Borders laying off 88 at Ann Arbor headquarters today amid 164 total cuts

Posted on Thu, Jan 28, 2010 : 8:30 a.m.

Borders laying off 88 at Ann Arbor headquarters today amid 164 total cuts

By Paula Gardner

Borders Group Inc. this morning confirmed that the book seller is laying off 124 corporate employees - 88 of them based at its Ann Arbor headquarters - plus another 40 at its warehouses.

The move - representing about 10 percent of its corporate workforce and 12 percent of staff at its Ann Arbor headquarters - was announced by e-mail to employees, and the layoffs started this morning.

According to an e-mail sent to employees this morning by Shereen Solaiman, senior vice president of human resources, "we must announce that we are moving forward with the unfortunate but necessary step of reducing our payroll by eliminating 124 corporate positions and 40 positions in our (distribution center)s. As you saw in our holiday sales release, we have not succeeded in improving our sales and, as a result, must make further adjustments to our cost structure."

Borders spokesperson Anne Roman clarified this morning that 36 of the affected corporate employees were not based in Ann Arbor. In addition, the 40 distribution center employees are assigned to facilities in Tennessee and California.

"This is a situation where the company is adjusting its payroll to the realities of what its sales situation is," Roman said.

Many of the affected Ann Arbor employees worked in computer systems, an area consolidated as the company announced layoffs and store closings of its Waldenbooks division in late 2009.

The bookseller, based at 100 Phoenix Dr. in Ann Arbor, employed about 800 at its headquarters in 2009, and another 100 at its three Washtenaw County retail operations. It employs 25,000 across its operations.

After today's layoffs, about 650 are employed at the Ann Arbor headquarters, Roman said.

"Obviously, it's a difficult day when job eliminations take place," Roman said of the atmosphere at headquarters. "I'm sure everyone is feeling that."

Remaining staff will be meeting later today with managers, according to Solaiman's email: "I know this is a challenging time as well for those of you who remain in place, and I know that you’ll offer your care and support to your colleagues today. It is important that each associate whose position is eliminated hear about the changes directly from his or her manager, so please be respectful of this process. Associates whose positions are eliminated will generally depart by mid-day. This afternoon, your leaders will hold meetings to discuss changes within your team."

Meanwhile, Roman said today's layoffs - which were concluding mid-morning - did not affect any of the chain's stores directly.

She added that she couldn't speculate on any future impact of Borders' sales drops on its retail outlets.

"There are no plans for any widespread store closures," she said. "... That's a matter of adjusting to sales, which the company does on an ongoing basis."

However, Solaiman's email made it clear that more changes could follow.

"While at this time we do not plan further wide-scale corporate payroll reductions, of course, we cannot guarantee that there will not be job eliminations in the future," the email said. "Currently, we are in the process of evaluating our store payroll and expect to make changes in our stores over the coming weeks. "

Angela J. Cesere | AnnArbor.com

This morning at Borders' headquarters, laid-off employees were hauling boxes with their possessions out to their cars. Several employees declined interview requests from AnnArbor.com, but one laid-off manager with two years of experience at the company said he wasn't surprised by the news.

"Soon after I got there, sales declined and reorgs and lay offs began," the employee said by e-mail on the condition that he remain anonymous due to fears about how his comments could affect his severance package. "I think I had been beaten into apathy and that is one of the reasons I was let go. I could not be strategic, as I was not sure of the future."

The layoffs are the latest round of changes at the nation's second-largest bricks-and-mortar book retailer. Borders announced Monday that it would be under the leadership of its 3rd CEO since early January 2009 after Ron Marshall said he was leaving to take over A&P.

Marshall replaced George Jones on Jan. 5, 2009, and now interim CEO Michael J. Edwards is running the company.

The layoffs may not be surprising to anyone who tracks Borders, which spent much of 2009 repositioning its operations after losing $187 million in 2008.

“With the change in leadership announced earlier this week, (layoffs) seemed to be the next step,” said Birmingham-based retail consultant Ed Nakfoor.

The company went into the 2009 holiday with a strategy to build customer loyalty and inventory. It deemphasized low-performing categories like music and cut its promotional spending, but results from the 11-week sales period showed that Borders lost ground from its disappointing 2008 holiday.

Total sales during the holiday were $846.8 million, down 13.7 percent.

However, the operating margin did improve due to other structural changes, and Roman noted that the company has improved its cash position.

At the company’s annual meeting last May, Marshall told employees and board members that the changes in the book industry will permanently affect sales and that the company had to restructure to be profitable at a lower sales level.

According to a report of that meeting in the Ann Arbor News: “’We find ourselves in a challenging position,’ Marshall said, noting that the company had dug itself into "a pretty big hole" over the last two years and was now unfortunately trying to recover during a severe economic downturn.”

Investors reacted to the news of this week's CEO switch by sending the value of the stock falling to under $1 per share, where it opened with this morning's trading. That's down from $1.12 at the start of the week and down from $2.01 in early November as the holiday sales season began.

The overall value of the company, based on the stock price, is $56 million.

An AnnArbor.com analysis of the struggling retailer's impact on the Ann Arbor region, published today, shows that the company generates about $1.6 million in tax revenue in Washtenaw County.

The company, which once employed about 2,000 at its Ann Arbor headquarters, laid off 136 employees from its corporate workforce in February 2009. Most of those positions were in Ann Arbor.

In March 2009, it laid off 742 at Borders superstores and Waldenbooks, then announced in late 2009 that it would close 200 Waldenbooks stores.

The company will report its fourth-quarter and year-end results on March 30, Roman said.

The laid-off Borders manager said he was unsure whether Borders can survive.

"Maybe they will just be online like Circuit City," he said. "If they can get direction and change culture, maybe. Morale was bad while I was there."

AnnArbor.com's recent coverage of Borders:

A few stories on Borders elsewhere this week:

Paula Gardner is Business Director of AnnArbor.com. Follow her on Twitter.
Sign up here to receive AnnArbor.com's weekly Business Review newsletter. AnnArbor.com business reporter Nathan Bomey also contributed to this story.

Comments

URmaster

Mon, Apr 19, 2010 : 4:21 p.m.

Border's will never be able to rebound unless they aggressive catch within the eReader market segment and push the technology and customer service. I will never forget when Border's shutdown their online music site (1997)... it was the dumbest business choice ever and will haunt them forever.

Bob

Thu, Feb 4, 2010 : 1:57 p.m.

So sad...I worked at the corporate office for nearly 10 years....I was lucky enough to survive all of the layoffs...and even luckier to get a better job a year ago. I hated driving to that big white building every morning not knowing if today would be the day that I'd be "let-go" and I feel sorry for anyone still there who has to live with that on a daily basis.. I wonder how many of my former colleagues were let go last week? Sorry to say but yes, Borders is nearly finished...they will NEVER compete with B&N or Amazon with such shoddy business practices and CEO's who only stick around to get huge bonuses before leaving for a better opportunities...but who can blame them?! To anyone currently working there...save yourself now!!!

Technojunkie

Fri, Jan 29, 2010 : 11:56 a.m.

Get on Borders' email list and their printable coupons make Borders store pricing fairly competitive with Amazon. Much as I like Amazon, you just can't beat local stores for instant gratification. Being able to look up store inventory online before heading to the store is very cool. Trying to go head-to-head with Amazon for online sales would be suicide. I think that their superstore model, stripped of music and videos and other such distractions that other retailers dominate, can survive. The smaller stores, not so much, except in locations with heavy foot traffic. E-book readers are a problem, but not everything works on those and a surprising number of publishers can't wrap their brains around the electronic business model. I'd sell e-books without DRM infections (Digital Rights Management) but tagged with the purchaser's name and email address. Sell in.pdf,.mobi (Kindle) and.epub format, allowing the purchaser to download in any/all of those formats for as long as they have a borders.com account. This would be to keep people from defecting to Amazon more than anything else. Good luck getting technophobic publishers to go along with DRM-free e-books though.

rrt911

Fri, Jan 29, 2010 : 9:25 a.m.

Email firing? Really....?

Sherri

Fri, Jan 29, 2010 : 5:46 a.m.

This is why Borders is going under - they have no leadership, I mean really, notifiying employees that have stayed with them despite the drop in confidence BY EMAIL? I hope the person hiding behind the keyboard that sent a "you are fired" email is the next to be axed. If they had real leaders in the company maybe they wouldn't need to let employees go. Any company that takes its main resource i.e. people so lightly deserves to go under.

G.W. Williams

Thu, Jan 28, 2010 : 7:49 p.m.

The bad economic news keeps on coming. I wish it would end. Our state officials have to do something drastic to change the circumstances. How about making our business climate more competitive by reducing the Michigan Business Tax and eliminating the personal property tax? Look at what happened when Michigan approved the film incentives package. Producers flocked to Michigan. Imagine what would happen if we incentivized all companies to hire more workers by reducing taxes on all industries. Check out the proposals at www.michiganturnaroundplan.com.

localguy

Thu, Jan 28, 2010 : 4:50 p.m.

I try to support the downtown Borders bookstore to keep business in downtown Ann Arbor. I think local is important,but my last experience with them was pretty bad. They didn't have the book on the shelf. O.K. fine, but to order the book would take 6 weeks. 6 WEEKS? I thought they could order it from Amazon get it in a week and charge me a little for a service charge and keep me as a customer. I got the book in less than 1 week from Barnes & Noble to my front door. It's just 1 book and 1 customer,but it all adds up.

Somewhat Concerned

Thu, Jan 28, 2010 : 4:20 p.m.

Borders is a company we have to want to survive, but they keep making mistakes. Read this example, posted the other day here, to get an idea of how dumb policies lead to bad results. It's not about a CEO who came and went and made a lot of money. He didn't make up the policy recounted below. If it was made up by one of the people who was let go, Borders has a better chance, but one would guess that the policy was a joint decision, made by a group, and that it reflects how Borders, the company, sees things, not how one CEO or other employee sees things. At some point, you have to say that they are reaping what they've sown. "After rooting for Borders for many years, I now believe it is doomed. Here's why. I buy lots of books at Borders. According to my Quicken log, over $4200 last year (2009). The Borders website is not as good as Amazon's, so recently I used Amazon's site to find two books in a subject area that interests me. I found the books, went to Borders #1 (Liberty St), found the books on the shelves, and asked if Borders would match the Amazon price. The answer (given with great courtesy) was "no" because Borders has a higher cost structure to stock the books. I pointed out that I was not mooching off Borders cost structure, but actually had mooched off Amazon's cost structure to find books I couldn't find on Borders' website. Nevertheless, the answer was "no," so I ordered the books from Amazon - the first time I have given Amazon an order because I have wanted to support Borders. Not only did I save a significant amount of money, the books arrived in two days, and the service was great. Borders managed to drive a good customer to try their mortal competitor. They have lost most of my business. Which successful companies have done that? Most companies do everything they can to get you to try them and remain loyal. Borders, on the one hand, has its loyalty card, and on the other pushed a loyal customer to try a competitor. They won't survive. I will miss them. I will be sorry for the good people in Ann Arbor who lose their jobs. But, Borders is not a charity; it is a business that is entitled to survive only if it provides value to people. It's not Amazon's fault that Borders is doomed. It is Borders' fault that it is doomed. Sad, but true."

Top Cat

Thu, Jan 28, 2010 : 10:23 a.m.

Sorry to say but Borders is finished. They are losing money and look out of date in the Age of Amazon.

Jon Saalberg

Thu, Jan 28, 2010 : 10:15 a.m.

This speaks to the paucity of the CEO suit-and-tie crowd, who go from one company to another, get millions in compensation, and achieve nothing. This is similar to the disaster that has occurred, and continues to occur, when companies hire a person to lead who doesn't have a clue about the business they're hired to lead - my best example is GM hiring a guy who admitted he knew nothing about cars. Just plain dumb. So now the latest Borders CEO is fleeing to sell...frozen dinners, toilet paper, and dog food?

Dr. I. Emsayin

Thu, Jan 28, 2010 : 9:52 a.m.

When Katherine Winkelhaus was Borders president, the company did well. I say bring her back as CEO. She knows the book business. It was all downhill after bringing in the supermarket guys.

Barb

Thu, Jan 28, 2010 : 9:49 a.m.

Oh, no. Man I hate seeing this.

UofM_Fan

Thu, Jan 28, 2010 : 9:19 a.m.

Borders needs to make huge changes if it hopes to survive (if survival is even an option at this point), but it doesnt have the staff any longer to make those changes. Theres only about 600+ staff at the main office. How on earth can they handle day-to-day operations at that staffing level, let alone make the changes that need to happen?