workers are a key element of our "flexible workforce" they are not included among the 112,887 full-time employees at year end.

  • Voluntary separations of about 2,500 support and management employees.

  • Additional layoffs or separations of as many as 5,000 support and management employees.

  • Hiring freezes and suspension of salary increases for most support and management employees.

  • Significant reductions in total compensation for executives / senior managers.

  • Shifting more resources to work on short- and medium-term material cost reduction. And

  • Shifting more resources to work on inventory reduction projects.

Not impacted by the cuts, are two new facilities Caterpillar has under construction, one in Texas and one in North Little Rock, AR. Caterpillar plans to move its motor grader production from its Decatur, IL, facility to North Little Rock and use the Decatur facility to support the long-term growth of its large off-highway truck business.

Caterpillar also noted that the financial and banking crisis accelerated in the fourth quarter and significantly impacted economic growth in general and the industries that it serves particularly. As a result, its outlook for 2009 has worsened.

Caterpillar said it expects 2009 will be the weakest year for economic growth in the postwar period. It is expecting recessionary conditions to persist in most of the world throughout the year, with no growth in the world economy.

(Randyl Drummer contributed to this report)

Download Closures & Layoffs and all these stories in Adobe pdf format here. The pdf version also includes all of this week’s Watch List stories and properties, plus bonus news items not found in these columns or the CoStar Group web news pages.

Home Depot Shuttering Stores; Cutting 7,000 Jobs

By: Sasha M Pardy
The Home Depot announced that it will exit its Expo business, which involves the closure of 34 Expo Design Center stores, five Yardbirds stores, two Design Center stores, and seven HD Bath stores. Supporting distribution centers will also be affected. According to CoStar Tenant, the typical Expo store is 100,000 square feet.

The Expo unit closure will impact approximately 5,000 associates; but Home Depot said it is also restructuring its support functions into a region- and district-based model, thereby reducing headcount in administrative function by another 2,000 associates, resulting in a 10% reduction in Home Depot's officer ranks. The retailer has also initiated a salary freeze among all officers of the company.

A list of closing stores, as provided by Home Depot is as follows.

Expo Design Centers
  • Scottsdale (7000 East Mayo Blvd., Phoenix, AZ 85054)

  • Anaheim 1011 (N Tustin Ave., Anaheim, CA 92807)

  • Dublin (7050 Amador Plaza Road, Dublin, CA 94568)

  • Emeryville (1555 40th St., Emeryville, CA 94608)

  • Encinitas (1550 Leucadia Blvd., Encinitas, CA 92024)

  • Huntington Beach (6912 Edinger Ave, Huntington Beach, CA 92647)

  • Laguna Niguel (25600 Rancho Niguel Road, Laguna Niguel, CA 92677)

  • Westwood Village (10861 Weyburn Ave., Los Angeles, CA 90024)

  • Monrovia (407 W Huntington Drive, Monrovia, CA 91016)

  • Redondo Beach (1519 Hawthorne Blvd., Redondo Beach, CA 90278)

  • Roseville (1120 Galleria Blvd., Roseville, CA 95678)

  • San Diego (7803 Othello Ave., San Diego, CA 92111)

  • San Jose (5095 Almaden Expressway, San Jose, CA 95118)

  • Boynton Beach (1520 SW 8th St., Boynton Beach, FL 33426)

  • Davie (8944 State Road 84, Davie, FL 33324)

  • Miami (5737 NW 7th St., Miami, FL 33126)

  • Naples (1000 Immokalee Road, Naples, FL 34110)

  • SW Orlando (4601 Millenia Plaza Way, Orlando, FL 32839)

  • Alpharetta (10700 Davis Drive, Alpharetta, GA 30004)

  • Atlanta - Perimeter (1201 Hammond Drive, Atlanta, GA 30346)

  • Downers Grove (1021 Butterfield Road, Downers Grove, IL 60515)

  • Vernon Hills (569 N Milwaukee Ave., Vernon Hills, IL 60061)

  • Burlington (43 Middlesex Turnpike, Burlington, MA 01803)

  • Bethesda (7111 Westlake Terrace, Bethesda, MD 20817)

  • Columbia (6100 Dobbin Road, Columbia, MD 21045)

  • Manchester (14205 Manchester Road, Manchester, MO 63011)

New Jersey
  • Bridgewater (744 US Highway 202, Bridgewater, NJ 08807)

  • Paramus (577 Winters Ave., Paramus, NJ 07652)

New York
  • Commack (1 Garrett Place, Commack, NY 11725)

  • New Rochelle (8 Joyce Road, New Rochelle, NY 10801)

  • Westbury (1250 Corporate Drive, Westbury, NY 11590)

  • Nashville (2421 Powell Ave., Nashville, TN 37204)

  • Dallas - Galleria (13900 Dallas Pkwy, Dallas, TX 75240)

  • Fairfax (11181 Lee Highway, Fairfax, VA 22030)

Design Centers
  • Concord (1461 Concord Ave., Concord, CA 94520)

  • Charlotte (900 Metropolitan Ave., Building #1, Charlotte, NC 28204)

  • Concord (5424 Ygnacio Valley Road, Concord, CA 94521)

  • Petaluma (2000 Lakeville Hwy, Petaluma, CA 94954)

  • San Pablo (13901 San Pablo Ave., San Pablo, CA 94806)

  • San Rafael (1801 4th St., San Rafael, CA 94901)

  • Alamo (3211 Danville Blvd., Alamo, CA 94507)

Download Closures & Layoffs and all these stories in Adobe pdf format here. The pdf version also includes all of this week’s Watch List stories and properties, plus bonus news items not found in these columns or the CoStar Group web news pages.

Microsoft To Lay Off 5,000; Halts Data Center Project, Office Lease Talks

By: Randyl Drummer
Microsoft Corp. announced 5,000 layoffs as part of a plan to cut $1.5 billion in spending. In addition, it has halted work on its $550 million data center in Des Moines, IA. The software behemoth earlier this month bailed out of talks to lease 300,000 square feet in Seattle and reportedly is re-assessing numerous other leases.

"We’re postponing construction of the data center in Iowa that we recently purchased land for," wrote Arne Josefsberg, general manager of infrastructure services, and Mike Manos, general manager of data centers, in a Microsoft blog on Friday. "We are still continuing construction of our facilities in Chicago and Dublin, (Ireland) and are planning to open them as customer demand warrants. But given the current economic climate, we’re going to do the right thing for our business and shareholders and revisit our plans on a quarter-by-quarter basis."

In an e-mail to employees last week, Microsoft CEO Steve Ballmer announced "a series of aggressive steps" to increase efficiency. "We’ll cut travel expenditures 20% and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year."

The company had been in negotiations to take all 300,000 square feet of office space at the under-construction 2201 Westlake mixed-use project at Westlake Ave. North and Denny Way. However, Microsoft said in a statement earlier this month it has "decided not to continue negotiations" due to the soft economy and changing market conditions.

In light of the further deterioration of global economic conditions, Microsoft announced additional steps to manage costs, including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing. As part of this plan, Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs immediately, 872 of which were in the Seattle area. These initiatives will reduce the company’s annual operating expense run rate by approximately $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million.

This story was excerpted from In The Pipeline, a column by Senior News Editor Randyl Drummer on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers.

Download Closures & Layoffs and all these stories in Adobe pdf format here. The pdf version also includes all of this week’s Watch List stories and properties, plus bonus news items not found in these columns or the CoStar Group web news pages.

Closures & Layoffs

  • Vertis Communications Inc. is closing down and laying off 283 workers in Sylacauga on Feb. 7.

  • Gildan is closing down and laying off 738 workers at 202 35th St. NE in Fort Payne on Feb. 27.

  • Patriot Homes Inc. is closing down and started laying off 125 workers at 1871 Bexar Ave. East in Hamilton.

  • W.Y. Shugart & Sons Inc. is laying off 60 workers at 405 Beeson Gap Road NE in Fort Payne on Feb. 11.

  • AlaTrade Foods LLC is closing down and laying off 200 workers in Boaz this week.

  • D.R. Horton is laying off 41 workers at 16430 N. Scottsdale in Scottsdale on March 9.

  • Freeport-McMoran Morenci Inc. is laying off 1,550 workers at 4251 State Highway 191 in Morenci on March 16.

  • Head/Penn is laying off 143 workers at its racquet plant at 306 S. 45th Ave. in Phoenix on March 9.

  • Quantas Airways Ltd. is laying off 50 workers at 2801 E. Elvira Road in Tucson on Feb. 27.

  • Matson Navigation Co. in Oakland, CA, plans to reduce its non-union headcount at its by approximately 60 positions, augmenting position eliminations that resulted from hiring freezes adopted in 2007 and 2008.

  • Time Warner Inc.'s Warner Bros. Entertainment movie studio is eliminating nearly 800 jobs, or 10% of its global workforce, and is examining further cost reductions. Most of the jobs will come out of the studio's headquarters in Burbank, CA, through a mix of layoffs, the elimination of open positions and outsourcing. About 300 jobs in information technology and accounting are being outsourced through French company Capgemini and some of the jobs will move to India and Poland. About 100 of those back office positions will be offered to current employees who will continue to be based in Burbank. Some 300 other people will be laid off and 200 open positions will not be filled.

California, Oregon
  • Intel Corp. in Santa Clara, CA, will consolidate and streamline some older capacity by close two existing overseas assembly test facilities and halting production at its wafer fabrication facility in Hillsboro, OR. In addition, wafer production operations will end at the D2 facility in Santa Clara, CA. The actions at the four sites, when combined with associated support functions, are expected to affect between 5,000 and 6,000 employees worldwide. However, not all employees will leave Intel; some may be offered positions at other facilities. The actions will take place between now and the end of 2009.

  • AT&T is laying off 191 workers at two locations in Meriden on Feb. 9.

  • DriveSol Global Steering Inc. at 156 Park Road in Watertown is closing down and laying off 241 workers by March 15.

  • Greenwood Publishing Group Inc. at 88 Post Road W in Westport is closing down and laying off 40 workers on March 16.

  • Protocol Integrated Direct Marketing at 7 Mckee Place in Cheshire is closing down and laying off 161 workers by March 30.

  • The Stanley Works is laying off 56 workers in Clinton starting Feb. 26 and closing down by Dec. 1.

  • Alliance Entertainment LLC at 4250 Coral Ridge Drive in Coral Springs is laying off 462 workers by May 4.

  • American Airlines at 6150 NW 17th St., Bldg. 714-Bay 40, in Miami is laying off 97 workers this week.

  • Chromalloy Gas Turbine LLC at 630 Anchors St. in Fort Walton Beach is laying off 257 workers on March 27.

  • Dow Jones & Co. at 8251 Presidents Drive in Orlando is laying off 59 workers on Feb. 2.

  • East Balt Baker of Florida Inc. at 1108 Collins Drive in Kissimmee is laying off 53 workers by March 15.

  • Elsevier Inc. at 6277 Sea Harbor Drive in Orlando is laying off 66 workers by June 30.

  • Eva-Tone Inc. at 4801 Ulmerton Road in Clearwater is laying off 107 workers by March 20.

  • Express Scripts Inc. at 841 Prudential Dr., Ste. 800 in Jacksonville is laying off 75 workers on April 1.

  • JPMorgan Chase Bank at 3990 S. Babcock in Melbourne is laying off 300 workers this week.

  • Lear Corp. at 5100 W. Waters Ave. in Tampa is laying off 35 workers by Sept. 30.

  • Marriott Vacation Club International 8403 S. Park Circle, Suite 500, in Orlando is laying off 173 workers on Feb. 20.

  • Nuvell Financial Services LLC at 7159 Corklan Drive, Suite 200, Jacksonville is laying off 153 workers on March 7.

  • Owens & Minor / AOM Healthcare Solution at 1801 W. Sample Road in Deerfield Beach is laying off 353 workers this month.

  • Pilgrim's Pride Corp, at 19740 U.S. Hwy 90 in Live Oak is laying off 505 workers by March 19.

  • Synovate TRS at 8600 NW 17th St., Suite 100 in Miami is laying off 88 workers on March 20.

  • Teleflex Marine at 6980 Professional Parkway E. in Sarasota is laying off 100 workers by June 22.

  • West Fraser McDavid Lumber Mill at 401 Champion Drive in McDavid is laying off 81 workers on Feb. 13.

  • Lodgenet in Atlanta is laying off 120 workers.

  • Pilgrim's Pride at 825 Barber St. in Athens is laying off 180 workers.

  • Primerica Financial Services in Duluth is laying off 50 workers.

  • Roper Corp. (GE) at 1507 Broomtown Road in Lafayette is laying off 258 workers.

  • Siemens Energy & Automation at 3130 N Berkeley Lake Road in Duluth is laying off 70 workers.

  • Springs Global's Finishing Division in Griffin is laying off 365 workers.

  • Standard Textiles at 1 Peerless Road in Thomaston is laying off 55 workers.

  • TRW in Warrington is laying off 215 workers.

  • Wilen Industries at 3760 Southside Industrial Pkwy in Hapeville is laying off 36 workers.

  • AT&T at 240 N. Meridian St. in Indianapolis is laying off 115 workers on March 16.

  • Beach Mold and Tool Inc. at 999 Progress Blvd. in Albany has started laying off 193 workers.

  • Color-Box at 5645 W. 82nd St. in Indianapolis is closing down and laying off 74 workers on March 10.

  • General Aluminum at 1561 NW 11th St. in Richmond is laying off 84 workers on March 8.

  • Holm Industries at 745 S. Gardner and 1320 S. Main St. in Scottsburg is closing down and laying off 38 workers on March 16.

  • Kimball Office at 555 E. Water St. in Borden and relocating to 200 Kimball Blvd. in Salem is laying off 75 workers on March 31.

  • MAHLE is closing down its distribution center in Churubusco and laying off 78 workers in the third quarter of 2009.

  • Patriot Homes is closing down in Middlebury and started laying off 125 workers.

  • Sleep Innovations Inc. at 2040 Toledo Road in Elkhart is closing down and laying off 104 workers on April 27.

  • Kongsberg Automotive is laying off 99 workers at 128 Baughman Ave. in Haysville.

  • Unilever Food Solutions is laying off 60 workers at 5015 S Water Circle in Wichita.

  • DESA is laying off 431 workers at 2701 Industrial Drive in Bowling Green.

  • Flextronics - Global Services is laying off about 150 workers at 4000 Commerce Crossing in Louisville.

  • MultiServ-HARSCO is laying off 95 workers at 6870 Highway 42 East in Ghent.

  • West Irving Die Casting is laying off 96 workers at 2900 Air Park Drive in Owensboro.

  • Bose Corp., the high-end audio equipment maker, is cutting 1,000 jobs - about 10% of its workforce. The job reductions will occur in select areas, including manufacturing and at the privately held company's Framingham, MA, headquarters.

Michigan (no impact date provided)
  • Checker Motors Corp. is laying off 150 workers in Kalamazoo.

  • Gerdau MacSteel at 100 E. Michigan Ave. in Jackson is laying off 299 workers.

  • Key Plastics at 40300 Plymouth Road in Plymouth is laying off 238 workers.

  • Manpower at 1305 Lincoln Road in Allegan is closing down and laying off 68 workers.

  • Shape Corp. at 1835 Industrial Park Drive in Grand Haven is laying off 400 workers.

  • CC Media Holdings, which owns billboards and radio stations under the Clear Channel name, is eliminating 1,850 positions, or about 9% of its staff. The dismissals were effective immediately.

  • Disney's theme park division is offering buyouts to roughly 600 executives at its U.S. parks - that's nearly every executive in the division. Disney says it's trying to reduce the size of its executive workforce but says it has no target number of buyouts (or savings) and says it can't predict how many people will accept the buyout. The executives have until Feb. 6th to decide.

  • Ericsson is cutting costs through a reduction in the number of consultants and other temporary staff, consolidation of research & development sites and layoffs. These activities will result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden, primarily in Stockholm.

  • Harley-Davidson Inc. plans to consolidate two engine and transmission plants in the Milwaukee area into its facility in Menomonee Falls, WI; consolidate paint and frame operations at its assembly facility in York, PA; close its distribution facility in Franklin, WI, at 10000 S. Franklin Drive; consolidate parts and accessories and general merchandise distribution through a third party; and discontinue its domestic transportation fleet operation. The planned volume reduction and restructuring actions are expected to result in the elimination of about 1,100 jobs over 2009 and 2010, including about 800 hourly production positions and about 300 non-production, primarily salaried positions. About 70% of the workforce reduction is expected to occur in 2009.

  • Huntsman Corp. in The Woodlands, TX, will reduce its full-time employment by approximately 1,175 positions by year-end 2009 - more than 9% of Huntsman's 12,770 employees. Full-time contractors working in the company's divisions and functions will be reduced by an additional 490 positions.

  • Rohm and Haas Co. in Philadelphia is undertaking a second set of actions to adjust its operations and cost structure. The initiatives, which build on actions announced in June of last year, will impact approximately 900 positions across all regions and businesses within the company except Salt.

  • Williams-Sonoma Inc. in San Francisco is taking a series of actions to align its infrastructure with current sales trends. These actions include: an 18% reduction in company-wide full-time headcount (approximately 1,400 positions); the closure of a 500,000-square-foot distribution facility in Memphis, TN, at 4300 Concorde Road; and the closure of its 38,000-square-foot Camp Hill, PA, call center at 3025 Market St. All of these actions will be completed this week.

  • Yankee Candle Company Inc. in South Deerfield, MA, plans to close the company's 28 Illuminations retail stores and discontinuance its related Illuminations consumer direct business. It will also close one underperforming Yankee Candle retail store, and cut its corporate and administrative workforce. The restructuring plan will result in the termination of the employment of approximately 330 employees of the company, including approximately 310 store employees. The stores should be closed by April 30. The Illuminations retail stores are located primarily on the West Coast.

New York
  • Rite Aid Corp. is closing its 255,000-square-foot distribution center in Bohemia by May 2009, laying off 60 associates. Rite Aid acquired the facility in June 2007 with its purchase of approximately 1,800 Brooks Eckerd stores and six distribution centers.

  • Air System Components Inc, with a plant at 12504 Weaver Road in El Paso will be going through a reorganization in the coming months and moving some operations to Mexico, which will result in the layoffs of at least 54 employees.

  • Freescale Semiconductor Inc. has developed plans to restructure certain operations at its facility at 6501 William Cannon Drive West in Austin, which will mean the layoff of 60 employees and at 7700 W. Parmer Lane also in Austin, which will affect 30 more employees by March 20.

  • Maxim Integrated Products Inc. is letting go 172 employees at its Dallas semiconductor facility at 4401 S. Beltwood Pkwy by June 26.

  • Merrill Lynch and Bank of America have begun implementing plans to combine their organizations; part of those plans will result in the layoff of 85 employees at 1401 Elm St. in Dallas on March 10.

  • Nabors Well Services has begun a layoff of 123 employees at 2450 State Highway 214 and based on current market conditions, it is foreseeable that it may ultimately close the Denver City facility.

  • Norbord Texas Jefferson Inc. will suspend production for an indefinite time period at 500 Nexfor Blvd. in Jefferson, but it will result in the permanent layoff of 87 employees as of March 13.

  • Plains Cotton Cooperative Association is laying off 160 employees at its denim plant at Highway 54 East in Littlefield by March 14.

  • STMicroelectronics Inc.'s manufacturing operations at the semiconductor wafer fabrication plant at 13 10 Electronics Drive in Carrollton were notified of a layoff effective March 15, due to the ramp-down of operations in anticipation of the closure of the facility in this year or early in 2010.

  • Interstate Hotels & Resorts at 4501 N. Fairfax Drive in Arlington, VA, eliminated 45 corporate positions, cut senior management pay 10% and reduced other corporate expenses, including advertising, travel, training and employee relations. The company expects all of these efforts combined will result in savings of at least $13 million in corporate overhead costs as compared to 2008.

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