Businesses Feel Effects of WorldCom Layoffs

Businesses Feel Effects of WorldCom Layoffs

Aug. 14-20, 2002

A smaller lunch crowd and business slowing on Saturdays has caught the attention of Neil Johnson, a bartender for the Old Dominion Brew Pub.

“I don’t know if it’s because of WorldCom, but something has hurt us. That could be WorldCom and companies going out of business or the economy,” Johnson said as he poured drafts for the customers lined up at the bar on an unusually busy Monday evening.

“Our Saturday’s don’t fill up like they used to,” Johnson said, adding that the brew pub used to get a “big pop” around 12-12:30 p.m. during the weekdays. “Now we’re getting half the crowd we used to,” he said. “The beginning of summer started out good. The last month has been dying.”

WorldCom, Inc. employees were known to frequent the brew pub, which is located in the Beaumeade Corporate Park on the other side of Waxpool Road from the Ashburn WorldCom facility. On June 28, WorldCom, a digital communications provider, laid off 530 employees from the Ashburn facility and 17,000 employees company wide.

"I think it might affect us a small amount," said Jerry Bailey, president of the Old Dominion Brew Pub. "We think it will if more people get laid off."

The brew pub's customer count shows fewer customers stopping in during July than in May and June. The pub expanded by 72 seats to 182 seats in October 2001 and has since seen an increase in business, though the increases in November 2001, April 2002 and again in July were smaller.

"You don't really know for sure. We had a couple declines like that," Bailey said. "Something happened in July and something happened in April. There were some AOL [America Online Inc.] problems as well, and they were very close to us."

BUSINESS at the Ashburn Pub in the Ashburn Village Shopping Plaza decreased slightly at lunch time following the layoffs, though WorldCom employees were a small portion of the customer base, said Kevin Twiss, pub manager. In response, the pub offered WorldCom employees a 20 percent discount and increased advertising.

"It [business] dropped off a little bit, and now is picking back up with new customers," Twiss said. "You don't see the same faces you used to."

The layoffs at WorldCom, along with layoffs at AOL, are a small part of Loudoun's economic picture.

"Everyone is still reeling from a stock market that plunged and the WorldCom layoffs, and just generally a slowing economy," said Randy Collins, president of the Loudoun County Chamber of Commerce. "The overall economy, most people would agree, has slowed down in some segments of the business community."

Technology consulting firms recently saw a downturn in business, while some travel, tourism and leisure-related businesses are still catching up from the Sept. 11 terrorist attack, Collins said.

"Sept. 11 has a mixed impact on Loudoun County," said Cheryl Kilday, president of the Loudoun Convention and Visitors Association (LCVA), which has offices in Leesburg.

The drive market bringing visitors to Loudoun improved following the terrorist attack, while hotel stays and the number of conventions and meetings the LCVA hosted declined following the terrorist attack.

"The hotels in the Dulles corridor are doing better than they were but they aren't back to pre-9/11," Kilday said.

BUSINESSES affected by the layoffs include cleaning services and service businesses, according to Larry Rosenstrauch, director of the county's Department of Economic Development. A few cleaning services are seeing an increase in business as landlords contact them to clean residences after move-outs. At the same time, service industries may be taking a hit as residents have less extra money to spend, he said.

Business at Dulles Shell, which is located near Route 28, dipped slightly following the WorldCom layoffs with "less sales and less customers," according to Alex Canary, store manager. "We don't have the same [number] of customers from that job," she said. "We are affected. It's pretty significant because every customer counts."

Collins said the economy slid in the first and second quarters of 2002. "Overall, I heard business people say it's been a slower than normal cycle, so they are hopeful the third and fourth quarters will come through," he said, adding that the summer season is "a traditional vacation time and a slow business time."

"Loudoun has fared pretty well through the Sept. 11 and the corporate community problems," Collins said.

J.J. Sabater expects business to pick back up at BMW of Sterling, which opened in mid-January near Route 28 and Pacific Boulevard. "You can see the WorldCom building from my lot," Sabater said, adding that traffic through the store recently has dropped by 20 percent. "It slowed down traffic a little bit, because you had WorldCom and AOL. ... It will pick up. I think the majority of clientele is mostly from Loudoun County. It has nothing to do with the IT world."

"Where we will see the economy pick up first is in the smaller and medium-size companies, not the big guys. A modest boost to a little guy is more noticeable," Rosenstrauch said.