Thursday, September 29, 2022

Colonial Williamsburg to outsource operations, announces layoffs

The Governor's Palace in Colonial Williamsburg. (Steve Roberts, Jr./WYDaily)
The Governor’s Palace in Colonial Williamsburg. (Steve Roberts, Jr./WYDaily)

Colonial Williamsburg announced Thursday it will outsource management of its commercial operations — including its real estate holdings, 19 retail stores and three golf courses.

A total of 333 employees, roughly 16 percent of the Foundation’s workforce, will be affected by the change — with 71 being laid off and the rest transitioned to other employers. 

Colonial Williamsburg President Mitchell Reiss called the move a “fundamental restructuring” of the Foundation. The commercial ventures will be contracted to four private firms, which will work in conjunction with Colonial Williamsburg to turn the businesses into profit-makers.

“The commercial businesses have been running at a loss for many, many years,” Reiss said in an exclusive interview with WYDaily Tuesday. “The idea is we need to stabilize the endowment, so the endowment supports the Historic Area, education and the museum. It’s why people care and it’s why they come. It’s why they support us.”

In data provided by the Colonial Williamsburg Foundation, the Colonial Williamsburg Company, the for-profit wing of the Foundation, was created in 1983 and has never been profitable.

The restructuring process will result in layoffs to 71 employees, who will be offered severance packages from the Foundation, some will be leaving June 29 and others will leave throughout the rest of the year. Two hundred and sixty two more employees will be offered positions with one of the four management firms.

The Foundation negotiated with the four firms to guarantee the employment of the 262 workers for at least one year, and those employees will receive a severance package whether they accept the position or not, Reiss said.

The employees laid off in June will receive health benefits through July — a benefit which typically would only last to end of the month, Reiss said.

The foundation has hired a New York-based human resources firm Lee Hecht Harrison to offer career counseling, skills workshops, and interview training to laid-off workers, Reiss said.

“Wherever we can, we’ve tried to be fair and we’ve tried to be compassionate,” Reiss said. “But we have to act or else the Foundation will not exist.”’

Among the changes, Colonial Williamsburg will no longer actively manage property in Merchant’s Square. The lessees of those buildings will work with the vendors who have been hired to manage the property.

Aside from three parcels of land in the area, the Foundation owns all the land and buildings that house popular restaurants from the Cheese Shop to the Blue Talon Bistro, according to the Williamsburg Real Estate Assessor’s Office.

The Kimball Theater in Merchants Square will close its doors July 6. According to Reiss, the last time the theater was profitable was 1999 — last year alone it lost $782,000.

Far from Merchant’s Square, the Golden Horseshoe Golf Club is in final negotiations to be managed by Illinois-based Kemper Sports. The Foundation is in final negotiations with Philadelphia-based food service company Aramark to take over products and retail management. BrightView, also out of Pennsylvania, is slated to take over landscaping management. Saint Louis-based WFF was tapped to take over facilities management.

Thursday’s announcement comes as the Foundation attempts to save the last $684 million of its endowment. In an analysis of the past 11 years of Foundation tax returns, WYDaily found the organization has suffered significant financial shortfalls, leading Colonial Williamsburg to transfer funds from its endowment to cover operations and debt repayments.

In 2014, the foundation lost a total of $62 million, or $176,000 every day, Reiss said. 

In 2015, the most recent tax year available, Colonial Williamsburg transferred $83 million from its endowment to cover its expenses. The Foundation paid off about $10 million of its debts annually between 2012 and 2015, according to tax returns. In the same period, its sales of retail products have stagnated.

Under the current stresses facing the endowment, it would be exhausted in eight years — if donors kept donating money. It could be exhausted much faster if donors saw the endowment headed for insolvency and stopped giving to the non-profit, Reiss said.

The “decisive action” will help stabilize the endowment and secure the financial future of the Colonial Williamsburg Foundation by 2019, Reiss added.

In a letter sent to employees Thursday morning, Reiss described the move as necessary to ensure “the future of the Foundation.”

“The fate of Colonial Williamsburg will have a massive impact on the surrounding community – economically, culturally, and otherwise,” he wrote. “And as important as Colonial Williamsburg is for the local and regional communities, our mission has an even larger impact on our Nation.”

“What we do here – bringing our history alive and telling America’s story – is what grounds us, what connects us, and what helps us to understand one another,” he added. “This is the role that Colonial Williamsburg has played in the past. It is the role we play today. It is the role we will play far into the future, provided we take action now.”

Roberts may be reached at Steve@localvoicemedia.com. Have you been affected by the change? Contact us at info@WYDaily.com. 

Related Articles

MORE FROM AUTHOR