Updated: Mammoth Mountain implements mass layoffs

Updated March 2, 11:34 a.m.

Black Wednesday: In draconian move, MMSA lays off 75

When it comes to Mammoth Mountain Ski Area, there are certain things which go with black: black diamonds, black passes, even black t-shirts.

But just don’t pair black with a day of the week. That means heartache and layoffs.

On what was almost immediately dubbed as “Black Wednesday” by local residents, Mammoth Mountain Ski Area laid off 75 year-round employees this week, representing 21% of its permanent workforce.

The draconian cuts reached into every nook and cranny of the company, including long-time employees of more than forty years service as well as two vice-presidents, Jack Copeland and Knud Svendsen.

As MMSA CEO Rusty Gregory said in an interview late Wednesday evening, “I’ve been through a few of these … and today was pretty severe.”

The layoffs will not affect ski area operations. Gregory said all terrain and all lodges will remain open at least through Easter. “One of the criteria we established when we began this process was that we would operate the ski area as we always have done and keep things open as long as possible.”

After a relatively strong President’s Weekend which saw MMSA almost hit its projected numbers, this past week reverted to the season-long trend, with business off 27%.

Gregory said, “We’re running at about a 30% deficit to our projected 1.3 million skier visits.” This likely translates to company revenue coming in $40-45 million below projection.

Gregory said the company began cutting expenses in earnest in January, scaling back hourly and seasonal personnel. However, some of these savings were offset by the recognition that the bill for commercial air service subsidies will be substantially greater than budgeted.

The company had budgeted $1.5 million for air subsidies this year, but could incur an additional $2 million expense above and beyond that.

Increasing air service to seven flights a day, he acknowledged, effectively “doubled down on the weather.” More flights mean more volatility. More upside as well as more risk.

The Sheet: How might that affect your risk tolerance for air service next year?

Gregory: We will probably do the same thing, but drop San Jose … the Orange County flight is on the bubble. Right now that flight is in the middle of the day.

One long-time employee who was laid off Wednesday was John Speakman, 59, of Bishop, a 23-year veteran of the company who worked as a mechanic in the CAT bay.

Speakman said there was no warning as to what was in store when he was called in at 7:30 a.m. Wednesday, his day off.

The Sheet: What’d they tell you?

Speakman: They said good-bye.

The Sheet: What are you going to do?

Speakman: I don’t know. I’m still trying to wrap my head around it.

Speakman, who still has a teenage daughter at home and a mortgage to pay, says his wife is working, but “that won’t cover it.”

While the company will carry his benefits for 18 months, there is no monetary severance.

A Vietnam veteran, Speakman thought he had three more years to get him better positioned for retirement. “I’m at a tough age [59],” he said. “They dropped me like a hot rock.”

“How do you get a job?” he asked rhetorically. “In Bishop … anywhere for that matter.”

“I still consider Rusty Gregory a friend, and I appreciate what Mammoth Mountain has done for me [over the years]. I’m not vengeful, but I am a little upset about the lack of warning. There was no class, no respect.”

“I’m not a corporate, banker guy. I’m a mechanic. But in my opinion, you’re either in the red or the black. We’ve been in the red for way too long, overextended, overextended … and now me and people like me bear the brunt of it [the day of reckoning].”

The average Mammoth Mountain employee costs about $78,000 in salary and benefits, with benefits accounting for approximately one-third of that number.

While there are no guarantees, Gregory did say that in the past, those subject to layoffs, perhaps even a majority of those laid off, have been rehired at or near their prior level of compensation.

Don’t, however, expect the Mountain to be doing any hiring until next winter.

The Sheet: Given the year we’re having and the layoffs, et. al., how will this affect next year’s MVP (Mammoth Value Pass) pricing?

Gregory: I don’t know yet.

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As the winds howled on the morning of Feb. 29, between 60 and 75 permanent, year-round employees of Mammoth Mountain Ski Area were laid off.

While Mammoth Mountain had yet to issue a statement at the time of this post, The Sheet had already received calls from now-former MMSA employees confirming this mass layoff.

Talk of a layoff had been looming around the Town of Mammoth Lakes for a few weeks, and last week, MMSA CEO Rusty Gregory told The Sheet that MMSA’s revenue for the fiscal year was 24% below what was budgeted. Skier visits are off 35%.

Budgeted numbers for FY ‘11-’12 were slightly above FY ‘10-’11 actuals.

“I am watching the trend closely this week, and I will be doing a lot of thinking over the weekend,” Gregory stated in the Feb. 25 issue of The Sheet.

Prior to the layoffs on Feb. 29, MMSA had cut wages for salaried employees 10% across the board. Gregory took a 15% cut.

Seasonals had already been cranked down to few/no hours. Year-round hourlies had been fortunate to get 20-22 hours/week.

More to come as this story develops.