Layoffs at Callaway: 'a devastating blow'

Date: 8/17/2010

Aug. 18, 2010

By G. Michael Dobbs

Managing Editor

CHICOPEE -- In what Mayor Michael Bissonnette described as "a devastating blow to those of us who grew up in this city," Callaway Golf has informed his office the company intends to begin a phased layoff over 18 months that would shift much of its golf ball manufacturing to Mexico.

Bissonnette said the company will maintain "a footprint" in the city and it is expected the high-end golf balls and other specialty products will continue to be made here.

The announcement comes at a time when Callaway has reported profits beyond its forecasts.

Asked about the lay-offs on Friday, Gov. Deval Patrick told Reminder Publications that his administration had worked with Callaway to encourage the company to stay here and will continue to work with other manufacturers to try to retain jobs.

The move to Mexico was announced on July 27 as part of the company's restructuring its manufacturing and distribution operations. The Chicopee facility was not specifically mentioned in the press release.

The press release did not address how many jobs would be eliminated, nor did it detail any services for the displaced workers.

"The redesign of Callaway's global operations creates a stronger, more flexible model that better positions our business for the future," George Fellows, president and CEO of Callaway Golf, said in the July 27 release. "This decision was based on an extensive review of our operations structure and supports the gross margin improvements necessary to secure our leadership position in a competitive market."

On July 28, a press release on the second quarter earnings and an assessment of the company for its first six months reported "net sales of $606 million, an increase of 6 percent compared to last year's net sales of $574 million. Changes in foreign currency rates favorably affected net sales by $21 million for the first six months of 2010, compared to the same period in 2009."

On July 28, Fellows was quoted as saying, "While the golf industry will recover, given recent increased uncertainty regarding retailer and consumer spending in the back half of the year, it does not appear that the industry will fully recover during 2010. We are therefore focused on the controllable portions of our business, including tight management of discretionary spending, investment in emerging markets and other key growth initiatives to drive long-term shareholder value and improvements in our operations such as the restructuring of our global operations announced yesterday. These actions, together with the strength of our brands, will allow us to maximize results in the current environment and prepare us to take advantage of a better market once global conditions improve."

Bissonnette had worked with company officials to reduce their overhead with incentives and by switching the facility from Western Massachusetts Electric Company to the Chicopee Electric Light Department for less expensive rates. He said the city's efforts had resulted in about $1 million in savings for the firm.

The mayor did not know how many workers would be released and how many retained.

"The numbers are still in flux," he said.

The union still has to approve severance packages for the employees, Bissonnette added.

He noted there were once 1,200 workers at the plant when Spalding ran it. Now there are 400 employees.

Bissonnette said there might be some workers finding jobs in the precision manufacturing sector in Western Massachusetts, which has been actively recruiting skilled labor. His administration will work with the state's career centers to try to help the displaced workers.

"It's going to hurt, that's for sure," he added.

He said a priority for his administration would be to try to see if there are other potential tenants for the sprawling plant.

"It's really a shame for the families," he said. "There have been three generations of families who have worked at the plant."