Circuit City to fire more than 3400 workers and rehire them at a lower wage
Richmond Virginia -- Circuit City, the nation's number 2 electronics retailer, which has been facing competitors and falling sales said Wednesday that it will lay off more than 3400 store workers immediately and replace them with lower paid new hires as soon as possible.
Analysts and economists agree that the move is an uncertain experiment that could backfire for Circuit City.
“This strategy strikes me as being quite cold,” said Bernard Baumohl, executive director of The Economic Outlook Group. “I don’t think it’s in the best interest of Circuit City as a whole.”
Circuit City claims that the reason for the layoff is that these workers were earning "well above the market base salary range for the role" and that they will be replaced with employees that will be paid at the current market range.
Circuit City’s move, by contrast, “shows they’re positioning for another tough year,” said Timothy W. Allen, a Jefferies & Co. retail analyst. Not only will service levels at the store suffer, he said, but “you’ve lost 3,400 customers-slash-employees.”
The laid-off workers will get a severance package and a chance to reapply for their former jobs at a lower pay after 10 weeks from their termination.
in addition to employee swapping, some companies are laying off employees and leaving the country. For example,
Sony, {MSNBC}--which it be laying off up to 600 workers at the West Moreland County Sony plan which manufactures rear projection TVs will be moving to Mexico because of price erosion and declining sales due to the popularity of the plasma panel television sets.
Haynes, {MSNBC}--which makes underwear, announced that they will close its Stratford Road textile manufacturing plant in Winston-Salem and move production to existing lower cost plants in the Caribbean basin and Central America.
Companies like Circuit City is going to find out a very short period of time in my opinion, is that you can save money by hiring cheaper employees, however, as a saying that I like to say is "the mighty New York Times is nothing without the kid on the bicycle", e.g., it is the people who interact with the customers are the ones that make the business.
If employees do not believe in the company because the company does not believe in the employees, then it is just a job, not a career. the end result for the company is lower sales and eventual bankruptcy. In my opinion, you can make your bottom-line look better in the short run, however, in the long run... a company's bad reputation is a hard one to rebuild.
Myself, I will no longer shop at Circuit City while they hold this attitude.