Avco to Close O.C. Office as Its Buyer Consolidates

Consumer finance giant Avco Financial Services, which has been acquired by a Texas-based rival, will close its headquarters in Costa Mesa, eliminating most of the 200 jobs there as part of a major consolidation, its new parent said Thursday.

The move by Dallas-based Associates First Capital Corp. will deal Orange County a double blow, eliminating jobs and a high-profile corporation whose presence for nearly three decades has helped business recruiters attract other companies to the county.

“It’s kind of a sad passing for an organization that used to be one of the innovators in the consumer finance business,” said Carl Danielian, a Newport Beach consultant who once worked for Avco. “Avco’s presence in Orange County was very large.”

Avco employees have been anticipating some consolidation since the company’s former parent, Massachusetts-based Textron Inc., decided to sell the company in August to Associates First in a $3.9-billion deal. The purchase was completed Wednesday.

“It’s kind of a relief,” Avco technical writer Scott Flanders said after the job cuts were announced Thursday morning. “It’s been hanging in the air for several months.”

Under the consolidation, which is designed to help Associates cut $200 million in costs, 425 of Avco’s 8,000 employees worldwide will lose their jobs, Associates said. Avco’s Denver loan-processing office will close by March, and its 200 workers will be eliminated.

Associates also said it will consolidate overlapping operations in the United Kingdom and Canada.

In Irvine, the Avco Technology Center will close in the third quarter this year, after the information systems are converted to Associates systems in Dallas. But the center’s 200 employees will be offered similar jobs by Electronic Data Systems Corp., a Texas-based informational technology and consulting services company that said it has worked out an agreement with Associates to employ those workers.

The future is less certain for employees at Avco’s headquarters in Costa Mesa, which are scheduled to close by the end of March. Associates said they can interview for jobs at its other offices in Dallas or South Bend, Ind. Associates will also help workers try to find jobs in Orange County, should they prefer, spokeswoman Sandra Allen said.

“It’s always unfortunate when you acquire a company and can’t keep everyone,” Allen said Thursday, speaking from Avco’s lobby on the 20th floor of a gleaming Plaza Tower high rise overlooking South Coast Plaza.

Job losses there will impact workers with a variety of skills, from secretaries to Chief Executive Warren Lyons, who announced his resignation to employees Wednesday after 13 years with the company. He had held the top job since 1995.

Avco also has four branch offices in Orange County with a total of 35 employees. Associates, which has its own branches in Anaheim and Santa Ana, has not yet determined what will happen to the Avco outlets, Allen said.

At the Costa Mesa headquarters, most employees declined to comment Thursday. Those who did said it is unlikely that most of their co-workers will choose to leave the state to join Associates.

“I don’t think very many people are going to want to move,” said Joslyne Hanna, a senior administrative assistant. “Once you live around here, it’s hard to leave it.”

While news of the job cuts did not come as a surprise, it was still somewhat unnerving.

“Human nature is to be anxious about change,” said Avco spokesman Jim Straw, who has been with the company 35 years and as of Thursday morning did not know the fate of his job.

The Avco deal is one of a number of consolidation moves in the financial service industry, as the big players acquire weaker competitors, absorbing new customers and revenue streams. Moreover, credit card companies and mortgage lenders have taken business from consumer-lending firms such as Avco.

Avco’s closure will mark the departure of a company that has been a fixture in Orange County since 1971, when it moved from Los Angeles into a new 16-story glass tower at the edge of Fashion Island in Newport Beach.

“We were, I believe, one of only two landowners in the center,” Straw said.

Textron acquired Avco in 1984 for $1.4 billion. In 1985, Avco sold its Newport Beach building to the Irvine Co. and moved to the landmark Fluor building off the San Diego Freeway at Jamboree Road. After a decade, Avco moved to its current suite of offices in Costa Mesa, where it occupies five floors.

In its heyday, Avco employed about 1,000 workers here, said Danielian, the former employee.

In the 1960s and 1970s, Danielian said, Avco was much larger than Associates, which ultimately surpassed its competitor. Avco fell behind with its technological systems and clung to a “storefront” type of business “that was somewhat inefficient,” he said.

Danielian said he came aboard in 1979 to start a bank card program for Avco, but the company shed that operation in 1987, even as more and more consumers were using credit cards to buy furniture and refrigerators, purchases they had previously financed through Avco.

Meanwhile, Associates was growing. Last year, when Associates was spun off from Ford Motor Co., the company began buying smaller financing companies. Avco was its largest purchase.

Once the current changes are complete, the combined global entity will have 35,000 employees in 16 countries, Allen said.