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Lack of buildings leads to loss of jobs

Local company expects to lay off 200 employees

Posted: April 19, 2013 2:00 a.m.
Updated: April 19, 2013 2:00 a.m.

Margarita Moran labels packages on an assembly line in the warehouse at AMS Fulfillment in Valencia.

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The lack of available industrial space is leading to the loss of jobs at one local company, which was unable to secure enough space quickly enough to satisfy a major client.

AMS Fulfillment was notified by Toms Shoes in February that the retailer was moving its business to a third-party order fulfillment company in Mira Loma, said Ken Wiseman, CEO and managing partner.

The shoe retailer needed a large enough space – some 500,000 square feet – to accommodate changes in automation that it wanted to make.

Despite looking at a number of options, including building a new facility, in the end, AMS couldn’t make a deal fast enough to meet the retailer’s needs.

As a result, AMS lost its largest client and last week filed a Worker Adjustment and Retraining Notice with the state. The notices are required by the Employment Development Department of any company needing to lay off 50 or more employees in one month and to give employees 60 days to notice to look for another job.

Over 200 employees will be affected by the job losses, Wiseman said. But the company spoke with employees, and has remained involved in weekly conversations with them, since AMS was first notified in February.
AMS has also retained a job service company, JVS, that it has used in the past when hiring employees.

Doing a quick study by zip code, Wiseman said that of the positions affected by the layoff notice, only 55 of them are filled people who live in the areas of Valencia, Newhall, Saugus, Canyon Country, and Castaic.

Employees may have the opportunity to be hired by the company that received the retailer’s account, he said. Some 82 employees live in locations that make them about equidistant to the new company and may be eligible for a job transfer.

“The company that won Toms business agreed with us to seriously consider taking our staff that would be willing to relocate or commute,” Wiseman said.

A third group of employees would have a longer commute, if hired by the new company, but they do not live in the Santa Clarita Valley, he said.

AMS looked at a number of opportunities to get under one roof, including moving into one property within the Valencia Commerce Center, said Doug Sonderegger, executive vice president with CBRE.

“It also looked a little bit farther outside of the area,” he said.

AMS did find one building that was large enough but in the end, timing and other factors worked against them, Sonderegger said.

There is a tight supply of large industrial buildings and demand is fairly strong, said Jonas Peterson, president and CEO of the SCV Economic Development Corp.

“There is light at the end of the tunnel,” he said. “A variety of new parcels are getting through the permitting process as soon as possible. Some (builders) are waiting to have a tenant in place; others are willing to make a speculative jump now.”

Peterson estimates there should be 6 million square feet of new product ready in the next three to four years.

“We’re just rounding the corner from where rents were too low to substantiate building,” Sonderegger said. “It’s pretty apparent there’s renewed enthusiasm in building.”

The third-party order fulfillment firm was willing to build a facility to meet Toms’ needs, Wiseman said. But, it just couldn’t be built quickly enough.

Builders Intertex, LNR and the people behind the Sterling Gateway property were willing to construct a building, Sonderegger said.

“The good news is,” Sonderegger said. “is that some of the facilities they (AMS) were going to let go, they’re now going to retain because they’ve been able to secure other business.”

“We are working on sales very aggressively and won some substantial accounts recently,” Wiseman said.

For now, the loss of the shoe retailer allows AMS some breathing space according to the owners. The company can re-focus its business for all of its clients, including the new ones coming on board, he said. It also makes the firm less vulnerable to being as dependent on one major client.

After the layoffs, AMS expects to retain more than 200 employees plus the temporary personnel it engages to cover spikes in activity.

“Based on historical growth, it will take two to three years of new sales to match the loss of this account,” Wiseman said.

 

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