State Farm Insurance, one of the largest employers in Sonoma County, will close its 450-employee Rohnert Park regional office next year and move most of the jobs to Bakersfield, the company announced Wednesday.
The impact of the recession combined with improved efficiency through better technology mean the company no longer needs the 30-acre campus off Rohnert Park Expressway.
The massive building on State Farm Drive is only 35 percent occupied today, and the consolidation into the Bakersfield office will help keep down costs, spokesman Lonny Haskins said.
"Certain parts of that building are a ghost town," Haskins said.
The insurer, one of the largest in California, expects to complete the move by July 31. The 55 State Farm agents served by the office, who are independent contractors spread throughout Sonoma, Marin and Mendocino counties, will be unaffected by the move, Haskins said.
The departure of a signature Sonoma County company is yet another sign of how the foreclosure crisis continues to be a drag on businesses related to the real estate market. Such a large block of jobs leaving in a short period also represents a setback to the nascent local economy recovery.
"The ripple effect of the residential real estate market just keeps rippling outward," said Ben Stone, director of the Sonoma County Economic Development Board.
The closure is part of a statewide restructuring of State Farm operations in California. The company will also shut down its regional office in Fresno and end leases at nine smaller satellite offices in Chico, Lancaster, Modesto, Palm Desert, San Francisco, San Luis Obispo, San Marcos, San Ramon and Watsonville.
The housing crisis has harmed State Farm's business in two main ways, Haskins said.
When homes are lost to foreclosure, the insurance policies on them expire. The recession also has caused cash-strapped families to cancel optional policies they can no longer afford, such as renter's insurance or flood insurance, Haskins said.
Employees were informed Wednesday afternoon in a meeting held in the building's auditorium, and Haskings said it was an "emotional time" for many.
Some workers said they saw the writing on the wall.
Cybele Susavilla of Windsor has worked in information technology for the company for over 20 years and has watched the local work force shrink.
The company moved its regional offices from Berkeley to Santa Rosa in 1963, and built the office in Rohnert Park in 1977. Employment peaked around 1,100 in the late 1990s. A 2004 reorganization saw 66 offices consolidated to 21. At that time, about 100 claims workers from Rohnert Park were relocated to Vallejo, with others going to Bakersfield.
"I think a lot of people realized it was coming down the pike sooner or later," Susavilla said.
She said she's not sure whether she'll take the company up on its promise to offer jobs in Bakersfield to most workers, saying she needs to discuss it with her family.
Underwriting service assistant Lyle McKeany, 33, said he's not as affected as some longer-term employees because he's only been with the company for a few years. He described workers as "a little shocked but not surprised" by the news.
While the announcement was sudden, most employees are well aware that State Farm has been affected by the economy and technology and that the company has been in consolidation mode.
"People are tightening their belts so the company has to follow suit," McKeany said. He also said he hasn't had enough time to consider whether he would relocate.
How many employees will be offered jobs in Bakersfield remains to be determined, but most will, Haskins said.
"We have a big need for jobs down there in Bakersfield," he said.
He acknowledged there may be workers who are not offered positions in Bakersfield because they are made redundant by the consolidation.
"I'm kind of in flux at the moment myself," Haskins said.
A small number of jobs needed on the North Coast may remain behind in new office space, he said.
The company will assist in the relocation of most employees from Rohnert Park to Bakersfield. Severance packages will be offered to those who do not accept new positions, Haskins said, but details are not yet available.
The company plans to sell the Rohnert Park building after closing it.
Improved technology can be a double-edged sword for a labor market, creating new jobs but also taking others away through higher efficiency, Stone said.
Companies like telecommunications equipment maker Agilent are showing strong profits and medical device maker Trivascular is hiring hundreds of new workers, Stone said.
But paperwork intensive companies like State Farm that find ways to use technology to streamline operations can find themselves able to shed jobs and costs, Stone said.
Unemployment in Sonoma County remains stubbornly high at 10.2 percent, but that's lower than the state average of 12.5 percent.
Stone's optimistic that on balance technology will add jobs to Sonoma County's economy.
"Overall, we see the economy healing, but we're not out of the woods yet," he said.
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