Layoffs hit cell phone recycling firm ReCellular despite 50% growth
Ann Arbor-based cell phone recycling firm ReCellular Inc. laid off dozens of workers four months after reporting that its sales would rise 50 percent in 2011.
The company, which recently moved its headquarters to Ann Arbor but also maintains a 57,000-square-foot recycling plant in Dexter, confirmed that it had recently cut jobs.
Joe McKeown, ReCellular's vice president for marketing and communications, declined to reveal how many workers the company cut.
Sources familiar with the move said about 70 people, including full- and part-timers, were laid off.
"Unfortunately we did have to take some personnel actions as we right-size our business for what we see going forward," McKeown said. "We believe that we’ve taken all the actions that we need to take, and we tried to treat everybody with as much respect as possible."
The layoffs come halfway through what ReCellular has previously described as a year of rapid growth. In February, the company projected that its revenue would rise more than 50 percent from $66 million in 2010. The firm reported reselling or recycling 5.2 million phones in 2010.
Asked what's driving the cuts, McKeown pointed to "seasonality in the business" and consumers' transition to smart phones, which are more complex than earlier cell phones.
But he said "there’s no reason to be concerned" about the viability of the company, which still employs "well over 250" people, including some at smaller satellite offices outside Michigan.
"We’re stable, we’re operating profitably," McKeown said. "We’re just attempting to make sure we serve our various customers and shareholders."
The move also comes a month after the company announced a number of changes to its executive ranks.
The company announced May 16 that it hired McKeown as VP of marketing and communications, Eric Miller as vice president of business development and marketing, and Elyssa Edwards as vice president of electronic commerce.
“With the market for re-commerce electronics expected to grow by more than 60% over the next 3 years, we’re investing in our senior leadership team to help capture the majority of that growth," ReCellular CEO Steve Manning said in a news release issued last month.
In May 2009, Manning replaced ReCellular founder Chuck Newman as CEO, though Newman continues to serve as chairman of the company's board.
Earlier this year, ReCellular moved its corporate headquarters to 13,000 square feet of subleased space at the facility on Phoenix Drive that also houses Borders Group Inc.'s corporate headquarters.
The company has also secured $20 million in funding from outside investors, including an undisclosed sum from the Michigan office of global investment firm Beringea, which is managing state pension dollars funneled through the InvestMichigan! Growth Capital Fund.
Jeff Bocan, a managing director of Beringea's Michigan office and a member of ReCellular's Board of Directors, said the cuts were necessary to reposition ReCellular to succeed as smart phone sales surge.
"The reality is there are some fundamental shifts in the cell phone industry and more and more people are moving to smart phones and to tablets as their communication devices, away from what has been ReCellular's traditional business of dealing with the very simple, brick, candy-bar texting-only cell phones," Bocan said.
"In the future, we'll be moving and handling less product for the same dollar. The product we're moving is more valuable, so we need fewer people to move the product to stay steady."
Bocan said Beringea is still optimistic about its investment in ReCellular.
"The growth prospects are still there," he said. "Things have been a little bit slower than what was expected in the first half of the year, but we're really optimistic about the second half and what we've got coming."