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Downsizings: Planned Job Cuts Up 50% Led by Retail

Also This Week: RadioShack Leaning To Shed Up to 500 Shacks; Sony Planning Another 5,000 Job Cuts; United Cuts To Slam Cleveland Airport; and Many More New Space Availabilities
February 10, 2014
After falling to a 13-year low in December, monthly job cuts increased nearly 50% to kick off 2014, as U.S.-based employers announced plans to reduce their payrolls by 45,107 in January, according to the latest report on monthly job cuts from Challenger, Gray & Christmas Inc.

Not surprisingly, the heaviest downsizing activity occurred in retail, which traditionally announces store closings following the year-end holiday period. Although this year the list of retailers reducing headcount include some that are trimming staff in traditional retail poistions while adding in new areas, such as e-commerce.

Overall, retailers announced 11,394 job cuts in January; a 71% increase from the 6,676 retail cuts tracked in January 2013.


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“Retail employment will, in fact, fall further than the announced job cuts indicate,” said John A. Challenger, CEO of Challenger, Gray & Christmas. “Starting in January, retailers started shedding the tens of thousands of temporary seasonal workers hired to help handle the holiday rush. The announced job cuts, on the other hand, will impact full-time, permanent workers in the stores and at the corporate offices of these struggling chains.”

Among that group, J.C. Penney Co. announced that it would be cutting 2,000 workers from its payrolls through the closure of 33 stores.

Not every sector announcing job cuts is struggling. Several significant job-cut announcements came from companies in the high-flying technology sector. The computer industry ranked second among January job cutters, announcing plans to shed 6,456 during the month. That was up 146% from the previous January when these firms announced 2,626 job cuts.

“Perhaps the most notable cuts in the tech sector came from Intel and EMC Corp. In both cases, the cuts were due to shifts in business strategies. In these situations, it is not uncommon for job cuts to occur in one area while hiring occurs in another. In fact, EMC indicated in its announcement that it expects to end 2014 with the same number of employees it had to begin the year,” said Challenger.

The financial sector, which finished 2013 as the top job-cutting sector of the year with 60,962 announced layoffs, started 2014 as the third largest job-cutting sector. Employers in financial services reported 4,817 planned layoffs in January. That is 44% fewer than the 8,578 financial job cuts these firms announced to begin 2013.

“This could be another year of significant downsizing in the banking industry. While the housing market is bouncing back, many banks had ballooned their staffing in mortgage lending area to deal with foreclosures and troubled assets. As the number of foreclosures, refinancings, and troubled mortgages continue to decline, so will the need for these extra workers. The remaining mortgage bankers should be busy with increased home lending, but right now the staffs are larger than demand warrants,” Challenger noted.


RadioShack Leaning To Shed Up to 500 Shacks


RadioShack Corp. is planning to close around 500 locations in the coming months, according to reports in the Wall Street Journal. It isn’t clear which of RadioShack’s roughly 4,300 stores will be closed and when exactly the closings will begin.

RadioShack secured $835 million in loans last October to refinance the roughly $635 million in debt the company has coming due. The cash also gives the electronics retailer room for a major overhaul, according to Garrick H. Brown, Research Director, Terranomics.

“It’s no secret that RadioShack has been only a few notches above Sears and JC Penney on many analysts watch lists over the past few years. And their problems will need a lot more than just some good ads,” Brown said. “And there is no way to tell if this strategy will be enough to turn around RadioShack. It all depends on whether the brand can be successfully reinvented.”

“But the closures are not really the surprise here, these were probably coming down the pike whether as part of a turnaround plan or not,” he added.


Sony Planning Another 5,000 Job Cuts


Sony Corp. forecast a surprise $1.1 billion loss as Kazuo Hira, its CEO, mulls plans to sell its personal-computer business and spin-off the television division into a separate unit.

Sony hasn’t ruled out selling its TV business in the future after receiving various offers, Hirai told reporters in Tokyo last week. The net loss will total 110 billion yen in the year ending March 31, the company said in a statement, scrapping its revised October forecast of a 30 billion-yen profit. The company’s German traded shares fell.

The job cuts would be in addition to at least 10,000 job cuts previously planned.

Due to the implementation of these measures across the TV and PC businesses, as well as Sony's sales, manufacturing and headquarters/indirect function, the company is anticipating a group-wide headcount reduction of 5,000 by the end of fiscal 2014. Of these, approximately 1,500 are expected to be in Japan and 3,500 overseas.

Already in the U.S., Sony plans to abandon its eBook platform and transition its reader to Kobo.


United Cuts To Slam Cleveland Airport


United Continental Holdings plans to cut back daily departures from its former Cleveland hub by 64% from 200 to 72 as well as reduce 66% of non-stop markets served from 59 to 20. The reduction will be done in stages beginning in April and being completed by June.

United is the dominant carrier at Cleveland and its decision could lead to the airport losing as much as a third of its current traffic.

Cleveland Airport currently has about 245 average daily departures, of which 165, or 67%, are United’s. The reductions will also mean a reduction of several hundred employees at Cleveland.


Closures & Downsizings


Buffet Partners, L.P., d/b/a as Furr’s Fresh Buffet, a leading regional value-oriented restaurant chain, filed a voluntary petition for relief under Chapter 11. The Dallas-based company operates 29 locations, as well as the Lubbock-based Dynamic Foods operation, which provides food and menu items to both Furr’s stores and third-party customers. Furr’s intends to work with all key constituents in its restructuring process to maximize its asset value and to exit Chapter 11 in the quickest and most efficient manner possible.

Digirad Corp. entered into a lease termination agreement with B. Young Properties LLC for office and warehouse space at 13950 Stowe Drive in Poway, CA, comprising of 47,000 square feet of rentable space. The original term of the lease was through February 2016. Digirad will pay a termination fee of $473,050.

Forest Oil Corp. is winding up its vertically integrated drilling operations, transitioning to the exclusive use of third-party drilling rigs. Forest expects to complete this process by Aug. 31. This course of action involves a workforce reduction, among other things, and Forest estimates that it will incur costs ranging from approximately $6.5 million to $7.5 million.

GenCorp Inc. is contemplating a restructuring plan that could see the layoff of 5% of its staff or 225 employees. It is expected to be completed by the end of March 2014. In connection with such implementation, the company expects to incur costs of approximately $15.7 million, consisting of costs for severance, employee-related benefits and other associated expenses. The estimates are subject to change.

HDOS Enterprises, the owner of the popular Hot Dog on a Stick restaurants, filed a Chapter 11 bankruptcy petition. The Carlsbad, CA-based company currently operates 93 locations. Significant reductions to its corporate workforce and expenses, initiatives to grow top-line sales, and numerous programs to achieve savings from supply chain to store level have been undertaken over the past year. In addition to these continuing efforts, HDOS will be working closely with its landlords to review and renegotiate leases, the vast majority of which were written at the height of the real estate bubble.

LTX-Credence Corp. approved a strategic restructuring plan and expects to reduce its worldwide headcount by 240 full-time and contractor positions, close its development facility in Beaverton, OR. It will also consolidate certain other facilities and operations worldwide. The closure of its Beaverton facility will be completed by July 31.


Sheet2

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CompanyAddressCityStateClosure or LayoffNo. of LayoffsImpact Date

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AGI - Shorewood Group620 S. Belmont Ave.IndianapolisINClosure2033/31/2014

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Archiver's Stores4650 E. Southport Road, Suite FIndianapolisINClosure102/14/2014

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Archiver's Stores5856 E. 82nd St.IndianapolisINClosure112/14/2014

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Mars Super Markets Inc.1401 Edison HighwayBaltimoreMDClosure783/9/2014

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Winner Distributing Company7616 Canton Center DriveBaltimoreMDClosure1252/28/2014

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Ascend One9755 Patuxent Woods Drive, Suite 100ColumbiaMDLayoff1473/31/2014

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Sears Holdings Corporation Product Rebuild Center2101 Brightseat RoadLandoverMDClosure863/16/2014

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PAE Applied TechnologiesPatuxent River NAS 47758 Ranch Road, Building 1492Pawtuxent RiverMDClosure1052/24/2014

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ConAgra Foolds4490 44th St. SEGrand RapidsMIClosure2613/31/2014

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Syncreon US7408 E. Metropolitan PkwySterling HeightsMIClosure946/30/2014

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Lockheed Martin Corp.1210 Massillon RoadAkronOHLayoff5066/26/2014

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TeleTech1230 Park Ave.AmherstOHLayoff1923/17/2014

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Schenker Inc.2300 Owens Road and 800 Dupont RoadCirclevilleOHLayoff142Immediately

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CP Redi1030 Freeway Drive NorthColumbusOHClosure803/28/2014

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Diversified Machine507 W. Indiana St.EdonOHClosure823/31/2014

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Catholic Charities Corp. (Parmadale Institute)6753 State RoadParmaOHClosure1193/16/2014

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Verizon474 Boardman Canfield RoadYoungstownOHClosure1603/31/2014

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Glenn Walters Nursery1355 N. Barlow St.ConreliusORLayoff119Immediately

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Group Data Services536 Tennessee Ave. SouthParsonsTNClosure163/21/2014

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Cameron International1806 E. Front St., Business Hwy 287ElectraTXClosure121Immediately

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Baylor Medical Center2300 Marie Curie DriveGarlandTXClosure474/7/2014

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Quality Terminal Services1111 Intermodal PkwyHasletTXClosure1942/28/2014

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Jacobs Field Services (Lanxess Facility)4647 FM 106OrangeTXLayoff94Immediately

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Hubbell & Hudson Management24 Waterway Ave., Suite 125WoodlandsTXClosure803/12/2014

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Sheraton Crystal City Hotel1800 Jefferson Davis HwyArlingtonVAClosure954/12/2014

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Kroger Food Stores544 E. Stuart DriveGalaxVAClosure523/21/2014

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Aditya Birla Minacs9950 Mayland DriveHenricoVALayoff1723/29/2014

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Kroger Food Stores2840 Linkhorne DriveLynchburgVAClosure983/21/2014

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JC Penney880 N. Military HwyNorfolkVAClosure1155/3/2014

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Oldcastle Building Envelope1020 10th St.EverettWAClosure563/12/2014

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Mettler-Toledo AutoChem14833 NE 87th St.RedmondWAClosure216/30/2014

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Benedictine Manor464 South. St. Joseph Ave.ArcadiaWIClosure1144/14/2014

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Super One Foods1009 Holiday LaneHurleyWIClosure403/8/2014

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Piggly Wiggly2215-80th St.KenoshaWIClosure463/15/2014

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Assisted Living ConceptsW140 N8981 Lilly RoadMenomonee FallsWIClosure352/28/2014

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Kindred Transitional Care and Rehabilitation5700 W. Layton Ave.MilwaukeeWIClosure397Undetermined

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VyMacW3130 State Road 59 EastWhitewaterWIClosure422/28/2014

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Ruan Transportation2721 Industrial St.Wisconsin RapidsWIClosure373/21/2014



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