Shutterfly Inc. has decided not to fill 14 open positions at its Shakopee manufacturing plant, which opened in 2014, as part of a national restructuring plan.
The company announced that it will reduce its nationwide staffing by 13 percent — or 260 employees — following a nearly 31 percent decline in profits for the last quarter of 2016. The digital photo company will also close its offices in New York and Santa Clara, Calif. The Santa Clara workers will move to corporate headquarters in nearby Redwood City, Calif.
The company estimates restructuring changes to cost between $15 and $20 million in 2017.
In August, the Scott County Board and Shakopee City Council granted Shutterfly’s Shakopee facility an extension to meet promised job goals established under a tax-break agreement that helped lure the business to town. At the time, the company fell 28 jobs short of the 258 jobs that it had agreed to create within about two years.
A 2016 job report shows Shutterfly maintained an average of 259 full-time employees, just over the minimum required by the tax abatement agreement, said Samantha DiMaggio, Shakopee’s economic development coordinator.
DiMaggio, who has defended Shutterfly’s investment and stressed flexibility for the growing business, said she is not concerned by Shakopee’s latest job freeze announcement.
“This is how manufacturing works; seasons go up and down,” DiMaggio said. “We’re just glad they’re here.”
Shutterfly’s net income fell to just over $91 million, or $2.63 per share, during the fourth quarter of 2016 compared with $131.1 million, or $3.57 per share, a year earlier. Revenue rose 2.4 percent to $561.2 million over the same period.
Shutterfly, one of Shakopee’s top employers, aimed for an hourly average wage of $18.78; it actually hit an average of $24.81 an hour last summer.
Moving forward, the company will dismantle its pro gallery service and reinvest in Tiny Prints as its premium cards and stationery brand.