|
Fingerhut: the end of an era?
 Media Credit: Courtesy of Fingerhut An aerial view of the St. Cloud Fingerhut plant. Fingerhut’s parent company, Federated Department Stores, Inc., announced Jan. 16 that they would liquidate the company. News of the closing shocked local residents and sparked fears of a recession.
|
|
When Federated Department Stores, Inc. announced that they would be forced to close its subsidiary, Fingerhut Companies, Inc., if it did not find a buyer for the company, many people reacted with shock.
Literally thousands of people are watching, with interest, the events that are unfolding at Fingerhut. Some more so than others.
Among these group of people are the many college students who work at the company’s St. Cloud location.
While no official numbers could be made available as to how many college students work at Fingerhut, it is understood that this number is a considerable one. And a substantial number of these are SCSU students.
Angela Miller, a sophomore at SCSU, who works as an administrative clerk at Fingerhut, was attending a floor meeting with about 400 collectors when the vice-president of the company walked in and said “I wish I were here to give good news, but I’m not.”
She said everyone at the meeting knew at that point that it was the end.
“This was about the same way that we found out that our Tampa facilities (collection center) closed April of 2000,” she said. “I was in shock but it didn’t really hit me until I looked around at the people who were crying.
“Of course, they have all probably worked there for 15 years.”
Miller has been working at Fingerhut for 16 months. She made collection calls for about a year before she became an administrative clerk, doing secretarial and clerical work and answering to supervisors and team managers.
Miller’s friend and co-worker Elizabeth Paulson, a fifth-year Criminal Justice System major at SCSU, was as equally shocked when she found out the news about the possible end of Fingerhut.
“I was home on Wednesday night,” she said, “when Ang (Miller) called me and told me they just had a floor meeting at work where they told the employees what was happening.
“My immediate reaction was shock and anger at the news.”
Paulson is an accounts services representative who calls customers who are delinquent in their payments. She has worked at Fingerhut for 14 months.
Schools
But it is not only college students who will be affected by Fingerhut’s closure. Local school district officials are also preparing for the worst.
The St. Cloud school district, District 742, is already experiencing lower enrollment. With Fingerhut closing, enrollment numbers may take a turn for the worst.
It is estimated that some 500 students have parents who work at Fingerhut. And some of these may have parents who both work at the company - a potentially devastating fact.
Local school counselors have already begun support programs for students affected by the closing.
Background
Founded in Minneapolis in 1948 by brothers Manny and William Fingerhut, the company’s first business dealings revolved around the manufacturing and selling of automobile seat covers. The company’s St. Cloud operation opened its doors in 1960 at the newly built industrial park.
The company changed hands once, in 1979, when American Can bought it over, before Federated purchased it in March, 1999.
Cincinnati-based Federated, a retail company which owns department chains Macy’s and Bloomingdale’s among others, purchased Fingerhut for $1.7 billion — a far cry from the $136 million American Can paid for the company. Federated is estimated to be worth a hefty $15 billion a year.
Fingerhut’s first public stock listing was completed in 1970. In 1990, 6.3 million shares of Fingerhut went on sale at the New York Stock Exchange, selling at the ISO price of $16.50 a share.
Fingerhut became a billion-dollar company in 1980. Seventeen years later, the company was valued at twice that.
The second largest consumer catalog company in the United States, Fingerhut also conducts e-commerce through its two popular web sites, Fingerhut.com and Fingerhut En Espanol.
The company also owns the Arizona Mail Order, Figi’s, Popular Club, Brownstone Studio, Lew Magram and Bedford Fair catalogs.
However, the company is expected to off-load most of these catalogs by the middle of the year.
Fingerhut’s sales took a drastic dip in 2001, forcing cutbacks which eventually moved the company back into the black.
The company has about 6,000 employees, of whom about 4,700 work in Minnesota. This makes Fingerhut the largest private sector employer in the state.
Of the approximately 4,700 workers, about 2,670 alone were working at Fingerhut’s St. Cloud location. This number was reduced somewhat when about 300 workers at the St. Cloud Fingerhut operation were laid off on Jan. 7. Fingerhut is based in Minnetonka, Minn.
News of Fingerhut’s impending end was unexpected as St. Cloud city officials had expected the St. Cloud Fingerhut operation to remain open. The plant will remain open only temporarily should a buyer not be found.
The plan is for Fingerhut to reduce its work force gradually, starting with the company’s fulfillment center.
Employees working at the returns and collections department will remain at their jobs the longest.
Potential buyers
A short while after the news of Fingerhut’s closing got out, however, a potential buyer emerged. St. Cloud native Tom Petters had informed city officials that he intended to lead a group of investors in purchasing Fingerhut and rescuing it from doom.
St. Cloud Mayor John Ellenbecker announced this Friday.
City officials will discuss an incentive package to be offered to a buyer. The city already has an incentive package going with Fingerhut and Ellenbecker said the city would look to the state for further aid.
Several days later, a second potential buyer emerged. Peter Lytle, a partner in Business Development Group, based in Wayzata, announced that his company was interested in buying Fingerhut from Federated.
On Tuesday, Ellenbecker said a third prospective buyer had come around and had arranged a meeting with him sometime this week. It has come to light that Fingerhut union leaders have been in touch with a New York company over the possible purchase of the company.
Future unsure
Right now, however, nobody knows for sure what will happen.
Ben Saukko, a Fingerhut spokesman, said the company was unsure whether Federated would go ahead with the liquidation of the company, or whether a buyer would eventually come through.
“If the liquidation goes ahead,” he said, “the employees will be provided with severance. This may include job fairs, counseling and other things. But I’m not sure what the entire deal will be.”
Chamber of Commerce
The St. Cloud Area Chamber of Commerce, meanwhile, announced that it has already taken steps to prepare for the nearly 3,000 Fingerhut employees who may enter the job market should the St. Cloud plant close.
Teresa Bohnen, Chamber president, said no one wanted to hear that a major employer would be closing its doors.
“But when it happens, the best thing we can do is create an action plan and that’s what we’re doing,” she said.
The Chamber immediately began working with Fingerhut management to make available information to Chamber members about job fairs that Fingerhut will host in the next few weeks. The company is doing this to aid its workers in finding new jobs.
Chamber staff have also been gathering information on job openings from its members and all the information would be posted on its web site. Bohnen said the Chamber would also be working with educational institutions to come up with retraining programs for Fingerhut employees who may find themselves out of a job.
Both SCSU and St. Cloud Technical College have offered their services to Fingerhut employees. Both institutions offer free services such as seminars and job fairs.
Severance
Miller said employees have heard that a severance package had been put together. However, she added that no one knows what the package entailed.
“By law, I think we will be given 60 days (pay) and as long as we stay through our retention period, we get severance pay,” she said.
Paulson agreed, adding that she believed that employees would also be given a bonus along with the severance pay.
“The company is also offering help to those who need it with job placement,” she said.
Bohnen said Fingerhut’s closing would have a ripple effect throughout the business community.
“It’s not just employees who will feel the impact, but local vendors who provide services to Fingerhut,” she said.
The Chamber is expected to attempt to identify such local businesses to learn how large the impact will be on the community. It will possibly also provide assistance to the businesses that will be affected the most.
One thing is for sure — Fingerhut’s closing has sparked fears of the first St. Cloud recession in 20 years. An economic analysis by Jamie Partridge, the chair of the College of St. Benedict and St. John’s University’s management department, has revealed that another 700 jobs could be lost in a ripple effect.
State legislators
Meanwhile, several state legislators have proposed that the state government add $95 million to the dislocated worker fund to aid those who have lost their jobs. This would include Fingerhut employees who may find themselves out of a job soon.
The state currently has $3.4 million in its dislocated worker fund for the next five months. The fund is used to pay for counseling, retraining and job-seeking.
State legislators and Fingerhut workers now want Gov. Jesse Ventura to get involved in the issue by getting Federated to sell the company rather than close it.
Several leaders delivered a letter Tuesday to Ventura’s office pushing him to speak with Federated’s management.
However, Ventura began a 10-day vacation on Jan. 16 — the day Federated made public its plans to sell Fingerhut.
The state Department of Trade and Economic Development, meanwhile, is gathering data on Fingerhut’s value. This will be released to prospective buyers and their bankers.
Losing hope
As sure as other Fingerhut employees are hoping for the best, both Paulson and Miller are hoping a buyer can be found soon.
“Of course I am hoping that a buyer is found,” Paulson said. “But I’m not getting my hopes up.”
Miller, however, is losing hope.
“I was given hope last Friday when we found out that there was a potential buyer,” she said, “but now I’m losing hope and I am just confused. I, like everyone else, want answers.”
Both girls are not currently looking for a job and are hoping to stick around at Fingerhut as long as possible.
“I am going to see how long they (the Fingerhut management) plan to keep me here,” Miller said. “I might have to go back on the phones. I’m not sure. There is nowhere else I could work for this pay and flexible schedule.”
Those were some of the things that attracted college students to Fingerhut. Apart from that, the company also provided tuition assistance and paid time off.
Paulson believes she is one of the lucky ones. As an accounts services representative who calls up customers who do not pay up, she will be needed the longest, as Federated hopes to collect as much as possible before Fingerhut goes under.
“At least I’ll be around till October,” Paulson said. “I just feel sorry for the employees who have been there for many years. It will be very hard for them to find somewhere to work.”
Employee Breakdown
Nationwide - 6,000
Minnesota - 4,700
Minnetonka - 710
Plymouth - 465
Brooklyn Center - 330
Eveleth - 365
Mora - 45
Monticello - 90
Johnson City, Tenn. - 815
Piney Flats, Tenn. - 540
South Dakota - 25
Leslie Andres can be reached at: [email protected]
Staff writer Rebecca Jackson contributed to this report.
|
|
|
|
Privacy Policy Network Advertising Article Syndication
|
|
