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Disney plans resorts reorganization, layoffs
Jason Garcia | Sentinel Staff Writer
7:51 PM EST, February 18, 2009
The Walt Disney Co. on Wednesday said it would eliminate an undisclosed number of jobs as part of a sweeping corporate overhaul at its domestic resorts, which includes plans to combine back-office operations at Walt Disney World and Disneyland.
Disney would not say how many jobs it intends to cut or how much money it expects to save through the moves. The company employs about 80,000 people at its U.S. resorts, including 62,000 in Central Florida.
With the shakeup, Disney will consolidate East and West Coast "operating infrastructure" - responsibilities ranging from procurement to menu-planning to merchandise - under Al Weiss, the president of worldwide operations for Walt Disney Parks and Resorts.
The plans also call for uniting disparate creative engineering and business
In a written statement, Disney said it was forced to speed up corporate streamlining plans by the worsening global recession, which has eroded revenue at its theme parks and elsewhere across the Burbank, Calif.-company's media-and-entertainment empire.
"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Parks and Resorts Chairman Jay Rasulo said in the statement.
In a separate memo to employees Wednesday, Rasulo wrote that "organization changes require difficult decisions, including the elimination of some roles.
"These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues, and they have made valuable contributions," Rasulo added in the memo.
The announcement comes the same month Disney revealed that its first quarter profits fell 32 percent. Operating profit in the parks-and-resorts division fell 24 percent during the three-month period, which ended Dec. 27.
It also follows Disney's decision last month to offer buyouts to more than 600 executives at its domestic resorts. A spokesman said Disney received "a satisfactory response" to the offer, though Disney declined to say how many executives took the buyouts.
John Gerner, managing director of Leisure Business Advisors, a Richmond, Va., consultant firm, said Disney will likely be able to make deep cost cuts by consolidating operations.
"I think it definitely has quite a lot of potential for savings. 5As far as the theme parks go, there's definitely economies of scale in being able to merge all those operations together to the extent that they can and centralize them," Gerner said.
But Gerner said Disney, which relies on a constant infusion of fresh content to fuel everything from park attendance to DVD sales, must not cut too deeply in creative areas.
"They've got to be careful because there are so many very specialized people that work for Disney, especially on the creative side, that would be very difficult to replace once things turn around," Gerner said. "That's what a lot of creative companies, not only Disney, have to rely on."
In addition to steering "operating infrastructure" at the Orlando and Anaheim, Calif., parks through Weiss, Disney said that its Walt Disney Imagineering unit would be reorganized into a single practice reporting to Bruce Vaughn, executive vice president and chief creative executive, and Craig Russell, executive vice president and chief design and project delivery executive.
The company also said it would establish a new "Global Business Development team" headed by Executive Vice President Nick Franklin, which will be charged with combining existing business and real-estate development functions. The unit be will responsible for focusing growth strategies at existing parks-and-resorts businesses and identifying new opportunities around the globe. Vaughn, Russell and Franklin are all based in California.
Disney said other departments will make "appropriate changes" in the coming weeks.
As an example of what it hopes to achieve through the streamlining, Disney pointed to the simultaneous development of Toy Story Mania! attractions at both Disney's Hollywood Studios in Orlando and Disney's California Adventure in Anaheim, which helped hold down design costs.
The corporate overhaul means fewer employees will now report directly to Meg Crofton, president of Walt Disney World, and Ed Grier, president of Disneyland. But the two executives will continue to oversee the functions at their respective parks that deal directly with customers, employees and the local communities.