Thirty-One Gifts, which just four years ago pledged as many as 500 jobs for the area, will close its Springfield facility in January.
The closing, announced Thursday afternoon, will affect 74 employees at the company as well as an undisclosed number of workers at Exel Logistics, a local subcontractor.
The company initially pledged to create as many as 500 jobs when it first opened the distribution center at 1000 Titus Rd. in Springfield in 2011, but most of those jobs never materialized. Along with the Springfield operations, the decision will also affect 220 workers in Johnstown in Licking County, Ohio.
The site also provides jobs to workers at Excel Logistics, although company officials were still trying to determine how many employees from that company would be affected. Company officials at Thirty-One Gifts have recently said 92 employees work for Excel Logistics. Officials at Excel could not be reached for comment Thursday.
“We will consolidate our distribution and personalization activities to our home office in Easton in Columbus, closing our Johnstown and Springfield facilities in 2016,” Thirty-One Gifts said in a press release. “We are making these changes to align our operating capacity with business needs. Operations at Easton will continue without interruption.”
Thirty-One Gifts was founded in 2003 in Tennessee in the basement of Cindy Monroe, the company’s CEO and founder. The Springfield location produces handbags, fashion accessories, totes and other products, and personalizes them with monograms for customers. The items are then packaged and sent to one of an estimated 100,000 consultants, according to the company, who then sell the products to customers nationwide.
The company will keep workers on the job until January in part because the busy holiday shopping season is approaching, said Amy Donahoe, director of hiring and employer services for the Chamber of Greater Springfield. The company also did not want to lay off workers before the holiday season, she said.
Workers have the option to apply for openings in Easton, but it’s not clear how many workers will be willing to drive to that facility, Donahoe said. Workers who are interested in the Easton jobs will likely know if they are accepted for those jobs in the next couple weeks, Donahoe said. In the meantime, the chamber and local workforce development officials will work with displaced employees by offering training, resume advice and other services to help them find new work.
Workers who do not transfer to Easton will receive a severance package that includes continued pay and benefit options, according to information from Thirty-One Gifts. The company will also offer resume writing sessions, host multi-company job fairs and offer practice interview opportunities for affected workers.
“It’s a major blow economically, but we now have a building available and a very active chamber of commerce which will try to market it,” said John Detrick, Clark County Commissioner.
The company uses a direct selling model in which independent consultants typically sell the items at home parties. Companies like Avon, Mary Kay and Pampered Chef operate under a similar model. The company’s name comes from Chapter 31 from the Book of Proverbs, a biblical passage which the company interprets to celebrate hard-working women.
In 2011, the company had pledged to create as many as 500 jobs in Springfield over three years and set up a distribution center in the former O’Cedar factory in the PrimeOhio corporate park.
The company had not filed a Worker Adjustment and Retraining Notification with the state by Thursday evening.
The direct selling industry is facing several challenges, including low consumer confidence and increased competition from department stores and online retailers, according to a recent report by IBISWorld, a marketing research firm. However, the industry as a whole is expected to grow slightly.
“Revenue has gained traction since the economic downturn, and over the five years to 2015, it has grown at an estimated rate of 1.9 percent per year on average,” the report said. “Recent improvements in economic conditions will further boost the industry; IBISWorld estimates that revenue will increase 1.4 percent in 2015 to $42.7 billion.”
Earlier this month, officials from Thirty-One Gifts asked Springfield city officials to rescind incentives both sides had agreed to because the company had failed to create the number of jobs expected as part of the deal. Both sides agreed in 2011 that Springfield would provide a maximum of $396,000 in annual incentives based on how many jobs the company created.
The company has also invested about $8.7 million in equipment and other improvements at it Springfield location, according to city documents.
However, the company did not seek payment of those incentives, and the city never made a payment to the company under the deal because those jobs failed to materialize. The original agreement was scheduled to be in effect until 2017.
There was no indication from the company then that a consolidation was looming, said Tom Franzen, economic development director and assistant city manager for Springfield.
“”I’m not shocked, but at the same time they didn’t indicate in those discussions that this was something they were considering doing,” Franzen said.
The decision will also mean lost income tax revenue for the city. This is the second company to close operations in recent months. In July, National Oilwell Varco Inc. also decided to close its Springfield operations, a move that affected at least 150 workers.
But both Franzen and Donahoe said it’s hard to compare the situations because both companies operate in such different industries.
“It’s always a big deal when we lose employment,” Franzen said. “Both these incidents are not necessarily due to what we’ve done or haven’t done locally; it’s reflective of the industries they are in.”
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