The world's largest the largest private employer, Wal-Mart, which earlier this month reported a higher than expected quarter earning and said it would add over 30,000 jobs in the US and as many overseas (See: Wal-Mart creates 63,000 jobs; sales up 2.8 per cent) . said that it will close its South Side optical lab in Ohio and lay off 650 workers and shift its operations to Indiana, Texas and Arkansas.
The Ohio lab processes eyewear orders for the vision centres for Wal-Mart stores in the US. Recently the retailer announced that it would sharply reduce the cost of what customers pay for both contact lenses and youth eyewear that would help Americans save as much as 12 to 50 per cent on the costs of a yearly supply of contact lenses.
This 650 job cuts will be the biggest in Ohio since the beginning of the current recession. The retailer said that all the axed employees will receive regular paychecks and benefits for the next 60 days and will be eligible for positions at nearby Wal-Mart stores and Sam's Clubs. They will receive a severance benefit and all the sacked employees can also avail of the opportunity to receive outplacement services.
The company said that, henceforth all orders sent to the Ohio lab will be dispersed to labs in Crawfordsville at Indiana, Fayetteville at Arkansas and Dallas, thereby adding 100 more jobs.
"This decision along with expansions and improvements to our other eyewear manufacturing facilities will allow Wal-Mart to reduce costs and operate our optical business more efficiently," Volker Heimeshoff, divisional manager of health and wellness for Wal-Mart US, said in the statement.
But by closing this lab, Wal-Mart may end up paying $1.8 million to the Ohio Department of Development as it had given the retailer tax credit on the commitment given by the company that it would create and maintain jobs in Ohio for a certain number of years, when it started the lab in 2002.
The state officials are now finding out as to whether the retailer has kept its part of the deal and may penalise the company if it is found out that it has reneged on the commitment.
The matter is not as simple as it looks as Wal-Mart has said that it will still operate the optical lab from the same location with approximately 70 employees.
Wal-Mart is the largest private employer in the world, employing about 1.4 million people in the US and over 0.68 million outside. The retailer has created around 63,000 jobs worldwide this year, including over 33,000 in the US through its Wal-Mart Stores and Sam's Clubs. (See: Wal-Mart creates 63,000 jobs; sales up 2.8 per cent)
But in February, the world's No.1 retailer said it is planning to eliminate as many as 800 positions from its corporate office in Northwest Arkansas over the next few weeks as it attempts to adapt to the economy by cutting costs and improving efficiency. (See: World's top retailer Wal-Mart to slash jobs at headquarters)
Again in the same month, Wal-Mart said it was laying off 400 employees in September as it had decided to close its center in Georgia, where defective or recalled items were sent.
The retail industry in the US has shed about 500,000 jobs last year, according to the Retail Industry Leaders Association, a trade group. Macy's and Home Depot recently announced they would each lay off about 7,000 people. Circuit City's liquidation will affect roughly 30,000 workers. (See: American department store chain Macy's to slash 7,000 jobs, restructure operations / No.2 American electronics retailer Circuit City files for bankruptcy)