Tales of two Oregon towns give lessons on lessening outsourcing’s sting – How each dealt with the same departing call-center firm to try to save jobs

What do city leaders in Bismarck, N.D.; Morganfield, Ky.; Wise, Va.; Ponca City, Okla.; and Sterling, Colo., have in common?

Heartburn, perhaps, over Sykes Enterprises call centers.

By SCOTT BARANICK
ST. PETERSBURG TIMES

http://seattlepi.nwsource.com/business/187405_callcenters23.html

Sykes is closing its U.S. call centers at a rate of one a month. Although five cities so far have escaped the guillotine, any one of them might be lopped off next as the Tampa, Fla., company pursues cheaper labor overseas.

The tales of two rural towns in Oregon — Milton-Freewater (pop. 6,470) and Klamath Falls (pop. 19,642) — may offer some clues for city leaders on how to protect the jobs of local Sykes workers.

Lesson No. 1: Assume Sykes is going to close your call center, too.

In 2004 alone, the company has given nine of its U.S. call centers the pink slip, including its two Florida sites. Why not assume yours will be next?

That’s what Klamath Falls, a former logging community, did last year.

At the time, city officials were well aware Sykes had closed several U.S. centers. They also knew Sykes’ local head count was falling.

So when Sykes announced in late 2003 that it would lay off all but 80 of its Klamath Falls staff, city leaders saw the writing on the wall.

"We had been monitoring (the center) for some time," said Trey Senn, executive director of the Klamath County Economic Development Association.

Officials in Milton-Freewater, where Sykes was both the top employer and taxpayer, also knew about the closures elsewhere. But Deputy City Manager Linda Hall said the town felt secure. The March announcement that Sykes would close its facility there and lay off all 264 workers came as a shock.

Lesson No. 2: Take the offensive.

After Sykes said it would cut its Klamath Falls staff to 80, city leaders called the company with a point-blank question: Would you be willing to sell or lease your property if we found a new tenant?

The fact that Sykes said "Yes" made it clear the company was not planning to revitalize its operation, Senn said.

The company agreed to sell its 20 acres, 42,000-square-foot building and all the furniture, computer equipment and cabling inside for $4 million.

Sykes spokesman Jeff Tucker said the company lowered its price to help the community.

In Milton-Freewater, an agricultural and mining community near the Washington border, officials sought a similar package from Sykes, minus the $4 million price tag. In a March letter to then-CEO John Sykes, City Manager Delphine Palmer said the community deserved to get the building and land free of charge because of incentives it offered the company in 1998. Among other goodies, the city took out a 20-year, $2.2 million loan from a local bank and gave the cash to Sykes.

Sykes refused. After all, Tucker said, the company never guaranteed Milton-Freewater a particular number of jobs, wage level or length of stay.

Lesson No. 3: Act quickly.

Klamath Falls didn’t waste any time when it learned that a growing Virginia company was seeking to lease additional call centers.

By Thanksgiving, two months before Sykes was to close its Klamath Falls facility, Senn was meeting with company representatives.

The company said it would sign a 10-year lease at $10 per square foot but wanted a quick turnaround.

Fearing a bank loan would take too long, city officials borrowed $4.5 million from the state’s strategic reserve fund at 5 percent, bought the building from Sykes, and sank the remaining $500,000 into renovations. City and state officials also offered the company $400,000 for employee training.

The fast work paid off. Privately held NEW Customer Service Cos. of Dulles, Va., which handles phone calls concerning extended warranties on computers and other goods, chose Klamath Falls over several competing cities.

Lesson No. 4: Keep your expletives to yourself.

Milton-Freewater admittedly was a little angry at Sykes. The company arrived in 1999 with a flourish and, according to city officials, tried to quietly head out five years later by faxing a goodbye letter to Mayor Lewis Key.

But Hall said company officials didn’t like it one bit when they picked up the newspaper in March and read bitter quotes she and others aimed at it.

Milton-Freewater recently lost out to Hays, a town in Kansas (pop. 20,013) and site of another ex-Sykes call center, for yet another contract with NEW Customer Service Cos.

Lesson No. 5: No guarantees, no goodies.

Companies such as Sykes and NEW have their choice of job-starved communities.

"With Sykes, we had committed $200,000 of grant money in return for a guarantee of 200 jobs for one year," Klamath Falls’ Senn said. "When we did it all again this time, the state asked for at least 400 full-time jobs for five years. And NEW was excellent on it, said, ‘Yep, no problem.’ "

The NEW facility already employs 560 workers.

What about Milton-Freewater? Sykes canceled its closure notice in May after obtaining some new work. A small crew still works there; the search for a new tenant continues.