Palm Coast Data, once Flagler County’s largest private employer, will lay-off 150 employees–nearly 40 percent of its workforce–and by August leave its home on Commerce Boulevard for the past several decades.
John Meneough, the company’s CEO, said Palm Coast Data intends to keep its remaining 250 employees in Palm Coast, but it’s not yet clear where, and some of those employees may continue working from home, as they have been through the coronavirus emergency. The company is looking for a new home within the city limits, but in space much smaller than the 204,000 square feet it occupies in two buildings on Commerce Boulevard.
Though accelerated in part by the coronavirus crisis, the layoffs are part of a broader restructuring of the company under its Irish-owned parent, while its exit from Commerce Boulevard is the result of a settlement this week of a lawsuit by its landlord–Palm Coast Data’s former owner–over allegations of unpaid bills.
Palm Coast Data is, in effect, getting evicted from the property.
“I think we have about 400 people, there will probably be about 250 people left when everything is done, give or take a few,” Meneough said in an interview with FlaglerLive at his office today. That includes part-timers. Two years ago, a fifth of the company’s employees were part-timers.
The company is outsourcing two substantial operations: both its inbound and outbound mail operations, including the lettershop. The subscription-fulfillment operations at one point before last decade’s Great Recession processed some 12 million pieces of mail for 300 publications. Its diminishment, and now disappearance, is expected to substantially affect operations at Palm Coast Post Office, which had maintained an annex within the Palm Coast Data lettershop.
Those operations are being outsourced, Meneough said, to CDS Global, a Des Moines-based company, some of whose executives have shuttled over the years between there and Palm Coast Data, including Rory Burke, who retired from Palm Coast Data last November. (Burke filed a breach of contract lawsuit against Palm Coast Data last month over unpaid severance.)
The layoffs are an additional blow to the local workforce, already battered by coronavirus layoffs, and to Palm Coast as a city, whose identity has long been closely tied to high-employment, low-impact, environmentally clean businesses like Palm Coast Data.
“I was saddened to hear of the latest news about Palm Coast Data,” Palm Coast Mayor Milissa Holland said today. “As a long time employer of Palm Coast they have made significant positive impacts towards our residents’ lives. We appreciate their commitment to remaining in Palm Coast and city staff are reaching out in a collaborative effort to better understand their immediate and ongoing needs to determine ways we can be helpful during this transition. The city is committed to business retention as one of the strategies of economic development.”
Twelve years ago, the city provided $400,000 in tax incentives and ceded the 70,000 square feet of 11 Commerce Boulevard, which had been Palm Coast’s City Hall, to Palm Coast Data as part of an economic-incentive package to keep the company operating locally. (The company eventually bought the building for $3 million.) Palm Coast Data was in the midst of consolidating operations from Colorado and Ohio into Palm Coast and pledging an increase of its workforce to about 1,700, from 1,000 at the time. Figures filed with the Securities and Exchange Commission over the years show the company never exceeded that peak, its total number of employees declining steadily during and after the Great Recession. The company had to return over $1 million to the state of Florida for not meeting employment benchmarks, and after receiving $3 million in cash in state economic incentives.
“The big mass publishers are gone, you know that, the Times, the Newsweeks, the US News, the Sports Illustrated, all of those, it’s all gone online because people want instant information, instant gratification,” Meneough said. “It’s like I used to tell everybody when I was growing the business. I think there are going to be other opportunities that aren’t even defined today. I remember when I started out on the business, we didn’t have a letter shop, we didn’t even have a call center. I think there’s going to be other things that will grow out of this that will open it up to different market places.” Meneough announced the coming layoffs and realignment to the company’s staff in a letter on Tuesday.
“When I started in the business,” he said, if a publication had a million subscribers, “we’d send out five pieces of mail on an annualized basis. Now it’s way lower than that because people are paying online, they’re paying credit cards that are automatic withdrawals, whatever it is. You’re just not sending the invoices out, and are you sending the renewals? No, whether it’s membership or anything else. So that’s shrinking. There’s still an older population that still likes to get the hard copy. So instead of having a big warehouse and a big space like that, let’s outsource that, and let’s also outsource our front end, but keep our customer care here, which is telephone operations, which is inbound.” The company is looking at means of using artificial intelligence to conduct some of its membership-related operations.
Palm Coast Data had weathered difficulties for much of the past decade as publications shrank or went out of business, though the company around 2018 appeared to have stabilized. That year it was acquired by Studio Media Group, an Irish company, in a complicated deal with its former owner, Amrep Corp. The deal involved a $1 million cash payment and turned Amrep into Palm Coast Data’s landlord: Amrep took ownership of the two buildings on Commerce Boulevard, requiring Palm Coast Data to make rent payments starting at $1.9 million a year, and rising to $2.5 million by the 10th year.
The relationship between Palm Coast Data and Amrep quickly soured, according to court papers.
Last December, Amrep, acting through two local subsidiaries, sued Palm Coast Data over allegations of unpaid rent and other charges, while Palm Coast Data accused Amrep of fraud for having allegedly hidden liabilities when Studio Media Group was buying the company. At one point Palm Coast Data agreed to buy one of the buildings on Commerce Boulevard, but that agreement fell apart, too, triggering the settlement agreement leading to the company’s eviction.
On Monday, the two sides settled out of court, with Palm Coast Data and Amrep agreeing to end the lease at the two buildings on August 15, when Palm Coast Data “shall be evicted and removed from the premises without further litigation,” according to the joint stipulation for final judgment.
“It’s done, it’s done. Period,” Meneough said of both the legal case and of Palm Coast Data’s relationship with Amrep.
The settlement with Amrep is one half of a major development affecting Palm Coast Data. The other is Studio Media’s $7.5 million acquisition on Monday of Darwin CX, which Meneough described as “our database of the future, and fulfillment software of the future.”
Those transitions are taking place when about half of Palm Coast Data’s existing employees are working from home. That’s not going to change much for now. “We’re going to continue that until–your guess is as good as mine when this thing is going to be over with, the virus,” Meneough said. But he stressed that there would not be a period of time when Palm Coast Data would be homeless: it will have found a new location by August.
“Palm Coast Data is an important part of the community, we want to remain an important part of the community. We want to bring other opportunities in here and look for some growth when the world settles down a little bit. Who knows when that will be,” Meneough said. He would not elaborate on his own future at the company, though at 72, and already brought out of retirement to run it after Burke’s departure last year, Meneough is not likely to remain there too long.
“There’s sadness and concern. Any time you have staff change and anything else like that, it’s always tough,” he said. “We’ll try to make it as soft as possible for everybody, because these are not fun times. Not fun times for anybody. And I feel sorry for the 35 million people that declared unemployment for the last what, six, seven weeks. That’s not good, too.”