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."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Carl Powell
Fri, Jul 29, 2011 : 1:30 a.m.
Internal sources tell me that things are as silly as ever at ReCellular. . New people streaming in to fill spaces of others just fired. Oh yeah, bring in people without experience to replace those with. Smart ? Not so much. Still no hint of any cost of living increases for people working for many years at the same low wage. Great place to work ? not even a good place to work obvoiusly. Of course, there are no jobs locally for these people so they are stuck . No funds for the employees but seemingly endless money to reconfigure the plant or adding "managers" . It's like thiose deck chairs on the Titanic, guys. Moving them around will not remove that iceburg dead ahead and the sinking that follows. Still rosey projections for things going forward from the CEO. Seriously? The place is buried with product nopbody on the planet has any use for. Tons of scrap that has to be disposed of some how and some place ...Green? Not so much. These guys are certainly skilled at convincing investors that things are good. They have secured still more money to burn through. I need to find such willing victims to borrow from. If even a fraction of what I hear from internal sources is true....this company is a trainwreck waiting to happen.
A Ebright
Sat, Jul 2, 2011 : 3:49 p.m.
This company has a very long history of poor management with expected poor financial results. Empoyees are terminated on a constant basis with or without reason. Even managers need not fully unpack their boxes to settle into an office. Poor decisions will invariably lead to another bad quarter or month and lead to yet more "right sizing". It's simply not a company with any loyalty to anyone and therefore, a real bad bet for employment or investment purposes. Having talked to many current and former employees , it always bas been and still is a mediocre operation. It's simply a bad bet on any level.
Atticus F.
Fri, Jun 24, 2011 : 5:41 p.m.
Where are all of the people who were claiming that these people were going to hire more workers after they recieved a tax break. Sounds more like they took the money and lined their pockets with it.
A Ebright
Sat, Jul 2, 2011 : 3:58 p.m.
Oh yeah.....the Chairman of theBoard and former CEO ran right out and bought a new Chevy Volt right after they became available. The car cost nearly $40 k. Obviously the financial woes of the company have not impacted him much. I will give him credit for making a "green choice" however.
Monica R-W
Fri, Jun 24, 2011 : 7:15 p.m.
@Atticus, and maybe you missed this article on M-Live were the head of the Michigan Small Business Association CONFIRMED exactly what you are talking about here. Gov. Snyder attended their June 23rd meeting in Lansing to ask the 12K business leaders in attendance to create "Just One Job". I know, sounds like begging to me but, here is the article. Judge for yourself: <a href="http://www.mlive.com/politics/index.ssf/2011/06/gov_rick_snyder_presses_busine.html" rel='nofollow'>http://www.mlive.com/politics/index.ssf/2011/06/gov_rick_snyder_presses_busine.html</a> If these business leaders created "Just One Job", there're up to 400,000 unemployed people in the state. Count the lay-offs to come from Re-Cellular and that number increases. Let's not forget a Green Energy company in Brighton that decided to move to Indiana for bigger tax incentives. That is a lost of up to 500 jobs right there: <a href="http://www.clickondetroit.com/news/28335893/detail.html" rel='nofollow'>http://www.clickondetroit.com/news/28335893/detail.html</a> So, let's just say these 12K businesses created "just one job", today. There would be still 388,000 unemployed Michiganders. Gov. Snyder just gave C and S Corporations a GIFT of ending the MBT (Michigan Business Tax) and 1.4 Billion (with a capital "B") more dollars worth of tax cuts. Something is not right in Snyder's math skills here. Didn't he graduate from UofM with three degrees by the age of 24? Meanwhile, Gov. Snyder and GOP company just signed into law the first reduction in unemployment claimants state-based benefits weeks in Michigan's history. In January 2012, newly unemployed claimants will only receive 20, not 26 weeks to find a new job. So these 12K SBA owners better move on Gov. Snyder suggestion, really quickly. It's June 2011, now: <a href="http://www.usatoday.com/news/nation/2011-03-29-michigan-unemployment_N.htm" rel='nofollow'>http://www.usatoday.com/news/nation/2011-03-29-michigan-unemployment_N.htm</a> Finally, Snyder fail to ask, just one small detail. He should have included, in his statement that the jobs created be Full-Time and Non-Temporary. I mean for 1.4 Billion dollars worth of tax cuts, that is not too much to ask. Right? <a href="http://www.firericksnyder.org" rel='nofollow'>http://www.firericksnyder.org</a>
ConcernedInvestor
Fri, Jun 24, 2011 : 5:38 p.m.
I hope this doesn't mean State of Michigan Retirement Systems money is being invested in companies that do business in Sudan, Iran, etc., because if they are, this is against state law: <a href="http://www.michigan.gov/documents/treasury/Divestment_285722_7.pdf" rel='nofollow'>http://www.michigan.gov/documents/treasury/Divestment_285722_7.pdf</a> Doesn't Recellular ship nonusable phones to some of the countries that are part of the law where hand labor for disassembly is cheap? State of Michigan Retirement Systems invests with Beringea via "InvestMichigan". The InvestMichigan program invests $20 Million in Recellular? Follow the money - what happens to the State Retirement System impacts everybody who lives here - just ask California.
A Ebright
Sat, Jul 2, 2011 : 3:55 p.m.
Very good questions and points you made. I see no reason to believe that ReCellular would not scheme or scam to profit. After all...they seem unable to make it happen without constant more investment from the outside. I think some investigation is warranted.
Monica R-W
Fri, Jun 24, 2011 : 4:24 p.m.
More of Gov. Snyder 1.4 BILLION dollars worth of tax cuts for businesses, at work!
dougfroma2
Fri, Jun 24, 2011 : 2:06 p.m.
Sounds like that building shared with Borders is jinxed!
daytona084
Fri, Jun 24, 2011 : 1:05 p.m.
As usual, the armchair experts know all the answers after reading a 1-page story. and are ready to bash. Yes it is entirely possible to be hiring and firing at the same time. Happens all the time. Not every position has the same job description and not every employee has the same qualifications..
A Ebright
Sat, Jul 2, 2011 : 4:08 p.m.
However, this company has always had a revolving door with endless hiring and firing. These are people.s lives. If a manament team lacks the ability to forecast with any accuracy whatsoever..they are the ones who need to be replaced. CEO's can make million dollar mistakes without consequence but a janitor may be fired for missiing a trash can . Or simply to help "right size" staff (cost) so the CEO can still receive his obsurd compensation package. Seriously ? ReCellular is typical of the Corporate greed and stupidity pervasive in America now.
A2comments
Fri, Jun 24, 2011 : midnight
You can't make this stuff up. 3 vps to handle what 1 good svp could handle. Then lay people off to help pay for. Doesn't pass the smell test.
Dr. Rockso
Thu, Jun 23, 2011 : 10:57 p.m.
An example of RIcks tax gift to business creating jobs. Err?? Not!
John of Saline
Thu, Jun 23, 2011 : 10:50 p.m.
I wonder how the recycling process works. This explains why "Cell Phones for Soldiers" phones are mailed to Dexter.
Lou Perry
Thu, Jun 23, 2011 : 7:24 p.m.
As of a few weeks ago ReCellular ran Help Wanted ads in annarbor.com. They mentioned long-term career's and growth. Great management.
Barb
Thu, Jun 23, 2011 : 8:13 p.m.
Yep - I saw the ads as well. That company has had some major ups and downs over the years.