Obama Backs Labor In Chicago Layoff Dispute

Barack Obama has done something today that I can't see any other recent president-elect doing. He put out a statement yesterday about the workers who are staging a sit-in in a Chicago window manufacturer where they were recently laid off.

From the Chicago Sun Times

"When it comes to the situation here in Chicago with the workers who are asking for their benefits and payments they have earned, I think they are absolutely right," Obama said Sunday at a news conference announcing his new Veterans Affairs director. “What’s happening to them is reflective of what’s happening across this economy."

"When you have a financial system that is shaky, credit contracts. Businesses large and small start cutting back on their plants and equipment and their workforces. That’s why it’s so important for us to maintain a strong financial system. But it’s also important for us to make sure that the plans and programs that we design aren’t just targeted at maintaining the solvency of banks, but they are designed to get money out the doors and to help people on Main Street. So, number one, I think that these workers, if they have earned their benefits and their pay, then these companies need to follow through on those commitments."

"Number two, I think it is important for us to make sure that, moving forward, any economic plan we put in place helps businesses to meet payroll so we are not seeing these kinds of circumstances again,’’ he said. “Have we done everything that we can to make sure credit is flowing to businesses and to families, and to students who are trying to get loans? And to homeowners who have been making payments on their homes but are still finding their property values so depressed that it becomes very difficult for them to make the mortgage payments?"

"That’s where the rubber hits the road and that’s going to be the central focus of my administration."

There was no legal shuffling, no middle of the road reticence in Obama's "I think they are absolutely right."

Maybe you might think this is of little consequence, but if you watch your national news tonight you will see an ad that General Motors ran today in the trade journal Automotive News, an unsigned open letter entitled "GM's Commitment to the American People" that almost took my breath away when I heard it on cable news at lunch. "While we're still the U.S. sales leader, we acknowledge we have disappointed you," the ad said. "At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster."

If you read Sunday's post here, titled "Obama Says Big Three Exec Pay 'Out Of Line'", then you may recognize the words in the sentences above - they practically mirror Obama's comments to Tom Brokaw about the auto industry's woes.

Make no mistake about it - this will not be "business as usual" in America. Our commander-in-chief sets the tone for the entire nation. I would imagine that Merrill Lynch's CEO would like to take back his demand for his 10 million dollar bonus now.

But back to Republic Windows. It looks like they tried to pull the okie doke on their employees, but they just happened to have the wrong bunch to mess with. Check the facts out for yourself below.

[Compiled from several national news sources]

Workers occupying the Republic Windows & Doors factory slated for closure are vowing to remain in the Chicago plant until they win the $1.5 million in severance and vacation pay owed them by management.

Management claims that it can’t continue operations because its main creditor, Bank of America (BoA), refuses to make any more loans to the company. After workers picketed BoA headquarters December 3, bank officials agreed to sit down with Republic management and UE to discuss the matter at a December 5 meeting arranged by U.S. Rep. Luis Gutierrez (D-Ill), said UE organizer Leah Fried.

BoA had said that it couldn’t discuss the matter with the union directly without written approval from Republic’s management. But Republic representatives failed to show up at the meeting, and plant managers prepared to close the doors for good — violating the federal WARN Act that requires 60 days notice of a plant closure.

TRACO has announced the sale of its residential vinyl replacement division to Echo Windows LLC. Echo Windows will assume all TRACO residential vinyl manufacturing and sales operations, and will continue manufacturing TRACO’s Sienna Series and Power Two composite vinyl/aluminum windows in the Red Oak, Iowa, facility, which was purchased as part of the agreement.

“The decision to sell our vinyl division was a difficult one for us, as TRACO was founded by my parents in 1943 to service the residential market. But, we are certain that we have chosen the best fit for our long-term residential customers,” says Robert P. Randall, president and chief executive officer of TRACO.

Sharon Gillman, who shares an address with Republic President and CEO Rich Gillman, is listed as an officer of Echo Windows & Doors LLC, which was incorporated in Illinois on Nov. 18, according to secretary of state records.

Neither she nor Rich Gillman could be reached for comment on Sunday. A secretary who answered the phone at the Iowa plant purchased by Echo said Rich Gillman was not in on Sunday, and that she did not know when he would be in.

An "echowindows.com" Internet domain has been registered, but no content has been placed on the site. The administrative contact on the domain registration is Amy Zimmerman—the same name as the vice president of sales and marketing at Republic.

Zimmerman could not be reached for comment on Sunday, but said last week that, "Banks are in the business to make money and at some point they have to make a business decision and that's what this is."

Echo Windows officials told employees at the former TRACO manufacturing plant in Red Oak, Iowa, on Thursday that the workforce would be doubled from the current 50 employees because they have production orders lined up.

On Sunday night, Atty. Gen. Lisa Madigan said her office plans to investigate the sudden closing of Republic Windows & Doors Inc. The move came after the office received requests for help from the United Electrical, Radio and Machine Workers union, Madigan said in a statement.

Negotiations are set for Monday, December 8. Whatever happens, however, the workers have already sent a message to employers that if they violate workers rights and the law, they can expect a fight.

While I was putting my thoughts together, and looking around for the latest news on this whole thing, the press release below showed up. It looks like the Gillman's public relations firm is going to have to earn their money today - the narrative on this situation has practically been set in stone at this point, without any significant input from Gillman other than the standard blanket denials that larger corporations rely on to help them weather a crisis.

I thought it was interesting that they included their financials - it looks like they are trying to push back on the storyline that they were planning to leave their old employees in the lurch because they were greedy.

CHICAGO--(BUSINESS WIRE)--The management of Republic Windows & Doors today announced the following chronology of the company’s discussions with its lender Bank of America."


10/15/2008

■ Informed Bank of America that Republic had a 10/24/08R buyer for the existing Note for ±$3.0M, discount of $1.5M.

■ Offer rejected by Bank of America stating they believed they were “over” collateralized.

■ Bank of America demands plans for “orderly” wind down Republic.

10/16/2008

■ Republic presents plan for “orderly” wind down including ceasing manufacturing in January 2009. INFORMS BANK OF AMERICA OF POSSIBLE WARN ACT NOTICE ISSUES AND VACATION PAY.

10/18/2008

■ Bank of America rejects plan and demands a shorter wind down period.

10/27/2008

■ Republic responds with a new plan to cease operations January 2009.

10/29/2008

■ Bank of America rejects plan.


11/25/2008

■ Republic requests permission from Bank of America to issue vacation pay to all employees.


11/26/2008

■ Bank rejects Company request to make vacation pay.


HISTORY

1998

■ Republic moves to new headquarters on Goose Island.

2002

■ Company reports first loss in history.

■ Loss history

2008/Q3 $5.7mm
2007 $5.5mm
2006 $7.2mm

Results from Previous Management Team

2005 $21.1mm
2004 $5.7mm
2003 $3.7mm


2006 - 2007

■ Richard Gillman, previously a minority shareholder buys out all other partners assumes all debt obligations and adds ±$2,200,000 of his personal funds to add capital to the business; installs new COO from outside of the company.

2006 – 2007

■ Fixed expenses are reduced $18.9 mm, or 47%.

02/2007

■ Productivity increased ± 30%.

02/2007

■ Gillman secures new capital.

11/2008

■ Gillman family forms Echo Windows, LLC.

Despite inheriting a company bloated with overhead and lacking any type of manufacturing discipline and/or productivity, the company makes significant improvements only to encounter and unprecedented decline in new home construction, which led to a decline of company sales to new construction of 80%. This placed the company in the impossible position of not having the ability to further reduce fixed costs, coupled with severe constrictions in the capital debt markets and an unwillingness of the current debt holder to continue funding the operations."

It will be even more interesting to see if they drag a company lawyer out next to explain why they did not comply with the WARN Act, especially when they seemed to be fully cognizant of its requirements.