The presence of State Farm's operations center in southwest Bakersfield — and the hundreds of jobs it created — has been touted for years as a significant economic driver for the southern San Joaquin Valley.
But will its departure have the opposite effect?
“Losing a big industry player like State Farm is never a good thing for an area,” said Nick Ortiz, president and CEO of the Greater Bakersfield Chamber of Commerce.
But Ortiz was not surprised by the company’s announcement Thursday that it is leaving Bakersfield.
“It’s not unexpected,” Ortiz said. “We’ve known they’ve been looking to consolidate their employees into regional hubs.”
Some 740 State Farm Mutual Automobile Insurance Co. employees who work at the operations center at 900 Old River Road will likely be affected, company spokesman Justin Tomczak said in an email. At one time the company had close to 1,300 employees working at the facility.
The company announced plans to exit its facility here and from 10 other places over the next several years.
But unlike some of the other affected locations whose exits take place next year, Bakersfield’s pain will be delayed for about four years as the company’s departure locally is scheduled in 2021.
“State Farm will continue to have a strong local presence in the community through our agents and local claims employees,” Tomczak said.
The work from the 11 affected offices will move to State Farm's headquarters in Bloomington, Ill., its offices in Atlanta, Dallas and Phoenix, plus other existing locations across the country, the company said.
Nationwide, the moves will affect about 4,200 of the company’s nearly 70,000 employees. State Farm said it will extend affected employees job opportunities in other locations.
“We understand the decision to exit these facilities directly affects our employees and their communities," Mary Schmidt, executive vice president and chief administrative officer of State Farm, said in a news release. "While the exits will begin in 2018 and continue over several years, we are announcing this decision now in order to give employees time to make personal and professional decisions.
"The company’s decision to exit these facilities was based on efforts to best serve customers by gaining efficiency through streamlining and improving processes, leveraging technology, and concentrating employees in larger locations."
The Illinois-based company has been a source of worried speculation locally for years because of its national consolidation moves. State Farm stoked fears it was planning to pull up stakes in Bakersfield in August 2013 when it announced it had offered for sale its 556,000-square-foot Old River Road complex along with 22 other properties across the country, including other operations centers.
The Bakersfield property sold to a private equity firm in late 2013 under a lease-back arrangement that gave the insurer at least five more years at the site.
At the time, the company denied the sale was an indication it planned to leave Bakersfield. Leasing rather than owning simply provided State Farm the flexibility to make adjustments in its operations to better serve customers, a spokesman told The Californian in 2014.
But by then, State Farm had already leased or begun construction on massive business complexes in Arizona and Texas.
At the time, spokesman Sevag Sarkissian dismissed speculation about the company's future moves.
"The sale of this building does not indicate a change in the workforce in this location," he told The Californian.
Despite the company’s assurances, no one seemed surprised this week by the insurer’s announcement.
“It is unfortunate but not at all unexpected,” Bakersfield City Manager Alan Tandy said in an email. “We have been aware of the shrinkage in staffing,” he added. “They had opted not to renew the naming rights deal for the Sports Village."
Indeed, the State Farm Sports Village on Ashe Road in the city’s southwest has reverted back to its original moniker, the Bakersfield Sports Village.
Susan Spears, who was employed for 32 years at State Farm before leaving two years ago, said Friday the decision by the company not to renew the naming rights deal was just one indication that it was pulling back from a long tradition of community involvement and support.
“I knew things were changing,” Spears said. “There was less involvement, less support for volunteering.”
Spears transferred to Bakersfield from an operations center in Costa Mesa in 1995, the year the company moved into its southwest Bakersfield facility. She knows the stress of relocating, but said the move to Bakersfield allowed her and many other fellow employees to become homeowners for the first time.
“I learned a lot from State Farm,” she said. “The training they provide is impeccable.”
But changes in more recent years caused her to rethink her employment situation.
“The morale was not good,” she said. “It was time for me to leave. I’m very happy I did.”
Outside the company’s offices Friday, a few employees were willing to talk about the news of State farm’s planned exit, but they asked that their names not be used.
One employee said she's worked for State Farm for 35 years.
She said worked for State Farm in Costa Mesa, then transferred to an office in Irvine before moving to the Bakersfield office in 2011. She said she is not yet sure what she is going to do.
"It's a lot to take in," she said.
One man, who did not provide his name, said he has worked for the company for a little more than 29 years. The planned closure, he said, was almost expected since the building was sold a few years ago. The move would help State Farm's "long-term sustainability."
"In general," he said, "people knew it was going to happen."
He said he probably won't move to another location when the Bakersfield office closes.
Tandy said he would like to see the building put to good use after the insurance company’s departure.
“Hopefully the building owner will work with the community to refill the building with a suitable replacement employer,” he said.
The Chamber’s Ortiz echoed Tandy’s hopes.
“How will the building be repurposed?” Ortiz asked.
“I remember being in that building in 2006 or 2007,” he recalled. “It was humming. It really was a true corporate campus.”
But the building is so large, Ortiz believes it may be eventually shared by more than one tenant.
“Vacancy rates in that area, they are really low” because it’s a coveted location, Ortiz said. So he believes there’s a good chance the building will not remain vacant long.
“The area has really high rents and really low turnover.”
Staff writer Dorothy Mills-Gregg contributed to this story.