When U.S. manufacturers want to cut labor costs they often close up shop and head for a Third World country to find cheap labor. But when retailers want to cut costs they don’t have that option because they need stores in American towns if they want to sell to Americans.
Circuit City has found a unique way around this conundrum. On Wednesday officials at the struggling electronics retailer announced they would fire 3,400 of their highest-paid clerks and replace them with workers who will take less money, essentially hoping to find their own bargain-basement work force right here in the good old USA.
It’s all part of a plan to save money and cuts costs for the big-box chain, which also reduced sales growth expectations this week. By shutting stores, outsourcing its IT department and cutting 9 percent of its 40,000 store employees, the company hopes to save $110 million in its current fiscal year and $140 million next year, says Circuit City spokesman Jim Babb. More.