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Facility Closures & Downsizings: Avon Cutting 1,500 Workers; Closing Facilities

Also: Rx for WebMD Includes 250 Job Cuts; NIH Cutting HQs Staff in Northern Virginia; Solar Power Dims for Suntech; and more
December 12, 2012
Avon Products Inc. is taking steps to $400 million a year from its annual cost over the next three years.

Initial steps of the cost-savings initiative will include a targeted global headcount reduction of 1,500 positions and the closure and rationalization of certain facilities, and the exit of the South Korea and Vietnam markets. These initiatives are expected to be largely completed before the end of 2013.

The actions are aimed at concentrating resources on high priority markets and activities and boosting efficiencies.


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Avon’s principal properties worldwide consist of manufacturing facilities for the production of Beauty products, distribution centers where offices are located and where finished merchandise is packed and shipped. Its domestic manufacturing facilities are in Morton Grove, IL and Springdale, OH. Its domestic distribution centers are in Atlanta, GA; Zanesville, OH; and Pasadena, CA. Its research and development facility is in Suffern, NY. It also leases office space in two locations in New York City for its executive and administrative offices, and owns property in Rye, NY, for Global IT and Global Finance.

In June 2011, we terminated a lease for office space in New York City and moved to a new office with more favorable terms.

It currently is holding on to closed distribution facilities in Newark, DE and Glenview, IL. Both properties are listed for sale and the Glenview site is under contract. And it was to close its Springdale, OH, this year.


Rx for WebMD Includes 250 Job Cuts


WebMD Health Corp. is planning a comprehensive program to streamline its operations and reduce costs.

New York-based WebMD expects these actions to result in a reduction in annualized operating expenditures of $45 million, including the impact of a workforce reduction of 250 positions, or roughly 14% of the company’s employees. While most of the workforce reductions will be effective at the end of this year, other cost savings actions will be implemented over the course of the first quarter of 2013.

The company anticipates it will record a pre-tax restructuring charge of $6 million to $8 million in the fourth quarter of 2012 primarily for severance and other costs related to this cost reduction initiative. This charge was not contemplated in the company’s previously issued 2012 financial guidance.


Hostess Demise Boosts Fourth Quarter Layoffs


Job cuts increased for the third consecutive month in November, as employers announced plans to shed 57,081 workers from their payrolls. That was up 20% from the previous month when announced layoffs totaled 47,724, according to the latest report from global outplacement consultancy Challenger, Gray & Christmas Inc.

November cuts were 34% higher than the 42,474 job cuts announced by employers in the eleventh month of 2011. Last month was only the fourth time this year that job cuts exceeded 50,000.

Employers have now announced 490,806 job cuts this year. Despite the faster pace of downsizing as the year comes to a close, the year-to-date total is 13% lower than the 564,297 job cuts announced through November 2011.

The November surge was led by the food industry, which saw 19,709 cuts during the month. The bulk of those resulted from the bankruptcy of Hostess Brands which, after years of declining sales of its high-calorie snack cakes in a more health-conscious America, was forced to shutter its operations and dismiss all 18,500 employees.

The next largest job-cutting industry was the computer sector, which announced 3,313 job cuts in November. That was up 208% from the 1,076 announced by these firms in October. The computer industry remains the top job-cut industry for the year, with a total of 45,060 announced layoffs since January. About 60% of those cuts, however, were the result of the 27,000 job cuts announced by Hewlett-Packard in May.

“Job cuts this year have really been driven by a handful of large-scale cuts. This month, the Hostess cuts dominated the monthly total. Last month, nearly a quarter of the 47,724 job cuts came from Ford. In May, it was the single job cut by HP that drove the monthly job cut total to 61,887, which is the highest level we have seen so far this year,” said Rick Cobb, executive vice president of Challenger, Gray & Christmas Inc.

“The approach of Christmas is not likely to provide any relief from large scale layoffs. In fact, the end of the year tends to see heavier downsizing activity, as companies make last-minute attempts to meet earnings goals or adjust payrolls based on the budget for the coming year,” Cobb noted.


NIH Cutting HQs Staff in Northern Virginia


NII Holdings Inc., a provider of mobile communications services operating under the Nextel brand in Latin America, is moving some of its headquarters position in Reston, VA, to Latin America.

As part of this strategy, the company will reduce 20% of its workforce at its headquarters in Reston, where it leases about 181,800 square feet of office space at 1875 Explorer St. under a lease expiring in January 2020. The company employed an estimated 400 people in the U.S.

These actions are designed to streamline decision-making, and to begin reducing corporate headquarters costs, further strengthening the company’s ability to execute on its strategic priorities in Latin America.


Solar Power Dims for Suntech


Suntech Power Holdings Co., the world’s largest producer of solar panels, will stop two of three production shifts and reduce its workforce at its Goodyear, AZ, solar panel manufacturing facility.

The slowdown in production is due to global oversupply and higher production costs related to recent import tariffs imposed by the U.S. government, according to Suntech.

The Goodyear facility’s annual production throughput will decrease from about 45MW to 15MW, and roughly 50 positions will be eliminated. The decision is in line with Suntech’s global restructuring efforts to right-size production capacity and reduce operating expenses by 20% in 2012 and 2013.

“We will continue to produce solar panels in Arizona to meet the needs of our customers, particularly those who are willing to pay a premium for U.S.-manufactured products,” said E.L. “Mick” McDaniel, managing director of Suntech America.

On Nov. 7, the U.S. International Trade Commission voted to impose unilateral tariffs of 35.97% on Suntech solar cells produced in China. The rising costs of components like solar cells increases the costs of manufacturing solar panels in the U.S. Tariffs on solar cells come in addition to tariffs imposed by the U.S. government in 2011 on aluminum frames, another key input for solar panel manufacturing.

“Subsequent to our decision to invest in Arizona, unnecessary upstream trade barriers have made it difficult and more costly to manufacture solar panels in the U.S. In addition, these new tariffs limit our ability to utilize Suntech’s advanced solar cell technology imported from China,” added Mr. McDaniel. “We will continue to assess our options and if the political and business environment improves, we may reconsider expanding our manufacturing operations in the U.S.”

Suntech’s Goodyear, Arizona, manufacturing facility features highly-automated manufacturing and product testing equipment and currently produces Suntech’s 300-watt solar panels for commercial and utility-scale electricity generation. All solar panels produced at the facility are backed by an industry-leading, 25-year power output warranty and are compliant for procurement in American Recovery and Reinvestment Act (ARRA) and Buy American Act projects.


Facility Closures & Downsizings




Sheet1

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CompanyAddressCityStateClosure or LayoffLayoffsImpact Date

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Lawson Products2350 West Pinehurst Blvd.AddisonILClosure5512/3/2012

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The Sutton Place Hotel21 E. Bellevue PlaceChicagoILClosure9912/10/2012

.

HMX Group1680 Touhy Ave.Des PlainesILClosure56712/18/2012

.

TMK IPSCO2650 Warrenville Road, Suite 700Downers GroveILClosure5412/23/2012

.

Marathon Bank of New York/Investors Bank31-33 31st St.AstoriaNYClosure311/31/2013

.

Bombardier Mass Transit Corp. Overhaul Division7940 State Route 415BathNYClosure359/15/2013

.

Spectrum Plastics Group2 International Blvd.BrewsterNYClosure503/15/2013

.

Grocery Haulers777 Brush Ave.BronxNYClosure522/10/2013

.

DCD Marketing Ltd.73 Wortman Ave.BrooklynNYLayoff602/26/2013

.

Sunrise Bakery4564 2nd Ave.BrooklynNYClosure782/27/2013

.

Brockway-Smith Co.171 Stacy RoadCoxsackieNYClosure592/1/2013

.

Archcare Inc. @ Kateri Residence150 Riverside DriveNew YorkNYClosure5923/1/2013

.

New York Marriott Downtown, 85 West Sports Bar and Grill85 West St. at Albany StreetNew YorkNYClosure3811/30/2012

.

Monitor Company Group LP140 Broadway, 49th FloorNew YorkNYClosure982/20/2013

.

Vette Thermal Solutions6377 Dean ParkwayOntarioNYClosure843/1/2013

.

Citigroup1 Reckson PlazaUniondaleNYClosure1003/3/2013

.

Southeastern Container115 Airport DriveWappingers FallsNYClosure1510/1/2013

.

Mercy of Northern New York218 Stone St.WatertownNYClosure2402/20/2013



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