Slower economy stings aggressive companies

And as hundreds of Tampa Bay area workers have found out, call centers are easy targets.

By KYLE PARKS

© St. Petersburg Times, published March 6, 2001

TAMPA -- Less than a year after it opened a glitzy call center off Interstate 75 east of Tampa, SBC Communications is shutting it down.

The move will put an estimated 400 people out of work, victims of the slowing economy and the San Antonio, Texas, telecommunications outfit's overambitious growth plans.

The SBC employees have plenty of company: In the past five weeks, businesses have announced more than 2,600 job cuts in the Tampa Bay area.

Fingerhut, a catalog retailer, is closing its 950-employee Tampa call center. Telecom giant WorldCom is shutting its center in Pinellas Park, eliminating 499 jobs. And the Bear Stearns investment company is cutting 140 jobs from its Tampa information-services office.

The layoffs are a warning for anyone who thought Florida might be immune from the nation's economic slowdown.

"There isn't going to be any part of the country that's going to escape this," said Mark Vitner, a First Union Corp. economist in Charlotte, N.C.

While the Tampa Bay area is fortunate to have a diverse economy that's relatively light on manufacturing, its call centers have become an increasingly tempting target for corporate cost-cutters.

"The quickest way to save money is by cutting people, and that's what a call center is," said Warren Rodgers, who runs Computer Specialists, a Tampa executive search company. "And a call center is going to be hit hard on the front end of a slowdown, because when customers stop buying, the phones aren't ringing."

Across the country, executives are coping with slowing sales, a bearish stock market and worries about the technology industry. Hardest hit: companies with the most aggressive growth plans.

Count SBC among them. The telecom company has said it wants to be in 30 states within two years, and the Tampa call center was part of the plan. Workers at the center, opened last April in Hidden River Corporate Park, answered questions from SBC customers in cities such as New York, Seattle, Boston and Atlanta.

The company planned to hire as many as 500 people in Tampa last year. To attract workers, it offered an average salary of $33,000 -- high for call-center work -- and perks such as a company-funded pension, a 401(k) savings plan and flexible schedules tailored for college students and other part-timers.

SBC's growth is continuing in Florida -- it serves Miami and Fort Lauderdale and plans to offer local phone service in the Tampa Bay area and Orlando within two months.

But in many markets, it has run into major problems. SBC has struggled to get regulatory approval in some states to offer long-distance service. And like other telecom providers such as Verizon, it has found that many customers don't want one "bundle" of services.

"At least for now, we won't be offering service for corporate data networks or Internet service in new markets," SBC spokeswoman Wendy Flanagan said. "With that in mind, there isn't as much a need for call center workers."

Monday, officials told workers at the Tampa office, the only facility being closed in SBC's companywide cost-cutting. SBC's stock closed at $45.41 a share, down $1.16.

The functions at the Tampa center will be combined with SBC operations in Dallas. Tampa employees can apply for openings in other cities. SBC officials wouldn't detail the number of job cuts, their timing or what the company would do with the building.

SBC is left holding a 10-year lease on the 135,000-square-foot building, which housed a sophisticated Salomon Smith Barney processing center before that facility was moved to New York in 1998.

SBC likely will try to sublease the building for the remaining nine years, but it will be a challenge because it would be too expensive for many tenants.

Some area business leaders chose to look at the positives in the news.

"The historical trend here has been to attract other companies that will pick up the slack," said Robin Ronne, senior vice president of economic development for the Greater Tampa Chamber of Commerce.

But this wave of layoffs, with so many happening so fast across a range of industries, is unprecedented in the Tampa Bay area, economic development officials say.

"All this is creating havoc," said placement firm executive Rodgers, who also heads the Tampa Bay CIO Council, a group of area high-tech executives. "I have never seen so many qualified IT (information technology) pros available."

Though area unemployment remains low, Rodgers worries that more companies are relying on temporary or part-time workers. That's because more employers say they need more flexibility in the ever-changing economy. Tracking "just-in-time" inventories and feeling more pressure from Wall Street, companies are pressured to move quickly to cut costs.

"The slowing of this company is moving into sectors that once were thought invulnerable," said John Challenger, chief executive of Challenger, Gray & Christmas, a Chicago outplacement firm that tracks job cuts.

The firm tracked 142,208 announced U.S. job cuts in January, the highest monthly total it has tabulated. In February, 101,731 jobs were cut -- almost three times more than the February 2000 figure of 35,415.

Still, the Southeast's job-cut total was the smallest of the four U.S. regions tracked by the firm.

"It will be a smoother ride for the Southeast," Challenger said. "That area is more diversified and it has lower costs."

Also, many economists think the economy should start a recovery by summer. Investors tend to study year-to-year quarterly results, and third- and fourth-quarter figures this year should look better because the slowdown started in many industry sectors in mid-2000. Also, if earnings warnings and layoff announcements taper off, consumers might be convinced they can start spending again.

That's little solace for area residents who are losing their jobs.

And economist Vitner says any turnaround won't be quick.

"We are in for a rough couple of months," he said.

- Times researcher John Martin contributed to this report.

Southeast has fared better

Corporate layoffs in February, by region:

Midwest: 35,457

Northeast: 29,323

West/Southwest: 21,850

Southeast: 15,101

Source: Challenger, Gray & Christmas

Tampa Bay cutbacks are adding up

Among the major job cuts announced in the area over the past five weeks:

February

R.R. Donnelly & Sons: Printing company is closing 120-worker plant in St. Petersburg.

Fingerhut: Catalog retailer will close two Tampa call centers, eliminating about 950 jobs.

Bankers Insurance: Company fired 22 people, and spin-off Insurance Management Solutions Group cut 53 jobs.

Z-tel Technologies: The phone service provider is cutting 125 jobs at its Tampa headquarters, part of companywide cuts totalling 400.

March

WorldCom: Phone company is closing Pinellas Park call center, eliminating 499 jobs.

Bear Stearns: Investment company is closing Tampa information-services office. Jobs lost: 140.

Jabil Circuit: Electronics manufacturer is trimming its work force. At least 300 jobs reportedly will be cut.

SBC Communications: Phone company is closing its Tampa call center. An estimated 400 jobs cut.

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