Another Grim Holiday for Workers at Circuit City

Circuit City is filing for bankruptcy. This should surprise no one. The beleaguered electronics retailer recently announced they are closing more than 150 stores and laying off thousands of workers just before the Holidays. How many? Over 7,000 workers will find themselves without a job by Christmas. More cuts are expected to be announced as the reality of the situation unfolds. 

You may recall that last year around this same time I participated in a boycott against Circuit City in protest of management firing 3,400 top salespeople. They would allow them to return after 10 weeks (The holidays) to reapply for their former position at lower pay. The decision by management was an incredible insult to the workers and one that will go down in history as a mean spirited dismal failure. 

Circuit City was never able to recover from managements blunder instead their sales plummeted, customer satisfaction suffered and their reputation for not caring about employees persists. 

In the last 12 months customers have complained about returns not being accepted and  store warrantees not being honored. Store warranties are a lucrative part of any electronics retailer business model. With experienced salespeople replaced with less experienced sales staff, sales of the warranties collapsed. 

The stock market and slowing economy dealt a final blow leaving management no choice but to capitulate. Sales this holiday season are expected to be the lowest they’ve been in decades. The problems are likely to spread to other companies like Hewlett Packard which is owed more than a 100 million dollars by the retailer. The value of commercial properties owned by Circuit City has also dropped.  

KB Homes to Declare Bankruptcy?

You could see the crowd behind the caution tape at the Indymac bank in Pasadena today. There were over 100 desperate people in line despite the FDIC’s best assurances that there is absolutely no rush to get your money out. “Everything is fine” they say on the radio. “Plan on coming down another day when the crowds have died down a bit,” customers were told. FDIC agents served free sandwiches and drinks to the people who stood in line for hours according to one news announcer. Meanwhile a dozen or so news vans peppered the neighborhood. A run-on-the-bank is reminiscent of the great depression and the last Bush Presidency. I remember when the now infamous Savings and Loan Scandal broke causing over 2000 financial institutions to collapse from bad loans. Now Indymac is the latest to fall because of shifty no down, low interest, no documentation, “We’ll lend to anyone” shenanigans. Remember those days? KB Homes stock took off like a rocket back then. But then it all came to an end with the bursting of the residential bubble. Tomorrow General Motors will announce huge layoffs and plant closings. A lot of workers and their families will be hurt by it. Some will say that the two have nothing to do with each other. That the rise in oil prices and the housing bubble are completely separate issues. Perhaps; but one thing is for sure, the workers and the customers are always hurt when something like this happens. Keep an eye on KB Homes this week. If you see more sales offices close, don’t be one of those poor souls waiting to just get out with whatever you can get. I guarantee the FDIC won’t be serving any sandwiches.