State Farm announced that it would close some of large facilities in different states. Few days ago, it announced the plan to close the operations of its Bakersfield facility in 2021. The insurance company also informed that State Farm Facility Closure would affect 11 facilities from 2018 to 2021. Besides Bakersfield, the facilities are located in New Jersey, Indiana, Michigan, Florida, Oklahoma, and Maryland. The closure will also affect its office in Irvine and Petaluma. What are the reasons for the company to announce the plan so early?

Predictable Effects of State Farm Facility Closure

The Illinois-based company admitted that the closure would lead to huge effects, particularly on the employees and their communities. Of 70.000 employees it has now, about 4.200 may lose jobs even though the company representative also said that it would offer jobs at other facilities owned by the company. The company announced the plan soon to give the employees time to make personal decisions related to their professional life.

For instance, State Farm facility closure will involve its office in suburban area of Downers Grove, which now has 460 employees. The office consolidates the operations in Bloomington, Atlanta, Phoenix, and Dallas. Its West Lafayette facility now employs 310 people. However, the employees in this facility have a chance to move to the company’s headquarter, which will remain open in Bloomington, Illinois.

The employees could choose to find another job. However, those who decide to survive in State Farm might get the opportunity at other facilities owned by the company. This was admitted by the company’s Executive Vice President – Mary Schmidt – in a news release. The closure will begin from its facilities in Petaluma, California, and Parsippany, New Jersey.

Reasons Behind State Farm Facility Closure

Actually, State Farm facility closure was not surprising. The company has been recording loss in the last few years. Last year, it even recorded a loss of $7 billion last year. It was the largest loss since it offers car insurance packages 95 years ago. The company had even decided to raise insurance rates to cope with the increase in insurance claims. However, it did not seem to prevent the company from substantial loss.

The company made sure that operations would not be affected by the notice of State Farm facility closure. The company will keep communication with the customers. The Senior Media Specialist at State Farm – Justin Tomczak – said that they would be there for the customers. The customers will still be able to access the services through local agents and local claim employees. They would maintain local presence. Therefore, the restructuring plan would not affect the operations and the services at a whole.

Tomczak admitted the news on State Farm facility closure was responded differently by the employees. They responded to it with some degree of concern. However, to some extent, the feeling was relieved by the fact that they have enough time to evaluate their position and prospects with the company. In other words, the employees are not forced to make decisions quickly. They can choose to find a different job or set up their own business.