The announcement from Disney
DIS
on mass layoffs in it’s Parks, Experiences and Products division has created waves across the themed entertainment industry. According to a statement from Disney, approximately 28,000 domestic employees will be affected by the layoffs, of which about 67% are part-time. The ongoing coronavirus pandemic and continued closures of some of Disney’s parks and resorts resulted in a $2 billion loss for the Parks, Experiences, and Products segment in its third quarter.

Disney’s layoffs will be felt company-wide as it affects everyone from executives to hourly employees working inside the parks. It is important to note that while theme park personnel is what many people think of for the Parks, Experiences and Products division of the Walt Disney Company, it also encompasses Aulani, A Disney Resort & Spa in Hawaii, Disney Vacation Club, Disney Cruise Line, and Adventures by Disney, Walt Disney Imagineering, and Disney Consumer Products, Games and Publishing.

The Disneyland Resort in Anaheim, California, employees about 32,000 people across the two theme parks, shopping and dining district, and three Disney-owned hotels. The resort has been closed since March with few employees returning to work. According to Unite Here Local 11, the union that represents almost 3,000 Disneyland employees, 950 union members will be laid off effective November 1. In a press release, the union mentioned they will engage in bargaining with the company over issues like job security and healthcare coverage. On Wednesday, September 30, the union-backed Disney employees will caravan to the California State Capitol to ask Governor Gavin Newsom to sign AB3216. The governor has until the end of the day on September 30 to sign AB3216, which would guarantee the most experienced of the workers the ability to return to their jobs when the crisis subsides.

Governor Newsom has been reluctant to give any guidance for theme park reopenings during the ongoing pandemic. Disneyland, the city of Anaheim, and over a dozen state legislators, have called on the governor to give any type of update or set of rules so theme parks around California could partially reopen and resume regular operations. They continue to mention that theme parks in other states have not been linked to any major outbreaks of coronavirus. In a statement, Josh D’Amaro, chairman of Disney Parks, Experiences and Products said in-part the layoffs have been “exacerbated in California by the State’s unwillingness to lift restrictions that would allow Disneyland to reopen.” Earlier in September, Newsom said theme park reopening guidelines would be coming “very, very shortly,” and as of publication still have not been released.

In April, the Walt Disney World Resort in Orlando, Florida which has more than 70,000 employees, furloughed 43,000 of them. Disney continues to pay furloughed employees’ health benefits. The Walt Disney World Resort reopened in July, and while some employees were called back to work, Disney did let others know in August that furloughs were going to be extended. Still, with more hotels and in-park offerings opening, Disney is continuing to call back select employees that are needed on a case-by-case basis, including recreation staff for hotels that were being used by the NBA for the NBA bubble.

While Walt Disney World can operate in a bubble, Disneyland cannot. The reliance on the city of Anaheim for people to stay at nearby hotels and dine at off-site restaurants is crucial to bringing visitors back to Walt Disney’s original park. Tourism is one of the biggest sources of income for the people who call Anaheim home. Without the Disneyland Resort being allowed to open its theme parks or hotels locals are struggling to make a living, even if they don’t work directly for Disney. Mike Lyster, the Anaheim Chief Communications Officer said, “The City of Anaheim is looking at a $100 million budget deficit that will be felt by people throughout our city.” Unemployment in the city is at 15%, which is higher than it was during the Great Recession at 12%.

At the start of the pandemic and Disney theme park closures Disney executives took a drastic cut in pay. In a March 30 memo, Disney CEO Bob Chapek said, “Effective April 5, all VPs will have their salaries reduced by 20%, SVPs by 25%, and EVPs and above by 30%.” Chapek took a 50% reduction, and Bob Iger, Executive Chairman, gave up 100% of his salary. When this memo was issues there was no end date set. In August, executives were alerted that their pre-covid pay would resume.

One glaring question many people have is why can’t Disney funnel money from it’s other arms to save Parks, Experiences and Products employees? The simple answer is that each arm of the company (Marvel, Pixar, Star Wars, Parks, Experiences and Products, Direct to Consumer & International, ect.) has their own budget and way of doing things. Even though The Walt Disney Company is a multi-billion dollar enterprise, each arm operates as it’s own smaller business.

The Walt Disney Company has a long way to go before being able to resume normal operations with its Parks, Experiences and Products division. The pandemic has shown that no matter how big and seemingly indestructible a company is, there are situations that make the perfectly balanced house of cards tumble.