Volume 10, Issue 1 - January 2009

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Closing a Plant: Dos and Don’ts and Lessons Learned

Republic Windows and Doors’ announcement on Wednesday, December 3, that it would cease operations the following Friday wasn’t taken lightly by employees (see related story in the December 2008 issue of DWM, page 17, and on page 14 of this issue). Given only a few days notice, workers staged a sit-in demanding their severance and vacation pay. According to union officials, such short notice represented a violation of the Worker Adjustment and Retraining Notification (WARN) Act, which protects workers, their families and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs. In the end, workers and Republic reached a $1.75 million settlement. 

Workers at the Jancor Co., owner of Kensington Windows and Survivor Technologies, weren’t even that lucky (if you can call it that). The company closed its doors abruptly at the end of October—with no warning at all—not even a few days. One of the employees was Tom Madden, vice president of sales and marketing for Jancor’s Heartland Division (vinyl siding). He says the company left employees not only jobless, but also with additional, unexpected expenses. 

“It’s bad enough to lose [your] job, but it’s another thing to be responsible for insurance money when you paid premiums for insurance,” he said, “not to mention receive no severance, and only 20 percent of the business/travel expenses incurred before the bankruptcy. Only 50 percent of the vacation was paid, all medical coverage ceased immediately and there was no COBRA coverage offered because the companies were self-insured.”

Madden was left with $1,000 in unpaid bills but knows people who were out $2,000 to $4,000. He knows of at least one employee who had $30,000 of surgery that won’t be paid, although the employee paid his insurance premiums. And that’s just the beginning.

“We had people who had pre-existing conditions like cancer and now it’s hard to get insurance,” says Madden.

Madden says he watched the Republic coverage on television—with much of the nation—and couldn’t help but compare what happened there with his own experience at Jancor.

“When I watched the news coverage I sat there wondering whether the Republic employees were going to be treated as badly as we were—at that time I didn’t know who the lender was,” says Madden. “The good thing was that Bank of America stepped up due to political pressure.”

Jancor’s loan was from PNC Bank, and officials there did not respond to Madden’s calls. He adds that Jancor employees have contacted several agencies such as the state attorney general and various state agencies asking them to investigate the situation.

“If [Jancor] had invoked the WARN Act we would have been prepared for this,” says Madden. He says that is the worst part for Jancor’s 800 employees and something other companies should keep in mind should they need to close. 

“The shame of this is if you want [or need] to close that’s your right, but the way employees were treated was horrendous. I hope this doesn’t happen to other Americans,” he says. “At least that way people can leave with a little dignity and move on.” (Attempts by DWM magazine to reach Jancor officials have been unsuccessful).

(Just before DWM went to press, it was announced that the principals of ProVia Door in Sugarcreek, Ohio, have purchased the assets of Heartland Building Products (HBP) in Booneville, Miss., from Jancor Companies, Inc. as well as two separate manufacturing facilities in Olive Branch, Miss. and Macon, Miss). 

The Right WayUnfortunately, Jancor and Republic, and the others that have closed, aren’t likely to be the last of these, experts predict. Gene Grabowski, a senior vice president with Levick Strategic Communications based in Washington, D.C., says when it comes to these situations, Grabowski there are three vital steps employers and owners should follow.

“First is communicating with the employees who may remain, whether they are in the closing plant or other locations,” says Grabowski. “It’s vital that they are your first audience. Be transparent and honest with them about what’s going on … and give them more information—not less—in these circumstances.”

The next step, Grabowski says, is communicating with the community in which the plant is located, because closing a plant will affect many people in that area.

“Speak to them as though they are family; be open and compassionate,” Grabowski says, adding to also keep in mind that news travels fast and will stay with the company, even years later when it may be considering opening a new plant in another nearby community. “Be aware of those existing and future circumstances [surrounding the closing of a plant].”

The third key step is being aware of how you communicate with the media and Wall Street (if it applies).

“Make sure that the messages you communicate with the media are the same as what you’ve told your employees and your community,” he says, explaining that you may speak to the different groups with different words, but the story needs to be the same. “Multiple messages are a disaster, so be consistent.”

Therma-Tru knows first-hand the difficult task of closing a plant. The company announced in October 2008 that it will close its Fredericksburg, Va., plant. Bob Keller, vice president of manufacturing says there are some important items to remember when facing such a decision. 

  • Give employees ample notice, whether it’s required by law or not. Keep your messages clear, consistent and honest to help avoid any confusion.
  • It’s also important to reassure employees you are committed to being fair and respectful of their needs, and the decision to close the plant is in no way a reflection of their hard work. For example, Therma-Tru offers transition assistance, including severance pay and benefits, as well as job search training to help those affected by plant closings to get back on their feet quickly.
  • Don’t let the emotions of the decision keep you from making the decision. While closing a facility may negatively affect a large number of people, it is important to remember that these decisions are made to weather difficult market conditions and ensure the long-term well being of the company. 
  • Have a dedicated project leader that is very strong and respected. The project leader needs to have a detailed project plan that is followed and review often (at least weekly). 
  • The project leader should not be responsible for running the closing plant during the closing process, as there are key items that will be overlooked. The plant culture will be very difficult to manage during this time, so having the plant leader able to focus on running the plant will insure the closing facility continues to run well. 
  • Double the attention to safety in the closing facility. Associates will be worried about their families and futures during the transition, so ensure safety is discussed daily and supervisors are diligent about keeping associates focused on a safe work environment. 

Republic Files for Bankruptcy and Workers File Charges Against Owner 

After a long saga involving both the United Electrical, Radio and Machine Workers of America (UE), the Bank of America and other lenders, Republic Windows & Doors filed for Chapter 7 bankruptcy relief on Friday, December 12, in the U.S. Bankruptcy Court for the Northern District of Illinois. In a statement released by Republic, the company says the bankruptcy filing for liquidation was required by its lender, Bank of America, in the negotiated settlement with the UE.

“What happened to Republic is a microcosm of what is happening to many large and small businesses,” says Republic chief executive officer Rich Gillman. “In our case, declining home sales, the credit debacle, [and] the lack of cooperation from Bank of America led to the measures taken today.”

According to court documents, the company has between $1 and $10 million in assets and between $10 and $50 million in liabilities. Specifics were not provided in the initial filing.

Among the industry creditors on the list are the American Architectural Manufacturers Association, Amesbury Group, Aqua Surtech OEM, Ashland Products Co., Associated Laboratories, Bostik Findley Inc., C.R. Laurence Co. Inc., Caldwell Manufacturing Co., Cardinal CG and Cardinal FG, Century Hardware, Custom Window Extrusions Inc., DAPA Products, Deco Products Co., Edgetech IG, Erdman Automation Corp., Fasco Hardware, Glaston America, Grafco, Guardian Industries Corp., Intermac Inc., Jordan, Knauff & Co., Joseph Machine Co., LCS Precision Molding, Oldcastle Glass, Pistorius Machine Co., Preferred Engineering Products, Ramapo, Ritescreen Co., Roto Hardware Systems Inc., Southwall Technologies, Spectra Gases, Sturtz Machinery, Truth Hardware, Urban Machinery, Veka, Ventana USA, Venture Tape Corp., and Vision Industries Group. Amounts owed had not been disclosed. 

Inside Echo and Republic

Meanwhile, more details have emerged about Echo Windows, a company which Gillman incorporated on November 18—two weeks before the Republic closing. TRACO had announced on December 4—one day after Republic had announced it was closing—that it had sold its residential windows business in Red Oak, Iowa, to then-unknown Echo Windows.

One dealer, a previous Republic customer, told DWM magazine, “It [Republic’s closing] hasn’t impacted our business as we are still doing business with them [Republic].” The dealer, who wished to remain anonymous, then confirmed that they had switched their window business from Republic to Echo.

When DWM called the Red Oak facility an unidentified representative said, “We have no comment at this time.” 

Local papers have reported that business is definitely up at the Iowa plant, though, where a second shift has been re-instated and plant officials are even considering new hires.

Back in Chicago, some Republic workers are still holding out hope that the company will re-open under new ownership. UE director of organization Bob Kingsley announced that the group has formed a foundation called “The Window of Opportunity Fund,” which will be dedicated to re-opening the plant. It will be started with funds from the UE national union and the donations to the local UE that resulted from the workers’ occupation of the Republic plant.

In other news, it was reported in the Chicago Sun Times that Gillman and a Republic adviser said that prior to the Echo purchase, Republic had investors lined up to pay cash for the assets of Orrville, Ohio-based American Weather Seal (AWS). AWS reportedly had $15 million in annual sales, which, combined with Republic, would have boosted the latter company’s sales to roughly $55 million and would have allowed it to turn a roughly $3.5 million profit, said Gillman and his adviser, according to the article. But Bank of America, which also was a lender to AWS, decided to liquidate the company instead, according to the article. 

Just as DWM went to press, the UE filed charges against their former employer. The union believes that Gillman improperly took equipment from Republic in order to set up Echo Windows. The union asked the National Labor Relations Board in Chicago to seek an injunction to force the employer to follow the law and return the machinery to the factory. Visit www.dwmmag.com for the latest updates.

Republic Windows Story Garners National Attention

Door and window manufacturer Republic Windows & Doors not only was a recent hot topic in the fenestration industry news, but the story of the company’s abrupt closing—and union sit-in—drew national attention in December. The story appeared in various news outlets throughout the country—particularly after incoming President Barack Obama offered his opinion on the issue and political notable Jesse Jackson delivered turkeys and food to employees during the sit-in. Even Illinois Gov. Rod Blagojevich was on the scene at Republic at one point, where he announced that the state of Illinois would not deal with the Bank of America until the issue was resolved.

Among the news outlets that covered the story were The Chicago Sun Times and The New York Times, both of which sought information from DWM publisher/editor Tara Taffera, and included information from DWM in their own reports.

“It’s unfortunate that this story brought door and window manufacturers to the national spotlight, but I’m proud that DWM was recognized for its outstanding coverage of the story,” says Taffera. 

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