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Tuesday, February 8, 2011

BREAKING: Powell's Lays Off 31 Workers.

Posted by Sarah Mirk on Tue, Feb 8, 2011 at 3:21 PM

UPDATE 3:12pm: After we published, Powell's sent out a press release about the layoffs. It doesn't delve into the specific numbers, but says that the market downturn forced the layoffs. “Consumer behavior —- how, where, and what people read —- has changed dramatically over the past several years,” it says. The whole thing is pasted below the cut, along with the email Powell's sent out to its staff this morning. Key detail: "Given that company sales are down this fiscal year, and that we are projecting annual sales decreases for the next few years, we need to take immediate steps to scale the company to our sales." DON'T DIE, POWELLS! DON'T DIE! (please)

Original post at 2:40pm:

Powell's Books sent out a sad all-staff email this morning: 31 workers will be losing their jobs as of today.

The layoffs affect lower-level workers, no managers are under the axe. The branches affected are the Burnside store, the NW industrial warehouse, the Hoyt street warehouse, and the Beaverton store.

The laid-off workers comprise about seven percent of the unionized workforce, says ILWU Local 5 says union representative Ryan Van Winkle. ILWU Local 5 represents Powell's non-management workers and just celebrated its tenth anniversary last fall. Powell's contract allows the option to pay workers two weeks worth of salary in exchange for laying them off immediately, explains Van Winkle.

Van Winkle says the union and company have worked together over the past year to avoid layoffs by making other cuts, like reducing hours. "It's certainly an issue that they're not cutting managers. As a union," says Van Winkle. "We're worried about doing more work with less people and also, frankly, being sure that this doesn't disrupt the work the union does, like filling those cut jobs with managers or temporary workers."

Powell's is reportedly planning to make an official announcement about the layoffs today at 4pm.

The announcement arrived an hour early! Powell's sent out this release at 3pm:

Powell’s Books, one of the largest independent bookstores in the world, announced today the decision to reduce its workforce, a move that is part of the Company’s response to the unprecedented, rapidly changing nature of the book industry.

Consumer behavior —- how, where, and what people read —- has changed dramatically over the past several years. It’s a story that’s hard to miss with daily articles about the book industry, the future of physical bookstores, and the rise of eBooks. As technology evolves, Powell’s expects consumer reading behavior to continue to change as new options and formats for reading develop and improve over time.

In addition to changing consumer behavior, Powell’s Books has been significantly impacted by market conditions, including an industry-wide decline in new book sales, rising healthcare costs, and the economy.

All of these circumstances have weighed on Powell’s business continually for the last three years. While the company has seen its share of changes over the past four decades, adverse market conditions generally never lasted more than two consecutive years. Unfortunately, at this critical point in time, corporate leadership expects similar trends as it has now experienced for several years.

Emily Powell, President of Powell’s Books stated, “I feel it is critical to make some very difficult adjustments at this time, to address our current reality and to prepare the company for success in the future, a future that looks very different than our business today.”

A major change shared today was a layoff impacting employees at various locations. This undesirable course of action was taken only after serious consideration of other possible options and a careful evaluation of the future. Ms. Powell shares, “I would like to thank all of the Powell’s employees who have shared their expertise and supported the business’s goals every day. Their contributions to Powell’s and the reading community have been substantial.”

Although Emily Powell assumed management of the company in July 2010 from her father, Michael Powell, Michael has been involved in the recent changes. “Emily’s transition to leadership of the business happened at a precarious time, at a crossroads in our business. I’m confident her fresh ideas and her understanding of technology will steer the company successfully forward. We plan to have Powell’s Books at the heart of the Portland community for years to come.”

And here's the email they sent to staffers this morning. It's important to point out that the email says managers (that's "non-bargaining unit employees") will take a hit, too: their pay will be frozen for a year starting in July and company contributions to their 401(k)s are also halted.

We expect that you are concerned about the company's sales trend in
recent months, changes in the book industry, and actions the company may
need to take to adjust to these events. This email is to let you know
about immediate next steps the company is taking.

Sales for this fiscal year are down and we expect this trend will
continue. The largest decreases have been in new book sales. We see this
as a clear indication that we are losing sales to electronic books and
reading devices. Given the company's declining sales, combined with
industry data on the rapid growth of electronic book sales, we expect to
see continuing erosion of new book sales over the next few years. While
we believe we can compensate for some of the loss with solid used book
sales and growth in gift sales, the erosion of new book sales will
continue to take its toll.

Given that company sales are down this fiscal year, and that we are
projecting annual sales decreases for the next few years, we need to
take immediate steps to scale the company to our sales.

We have made the difficult decision to lay off 31 employees from the
bargaining unit. The locations where lay offs will occur are: Burnside,
CHX, Indy, Hoyt and Corporate.

Managers are notifying the employees who are being laid off today in
one-on-one meetings. We are making every effort to notify all employees
directly affected by the end of the day today. At Burnside, CHX, Indy,
Hoyt and Corporate the location manager will let everyone know via email
when the employees being laid off at that location have all been
notified.

The second phase of the lay off process, bumping, will begin by the end
of the week. Bumping is a complicated process to work through and will
take some time. Some staff members who were not laid off initially may
be displaced in this process. Both Powell's and the union recognize that
until the bumping process is complete, there will be anxiety and
uncertainty for many employees. The company and the union are committed
to working through the bumping process as quickly as possible. We will
notify everyone when the bumping process has finished.

The company has different options, and has taken different measures at
this time with non bargaining unit employees. We have reduced benefits
by suspending company 401k contributions effective February 21st for a
minimum of a year. A pay freeze will go into effect July 1st, and be in
effect for a minimum of a year. (No anniversary increases, no October
increase.) These measures affect only the excluded group. Bargaining
unit employees remain whole in terms of pay and benefits - per the
contract.

We anticipate that the reduction of staff in the bargaining unit,
combined with the benefit reduction and pay freeze for non bargaining
unit employees, will be an adequate adjustment for the sales decrease
this fiscal year. If sales continue to decrease in the future, we will
need to make further reductions. As we have done before, we will try to
avoid layoffs by reducing the size of the company over time through
attrition.

Out of respect for the employees who are directly affected by this
decision, we ask that this email, and the information it contains, be
held in confidence within the company until the end of the day today.

We deeply regret having to take these steps. We are very sorry to be
ending the employment of staff members who have been part of Powell's
and who have contributed in so many different ways.

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