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Circuit City’s Mushroom Cloud

June 9th, 2009 · 5 Comments · Coping, Series, War stories

mushroomcloud

“I didn’t say it was your fault. I said I was going to blame it on you.” — Anonymous

Former Circuit City employees took a direct hit when the company closed. But the fallout is still spreading far beyond the walls of Circuit City’s echoing stores. If you think you aren’t affected, think again.  Here are some random thoughts about who has taken a hit and what might change as a result of The City’s death.

New School Bus Routes

Circuit City left 18.7 million square feet of empty retail and warehouse space. They abandoned over 575 leases.  Across the country, mall and shopping center owners – who were already sweating – are hyperventilating. One well-meaning, ivory tower-dwelling person suggested they use the big-box stores for schools. It’s not a stretch to imagine converting Circuit City’s former headquarters campus, but what municipality has the coin to rent the typical Circuit City store space?

Up Your Credit Limit

You’re going to need it. PCs and TVs are going to get more expensive with the blow that the big electronics manufacturers took. HP may never get the $120 million Circuit City owes it. Samsung is waiting for $115 million and Sony is out $60 million. These companies were already getting flogged by the economy. Another 20+ manufacturers are in the same boat, big names including Toshiba, Garmin, Panasonic, Monster, and Kodak.

No More Newspapers

I’m not very sympathetic of the media. But newspapers are run by people and, although I don’t like what they do, their fates matter. The industry is already fighting to stay afloat, and now Circuit City’s colorful Sunday inserts are gone. This could mean as much as a 10% reduction ad revenue for local papers.

Small Business Shock

Plenty of small businesses are struggling because of Circuit City. Cafe 56 in Cleveland counted on customer and employee business from a neighboring Circuit City store. Freelance photographer Scott Brown hopes to get paid some of the $30,000 he’s owed by Circuit City, but it’s not likely. It’s a shock to realize that big, established companies aren’t dependable any more.

And the Biggest Loser Is…

Shareholders! They won’t get a check worth the postage. On the last day of trading, shares closed at 10 cents. Former employees who held stock in their 401Ks are going to be retiring later, if at all. If you think you’re exempt because you didn’t own any stock, you might want to check your mutual fund holdings. Even moderate risk funds often dabble in high-risk investments, such as in the stock of a company who was looking for a last-minute buyout. It would’ve rewarded those shareholders who had nerves of steel very nicely.

I’m sure there are other businesses that have suffered too. What other stories can you add?

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5 Comments so far ↓

  • smileyone

    While mentioning all of the businesses that are under the strain, you neglected to mention state budgets for unemployment. With 46000 associates laid off due to the company closure, the states are left to pick up the tab for unemployment. While a lot of CC employees have found work, there are still thousands seeking work in a time when it is an employer’s market, not an employee’s market. This drain on the state’s budgets means that other areas in need of state funding are also at risk, education, health care, etc. not to mention the loss in tax revenue from state taxes as those collecting unemployment are most likely not contributing. And then there are the families that are still not employed who may lose their house, can’t afford basic necessities that have no idea where to go or what they are going to do. There are far more things impacted by this instead of businesses, and they are called “people”.

  • Laurie Phillips

    Excellent points. The previous article on Circuit City, http://www.deadcompanyclub.com/2009/05/04/you-have-it-bad/, talks about the immediate effect on employees because of the company closing, but you bring up a new point about state budget cuts and getting unemployment. From what I understand, California is the place to be if you lost your job – many weeks of unemployment benefits – and New York is one of the worst. Also, I’m hearing that teachers are losing jobs because of budget cuts, not to be replaced, because that funding is being spent on more urgent needs. The ripple effect continues to widen.

  • I Make Thousands of Dollars a Month Posting Links on Google from Home

    Hey, nice post, really well written. You should blog more about this. I’ll definitely be subscribing.

  • kristin

    “The ripple effect continues to widen.” …

    the wider it gets, the slower it moves, and the more space there is between rings…

    now, we know there is no way to stop it, but what happens in the meantime?

    I know there are people who still have their jobs…I was just at an interview (I am in technology, which has actually been suffering for years from neglect due to greed) where for 4 hours I entertained my prospective employer, for a perfect position for my skills, personalities meshed beautifully on both sides, and yet…’They loved you, but are going with someone they know…”

    So, I ask myself, why bother? why not just drop out, move to the woods, move some rocks around, and prepare for next winter by replicating primitive survival techniques as seen in the movies? eat bugs? chew bark? make fire with stones and straw?

    I think about the people who can’t imagine the day when the lights go out, and already see more people sleeping in the park, in this cold early summer, than in any previous years. I know an old man who has lost all his retirement, because he was loyal to Merrill Lynch, his first employer 50 years ago, who knew Mr. Merrill personally, and has kept all his money in Merrill stock all these years. He is despondant…but I am not.

    I am so angry that the pure energy from rage keeps me from giving up. I watch the teensy tiny upcreep in jobs postings, and pity the hr folks who have to sift through thousands, yes, thousands of resumes. I watch the insane politicians flipping & flaying like dying fish in a sea of poison…

    Stories of the Mushroom Cloud…well, like George Carlin said, bless his soul, the earth doesn’t care if humans are on it or not…it will renew itself, despite the abuse we’ve subjected it to…we, as a species may not survive, and the structures we’ve created, corporate, institutional, cultural, are likely all doomed, in their current form.

    We are experiencing a transformation, and who can say what will happen? We are like an adolescent, with a serious case of hormonal imbalance, prone to insane acts of impetuous dangerous and destructive behaviour. Some, no doubt, will survive, even thrive, but it will certainly take a long time to finish this transformation. The details are truly interesting, but the big picture is really amazing.

    I don’t really mean this to sound so pessimistic…the chronicles on these times (like this site) is proof that there is hope, because there is

    1) intelligence (light)
    2) anger (energy) and
    3) compassion (warmth) …

    all ingredients for a new life form…viva la revolution!

  • milton

    big deal. circuit city.
    it didn’t start the big mushroom cloud.
    it’s just a created fallout particle creating more fallout.

    america doesn’t produce any of the stuff it sold.
    and hardly produces anything at all.
    it was only a matter of time before nobody could buy it.
    so it’s matural that nobody would sell it anymore.

    it’s time for the foreign producers to start enjoying the fruits
    of their own industry.

    but there is cause for optimism for america.
    we may not be an intellectually industrious culture like china
    but we do have bravado.
    it took china 500 years to recover.
    i bet america can do it in the less than 480
    if we start retraining now.
    so start retraining now.
    a journey of even a thousand years..you know the rest.

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