Bracing for sales, job hits
From the local Lamborghini dealership to dry-cleaning shops to office cubicles, the pending sale of Countrywide Financial Corp. prompted a universal question Friday: Now what?
The troubled mortgage lender is a major presence in the business and residential corridor that straddles Los Angeles and Ventura counties on both sides of the 101 Freeway. More than 600 people work at the headquarters complex in Calabasas, with about 4,500 more a few miles to the northwest in Simi Valley.
Thousands more work at sites scattered from the west San Fernando Valley to Thousand Oaks, as well as in offices throughout Southern California.
How many of those jobs will be jettisoned by Bank of America Corp., the North Carolina-based financial giant that has agreed to buy Countrywide for $4.1 billion, is unclear. But when one corporation buys another, it generally expects cost savings, and that usually translates into job cuts.
“You just ruined my day,” dry cleaner Doug Tempo said after learning of Countrywide’s takeover. “Business is slow enough. I don’t need another hit.”
Tempo, whose shop is down the street from a pair of Countrywide office buildings in Simi Valley, estimated that he has already lost about 4% of his business because of recent layoffs and transfers at the mortgage lender.
In September, Countrywide said it would cut as many as 12,000 jobs as the downturn in the housing market and chaos in the home-lending business devastated the firm’s finances.
For Countrywide employees, the takeover only deepens the uncertainty they have been dealing with for months.
“It’s better than being bankrupt,” said an employee in Simi Valley who asked not to be quoted by name. “Ideally, I would have liked it if Countrywide had survived and pulled through.”
He thinks the companies are a good fit but said “it’s still possible I won’t have a job in a month. You never know what Bank of America is going to do.”
Kenneth Lewis, Bank of America’s chief executive, praised Countrywide’s mortgage operations Friday as “industry leading” but offered few specifics about his plans for the firm’s 50,600-person workforce.
Bank of America said that combining its mortgage operations with Countrywide’s would shave the businesses’ combined operating costs by 11%, or $670 million a year, by 2011. But bank executives declined to say how much would come from cutting jobs.
One near-term victim could be the company’s Calabasas headquarters, which served as the home offices of aerospace company Lockheed Corp. before it merged in 1994 with Martin Marietta and moved to Bethesda, Md.
Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., predicted that “a lot of the headquarters staff will disappear.” He expects the firm’s nerve center, a low-slung, Mediterranean-style building perched on a hillside, to be on the market within the year.
That would affect not only Countrywide workers who are laid off or transferred but also the various companies that do business with Countrywide, including law firms, print shops and janitorial outfits, Kyser said.
The fallout from that could further weaken the area’s wobbly real estate markets, said Delores Conway, director of USC’s Casden Real Estate Economics Forecast. She noted that earlier layoffs at mortgage firms in Orange County dinged home prices there. Commercial real estate in the Calabasas area also would suffer, Conway said.
“Countrywide has already had some layoffs, and you will see it reflected in the office market,” she said.
The outcome could be better in Simi Valley, Kyser said, especially if Bank of America opts to expand Countrywide’s mortgage servicing and origination operations. Countrywide’s nationwide servicing arm -- which handles bill collection, foreclosures and workouts with troubled borrowers -- grew from 8,059 employees to 8,854 from July through September last year as the firm shifted its emphasis from making loans to servicing them.
“Sooner or later the housing market will recover, and Bank of America will be in a position to really generate a lot of business for themselves with this acquisition,” Kyser said. “The mortgage servicing operations will stay, and could actually get bigger.”
In the long run, “it could be Simi Valley’s gain.”
That would be good news for Ventura County, which was rocked in August by news that its biggest private employer, Thousand Oaks-based biotech firm Amgen Inc., was cutting as many as 2,600 jobs.
Last year, the county’s workforce grew by a meager 0.8% -- or slightly more than 2,000 jobs -- down from 2.3% growth in 2006.
Simi Valley City Manager Mike Sedell said his office would approach Bank of America to discuss how Countrywide’s loan servicing operations in his city would fit into the consolidated company.
“We’re not looking at a potential disaster at this point,” Sedell said. “We’re looking to make lemonade out of this thing if we can.”
In Thousand Oaks, city officials hope that Countrywide Bank, the mortgage firm’s retail banking operation that’s based there, will escape unscathed. City Manager Scott Mitnick said Countrywide representatives assured him Friday that little would change after the planned merger, at least through next year.
Mitnick hopes there isn’t a name change looming for the Thousand Oaks Civic Arts Plaza’s Countrywide Performing Arts Center.
In 2003, the mortgage firm agreed to pay $4.25 million for naming rights on the center, which bills itself as the largest theatrical venue between Los Angeles and San Francisco. The final payment was made last fall, and Mitnick would prefer that the Countrywide name remain on the building -- and on the illuminated sign overlooking the 101.
Another worry: losing the local touch when it comes to charitable giving.
Teresa Moore, manager of Lamppost Pizza in Simi Valley, said Countrywide was “huge” in helping local schools -- donating computers, reams of paper, and money to sports programs.
“Is Bank of America going to step up and take Countrywide’s place?” she asked. “Otherwise, it’s back to fundraising.”
In the meantime, some retailers hope the area’s residents who don’t rely on Countrywide or Amgen for a paycheck will keep things humming.
“We have a lot of music producers and wealthy real estate investors out here, and they seem to be doing just fine,” said Jessica Sarmiento, manager at Lamborghini Calabasas, which sold 15 of its super-luxury cars during its first month after opening last summer but only eight last month. She said the downturn might be partly because of the slow winter sales season.
Others are putting their faith in the prediction that Countrywide’s new owner ultimately would expand rather than shrink its new possession.
Certainly, workers from Green Acres Farm Market and Catering didn’t seem too concerned about losing their longtime customer. They were in the parking lot of Countrywide’s operations center on Simi Valley’s Tapo Canyon Road, grilling tri-tip, chicken and veggie kebabs Friday for an appreciation lunch for the lender’s employees.
“So this will be our last barbecue for Countrywide?” joked Tracy Barker as he turned meat on the grill.
“I don’t think it’ll matter . . . The same people are still going to be there. I don’t think it’s going to be that bad.”
Times staff writers Daniel Costello, Gregory W. Griggs, Peter Y. Hong, Roger Vincent and E. Scott Reckard contributed to this report.
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