Disintermediation Bites


Bad news for my hometown, as American Express announces the closing of its Greensboro, NC call center and the vaporization of hundreds of local jobs.

Blame the internet. From an email to civic bigwigs from Amex general manager Robert Garinger:

The decision to close our Greensboro facility comes at a time when we have seen a significant reduction in call volumes--particularly as many customers choose online and mobile channels for routine matters such as checking balances and paying bills...carrying fixed costs of real estate facilities that do not operate at full capacity severely limits our ability to continue to invest in and to grow our business.

Another memo (PDF), from Jim Bush, EVP of Amex's World Service group, says, "The shift to online and mobile channels has been fastest among customers in the U.S. where we now handle far more transactions digitally than we do by phone."

When I say "blame the internet," I'm speaking as a native of a region that has seen its traditional industries rocked by globalization and consolidation, and that suffers higher-than-average unemployment. We really, really do not need this now.

An Amex shareholder, or an IT consultant, would more likely say, "credit the internet." The company invested in technology that makes it cheaper to serve its customers, and the ROI includes savings on real estate and staffing. That's what technology is supposed to do for businesses, and, as a local blogger points out, telecom-related jobs have been in flux for more than a generation.

Amex is not leaving our county -- the company is building a couple of data centers nearby. But those refrigerated warehouses will employ only a fraction of the headcount at the call center, and there, too, technology is lowering the number of jobs available.

In theory, Amex and its investors will now go on to create more jobs, somewhere, and over time we end up with a stronger, more efficient economy. In human terms, in the place that just lost all those jobs, that's cold comfort.


4 Comments for "Disintermediation Bites"

  • Reggie January 25, 2011 3:23 pm

    "Blame" it on planning. One reason call center volume has declined is that companies have made it nearly impossible to conduct business by phone. There are huge navigation trees that encourage (or require) use of web sites to transact business. In addition, the call center employees are no longer allowed to do anything for the customer.

  • Michal Bonino January 24, 2011 10:05 am

    NAFTA emerged as a trade agreement in the 1990's, not the 1970's. Eugine seems to forget Milton Friedman's famous quote that firms exist for one reason, to maximize profit. Everything else is secondary.

  • Bob January 24, 2011 8:54 am

    @ Eugene: NAFTA in the 70's? NAFTA was a late 80's thing by Bush 1 with final approval by Clinton in the mid 90's. I agree that Americans are very shortsided in their purchasing habits. Businesses have to compete and the government sets the playing field of import duties or not (yes, influenced by business). America still has an amazing amount of manufacturering going on. The press enjoys saying there's nothing left, and while it's much less than 20 years ago, there's still a lot around - more technical and slices of the product rather than the whole thing.

  • Eugene January 21, 2011 11:46 am

    And it is going to get much worse! You also did not mention the HUGE number of jobs lost to IT outsourcing to foreign countries, nor the gross devaluation of the jobs that are left, due to huge competition among American citizens and the huge influx of foreign nationals into the IT sector. If American business has it their way, then they would eliminate every IT job in favor of HUGE software costs or outsource the whole department; they do not care about their American neighbors; they only care about their own personal bank account. Ironically, how many Americans paid attention when the labor unions complained about NAFTA in the 70's and the loss of jobs to offshore plants in foreign countries. Americas has lost nearly every type of manufacturing, and it is going to get worse. (Try walking into a Wal-mart and finding any item that does not say, "Made in China".)

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