Business

Direct-mail marketing firm shuts Elm City plant, laying off 380 workers

Posted October 23, 2008 10:45 a.m. EDT
Updated October 24, 2008 6:17 a.m. EDT

— Direct-mail advertising firm IWCO Direct is closing its plant in this small Wilson County community of 1,500 and laying off some 380 people.

Most of the employees were told at a meeting Thursday morning that they were out of work immediately. A “skeleton crew” will finish up a “couple of projects,” company spokesperson Deborah Haskel told WRAL.com.

IWCO, which is based in Chanhassen, Minn., formally closed on its acquisition of the plant from Cox Direct Media last December. It had invested “upwards to $25 million” in facility upgrades over a two-year transition period after agreeing to acquire the facility in October 2006, said Haskel, the firm’s vice president of marketing.

The company cited the recent economic downturn as the reason for the closure.

In some cases, employees will be offered an opportunity to transfer to IWCO’s Minnesota headquarters, Haskel added. The entire Elm City facility’s equipment and operations are being moved to Minnesota, and some 250 jobs will be added there to accommodate the additional work, IWCO said in a press release.

As the economy has slowed this year, direct-mail marketing campaigns have shrivled as well, Haskel explained.

“This was a very completely marketplace decision,” she said. “The U.S. Postal Service recently reported there have been 9 billion fewer pieces of mail this year, and this has been particularly the case in some of our largest market segments, such as credit card applications.”

While IWCO has not lost customers, the amount of advertising done through direct mail has dropped, she said. In some cases, marketing budgets have “dried up.”

Elm City faced loss of the plant in 2006 when Cox Target Media said it would close the plant as part of its Valpak operation. Some 440 people worked there at the time. That October, IWCO said it would purchase the facility, retain most of the extant work force and invest $18.9 million in upgrades over three years. It also announced plans to add 98 jobs.

In a statement Thursday on the about-face, IWCO Chief Executive Officer Jim Andersen the company needed to act “aggressively” due to the economic environment.

“These are difficult actions we must take to aggressively and pre-emptively react to the industry-wide decline in volume,” he said. By consolidating operations, Andersen added IWCO will benefit from “enhanced operating efficiencies, utilization, and productivity to deliver both postage optimization and low-cost, high-value marketing solutions.”