‘All’s well in Cartusville’
It was an incongruous scene, as the relocation industry struggled to rebound from rock bottom last October ”“ at the Cartus Global Network Conference in Chicago, Blues Brothers impersonators boogied with various corporate partners of Danbury-based Cartus Corp., as CEO Kevin Kelleher spun a positive angle on the carnage in the relocation industry of the past year.
“All”™s well in Cartusville,” Kelleher said.
If so, then one of the largest employers in Fairfield County is on its way to a remarkable turnaround, capped by an unusual pirouette in which it re-entered the “at risk” relocation business after spending the previous few years getting out of that very line of work.
In 2009, Cartus helped 1,200 companies perform 116,000 employee relocations in some 135 countries, 19,000 fewer jobs than in 2008, representing a 14 percent decline from the year before.
Cartus”™ Parsippany, N.J.-based Realogy Corp. reported its relocation services revenue totaled $320 million in 2009, down 29 percent from the previous year and easily the worst of Realogy”™s real estate businesses, which include Coldwell Banker and several other agencies, along with title and settlement services.
Despite Cartus”™ and Realogy”™s struggles, several senior executives received compensation increases in 2009, in the form of cash-based retention awards. That helped boost Kelleher”™s pay by more than half to just more than $700,000, though that was still more than $1.2 million below what he received in 2007, when Realogy CEO Richard Smith took home nearly $14 million before the bottom fell out of the residential real estate market. Smith received about $1 million in pay last year.
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Cartus was hardly alone in its relocation industry struggles ”“ in addition to corporate employee transfer business falling, relocation by job seekers slowed in the second half of 2009 as well, with only 7 percent of fourth-quarter job seekers taking positions in new towns. That is the lowest relocation rate on record, according to a report released by outplacement consultancy Challenger, Gray & Christmas Inc.
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If the relocation market had yet to pick up serious momentum near year-end, Cartus itself was on the prowl, announcing the acquisition of Primacy Relocation L.L.C., a Memphis-based competitor with 700 employees.
The deal was noteworthy in that Cartus picked up a large book of business performing “at risk” relocations for government agencies and businesses, in which it bears the risk of all expenses associated with acquiring, carrying and selling the home, including potential loss on sale.
In early 2008, Cartus dumped most of its government-based, at-risk contracts after seeing profits evaporate in 2007 due to the downturn in the U.S. residential real estate market. As of the close of 2009, at-risk client contracts represented less than 1 percent of Cartus”™ total business, with the company”™s portfolio now dominated by so-called “no-risk” contracts.
In a conference call with investment analysts, Realogy CEO Smith said Primacy”™s contracts are structured to mitigate the risk of a downturn in the real-estate market, in contrast to the contracts Cartus exited.
Smith also lauded Cartus”™ efforts to innovate in the industry in 2009.
“The Cartus asset-recovery business, which was launched in 2009, began to pick up momentum in the fourth quarter and is expected to generate a profit in 2010,” Smith said. “We believe it is a unique offering that capitalizes on the Cartus infrastructure and expertise to assist lenders and (loan service companies) in avoiding costly foreclosures through short-sale services. The early pilot program results are encouraging.”
If Cartus has seen a remarkable amount of change in the past few years, employees remain mindful of what remains carved in stone, according to one employee ”“ helping employees keep it together during transfers to new locales.
“A customer once ”¦ asked that we call his teenager, who was distraught about moving away from old friends, to talk about the excitement and adventure of moving and the importance of making new friends as well as holding onto the old ones,” wrote
Jon Wyatt, head of Cartus”™ quality assurance department, in a recent blog. “This family was successfully relocated, and the dad said the call to his child made his month. Relocating can be complex, and our customers expect us to make it easier.”