Employee reduction requirements were a common theme heard by the V.I. Economic Development Authority at its monthly public board meeting on Wednesday.
Of the three companies testifying Wednesday morning, all currently receive Economic Development Commission benefits and all three are in the process of reorganizing their businesses in response to a downward turn in the local and worldwide economic situation.
In the case of family-owned Lexington Management LLC, Chief Executive Officer Matthew F. Hagen proposed a dramatic change in overall business structure from their original beneficiary certificate listing them as a Real Estate Holdings and Management entity, to their future expansion into technological services and consulting.
Their certificate currently requires 12 employees, and they are now asking for a reduction down to five. Management is offering to offset the reduction with an additional annual charitable contribution as required of $20,000. The St. Thomas company is also asking for a reduction in overall annual charitable donations from $60,000 to $40,000, and the limiting of one intern or an additional donation of $5,000 to the University of the Virgin Islands.
A similar story was relayed to the board by the CEO of TransCaribbean Dairy Corp. doing business as St. Thomas Dairies. “I am sorry to be here today,” said Fred Hintz. “One year ago I sat before this board and was granted a reduction of employees, and unfortunately due to a downturn in business, I have returned to ask of you for the same once more.”
Hintz is asking for a required reduction of employees from its current amount of 30 to 24 (20 fulltime employees and four part time). “We are holding on as best we can, but we do not look to be in business by this time next year without finding a buyer for the company, an investment partner or the purchase of land adjoining the warehouse.”
St. Thomas Dairy currently relies on the school lunch program contract for carton milk and ice cream production as its main sources of income.
Also requesting an employee reduction from 10 to five was HMY Hotels and Resorts LLC, formally known as Universal Financial Services. While the company’s original intent was that of investment and capital management in seeking funds to build new hotel properties on St Croix and elsewhere, “it was necessary to increase the scope of our business to now include branding and hotel management,” according to manager B. Tuckey Devlin. “At this time it will require fewer employees than currently submitted in our original EDC certificate,” Devlin said.
The Virgin Islands legislature passed a bill Nov. 19, 2012, to reduce the number of required employees for "designated service businesses" in the financial services category under the Virgin Islands Economic Development Authority’s Economic Development Commission’s program from 10 to five.
That bill currently awaits the approval of the governor.
