TimesLeader.com

November 8, 2008

Economy pinches Solid Cactus, 40 laid off

As the economy soured, people cut back and businesses reacted, affecting the Web-design and e-commerce company.

By Jerry Lynott jlynott@timesleader.com
Business Writer

KINGSTON TWP. – When the expected spike in early holiday sales did not happen, Solid Cactus did what businesses across the country have done in tough economic times and cut its workforce.

The Web-design and e-commerce company laid off 40 people at two offices on Thursday, said Scott Sanfilippo, company president and co-founder.

The layoffs were split 20-20 between the company’s call center in Wilkes-Barre and its new technology center in Shavertown. Approximately 150 are still employed by Solid Cactus.

“We held out as best we could,” Sanfilippo said Friday.

The company beefed up its call center to accommodate the expected holiday volume, but when sales dropped in September and October, a tough decision had to be made.

“We’re hoping it’s just short term,” he said.

Indications are the slowdown will be around for a while as the ranks of the unemployed reached a 25-year-high nationwide. Data from the Labor Department showed there were 3.84 million collecting unemployment benefits in October, the highest level since 1983.

As the economy soured with rising fuel and food prices and the subprime mortgage mess, people cut back on spending and businesses reacted accordingly. That’s the reason for the layoffs at Solid Cactus, Sanfilippo explained.

“It’s 100 percent due to the economy. If our customers were still spending money with us, this would not have happened,” he said.

The company does not have the cash reserves built up to carry it through this period, he said, so it needed to cut expenses.

The layoffs will not affect the approximately $970,000 Solid Cactus received last year from the state to expand. The money to buy equipment and outfit the new technology center was tied to a five-year timeline.

Twice within the past two years the company was listed among the fastest growing companies in the country. It ranked 255th on the Inc. 500 list in 2007. This year it made the Inc. 5,000 list coming in at No. 612.

Earlier this year Solid Cactus, founded in 2002, moved most of its operations from the Jewelcor office building in Wilkes-Barre to the former Westmoreland Elementary School. It signed a five-year lease to fill three floors and planned to increase its workforce to 250 by 2009.

The workers let go were customer service representatives in the call center and mostly account managers in the technology center, he said.

Jerry Lynott, a Times Leader staff writer, can be contacted at 570 829-7237.