KREAMER, PA — Wood-Mode may have found its much-anticipated White Knight, after all – or the iconic, 77-year-old custom-cabinet manufacturer may yet be destined for extinction.
By mid-July, the company’s fate was virtually impossible to predict.
Nearly eight weeks after the sudden closure of the financially troubled company rocked the kitchen and bath industry, a Middleburg, PA businessman announced early last month that he is working on a deal to acquire Wood-Mode’s name and corporate assets, with an eye toward reopening the company’s Kreamer, PA factory on a limited basis by mid-August.
Bill French, owner of Professional Building Systems of PA, a manufacturer of custom modular homes, posted a notice on the “Wood-Mode Friends” Facebook page that he had secured an agreement in principle to purchase the company from owners Robert and Brooks Gronlund, and that he expected an agreement with Wood-Mode’s prime lender, New York-based Great Rock Capital, to be finalized no later than July 19. French was quoted last month as saying that he hoped to have Wood-Mode’s factory up and running within weeks after the acquisition was complete.
As of the deadline for this month’s issue of Kitchen & Bath Design News, however, the potential acquisition had yet to be finalized, casting Wood-Mode’s fate in doubt even amidst the apparently legitimate glimmer of hope that the company can somehow be saved.
“Over the next few weeks we will begin to offer jobs to Wood-Mode employees, a few positions at a time,” French wrote on the 1,400-member Facebook page. “I look forward to working with many of you to build a successful company.”
French, who did not reply to an inquiry from KBDN, was quoted as saying that he is optimistic his acquisition bid will be successful, and that he made the tentative deal public in advance of its completion to allay the concerns of former Wood-Mode employees, who have faced severe hardship in the wake of the mid-May closure.
Wood-Mode employed 938 people at the time of its shutdown. At its height, prior to the 2008 recession, the company’s payroll included approximately 2,000 employees, many with work histories spanning 20+ years and encompassing several generations of family members.
Stunned employees, assured by former management that Wood-Mode would be spared from closure, were notified of the abrupt shutdown shortly before being escorted from the company’s 1.3-million-sq.-ft. facility by state, county and local police. They were notified shortly afterward that their benefits had been terminated.
French said that hiring 200 workers would be a realistic benchmark in the months ahead, and that a workforce of up to 500 employees could potentially be achieved in reopening the Wood-Mode factory. As of mid-July, phone calls were reportedly being made to former employees to gauge the availability of potential labor, the status of which is yet unknown. At least two former Wood-Mode executives were said to have accepted offers to be part of French’s management team.
Ever since Wood-Mode’s closure, former employees have been buzzing about the situation at public and private meetings, in media interviews and on social media, expressing a wide range of emotions – among them a sense of betrayal, bitterness, frustration and nostalgia – as questions continue to swirl about the contributing factors that led to the apparent demise of what had been one of the industry’s most highly respected cabinet brands.
Although Wood-Mode said that its notice of closure was legal pursuant to conditions set forth in the Worker Adjustment and Retraining Notification (WARN) Act, there have also been accusations that the company failed to comply with the federal statute, which requires companies of Wood-Mode’s size to provide employees with 60 days warning prior to plant closures. Lawsuits filed by several former Wood-Mode employees charge that the company violated WARN by failing to provide workers with the requisite 60-day written termination notice. The lawsuits seek class-action status and the payment of wages, vacation time and benefits for the 60 days, as per the WARN act.
Wood-Mode, in response to the lawsuits, has contended that providing the 60-day notice would have precluded it from being able to sell the company or obtain the capital needed to continue operations. The company has also claimed that it falls under exceptions to the WARN Act that permit faltering companies facing unforeseeable business circumstances to act as it did. It claims that in closing the plant, it acted lawfully, in good faith and without malice or reckless indifference to employees’ protected rights.
Neither Robert Gronlund, who served as Wood-Mode’s chairman/CEO, nor his son, Brooks, the company’s president and COO, have commented publicly since Wood-Mode’s closure, which continues to reverberate through the kitchen and bath industry, as dealers, sales reps, suppliers and former employees attempt to cope with the fallout.
GLIMMER OF HOPE
Wood-Mode’s closure, while sudden and unexpected, had been foreshadowed for several years. Indeed, ever since the 2008 recession, Wood-Mode had experienced significant financial challenges, leading to salary cuts, elimination of bonuses, cash-flow shortfalls and a range of cost-cutting moves. The company had also been steadily downsizing, and two years ago secured a multi-million-dollar financing package enabling it to restructure debt and generate liquidity while operating under the bailiwick of a financial-turnaround team.
In recent months, Wood-Mode had been seeking additional financing and other options, including a potential acquisition that would have enabled it to continue operations, company officials said. Those efforts collapsed in May, the company claimed, when at least one prospective buyer backed away and Wood-Mode learned that its prime lender was unwilling to provide the necessary funding to move forward. Company spokesman David Scarr, Wood-Mode’s v.p./human resources, announced at that time that the company had no choice but to abruptly shutter its factory, blindsiding employees, suppliers and government officials, as well as Wood-Mode’s extensive network of U.S., Canadian and South American dealers, many of whom had long-term, exclusive relationships with the company.
While no less than a dozen prospective buyers reportedly made inquiries into potentially acquiring Wood-Mode’s assets in the wake of the company’s shutdown, it seemed increasingly likely as the weeks went by – and none of the acquisition inquiries bore fruit – that Wood-Mode was moving toward extinction. French’s announcement regarding a potential acquisition, in contrast, has provided a palpable glimmer of hope that the company can yet be saved.
Although relatively unknown in kitchen and bath industry circles, French is a prominent figure among homebuilders. His company, founded in 2000, is one of the largest modular manufacturers on the East Coast, producing more than 1,000 custom modular homes, schools, dormitories and other light-commercial structures per year, according to the company’s website. French, in 2016, was also one of 23 lesser-known candidates who paid $1,000 to the state of New Hampshire for a chance to participate in a televised forum and have his name placed on the ballot in the New Hampshire Democratic presidential primary.
BID SPARKS ATTENTION
But while French’s bid for a presidential nomination drew only limited support, his bid to acquire Wood-Mode has captured more than casual attention, particularly in hard-hit Snyder County, PA, where Wood-Mode had been a major employer.
However, even if French is successful in his acquisition bid, the jury remains out on whether Wood-Mode can truly be resurrected – and, if so, whether the revivified company could be anything more than a shadow of its former self.
Founded during World War II, Wood-Mode established a stellar, decades-long reputation as a custom-cabinet innovator known for its quality, customer service, craftsmanship and loyal, long-term dealer base. As a privately held firm, the company’s finances remain shielded from public scrutiny, but Wood-Mode, at its height, reportedly generated annual sales that placed it among the top 10 cabinet manufacturers in North America. Even at the time of its closure, the company was said to have a considerable number of cabinet projects (along with accompanying dealer and consumer deposits) in various stages of the production pipeline, and many dealers expressed surprise that a lack of sales could possibly have been a contributing factor in the company’s apparent demise.
A revivified company – under French or any new ownership – would likely be operated on a far-smaller scale than Wood-Mode’s previous iteration. Simply getting the company up and running would doubtless be a daunting, months-long task, fraught with numerous – perhaps insurmountable – challenges. Aside from assembling an experienced management team, rehiring both new and laid-off employees and gauging the status of unfulfilled cabinet orders, ownership would have to navigate through what will certainly be a complex maze of legal and financial issues.
Wood-Mode’s new ownership would also need to regain the faith of both laid-off employees and a dealer network that was severely shaken by the company’s sudden closure.
French, it was reported, was planning to reach out to Wood-Mode dealers in an effort to preserve relationships and secure future business. However, many dealers – once exclusive to Wood-Mode and its semi-custom line, Brookhaven – have since turned to replacement cabinet lines and begun the process of redefining their own corporate identities, reassessing showroom displays and dealing with the impact of the closure on anxious, bewildered customers. Many, having been burned by Wood-Mode’s closure, would presumably be hard-pressed to assume the risk of continuing an exclusive relationship with any cabinet vendor – let alone one fraught with uncertainty.
Similar sentiments apparently hold true for former Wood-Mode employees.
French’s announcement, while sparking celebration and guarded optimism among some, has been met with skepticism among others who have expressed lingering bitterness, disillusionment and betrayal over the way the closure has been handled. Former employees also remain awash in questions regarding the status of suspended benefits, including uncollected pensions and 401(k) funds, according to the “Wood-Mode Friends” Facebook page.
Several unemployed former employees who’ve been holding out hope that the Wood-Mode factory could somehow reopen said on Facebook that they applauded French’s acquisition bid and would welcome a return to work. Others say they have accepted new jobs. And still others – puzzled, embittered and disillusioned by the closure – seem skeptical and uncertain about a potential return to a company that many once held in the highest esteem. Stung by a sense of betrayal and frustration, they say they’re adopting a guarded, wait-and-see approach to any potential acquisition.
Editor’s Note: Regular updates regarding the status of Wood-Mode and the impact of its closure will be provided via digital news bulletins, as well as through postings on KBDN’s web site, https://ift.tt/2myQROc.
— Eliot Sefrin, KBDN Publisher Emeritus
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