New Wave of Layoffs Will Cut Irvine Co. Work Force by Half
The Irvine Co. said Friday that it plans to lay off 285 employees in its property management and leasing operations within the next eight months.
The layoffs will lower the company’s total number of employees to 635--down from 1,343 in July, 1986, and the lowest figure in more than a decade.
The giant land company, which owns more than one-sixth of Orange County, has already cut 423 employees from its payroll in the last 13 months.
The latest move will place private management companies in day-to-day charge of Irvine Co. properties, including the Fashion Island shopping center in Newport Beach, the Marketplace at University Town Center in Irvine, the Irvine Home and Garden Center and 11 company-owned neighborhood shopping centers.
In a letter to employees Friday, the company said it anticipated that just 34 positions will actually be eliminated and that the remaining 251 positions--and employees--will be absorbed by outside contractors.
Last year’s layoffs were linked with the company’s decision to halt its own farming and construction activities and to begin doing more contracting with tenant farmers, development partners and independent builders.
Dick Sim, president of the Irvine Co.’s new Investment Properties Group, which oversees the company’s office, retail, hotel and industrial development, said Friday that the company’s recent decision to transfer responsibility for property management to outside firms completes the company’s transition to the role of “executive developer.”
Included in the 285 layoffs announced Friday are 159 apartment managers that the company previously had said would be laid off in October.
In the future, Sim said, the Irvine Co. will keep a small core of management personnel to concentrate on planning and development, while overseeing dealings with outside property management firms and builders.
That arrangement, he said, will give the company greater flexibility to pace development on its property in step with market demand.
He denied that the Irvine Co. has any financial problems or that the layoffs would substantially reduce operating costs.
Sim said the use of outside builders has already helped Irvine Co. Chairman Donald L. Bren achieve his goal of greatly expanding the company’s portfolio of such income-producing properties as industrial and office buildings.
In two decades of doing all of its own construction, leasing and management, Sim said, the Irvine Co. accumulated just 700,000 square feet of industrial buildings. But since it began using outside developers 30 months ago, he said, the company has added 2 million square feet of industrial buildings and has 1.3 million more square feet under construction.
By using outside builders and managers, Sim said, the company plans soon to greatly accelerate its development of shopping centers in Irvine and Tustin.
Under the company’s new structure, he said, “we can do five to eight shopping centers at one time, rather than one at a time.”
Dan Beals, the Irvine Co.’s director of human resources, agreed that the main purpose for the reorganization is to change the business philosophy.
But he said some savings may be achieved if the company later decides to eliminate positions in corporate groups such as payroll, accounting, personnel and management information services that may no longer be needed to serve a shrunken work force.
The new layoffs will affect five of the Irvine Co.’s operational divisions: Irvine Pacific, Irvine Retail Properties Company, the Irvine Hotel Company, Community Cablevision and California Recreation Company.
Sim said he expects to pick a company to manage Fashion Island within the next two weeks and to phase in other management companies in the next eight months.
At Community Cablevision, Beals said, the company expects that 47 Irvine Co. workers will transfer to Doral Inc., a Los Angeles-based firm that is negotiating to take over installation, maintenance and customer service operations for the cable TV unit.
Doral, which already contracts with the Irvine Co. for mechanical operation of the company’s office buildings, is also expected to maintain and repair the company’s marinas in Newport Beach, Beals said.
As a result, he said, five dock hands working for California Recreation Co., an Irvine Co. subsidiary, are expected to go to work for Doral.
In its memo to employees, the Irvine Co. said responsibility for negotiating leases and land sales for its golf courses, senior housing, health care and recreation activities will be transferred from its Hotel Company to another division. The other division is the Irvine Land Management Co., Beals said.
In the restructuring, five positions in the hotel company will be eliminated.
As previously announced, the company’s Irvine Pacific subsidiary, which dropped out of home building in the past year, is also withdrawing from the apartment management business. The company said Friday that it is eliminating 159 positions in Irvine Pacific and that only about 15 employees will remain.
Most of the 159 employees--all apartment managers--are expected to go to work for the private management companies that will take over from Irvine Pacific. Beals said the company is close to agreement on contracts with Western National Properties, which will develop and manage 5,000 apartments, and with Anza Management Co., which will manage 1,600 apartments.
A third management firm yet to be chosen will manage the remaining 1,500 apartment units owned by the Irvine Co., Beals said.
MAJOR CHANGES AT THE IRVINE CO. April, 1983: Donald L. Bren buys control of the Irvine Co. for more than $500 million.
June, 1986: The company creates a separate office and industrial firm responsible for building and leasing the Irvine Co.’s projects throughout Irvine and Newport Beach. About 30 employees are laid off in the reorganization.
July, 1986: A total of 243 of the Irvine Co.’s 1,343 employees are laid off, the largest cutback in the company’s history. Charitable and political gifts and donations are reduced. The company’s annual “roundup” party is canceled as a result of the cost-cutting measures.
June, 1987: Irvine Pacific, the company’s residential building division, announces that it is dropping out of the home-building and apartment management businesses to concentrate on land development.
August, 1987: The Irvine Co. and dissident shareholder Joan Irvine Smith square off in court in a dispute over the value of the stock she agreed in 1983 to sell to Bren. Smith wants $500 million for the 11% share of the company she and her mother are selling; Bren is offering $88 million.
August, 1987: The company announces that 285 employees in five divisions will be laid off over a period of eight months. The anticipated reductions are in addition to about 180 layoffs that occurred gradually over the previous year. In a memo to employees, the company said it believes that a majority of affected employees will be hired by outside contractors.
