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Toys center won't open

August 10, 2000|By DON AINES

Toys center won't open



CHAMBERSBURG, Pa. - Approximately 300 people learned Thursday the jobs they were recently hired for would soon disappear with the announcement of an online retailing alliance between Toysrus.com and Amazon.com.

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Toysrus.com, the e-commerce arm of Toys "R" Us Inc., announced in April it would open a distribution center at a 700,000-square-foot facility in the Chambers-5 Business Park. Toysrus.com and Amazon.com announced a "strategic alliance" Thursday that local economic development officials said means the nearly completed distribution center will not open at the end of this month.

"Today was a real surprise and shock," Chambersburg Area Development Corp. Executive Director David G. Sciamanna said Thursday. "I've never seen a decision of this magnitude that was reversed this quickly," he said.

"You could have knocked me over with a feather," Franklin County Area Development Corp. Executive Director L. Michael Ross said about his reaction upon hearing the news. He said he had talked with local Toysrus.com officials Wednesday afternoon and they told him they were preparing to hold a job fair at the center.

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Ross said those local Toysrus.com officials were "taken aback as well," by the announcement.

"We have people that have left jobs to take jobs there," Sciamanna said. He was at the distribution center recently said "the parking lot was overflowing" with the cars of recently hired employees undergoing training in anticipation of the center opening for business.

"We can stay until it closes," Teresa Leevy said she and about 300 other employees were told Thursday. Leevy, 38, of Williamson, Pa., said the workers were not told when the center will close.

"I was training to be a packer, to pack toys," said Leevy, who was hired just two weeks ago. Married and the mother of three children, she said she left GS Electric Co., Chambersburg, after more than five years to take a job with Toysrus.com.

She said she made the switch for better pay and a different working environment. Leevy said there was no indication prior to Thursday that the center was not going to open and the announcement came as a shock.

"Toysrus.com... will identify, buy and manage inventory; Amazon.com will handle site development, order fulfillment and customer service, housing both Toysrus.com's and its own inventory in Amazon.com's U.S. distribution centers," according to a joint press release from the companies.

"Amazon.com is going to be doing the distribution part of the business," Sciamanna said. "They have the capacity to handle that part of the business without adding additional infrastructure," he said.

When Toysrus.com Chief Operating Officer Jonathan F. Foster announced plans for the center on April 11, he said the company's fast-growing online business required new distribution centers in Chambersburg and California to augment a 550,000-square-foot center in Tennessee.

Ross said the Tennessee and California centers will also be closing.

Foster said in April Toysrus.com was leasing the building from WCN Properties, owned by William and Craig Nitterhouse, but did not disclose the terms. He said his company would invest $25 million to equip and staff the building and have $50 million in inventory there by the fall.

"We believe they have a 10-year lease they are obligated to," Ross said. "They have a vested interest in finding another employer to go into that building" because of the millions it has spent on conveyor systems and other equipment.

Toysrus.com and Amazon.com did not return phone calls Thursday. The Nitterhouses could not be reached for comment about what will happen with the building.

"We intend to work cooperatively with the Toys 'R' Us officials to find a new tenant for the building as soon as possible to absorb the employees and management personnel they hired," Ross said.

Toysrus.com was going to hire approximately 300 year-round employees with another 500 or more being hired for the holiday rush, Foster said then.

"You have people who literally two weeks, three weeks, four weeks ago, left their jobs and now are on the street," Sciamanna said.

Ross said state and county job placement services will be mobilized to help the dislocated workers. When Foster was in Chambersburg in April he said Toysrus.com had been approved for $500,000 in state grants, including $250,000 for job training.

"That money has never been distributed," Ross said.

Sciamanna and Ross said they did not know whether the employees will be covered by the federal Workers Adjustment and Retraining Notification (WARN) Act. The act requires companies with more than 100 employees to give employees 60 days notice of a plant closing.

"They recognize the impact of their decision on this community and want to minimize the impact" on the dislocated workers, Ross said after speaking with Toysrus.com officials Thursday.

"This world of dot-coms is still evolving and there's a lot of volatility in the e-commerce business," Ross said.

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