Tuesday, February 16, 2010

Planned Closure of Hugo Boss Plant in Brooklyn Raises Questions of Fairness

By Olivera Perkins, The Plain Dealer
February 14, 2010, 10:00AM

Tracy Boulian, The Plain DealerSusan Brown, center, political coordinator of the Workers United union, talks to Hugo Boss workers near Nordstrom at Beachwood Place recently. The union believes that activities like this can raise public awareness that will put pressure on Hugo Boss not to close the Brooklyn plant that makes suits sold at Nordstrom.

Wanda Navarro's $13-an-hour job at the Hugo Boss plant in Brooklyn was the best she ever had. So when the owners talked about shuttering the factory, she had to do something.

The woman who describes herself as more of a wallflower became a leader in the union's effort to keep the suit-making plant from closing.

Navarro marched in protest in front of the plant with fellow workers. With wind chills in single digits, she demonstrated at Beachwood Place, where Nordstrom sells high-end Hugo Boss suits. She and other union members even handed out leaflets at the Davis Cup tennis finals in Barcelona, which the German company co-sponsored.

The drive by Workers United, which represents 311 of the roughly 375 employees at the plant, is both determined and doubtful. It seems unlikely that Hugo Boss will reverse its decision, but the effort itself draws attention to two longstanding employment issues:

Is it greed or responsible management when a company moves a profitable business abroad to make yet more money?

And should the United States try to preserve unskilled manufacturing jobs, or do they have little place in a restructuring American economy?

"We're in a tough fight, but we are pressing our case," said Joe Costigan, treasurer of the union's midwest region based in Chicago. He is working with the Cleveland local on the plant closing.
"We have to draw a line in the sand and say: 'Can we figure out a way to keep these jobs in the country, particularly when you have a company that is far from going out of business and wants to sell its products in this country?' " Costigan said. "If we can't fight to retain manufacturing jobs in this country, it means that we as a nation have a bleak economic future."

Hugo Boss officials see it differently.

"The reason for this decision is a significant under-utilization of capacity of this production facility and the fact that it was not globally competitive with the company's other facilities abroad," the company said in an e-mail.

Hugo Boss says it can make more money by moving the suit-making jobs overseas, where the work can be done for 28 percent to 40 percent less.

The debate about plant closings has existed in Cleveland and other manufacturing cities for more than 30 years.

For Navarro, it has to continue. There is no way she and her husband can afford their $900 monthly mortgage without her 10-year Hugo Boss job.

"We helped them to make a good profit," Navarro said. "Why don't they give us a chance? A chance to have a good job and earn an honest wage."

Added Sheila McVay, who has worked at the plant for 28 years, "There are no jobs that are going to pay us decent money like we're making now.

"We didn't think this was going to happen to us. We were dealing with a company that was doing well."

A company has the right to go after the highest profits, even if it means moving work abroad where suits can be made more cheaply, said Edward "Ned" Hill, dean of the Levin College of Urban Affairs at Cleveland State University, and an economic development expert.

"It would be a breach of business ethics if this company didn't close down the facility to move it where it could earn its highest profit," Hill said. "It is its fiduciary responsibility to its stockholders."

While the case can be made to save high-paying manufacturing jobs, it doesn't make economic sense for most companies to pay U.S. wages for unskilled labor, Hill said.

Some experts agree that the company has an obligation to maximize its profits, even if it costs U.S. jobs. Other people, including U.S. Sen. Sherrod Brown, assert that Hugo Boss should keep jobs here if it wants to expand sales in the U.S..

U.S. Senator Sherrod Brown, who recently met with workers at the plant, said there is a place for such jobs in this country. He wrote to company officials asking them to reconsider closing the plant. He is even looking for buyers for the facility, he said.

"If Hugo Boss wants to expand its sales and its profits in the United States, they ought to make some of their clothes here," Brown said. "They would probably get a lot of good publicity by doing it."

During union negotiations last year, the company told workers it wanted to lower wages from $13 an hour to $8.30, said Dallas Sells, the union's state director.

"They never said this plant is unprofitable," he said. The company said it could make the clothing for 28 percent to 40 percent less by going to Europe, he said.

Company officials would not confirm the figures. Hugo Boss has a facility in Turkey and contract workers in Romania and Bulgaria.

Mark Milko, president of the local, said the company demanded more than pay cuts.
"All they talked about was needing a subsidy," he said.

When local and state officials learned the company might leave, they looked into whether public money was available to help keep the Tiedeman Road plant in Brooklyn. In December, the union, company officials and elected officials met with Gov. Ted Strickland's staff in Columbus to discuss options for saving the garment workers jobs.

"Everybody felt optimistic when we left the meeting," said Susan Brown, the union's political coordinator.

Then a few days after Christmas, the same hand-delivered letter arrived at each employee's home.

Andreas Stockert, chief operating officer of Hugo Boss' parent company, Hugo Boss AG, wrote that the company had negotiated in good faith with the union.

"Unfortunately, it is clear that our efforts have failed," Stockert wrote. "Looking at the company's goals, which were driven by our customer preferences and our shareholder responsibilities, it is our conclusion and decision that it is time to close the Cleveland plant, effective April 27, 2010."

The letter made no mention about the meetings with Strickland's office.

Both the union and Strickland viewed the company's participation in the meeting as insincere.
"Multiple attempts have been made to reach out to Hugo Boss decision-makers to discuss what the state could do to help keep the jobs in Ohio," said Amanda Wurst, Strickland's spokeswoman. "Attempts to arrange even a phone call after the meeting have fallen on deaf ears."

In a letter Feb. 3 to Mark Brashear, chairman of Hugo Boss USA, Strickland asked the company to reconsider closing the plant.

A week later, in a response to the governor, Stockert left little hope.

"We listened to our employee representatives for months and, at their suggestion, met with your administration in December," he wrote. "Through the course of that process, it became apparent that neither your administration nor the union are in a position to change the economic realities in our business."

The atmosphere at the plant is one of a business about to pack up and leave town. The huge bolts of fabric are running low, and no new shipments have come in. Used-equipment buyers frequently show up ready to look at machinery and place bids.

But the union has not lost hope. While in Lorain County recently, President Barack Obama publicaly referred to Costigan, the union official from Chicago, as "a friend of mine" and spoke with him after the meeting. Costigan said he told the president about the union's fight with Hugo Boss.

"He is aware of what the circumstance is," Costigan said. "We're talking to some of the folks in his administration and some of his economic advisers."

An administration official said only, "The administration has been in contact with state and national labor leaders on the issue."

McVay, the Hugo Boss worker, also attended Obama's town hall meeting in Elyria. She got to shake the president's hand, but she didn't get to say this to him:

"My company is closing. Our jobs are going overseas. What can you do to help us?"

The union says an even crueler irony is that while the company wants to close the plant, it has set goals for dramatically expanding its U.S. market. The company says it wants to employ Americans, but not in manufacturing.

"We have an aggressive growth strategy in the United States that targets creating jobs in sales functions," the company's e-mail said.

Stuart Muszynski, president and chief operating officer of Project Love, agrees with the workers. His group promotes honorable business practices and gives out the annual Malden Mills Corporate Kindness Award, which honors a business leader who demostrates the values of businessman Aaron Feuerstein. Feuerstein was chief executive of a Massachusetts mill that continued to pay employees while the mill was rebuilt after a fire.

"The bottom line should not be the only consideration, even in these economic times," Muszynski said of the Hugo Boss situation.

Navarro, the worker, was more direct. "They're just being greedy," she said.

Take our poll

Is it fair for a profitable company to lay off workers to make even more money? A Plain Dealer poll

No comments: