Palm Coast Data did a very nice thing today. It thanked its employees with a picnic-pep-rally (with games to boot), acknowledging all they’d been through with the company’s consolidation and—though that was left unsaid—layoffs, restructuring, and a few new hires. In case you’re new to the scene, or as most people are, unfamiliar with what these folks do, they “fulfill” subscriptions for magazines.
The company did another very nice thing today. It invited and thanked elected and other government officials, and showed them around the place. The Palm Coast and county executives were there, along with their deputies (Sally Sherman in the county’s case, Beau Falgout, a senior planner and leader of the city’s economic development team, in Palm Coast’s case). Palm Coast Mayor Jon Netts and council member Holsey Moorman were there. U.S. Rep. John Mica and Sen. Bill Nelson sent representatives, as did Sen. John Thrasher. Three county commission members were there—George Hanns, the chairman of the commission, Barbara Revels (despite her foot injury) and Alan Peterson. Even Sheriff Don Fleming and his chief deputy, Rick Look, were invited, though Palm Coast Data drew a line at Flagler Beach and Bunnell officials: those were not.
- Palm Coast Data Parent Revenue Drops 21% in 2010, Accelerating to 24% in Last 3 Months
- Lay-Offs at Palm Coast Data; Parent Co. Posts Loss and Signs $20 Million Line of Credit
- Palm Coast Muscles Closer to $10 Million City Hall Through Financial Ploys
- Magazine Readership Off Sharply Among Affluent
The company also did a very dumb thing, as companies hooked on secrecy and PR contracts tend to do: press or public (the same thing, really) were not invited. Palm Coast Data is based in Palm Coast, but it employs an Atlanta-based PR company, Duffey Communications, to flack for it. Jeff Walker, a Duffey Communications man, was standing guard at the guest-registration table Friday afternoon, ensuring that only the right kind of people made it through. He was splendidly non-communicative for a communications guy. Palm Coast Data probably includes him on its employee tally sheet.
It’s perfectly understandable (and defensible, even necessary) for private companies to keep their company functions private. But this was not a company function—not when both the county’s and city’s top administrations, half the city council and a quorum of the county commission were there in addition to state and federal servants. By inviting all these people, the company made it a public function, then redefined public as those with government titles only, as if constituents aren’t quite good enough to see and hear what The Elected may see and hear.
It’s a wonder why elected officials go for this sort of shenanigans. They’re the ones who end up paying the price when their constituents accuse them of backroom dealing. It’s a wonder Palm Coast’s and Flagler County’s elected representatives were willing to take part in the dog-and-PCD show considering that it wasn’t their money but ours that subsidized the company’s sweet deal with the city and the county two years ago. The elected weren’t necessarily aware that the event was closed: council members or county commission members don’t, unfortunately, make it a habit to check on those details, which can be more telling than anything they hear at those pointlessly selective functions. City Manager Jim Landon himself had mentioned a few times in the past few months that the company might hold an open house to let people in town get a peek at what the company is all about. Maybe they thought that was it.
It wasn’t as if the invited heard anything worth the secrecy: John Meneough talked about the consolidation of the company, thanked the company and the city, talked about how the company got through its consolidation nine months earlier than planned (the company closed plants in Illinois, Ohio and Colorado and merged operations in Palm Coast).
No word of course about how yesterday (Sept. 30), Nicholas G. Karabots, the parent company (Amrep)’s majority shareholder, withdrew his offer to take the company private. That Sept. 8 offer helped stanch what had been the company stock’s worst nosedive all year—a 30 percent drop since a minor peak in April. Nor did Meneough chat about Palm Coast Data’s continuing losses and falling revenues—a 25 percent revenue drop in the first quarter of the current fiscal year, compared with the same quarter last year in subscription-fulfillment, which is Palm Coast Data’s core service and the lion share of the parent company’s revenue stream. The numbers continue an unhappy trend. The company is not on the most sustainable course.
Here’s another thing Meneough didn’t talk about: how many people actually work at Palm Coast Data, especially in Palm Coast itself. So it’s not known, besides vague generalities, how close, or how far, the company is from its 2008 staffing level of around 1,000, or its promise back then to add 700 more. It has laid off workers—and has hired some, and some of those new hires have presumably benefited from the tax subsidies from the city, yet there’s no accounting of how many actually have. So much for transparency from either the beneficiary or the provider of taxdollar subsidies. And Meneough didn’t take questions: It was no time for Q&A’s. Duffey Communications trained him well.
The company’s operations head talked about ongoing modernization and attempts to land a new line of business for the company (emphasis on attempts), including possibilities in electronic publishing, though when even Apple and New York’s major publishers haven’t figured out how best to deliver such things as magazines to Kindle-type devices without charging ridiculous sums, that’s a crapshoot for now. And for all the unemployment in the world, Palm Coast Data is having trouble filling IT spots, though one IT type told a commissioner that the company’s technological improvements are naturally cutting down on the need for new hires. Then there were the tours.
Inviting The Elected is the least Palm Coast Data should do: between the city and the county, the company is the beneficiary of half a million dollars in taxpayer subsidies on top of getting Palm Coast’s old city hall for $2.4 million less than its assessed value. When the city or the county buy land, they usually pay three to six times the assessed value or more, unless they don’t like the guy whose land they want to buy. The gift to Palm Coast Data will end up costing city taxpayers at least $10 million more once it builds a new city hall (Landon has been busy shilling for the new thing week after week in front of neighborhood watch organizations, where he says plans for the new city hall are “well received”).
Palm Coast, the county and Enterprise Flagler put together those concessions ostensibly to keep Palm Coast Data from leaving town and consolidate its operations elsewhere. Actual evidence that it was going to move elsewhere was never made public; the public was asked to go on faith—and dread—which it did, as did the council and the county, so for the last two and half years we’ve been hearing about how grateful we should be not only to the city and the county for bending over backward in keeping the company here, but to Palm Coast Data itself for staying. The concessions included generous subsidies for the 700 new jobs the company was to create.
Even as the company is attempting to reinvent itself, right now it’s in survival mode: like newspapers, magazines aren’t about to rebound. More will scale back publishing frequency (as US News & World Report, one of Palm Coast Data’s major accounts, did) or close altogether. Even the Magazine Publishers of America, the trade’s chief association, is getting the message: on Monday (Oct. 4), it will announce its name change at the 2010 American Magazine Conference to this clunker: “MPA—the Association of Magazine Media.” Whatever that means (papier mâché, too, is a medium).
That’s not going to change the trend putting a dagger in Palm Coast Data’s business model. PricewaterhouseCoopers put spending on magazine advertising—the fuel that keeps magazines going—at $10.5 billion last year. It’s expected to be $9.8 billion this year, a 34 percent decline from 2007. The declines are expected to continue. Magazines looking to the Kindle model to stay alive may have an out. But that cuts out the middle man like Palm Coast Data.
The point being that today’s event at Palm Coast Data was really two events. One is well deserved: Cheering the company’s employees is beyond reproach. Most of them are underpaid, overworked and uncertain. A free hot dog and a thank you go a long way. There’s no limit to hoping they have a long and prosperous time with their company, and vice versa.
The second event was an early fall snow job, probably designed as much for the employees as for The Elected. Palm Coast Data, like the industry it “fulfills,” is in trouble. It won’t level with its employees or its invitation-only audience. That’s its prerogative. It’s what companies do even when they’re half-way down the precipice. Ask Bear Stearns. But council and commission members elected to protect the public (rather than company) interest don’t have to buy the calculated flattery, let alone repackage it and sell it—as they will in coming weeks, singing the praises of today’s events—just as Palm Coast Data intends them to do all the way up to Tallahassee and Washington (tax breaks, anyone?).
Yet Palm Coast city officials led by Landon and his economic development amen corner keep pointing to Palm Coast Data as the jewel in Flagler County’s economic development crown, and the example to follow. Forget about the failure of the economic development tax, which was pre-ordained by its organizers’ tone-deaf arrogance. The problem is the aftermath: if betting big with more taxpayer dollars (through an increased sales tax, as the next push is all about) and bringing big companies like Palm Coast Data to town is the adopted strategy, the risks—doubly assumed by taxpayers, who’d be providing subsidies and employees to the baited company—aren’t worth the temporary rewards when a total bust may be the ultimate price. The county placed just that kind of bet on real estate in the past decade, a bet subsidized to the hilt by county and city policies written in the hieroglyphs of developer fantasies.
Ruin wasn’t worth those go-go years. Replicating the same bet on companies, especially those not strong enough to take free enterprise seriously and plan their fate on their own, would be a fresh, Flagler County-styled definition of insanity. Or socialized industry, if you prefer.
But take a look again at all those names attending the Palm Coast Data show today. That’s your “economic development” team. And they think they just got a fresh new set of talking points.