By Bill Meyer

SAN FRANCISCO, CALIF. – Described as an efficiency measure, Butterfields is consolidating its auction operation at its San Francisco headquarters, resulting in pink slips for 29 employees at its Los Angeles gallery and reducing the company’s total staff to 150.

As early as March, all Butterfields’ auctions, other than its Twentieth Century decorative arts and furniture sales and novice-collector Sunset auctions, will take place at Butterfields’ two San Francisco showrooms. Additionally, to reduce operational duplications and costs, Butterfields will no longer preview sales in both markets and simulcast events from its northern and southern California galleries.

Decorative arts and furniture sales will remain in Los Angeles thanks to specialist Peter Loughrey’s strong customer base in the area. “We want to make sure we are capitalizing on that,” explained Dodie Sutro Crawford, director of marketing at Butterfields. “It makes sense to invest there and maintain that presence in Los Angeles.”

Southern California buyers, accustomed to previewing and buying American paintings, books and manuscripts, and wine at Butterfields’ Los Angeles gallery, will now have to make the drive up I5, bid absentee, or do their business over the phone or Internet.

Meanwhile, Butterfields’ San Francisco office will be handling sales for more than 15 main departments. The question arises if the San Francisco location, with 130 employees, can handle the load? That won’t be an issue, according to Crawford, as many sales already were split between the two locations. Sale consolidation at the northern California office will simplify logistics in some ways, eliminating back-and-forth shipping between the two offices.

She also stresses that Butterfields is not retreating from the Los Angeles market, pointing out that it will hold at least 12 sales a year there – one a month. “We don’t see this at all as a pulling back,” said Crawford. “We simply want to optimize our operations so that we are not duplicating effort so much.”

She maintains that the reorganization will be transparent to Butterfields’ southern California clients, particularly consigners, who will have access to 10 to15 specialists, despite the layoffs.

“We are not changing our specialist presence in Los Angeles,” she noted. “We still will have specialists in every single one of our categories in Los Angeles.”

Though regrettable, staff cuts were focused on the Los Angeles office’s administrative and operations staffs, said Crawford, sparing all but two specialists, who worked in the Contemporary Painting and Decorative Arts departments. Crawford stresses that no department heads were let go

The vacated positions could be refilled in the future, as well: “As the business builds and we receive more and more property, we can always retract that and we’re interested in doing that,” said Crawford, “but right now we really do believe we have significant coverage.”

Increased adoption of Butterfields’ Internet bidding service, eBay Live Auctions, also will lessen the impact of the consolidation, according to Crawford. With Internet sales up from 3 percent to 50 percent from early last year in some categories, said Crawford, Butterfields do without double previews and live simulcasts.

“The numbers speak for themselves,” said Crawford. “We wouldn’t be doing this if we didn’t have numbers to back it up.

“In the days that we didn’t see a lot of growth in adoption of live auction technology, it made sense to have the simulcast sales,” said Crawford. “Now that the growth has been so significant, simulcast sales aren’t necessary.

This latest round of layoffs follows a significant restructuring in November 2000, which resulted in more than 32 layoffs, 11 in Los Angeles, including specialists in several departments. That July, the company also closed its Chicago gallery. Butterfields’ obviously is still tightening its belt, and, apparently, that sits well with owner eBay.

“Like any eBay-owned business, Butterfields is expected to contribute to the overall performance objectives of the parent company,” said Butterfields CEO Geoff Iddison. “eBay understands the current difficult economic environment of the traditional auction market and supports Butterfields in the changes it is making to meet these challenges”.

Crawford couldn’t speak to specific numbers, but acknowledges that cost cutting is a priority.

“I can tell you that’s one of the reasons we are doing this,” said Crawford. “We figure we can service the customer completely, and we can also improve the financials of our company, which ultimately is what is going to make the company healthy in the long run.”