Professor Michael Lord Comments on the Closing of Greensboro’s American Express Call Center

1.20.2011 Article, Faculty News, Retail

American Express call center closing a blow to region

Reposted from Winston-Salem Journal | by Richard Craver

The countdown has started on the largest commuter job cut in Triad history.

The American Express Co. call center targeted for closing by the end of 2011 is based in Greensboro near Piedmont Triad International Airport.

However, company officials said nearly half of the center's 1,900 workers live outside Guilford County, primarily in Forsyth County.

The decision, announced Wednesday but sealed about two weeks ago, caught company employees and Triad economic officials by surprise.

"Many people will think that the negative economic impact of this decision will be felt just in Guilford County," said Greg Lilly, an associate professor of economics at Elon University.

"This will have a dramatic impact on Forsyth County as well at a time when both communities are struggling to find work for those already unemployed."

The company said that about 400 of the 1,900 workers would be set up to work from home. The rest could qualify to be transferred to three other U.S. centers or receive a regular severance package that also features a "bonus" equal to 16 weeks of pay.

American Express represents the second major Triad employer dependent on a commuting work force to announce it was closing in the past 1½ years. There were 905 employees at the Dell Inc. plant in southeastern Winston-Salem — with half living outside Forsyth — when the company announced in October 2009 it planned to shut down production.

Jim Bush, American Express'executive vice president of world services, said the job cuts won't start for 90 days "to give the employees and their families time to absorb the news."

Once the cuts start, they'll be phased in over the rest of the year.

Bush said that the company "was anguished" about closing the center it opened with great fanfare in the mid-1980s. The company already had reduced the work force by nearly half from its peak range of 3,500 to 3,800 in the mid-1990s.

The decision to close the 403,000-square-foot center was as much about real-estate consolidation as reducing employment, Bush said. The Greensboro operations are being moved into centers in Fort Lauderdale, Fla., Phoenix and Salt Lake City.

Bush said that the decision was based mostly on declining call volumes to its centers as more customers do their financial transactions online or through smartphones. He said that one out of every three employment seats in each center was empty because of earlier decisions to reduce its work force through attrition.

"Our Greensboro facility handles a narrower range of customer-service functions than the other major U.S. locations," Robert Garinger, a senior vice president and local general manager for American Express, said in an e-mail to community leaders.

"We believe our other three U.S. facilities, which already handle a wider variety of customer functions, are better equipped to manage an expanded range of work, and we will add staff in each of those locations as we migrate work there."

The company said it remained committed to building its data center in eastern Guilford at a cost of more than $600 million. Bush, however, said that it was unlikely that many of the call-center employees would qualify for one of the 100 jobs there.

Dan Lynch, the president of the Greensboro Economic Development Alliance, said he was caught "completely off guard" by the closing decision. He said that Greensboro was not given a chance to spare the center from being shut down.

Bush said that the company would make room for any employee who wanted to move.

"We would welcome 100 percent of the employees to transfer. We would be incredibly flexible to go to any of the three other sites."

However, local economists said it is highly unlikely there will be many takers given the level of the call-center wages, which in North Carolina typically range from about $8 to $20 per hour depending on experience and seniority.

"This announcement highlights how tough it is for the average family out there these days," said Michael Lord, an associate professor of management at Wake Forest University.

"AmEx may be offering relocation or severance, but most two-earner households can't simply pick up and move. It's not an option. They'd move to keep one job, but then lose the other. What good is that?

"Even if a single-earner household were willing to relocate, trying to sell a house in this market is challenging, to say the least."

American Express also said it was transferring operations out of centers in Madrid, Spain, and Sydney, Australia. Altogether, it expects to eliminate 550 jobs, but about 3,500 existing jobs could be affected by relocation moves. It expects to save $70 million annually, starting in 2012, from the moves.

The company also said it would provide enhanced job-training assistance worth up to $5,000 a year for two years, and would be willing to hold job fairs at the center.

Gov. Bev Perdue said that she would send the state's Rapid Response team to the center. The team is typically made up of "leaders from our work-force development teams, the Employment Security Commission and the community college system."

Gayle Anderson, president and chief executive of the Winston-Salem Chamber of Commerce, said she is hopeful that — because the job cuts aren't occurring immediately but will take place over the year — "people will find other employment opportunities in the region."

"I've already been contacted by one Winston-Salem employer who wants to interview some of their people and know of a Greensboro employer also interested," she said.

Mike Walden, an economics professor at N.C. State University, said that "while call centers provide significant employment for many, they are not an industry to hang your hat on for economic development.

"I don't think the move says anything very negative about the Triad area," Walden said. "The lost jobs are just a casualty of advances in technology."