By Lewis Loflin
In February 2004, Sykes Enterprises, a multinational call center company, announced the closure of its Pikeville, Kentucky, facility, resulting in the loss of at least 324 jobs. Located just across the state line from Southwest Virginia (SWVA), this closure followed a similar shutdown in Hazard, Kentucky, in 2003, costing 393 jobs, and foreshadowed the eventual closure of its Wise, Virginia, center by the late 2010s. Lured to these regions with millions in state tax incentives, Sykes’ pattern of opening and closing facilities highlights the fragility of corporate welfare-driven economic development. This retrospective examines the 2004 Pikeville closure, the subsequent Wise closure, their combined impact on SWVA and Eastern Kentucky, and the broader economic consequences, updated with 2025 insights.
Sykes Enterprises established its Pikeville call center in 1999, attracted by nearly $4 million in Local Government Economic Development funds, including coal taxes, and a five-year property tax abatement, as reported by the Lexington Herald-Leader on February 11, 2004. The $1 million facility, located four miles south of Pikeville on U.S. 23, peaked at 700 employees in July 2000, providing technical support for internet companies across 13 countries. However, on April 10, 2004, Sykes announced its closure, citing “client needs and changing market conditions” and the need to consolidate locations, according to spokeswoman Andrea Burnett. This followed the 2003 closure of its Hazard facility, which eliminated 393 jobs, leaving Morganfield as Sykes’ only remaining Kentucky operation at the time.
The closure shocked local officials and workers. Pike Deputy Judge-Executive Karen Sue Ratliff criticized Sykes for failing to honor its commitments despite receiving public funds, noting a $6.5 million annual payroll based on 400 employees earning an average of $7/hour (approximately $11/hour in 2025 dollars). Employees like Tabitha Blackburn, a 21-year-old computer science student earning $7.15/hour, faced significant personal challenges, while Joseph Rose, a 24-year-old student, described fluctuating hours and reduced benefits. Former Kentucky Governor Paul Patton had welcomed the call centers in 1999 as a means to market “intellectual capacity” and retain youth, but the closure undermined this vision, forcing workers into lower-paying sectors or outmigration.
Sykes expanded into Wise, Virginia, in 2000, opening a call center in the Lonesome Pine Business and Technology Park with a $5.6 million loan from the Virginia Coalfield Economic Development Authority (VCEDA) and additional state incentives, promising up to 400 jobs, as announced by Governor Gilmore. The Bristol Herald Courier (June 12, 2005) later reported the addition of 350+ jobs and 30 management positions, attributing success to the local workforce. However, this facility followed the same unstable trajectory as Pikeville. A 2016 WARN notice documented a layoff of 184 employees at the nearby Vansant facility (effective March 4, 2016), and a 2019 WCYB report confirmed nearly 200 layoffs in Buchanan County, signaling downsizing. Local accounts, including sullivan-county.com, indicate the Wise center was repurposed into welfare offices, suggesting a closure between 2016 and 2019.
Sykes’ financial difficulties—$46.8 million profit ($1.13/share) in 2000, a $18.6 million loss (46 cents/share) in 2002, and $6.67 million earnings in the first nine months of 2003 (per SEC filings)—drove its global expansion, including 400 jobs in San Salvador, El Salvador (2003), and later the Philippines (2005). Despite acquiring Frontier Secure’s Wise operations in 2016, Sykes’ 2021 merger with Sitel Group to form Foundever and the shift to work-from-home models (e.g., Kingstree, SC, 2020) diminished the need for the Wise facility. By 2025, no active call center operations are reported in Wise, with former employees’ Indeed.com reviews under Foundever reflecting a legacy site at $12–$15/hour, confirming its closure.
The closures of Pikeville and Wise have had lasting effects. In Pikeville, the loss of 324 jobs eroded technical employment, while in SWVA, the Wise closure (estimated 350+ jobs) compounded the region’s economic decline. Sykes’ pattern extended to Vansant and Clintwood, where $10 million in subsidies yielded a peak of 250 jobs, despite claims of 1100 “created” jobs, with Serco (formerly S.I. International) now employing 130 at $12–$15/hour. The region’s information sector declined by 45% from 2010 to 2020, despite a 2% national increase, reflecting the failure of call center strategies. Population declines of 3–5% in counties like Buchanan since 2010 and the outmigration of 8,000–10,000 college graduates annually highlight the ongoing struggle.
In 2025, SWVA’s call center landscape is limited to EarthLink in Norton and a few jobs in Scott County, a stark contrast to the early 2000s optimism. The promised “intellectual capacity” jobs have not materialized, with offshoring to regions like El Salvador and the Philippines—where wages are $1–$5/hour—undermining local employment, as warned by LENOWISCO. Educational gaps (~50% no diploma in Dickenson County, 2008) exacerbate these challenges, leaving workers with few viable options beyond low-wage sectors.
A LENOWISCO study foresaw non-unionized call centers’ collapse, warning of offshoring risks (Asia’s $1–$5/hour wages), low-skill reliance (~30% no high school diploma, 2003), and firms exploiting subsidies, like VCEDA’s $5.6 million for Sykes. Non-unionized sites lost ~2 million U.S. jobs by 2015, unlike AT&T’s protected workforce. Education gaps—~50% no diploma in Dickenson County (2008)—worsened vulnerabilities. LENOWISCO Study, sullivan-county.com
| Sector | SWVA (% Decline) | USA (% Change) |
|---|---|---|
| Arts, Ent., & Rec. | -20% | 6% |
| Wholesale | -25% | 3% |
| Construction | -35% | 24% |
| Information | -45% | 2% |
| Mining | -50% | -11% |
Notes: Excluding mining, SWVA experienced the greatest declines in sectors that grew nationally. The region’s mining sector decline exceeded the national average. A total of 10,451 jobs were eliminated across these five sectors, with 16,774 jobs lost when including national mining sector declines between 2010-2020. The 45% decline in the information sector persists despite an estimated $200 million in public investment, likely exceeding $300–$400 million, with significant data withheld.
Ref: Zach Jackson, Virginia Tech
The closures of Sykes’ Pikeville and Wise call centers exemplify the failure of corporate welfare in SWVA and Eastern Kentucky. Despite millions in subsidies, Sykes’ pattern of opening and closing facilities—Pikeville (324 jobs), Wise (350+ jobs), Vansant, and Clintwood (250 jobs peak)—left a legacy of job losses and unfulfilled promises. The LENOWISCO study’s warnings about offshoring and low-skill reliance remain relevant, as the region struggles with a declining tech sector and outmigration. Policymakers must prioritize sustainable industries, transparency in subsidies, and workforce development to address these structural challenges. Originally reported February 11, 2004, updated April 16, 2025.
Acknowledgment: I’d like to thank Grok, an AI by xAI, for assisting in drafting and refining this article. The final perspective and edits are my own.
