PHAR-MOR Closing of 65 stores to bring layoffs

THE VINDICATOR, YOUNGSTOWN
Layoffs are coming at downtown headquarters.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Cutbacks at Phar-Mor are starting as about 70 warehouse workers will be laid off Friday, a union official said.
An unknown number of layoffs at Phar-Mor's downtown headquarters also are expected in coming weeks, Mayor George McKelvey said.
The discount drugstore chain filed for bankruptcy protection Monday after months of cash flow problems and deteriorating relations with suppliers.
Phar-Mor is cutting about 20 percent of the 350 workers at its Tamco distribution unit in Austintown even though it intends to close and sell nearly half of its 139 stores, said Bob Bernat, secretary-treasurer of Teamsters Local 377.
He said the percentage of workers being laid off is lower than the percentage of store closings, because the unprofitable stores with lower sales will be shut.
The 65 stores that are to be closed represent about 27 percent of the business that Tamco handles, Bernat said.
Tamco distributes all of the health and beauty products and groceries to Phar-Mor stores.
Past troubles: The layoffs come after Phar-Mor increased employment by about 100 people in the past few years. Bernat said some new workers have been hired, while others have been recalled from layoffs when Phar-Mor first filed for bankruptcy protection in 1992.
Tamco had 1,100 employees when Phar-Mor had 300 stores in the early 1990s.
Gary Holmes, a Phar-Mor spokesman, declined to comment on potential layoffs.
Bernat said he is hoping Phar-Mor will be able to reorganize its finances, emerge from bankruptcy court protection and acquire another chain with profitable stores. Another good option would be for a chain to acquire Phar-Mor and maintain Tamco's operations, he said.
Either way, employment at the warehouse could grow, he said.
Buyouts: Earlier this year, Phar-Mor officials expressed interest in buying Columbus-based Drug Emporium, but it was acquired by Snyders Drug Stores of Minnesota.
Bernat said Snyders officials toured the Tamco warehouse a couple weeks ago. He said union officials were told they liked what they saw but no deal to acquire Phar-Mor is in the works.
Holmes said Phar-Mor and Snyders officials held discussions but nothing resulted from them.
McKelvey said Phar-Mor officials told him there would be cutbacks at the downtown headquarters, but the number wouldn't be known for two or three weeks.
He said he is watching the situation closely because the city received $307,000 last year in income taxes from workers at the headquarters. Phar-Mor also opened a store on Market Street in Youngstown last year.
In January, Phar-Mor laid off 22 of the 250 workers it had downtown at the time. Cutbacks were mainly in the merchandising and computer systems departments.
shilling@vindy.com