by Timothy McQuiston Vermont Business Magazine FairPoint Communications, Inc(Nasdaq: FRP), this morning announced workforce restructuring actions that will result in a reduction of approximately 260 positions across the 17 states in which it operates, including the closing of its call center inSouth Burlington, Vermont. A union representative said 73 unionized workers in Vermont (22 percent) will lose their jobs. According to a FairPoint statement, this action, combined with other headcount reductions over the past two years, approximates the level of voice line loss the company has experienced in that period. FairPoint is Vermont's largest telecommunications company.
"Access lines and legacy revenues are in secular decline, and we are taking these steps to ensure our administrative and operational structures remain aligned with the current size and composition of our business," saidPaul H. Sunu, Chief Executive Officer. "Faced with the realities of the industry and the competitive landscape in which we operate, we must be keenly focused on managing costs and enhancing productivity.These steps, while difficult, help solidify our future. We remain committed to providing great service to business and residential customers and will utilize improved processes to enhance productivity to continue to deliver preferred products and services to our markets," Sunu concluded.
The unions (the International Brotherhood of Electrical Workers and the Communications Workers of America) said in a statement that 219 employees in its northern New England operations of Vermont, New Hampshrie and Maine, which represents more than 10 percent of its workforce in the region, will lose their jobs.
"Our hearts go out to the hard-working men and women who will lose their jobs because of FairPoint's mismanagement and greed," said Mike Spillane, Business Manager of IBEW Local 2326 in Vermont. "Many of these folks have devoted years to a career with the phone company and they are proud of it. They are valued members of our communities who were willing to make incredible sacrifices during our historic strike. They fought not just for their own jobs, but for the quality service that our customers deserve. They don't deserve this."
Nearly all the CWA workers in Vermont will lose their jobs (shown walking a picket line in October 2014). VBM photo
Fairness@Fairpoint spokesperson Amy Masciola said the company told the unions that it will lay off 25 IBEW members in Vermont and 48 CWA members. Currently, there are 51 CWA members and approximately 275 IBEW members in Vermont. She said that as the unions and the company work through the layoff process, these numbers could change. She said the two sides will meet next week to hammer out the details.
Angelynne Beaudry, FairPoint's Corporate Communications Director, said, "The breakdown by the 17 states is not available now as the unions have a process they go through that will impact the final counts of the 17 states."
The call center will close but the Vermont headquarters will not be re-located.
"There are no plans to vacate Hinesburg Road," she said. "As a matter of fact, we recently signed a multi-year lease extension and Regulatory, Engineering, Operations, PR and Finance remain in that building."
FairPoint released its first quarter 2015 financial report on May 6, which showed a continuing loss. In the subsequent conference call with investors, Sunu, for the first time, suggested the company might be up for sale. The prospect of FairPoint selling its business was reported by Vermont Business Magazine two years ago. The company, despite being a legacy telephone company, is widely considered as being a valuable asset because of its vast landline infrastructure, both fiber and copper. They both support the vast network of cell phone service and the fiber optic cable offers high-end broadband connectivity. It also has a large portfolio of commercial telephone accounts.
FairPoint Communications reports 2015 Q1 result
FairPoints shares have risen over the last few months, in part because of a possible sale and, notably, because of its settlement of a long labor stoppage, which will save the company tens of millions of dollars in medical and pension cost. Shares peaked at over $20 (52-week range $13.05 - $20.98) shortly after the new labor deal was announced.
But neither Sunu's comments of a possible sale nor the announcement of layoffs have pushed the stock price up, which would otherwise be expected. Immediately after the Q1 report, shares lost about $2 after opening at $19.79 that day and have not rebounded. The stock price was at $18.29 as of mid-Friday morning.
Bitter labor negotiatioins led to a strike last fall and a rally at the State House in November. The company and union workers signed a new constractin February. VBM photos
FairPoint said it remains focused on transforming its revenue base to more sustainable, data-centric lines of business as technology and customer preferences evolve.To support this focus, the company plans to expand its staffing and support in areas such as the recently-announced data center inManchester, New Hampshire, and related lines of business.
To assist impacted employees in their transition, FairPoint said will provide severance based on years-of-service and will offer outplacement and transition assistance services to eligible employees.
SOURCES FairPoint Communications, Inc.CHARLOTTE, N.C.,May 15, 2015. www.FairPoint.com. IBEW & CWA. Vermont Business Magazine. VERY TOP PHOTO: FairPoint's headquarters in South Burlington will lose its call center but has extended its lease to retain offices here for finance and other administrative duties.