BLOOMINGTON -- State Farm said Monday that it plans to close 10 field offices in Illinois and 14 more in Indiana and Michigan, the insurer's latest cost-cutting move and one expected to save $8 million over five years.
The consolidation could displace hundreds of employees, but none based in the Twin Cities. The Illinois Operations Center in Bloomington will remain open and State Farm's corporate headquarters is not affected.
There are 1,300 employees in the 24 offices, which mainly handle auto and home claims, and State Farm's goal is to retain everyone, said spokeswoman Missy Lundberg. She said some claim representatives will stay put and work from home, but others, particularly in more administrative roles, will be given the option of relocating to one of six remaining Great Lakes Zone offices -- two each in Illinois, Indiana and Michigan.
While about 530 workers in Chicago-area offices will be commuting to a different facility in suburban Downers Grove, some of the 250 employees in downstate Illinois would have to transfer to Indianapolis.
"It's our responsibility to our customers and associates to make sure we continually evaluate our business operations to remain competitive in today's marketplace," State Farm Operations Vice President Cathy Wallace said in a statement. "Technology allows us to improve our efficiency and reduce facility related expenses while at the same time enhance service to our customers."
Employees were notified Monday. Lundberg cautioned that the consolidation is in its early phases, and specifics on who will relocate and when are not finalized.
"This is gonna be a hard decision for some of our employees downstate," she said. State Farm offers affected employees various resources, she said, such as the LifeWorks employee assistance and work-life program.
The changes resulted from a facilities study in the Great Lakes Zone that analyzed office space capacity, not the need for job cuts, Lundberg said. State Farm says the consolidation will allow it to "utilize technology while gaining operational efficiencies," such as better claims-handling software.
Similar studies have been completed in other zones. Last fall, State Farm announced plans to consolidate two operations offices in California into one in Bakersfield, affecting 600 workers. In January, the company said it would cut its offices from 56 to 33 in a zone in the southeastern U.S.
Monday's news also comes on the heels of other high-profile cost-cutting announcements at State Farm, from scaling back retiree benefits starting in 2012 to slowing the rise of its local property taxes through 2014.
Spokesman Jeff McCollum said the office consolidations are not directly related to an ongoing, national study of five departments. But both seek new efficiencies that State Farm says are needed to stay competitive.
The insurer posted a $1.8 billion profit in 2010.
"Part of running a major business involves periodically examining what's working, and what can work better," McCollum said. "At any one point in time, State Farm is studying one or more aspects of its business operation."
The Illinois Operations Center in Bloomington, which has 1,600 employees, will not see many major changes, said Lundberg. The changes also do not affect any of the roughly 1,040 State Farm agents in Illinois.
State Farm has more than 68,000 employees.
State Farm's consolidation should take about a year to complete. Here are the locations of the 10 Illinois field offices that will close; they are a mix of leased and company-owned space.
• Arlington Heights
• Tinley Park
SOURCE: State Farm