Frontier Lays Off 75 People,
Says Move Is Part of Restructuring Effort

By John Emerson
ROCK HILL - February 18, 2000 — Frontier Insurance Group, Inc., one of the county’s top three private employers, took a sharp knife to their workforce yesterday, eliminating about 75 positions, or slightly more than 10 percent of the labor force at the company’s corporate headquarters in Rock Hill.
Frontier’s chief executive officer, Harry Rhulen, said the company is undergoing a total restructuring from top to bottom and is eliminating several lines of insurance. He said those people laid off held positions that are no longer needed in the company and included several executive positions, including vice-presidents in the Health Care, Audit and Underwriting divisions of the company.
“We don’t like the fact that anyone is losing their job,” Rhulen said. “These are good people, and I’m sure they will be valuable employees. We’re supplying a severance package and assistance with job search and job relocation, writing resumes, coaching on how to interview for new jobs and providing some assistance for those who want to start their own small businesses.”
Sources, who asked not to be identified, said the severance package included two weeks’ salary for every year worked with the company as well as payments for accrued vacation time. Many of those who were laid off yesterday had been with the company for years and will continue to draw full salaries for weeks.
The sources said that, yesterday, additional security guards were on duty, apparently hired to maintain order if there were strong negative reactions among those who lost their jobs. Rhulen acknowledged the extra security people on duty, saying that Frontier’s insurance carrier recommended the move.
“We want to make sure that the people who are still here are comfortable and feel secure,” he said. “The extra security will be phased down as the comfort level improves, but I don’t anticipate that there will be any issues involved.”
Rumors of the layoff have been circulating for weeks as the company has gone through rough financial times. On February 1, Standard and Poor’s, a major financial rating service, downgraded the company’s overall financial condition from A, a strong rating, to BBB plus, a good rating, and also issued a negative outlook for the company in the near future.
“This is unfortunate but unavoidable,” Sullivan County Legislative Chairman Rusty Pomeroy said of the layoffs. “You never want to see layoffs, but you need to look at the big picture. If the company gets stronger, that’s what’s important.
Pomeroy said the county’s Center for Workforce Development, which supplies retraining and assistance for displaced workers, was ready to provide whatever services are needed for the people who have lost their jobs.
Town of Thompson Supervisor Tony Cellini echoed Pomeroy’s comments of concern for the laid-off employees, calling it “a tragic day.” He also said, however, that it was important that the company make whatever moves were necessary to “retain their important role in the economy of the Town of Thompson.”
Rhulen said the company has been slowly downsizing since December, but those terminations were small in comparison to yesterday’s layoffs. He said the current layoffs would probably be welcome news to investors.
The company’s stock, traded on the New York Stock Exchange, has plummeted during the last 18 months. Yesterday morning, it was trading at slightly under $3 a share, down from July 1998’s market price of around $25 per share.
The downward plunge within the stock market and the lesser value of the company’s shares have placed planned projects, such as the development of a hotel to house visitors to the corporate headquarters, on hold. Last year, the company announced plans to either refurbish or build a new hotel on the site of the Holiday Mountain Motel in Rock Hill, next to the county’s proposed Emerald Corporate Park.
Earlier this month, the county’s Industrial Development Agency, which was involved in funding for the hotel project and held the deed on the property, returned the full ownership to the company. That property, which had been removed form the tax rolls, will now be subject to property taxes.
“We’re not looking to do anything with it right now,” Rhulen said. “The intention was to have a place to put up visitors to our headquarters, but it was more complex than we originally thought. What goes on in Sullivan County over the next several months will have a strong effect on what we do with the hotel.”
Marc Baez, vice-president for business development with the Partnership for Economic Development, said yesterday that his organization was “keenly aware” of the impending layoffs. He said the Partnership has scheduled a seminar on how to start a business on February 25 at the county government center.
“We wanted to jump on this thing right away,” Baez said. “We’ve worked too hard for the last two to three years getting things lined up to let something like this have a negative impact.”