One of Medford's hallmark e-commerce businesses will exit the Rogue Valley by the end of the year.
More than 200 employees at Musician's Friend headquarters on Chevy Way have been told operations at the nation's largest direct-response retailer of musical instruments will be consolidated with parent company Guitar Center's facilities in Westlake, Calif.
Employees were informed a possible transfer was in the works during January and the decision was announced internally on Tuesday. The company is expected to make a formal announcement today. Telephone calls to Guitar Center headquarters as well as Musician's Friend were not returned on Wednesday.
A person answering the telephone at Chief Executive Officer Craig Johnson's office said Pamela Turay, vice president of human resources, was handling media contacts.
The company began offering relocation or severance packages to the approximately 230 local employees Wednesday, an employee who wished to remain anonymous confirmed.
"It's unfortunate and disappointing," said Medford Deputy City Manager Bill Hoke. "We're going to have IT people, designers, marketing, human resources and administrative people on the street looking for jobs. They are people with more than just one skill set. Those are good-paying jobs and it's a clean industry. It's disappointing they will not be remaining here."
Information technology, marketing, finance and accounting, as well as procurement activities, are housed in the 44,800-square-foot headquarters. Some units will be transferred sooner than others, but employees were told the move will be complete at year's end.
On top of layoffs at Harry & David and other agriculture-related firms, the shuttering of small businesses in recent months and the lack of construction activity, the news was hard to swallow.
"It's an additional hardship we'll have to deal with in the community," Hoke said. "If they don't move, there will be that many more people in the job market. Right now, there's not an excess of jobs. They've had very good people and well-trained, dedicated people."
The company was founded by Robert and DeAnna Eastman in a San Diego garage in 1980. They moved to the Rogue Valley in 1984 and ran the company out of an Eagle Point milking barn. The company expanded rapidly as catalog sales grew. Staffing reached around 250 before distribution was shifted to Kansas City and call center activities moved to Salt Lake City.
Guitar Center, which became publicly traded in 1997, acquired Musician's Friend in May 1999. Robert Eastman stayed on as its chief executive for the next decade, grooming present CEO Craig Johnson. Bain Capital acquired the company in October 2008 and took it private.
Guitar Center chairman Marty Albertson retired last year, Eastman said.
"You can see the logical progression," Eastman said. "This move came after the two old guards who understand how the business was structured were gone. Bain Capital will basically rewrite the way things are done, right or wrong."
Consolidation was a likely end, he said.
"There wasn't a need for consolidation because of a downturn in business or the economy," he said. "Bain Capital loves consolidation and what it can do to get synergies. For them it's a dream come true, although I don't think they understand the difference between retail and mail-order.
"It's a sign of the times, where businesses are leaner and meaner," Eastman said. "You continue to do more with less. Whether anyone wants to admit it, it's hard to pull out of the recession because our new bull market is jobless."
Mark Von Holle, president of the Southern Oregon Regional Economic Development Inc. board, said the Rogue Valley has carved out a solid technology industry with 12 of the 18 sectors represented. While the immediate future of displaced workers is in question, long-term, he expects growth spurred by business incubator activity.
Emerging technology firms may benefit from available talent, he said. "As we go forward there is going to be a greater demand for technically skilled workers."