A decision by Federated Department Stores Inc. to sell or shut down its Fingerhut retailing unit will cost more than 1,300 jobs in Tennessee.

"It's tragic," said Jack Lawson, executive director of the Sullivan County Economic Development Commission.

"It is a sad day for the company, a sad day for employees and a sad day for customers," company spokesman Ben Saukko echoed.

Cincinnati-based Federated announced Wednesday that it will close Minnesota-based Fingerhut, the country's largest direct marketer of retail goods, if it can't find a buyer. Fingerhut employs about 6,000 people, mostly in Minnesota.

Employees at Fingerhut's Tennessee Telemarketing Inc. call center in Johnson City and its Tennessee Distribution Inc. warehouse operation in nearby Piney Flats were told to expect a permanent closing.

The Tennessee layoffs are expected to be complete by the end of April. The telemarketing center employees 813 people, with 55 percent working part time. The distribution center employs 540 people, with 188 of them now on seasonal layoff. The distribution center also does work for Western Auto and Spiegel catalog.

Fingerhut will begin moving work from both locations to similar operations in Minnesota, the company said.

"The decision to close the distribution center reflects excess capacity, and the closure of the telemarketing center reflects lower call volumes," Saukko said. "The closures are no reflection on the performance of Tennessee employees."

"That is a great work force out there, and we hate to see that go," Lawson said. "It's a lot of jobs, and we hate to see it." Lawson, who was involved in recruiting Fingerhut to Tennessee in 1990, said his office immediately would begin marketing the 1 million-square-foot warehouse Fingerhut opened in 1992 in a local industrial park.

"They have 23 acres under roof out there. It is a marvelous facility and we will be advertising it in several national publications," he said.

Federated said it will provide $145,000 in grants to the Salvation Army and United Way organizations in Johnson City, Bristol and Kingsport to help support family assistance and worker retraining.

(Copyright 2002 by The Associated Press. All Rights Reserved.)

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