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Downsizing Opportunities: Corporations Launching 2014 Cost Reduction Initiatives

January 31, 2014
Albemarle Corp. in Baton Rouge, LA, initiated a workforce reduction plan which will result in a reduction of 230 employees worldwide.

Ashland Inc. in Covington, KY, expects to capture $150 million to $200 million of savings through a combination of: workforce reduction; job relocations in conjunction with a related global office consolidation; and a number of smaller cost-reduction plans. It expects that from 800 to 1,000 people to leave the company in calendar 2014 through either a voluntary severance program or job elimination. In addition, it expects another 800 - 1,000 jobs to be relocated to existing, lower-cost regional centers in the U.S. and abroad as it consolidates its global office network.

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Cbeyond Inc. in Atlanta implemented a workforce reduction plan to rebalance its resources. The workforce reduction plan resulted in reducing headcount by 100 employees. Cbeyond currently estimates that it will recognize pre-tax charges to its GAAP financial results of $2 million in the first quarter of 2014 consisting largely of severance and one-time termination benefits.

Compuware Corp. has started the final phase of its cost rationalization initiative, including reductions in the global workforce across all general, administrative and shared services divisions. The plan also includes the early termination of some operating leases and the closing or reduction in size of office facilities worldwide. This final phase of restructuring is influenced by the anticipated disposition of three operating business units. Lease and related facilities costs savings are expected to be about $7 million a year.

Dialogic Inc. in Milipitas, CA, initiated a restructuring plan designed to reduce operating costs. The restructuring plan is expected to result in a total workforce reduction of 90 full-time positions, or 16% of the company and its affiliates’ combined workforce.

Flextronics International Ltd. based in Singapore said it plans to reduce its workforce and initiate other cost reduction activities this quarter. The company expects to recognize $30 million to $35 million in pre-tax cash charges comprised primarily of employee severance and benefit costs. These cost reduction activities will yield potential annualized savings of $60 million principally to selling, general and administrative expenses through reduced employee expenses and lower operating costs.

Ironwood Pharmaceuticals Inc. in Cambridge, MA, is reducing headcount by 10%. Ironwood’s field-based sales force and medical science liaison team are excluded from the workforce reduction. Following the changes, Ironwood expects to have 480 full-time employees. It expects to complete the reduction in workforce during the first quarter.

Lexicon Pharmaceuticals Inc. in The Woodlands, TX, committed to narrow its strategic initiatives and focus resources on its late-stage drug development programs,. The decision will result in a workforce reduction of 115 employees, primarily in research, discovery and support positions, representing 45% of the company’s total workforce. Lexicon expects to complete the workforce reduction near the end of the first quarter of 2014.

National Beef Packing Co. plans to close its beef processing facility in Brawley, CA. The last day of production is expected to be April 4. Approximately 1,300 employees working at the facility will be impacted by this closure. A declining supply of fed cattle available for the Brawley facility was a key driver of the decision to close the plant.

Oshkosh Corp. in Oshkosh, WI, announced that it will continue consolidating facilities and operations as it undergoes review its overall manufacturing footprint. Last year, the company implemented significant reductions to its production and office workforce in its defense segment due to lower production levels mandated by significant reductions in U.S. government funding for defense vehicles.

Sears Canada Inc. is modifying its in-store management structure to increase the effectiveness of the chain of communication between management and the store associate teams within the stores. The company will eliminate primarily a mid-tier level of employees within its full-line stores, resulting in an average reduction of five associates per store. There will also be an alignment of the regional and head office structures to reflect the new store model. This will result in a staff reduction of 624 associates.

Semtech Corp. in Camarillo, CA, committed to a plan to reduce its workforce by 6%, with positions to be eliminated at multiple facilities and offices by the end of the first quarter. The plan was developed to capture the synergies associated with the combination of the advanced communications and Gennum product groups. The company estimates that the workforce reduction will result in total pre-tax charges of $2.5 million.

Sprint Corp. in Overland Park, KS, began implementation of a workforce reduction plan that is expected to be largely completed by June 30, 2014 and will include management and non-management positions throughout the company. The company expects to recognize a charge of $165 million for severance and related costs.

Tessera Technologies Inc. in San Jose announced that it was restructuring DigitalOptics Corp. to cease its remaining manufacturing operations. In connection with the restructuring the company is undertaking a related workforce reduction of over 300 employees primarily in Taiwan, the United States, and Japan. As part of these efforts, the company will be closing its facilities in Arcadia, CA, Rochester, NY, and in Taiwan and Japan. The restructuring, workforce reduction and facility closures are expected to be completed during the first and second quarters of 2014.

Weatherford International Ltd. , a Switzerland-based oilfield services company, has decided to reduce its international workforce by 7,000 employees, primarily from its fixed support cost base. This reduction will not affect the non-core businesses of Weatherford that have been earmarked for divestiture in 2014. Instead, it is designed to lighten the support structure of Weatherford to compensate for the divestiture program. The workforce reduction is expected to be completed during the first half of 2014, resulting in annualized savings of $500 million. Concurrently, additional strategic reviews are also ongoing with a view to eliminating operations that do not have critical mass and are currently unprofitable and a drain on Weatherford's cash flow.

Zynga Inc. is undertaking a cost reduction plan expected to generate pre-tax savings in the range of $33 million to $35 million in 2014. As part of the plan, Zynga expects to complete a workforce reduction of 314 employees or 15% of its current workforce, and implement additional cost reduction measures, including lowering its spend on datacenter infrastructure.

Facility Downsizings



CompanyAddressCityStateClosure or LayoffNo. of LayoffsImpact Date


Pilgrim's Pride1 Gold Kist St.BoazALClosure1,154Immediately


Rich Products Corp.One Robert Rich WayBuffaloNJUnknown2383/10/2014


FJC Security Services26 Journal Concourse Square W #1202Jersey CityNJUnknown5943/1/2014


St. Mary's Hospital350 BoulevardPassaicNJUnknown1,1793/17/2014


Abbott Point of Care400 College Road EPrincetonNJUnknown803/31/2014


McKesson Medical1130 Commerce Blvd.SwedesboroNJUnknown1403/14/2014


YM LLC12 Vreeland Ave.TotowaNJUnknown696/19/2014


Carolina Furniture406 Brooklyn StSumterSCLayoff683/6/2014


Esterline Defense Technologies25A Ledbetter Gate RoadMilanTNClosure1036/27/2014


Cameron InternationalElectraTX1211/15/2014


Baylor Medical CenterGarlandTX474/7/2014


Quality Terminal ServicesHasletTX1942/28/2014


Jacobs Field ServicesOrangeTX942/2/2014


Hubbell & Hudson ManagementWoodlandsTX803/12/2014


SuperValu#1 James River Turnpike MiltonWVClosure94Unknown


West Point Products Acquisition184 Schoolhouse Lane Valley GroveWVClosure 94Unknown

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