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March 26, 2013
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Basalt's biggest employer to close

BASALT - Four months after a top executive at Total Merchant Services said the business had no intention of leaving Basalt, the town's largest free-market employer announced Tuesday that it will pull out by May 28.

The privately held company said it is consolidating its operations at its Woodland Hills, Calif., location. The firm employs 140 workers in Basalt.

"There will be employee separations from today through May 28," CEO Joe Kaplan said. The terminations will be scattered throughout that period, he said.

Some terminations and restructuring in November fueled rumors within the company and in Basalt that Total Merchant Services was leaving, but Ed Freedman, co-founder and chairman of the board of directors, said in November that Basalt was not facing a threat.

"Our expectation is to stay in the valley," he said in November.

Workers remained uneasy. One former employee left one month ago for a different job in anticipation of Total Merchant Services closing its Basalt office.

"We all knew this was coming but they wouldn't tell anybody," the former worker said.

An employee who was released Tuesday and didn't want to be identified said workers were expecting the closure but they were unaware of the timing.

"We've lost all of our income, every bit," the employee said. "We will have to leave the area."

The mood at the firm Tuesday morning was "somber, at best," the source said.

Kaplan said the decision to consolidate was made "in the last few months" after consultations with business experts on the company's direction.

"It wasn't a plan, initially," he said of moving from Basalt. "It was a really, really tough decision for us." But it is also the best decision for the company and its long-term growth plan, he added.

Some employees were offered jobs in Woodland Hills, Kaplan said. He wouldn't disclose the exact number but said it is in double digits. Some of them are accepting the positions. Other employees can apply for a transfer, and the company will assess their requests, he said.

A letter from Total Merchant Services to the town of Basalt says 123 positions will be eliminated in Basalt and 17 will be relocated.

All employees will remain on the payroll through May 28, Kaplan said. In addition, those released before then will receive a severance package that Kaplan declined to reveal. Those losing their jobs will also have access to a career counselor, he said.

An employee released Tuesday confirmed that there was a severance package that provides health insurance through May 28 and payment of accrued vacation time on that date.

Total Merchant Services describes itself as one of the fastest-growing credit-card merchant-account acquirers in the nation. Kaplan said the firm works on business solutions with companies and provides everything from customer service to risk analysis for its clients. Many of the employees in Basalt worked in customer service on the telephone with clients.

The company was founded in Philadelphia in 1996 by Ed and Matt Freedman and then relocated to Basalt in 1997. It has expanded numerous times and now leases about 22,100 square feet of commercial space in the Riverside Plaza near downtown Basalt, according to landlord Bob Ritchie.

Ritchie said Total Merchant Services outgrew the space and that the Freedmans acquired property at Glenwood Meadows in 2007 for an office and employee housing. The relocation fell through when the recession hit, he said.

While he was prepared for the company to relocate in 2007, its decision to leave Basalt comes as "a total surprise, actually, at this point," Ritchie said. It has been an excellent tenant that grew from just 15 employees to about 200 at its height over 13 years, he said. The company's experience shows that Basalt "is a place where you can build a national company," Ritchie said.

Total Merchant Services spent a considerable amount of money for fiber-optic cable and high-speed Internet connections at the space. Ritchie said he has the flexibility to market the entire site for another high-tech incubator company or it can easily be divided into smaller sections.

Ritchie said the firm won't have to break its lease to leave.

"They have a way to get out," he said.

Workers were informed Tuesday morning about the decision to close the Basalt office, and some terminations were immediate, Kaplan said. While there had been rumors previously about the move, when the announcement was made, it still came as a shock for some employees, Kaplan acknowledged. He said the company is grateful for its Roaring Fork Valley employees, who played a big role in the company's expansion.

He was uncertain how many employees live in Basalt and how many commute from other towns.

"We pull from all the way down to Rifle," Kaplan said.

A terminated employee said the closure will hit the Glenwood Springs, New Castle and Silt areas harder than Basalt.

Basalt Mayor Jacque Whitsitt said the closure obviously will affect some Basalt families as well as businesses and restaurants where they dine and shop.

"I think everybody's going to be sad to see them go," she said. "I think in the long run, we'll be fine. We have a lot of things in the hopper." Whitsitt referred to other development proposals under review in and near downtown.

Town Manager Mike Scanlon said Total Merchant Services was a 24-hour operation, so some employees didn't use services. In addition, a considerable but unknown number of employees commuted from out of town. Still, the loss will be felt.

"Everybody has to eat. Everybody has to buy gas," Scanlon said.

He believes the departure is more a product of the company growing rather than Basalt being unsuitable as a place for business. The company can tap into a larger employee pool in the Los Angeles area simply as a function of its size, he said.

scondon@aspentimes.com


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The Aspen Times Updated Mar 27, 2013 06:25AM Published Mar 26, 2013 11:59PM Copyright 2013 The Aspen Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.