This is a Labor Day story about how the improbable can become the possible. The old Hugo Boss plant now has new life as Keystone Tailored Manufacturing, which is part of W Diamond. The union there was open to trying something unconventional. The goal was to save jobs and keep the plant open, but they also saw the fight as something greater.
BROOKLYN, Ohio – It was a long-shot proposition, but the Workers United union members were willing to offer it. They were desperate to save jobs.
After all, what did they have to lose? Last December, the corporation owning the former Hugo Boss men’s suit plant on Tiedeman Road planned to shutter the facility, which meant about 160 Workers United members were out of a job.
At the same time, this union also represented workers at a Hart Schaffner Marx men’s suit factory in Chicago, which was desperately looking to fill 100 slots. Workers who sew were very hard to find, since so much of the domestic apparel manufacturing industry had been off-shored for decades.
The union members reasoned that if W Diamond Group Corp., which owns the Chicago facility, would acquire the local Hugo Boss operation it would be a win-win. Hugo Boss workers would keep their jobs. W Diamond would solve its worker shortage.
A logical solution, but just how probable was it that all the moving parts would fall into place?
Even if W Diamond wanted to acquire the plant and operations, the company would need some public subsidy. Hugo Boss had to agree to sell. And perhaps even more so, would the union be successful at saving the plant from closing — again? Five years ago, when Hugo Boss sought to close the plant, the workers fought back with a multi-faceted public campaign. That time, they won, and the plant remained open.
This is a Labor Day story about how the improbable can become the possible. The old Hugo Boss plant now has new life as Keystone Tailored Manufacturing. It is a separately owned company for which W Diamond is its key customer.
Richard Monje, the union’s international vice president, said Workers United was open to trying something unconventional. The goal was to save jobs, but they saw the fight as something greater.
“There is something about our working-class communities today in that they have come resigned to what they think is their fate, rather than the belief that they can shape their fate,” he said. “Shape their destiny. Stand up and fight. Make the laws and create the alliances.”
The long-shot that turned into a sure thing began with Noel Beasley, the union’s international president, raising the idea of buying the Brooklyn-based plant with W Diamond’s CEO Doug Williams.
“Is there something we can do together?” he recalled Beasley asking him. “Noel knew the challenge we were having getting sewers,” he said. “In the end, he is my partner. Part of his role is to get the labor that we need to continue to be successful.”
Made in the U.S.A
The union raised the idea with Keystone of acquiring the Hugo Boss operations because Workers United had a good working relationship with Williams. They especially liked that he had a Made in the U.S.A. philosophy. Hugo Boss had opted to shut down the Brooklyn operation in favor of sending work overseas.
The union also liked his philosophy about profits.
“Some people say, ‘If I can’t make $100 doing that then I am not going to do it,'” Williams said. “We look at it and say, ‘If I could make a dollar, it is better than not making anything'”
Williams said he could abide by this principle because he and his wife Karen, who own the company, don’t have to answer to shareholders.
Williams grew up on a 1,000-acre farm in South Dakota.
“In the summertime it is 100 degrees and you’re out on a tractor,” he said. “In the wintertime, it is 30 below zero, and you are taking care of cattle.”
He wasn’t a farm boy at heart. As a teenager, Williams got a job selling men’s suits at a clothing store owned by his father’s friend. It suited him well. That early experience would eventually lead to a career in the apparel industry.
“I love the apparel business,” Williams said. “For whatever reason, it is something that I really, really enjoy.”
Williams would eventually work for Ralph Lauren for 17 years, where he would rise to become group president, running all the wholesale businesses in the U.S., the global manufacturing and all licensing. After leaving the company, he became an investor in Filson, which manufacturers hunting and fishing apparel in Seattle, and served as interim CEO before selling his interest.
Williams got a job offer from HMX Group, whose parent company was based in India, which owned Hart Schaffner Marx and some other companies manufacturing clothing in the U.S. and Canada.
“I was asked to come onboard and do the turnaround,” he said. “I asked them point-blank, ‘What are your goals? If your goals are to dismantle this company, and ship the jobs offshore, I have no interest in doing it’
“The CEO said to me, ‘That is not our goal,” he said.
But the workers didn’t believe it. Williams remembers his first visit to the Hart Schaffner Marx factory in 2009.
“There were 600 people in the cafeteria, and I step up in front, with my navy pinstripe suit on,” he said. “I felt like Gordon Gekko because everybody looked at me like that,” he said of the “greed is good” character in the “Wall Street” film.
“The expectation of the people was that I was there to dismantle the company,” Williams said. “I had to explain to them that that was not what I was there to do. I told them we were going to create a more efficient company. We were going to clean up the balance sheet. We were going to pay down the debt.”
At the Coppley brand clothing factory in Ontario, Canada, a worker asked him this: “Are we going to be here next year?”
“I saw the skepticism in their faces,” he said of the workers. “I said, ‘Does anybody have a Sharpie pen?’ They scrambled around and got a Sharpie. I said, ‘I am going to sign my name on the floor right here. I want you to sign your name right next to mine.
“‘I promise you that next year, we are going be standing here next to these signatures on the floor,'” Williams said. “After I left, they had gotten some clear shellac (and painted over the signatures) to make sure that the names would not be gone next year when I came back.”
He made good on his promise. A year later, workers there had gone from working three to four days a week.
But Williams was finding it increasingly difficult to keep such promises because he said HMX Group leadership did not have a commitment to turning the factories around. When HMX went bankrupt in 2012, Hart Schaffner Marx was one of its companies W Diamond ended up buying.
Now under his company’s ownership, Williams could get the turnaround of the Chicago company back on track. The factory had gone from having only enough work for four days to employees doing an hour of overtime five days a week and working a half-day on Saturday. Business had grown by 50 percent since W Diamond took over.
He said two factors contributed to the healthy growth. Both retailers and customers have responded “very positively” to the way the redesigned garments fit.
“The second was our largest competitor being purchased by Men’s Wearhouse and exiting the wholesale market,” Williams wrote in an email.
But staffing shortages stood to potentially unravel this success. He said in order to fill 100 slots the company was prepared to train 300 job seekers at a cost of $1.5 million.
“They might not even complete the training or they didn’t have the dexterity to make our garments,” Williams said. “We were getting maybe three applicants per week.”
Caught off Guard
At the same time W Diamond was having little success finding skilled sewers in Chicago, something else was about to happen to garment workers here.
In early December, Mark Milko, area director of Workers United, believed he had been invited to meet Hugo Boss’ new head of U.S. operations. Instead, Milko said a company “big wig” greeted him with, “You knew this was coming.”
“I’m thinking, ‘what was coming?'” Milko said. “They said, ‘We’re going to close.'”
They made the statement so matter-of-factly, he said. Then company officials rattled off what they intended to offer workers in severance pay and other items related to a layoff.
“I’m not talking about anything,” Milko remembers telling them. “The meeting’s over!”
He said he headed straight to the factory to tell Wanda Navarro, president of Local 168c at the plant. In 2010, she and co-worker Sheila McVay became the public face of the union’s campaign to keep the plant open.
Last time it was also in December that Hugo Boss said it would shutter the plant. Their reasons echoed those from five years earlier.
The company said, “inefficiencies and other challenges posed by the plant’s geographic location” made the Cleveland area a bad place to do business. Again, union members said that was just code for the company wanting to send jobs to Turkey or other places abroad where it had operations.
Five years earlier, the union fought back with a multi-faceted public campaign, which included actor Danny Glover leading a boycott of Hugo Boss clothing on the red carpet at the Academy Awards, as well as local demonstrations by workers. Also, the union found out that some public pension funds had invested in the private equity firm that then owned Hugo Boss. Some of those fund officials were willing to speak up for the employees.
All the actions the union took held to this central theme: Why was Hugo Boss seeking to rob its working-class employees of the American Dream at the same time it was also seeking to grow its share of the American clothing market?
Navarro was shocked when Milko told her the company wanted to close the factory again. Again, she said she was ready to fight back.
A short time later, an entourage of Hugo Boss officials, including those from the company’s human resources division, filed into the plant. Some were carrying boxes filled with official-looking documents.
“Oh no, they have people here to translate,” Navarro thought to herself.
People from more than 20 nationalities work at the plant, including immigrants from Bosnia, Cambodia, Romania and Vietnam. The last time she saw so many company officials at the factory, they were trying to shut the place down.
Even though she and Milko knew of the company’s intentions, they were expecting perhaps an announcement about closing — not a demand for employees to immediately sign papers regarding severance and other terms relating to being laid off.
“We told (the employees) not to sign or they would be giving away all their rights,” Milko said.
Only one person signed.
Hugo Boss officials must have known the announcement wouldn’t to go over well. Milko said they brought off-duty police officers with them. And they were right. Many workers were furious.
“I said, ‘Relax. Relax,'” Milko said to the employees broiling with anger. “The fight is just starting.”
They were ready to fight, but not with their fists.
When Milko reached Monje, the union’s international vice president, by phone he was outraged at Hugo Boss for wanting to close the plant.
“Everything they said they needed to have, because that was what they had in Turkey, we gave them,” Monje said. That included a maximum three weeks vacation – instead of four – and tying salary increases to performance.
“After five years of trying to do what they wanted they come and say they are closing the plant,” he said.
Monje said the union had three options: Fight for their jobs like before, bargain a better severance package or help find a buyer.
For most, losing a job was not an option, Milko said. It was a middle-age work force, most of whom had spent their careers in an industry where it would be difficult to find a job. But he said many workers believed their relationship with the company had deteriorated so they doubted whether it could be repaired.
They wanted to keep their jobs; but they wanted a new employer.
A roller coaster
Williams liked Workers United’s idea about Keystone acquiring the Hugo Boss operations; but he told them public funding would be necessary.
About a month after his conversation with the union’s international president, Williams was in Washington, D.C., meeting with Sen. Sherrod Brown, a strong proponent of keeping manufacturing jobs in the U.S. The senator had also been involved in the 2010 effort to save the plant. He gave Williams his support.
“We would do whatever we could,” Brown said he told him. “We wanted to have as little interruption of work here as possible. We told him we would work with the city and county to do whatever we could.”
By February, Williams was talking to Hugo Boss about acquiring the plant. He was also speaking to state and local entities about funding. Keystone wouldn’t be able to take over the operations without it. No deal had been struck or public funding secured, but things looked promising.
Back at the plant, her co-workers were giving union president Navarro a hard time. The union had committed to not revealing Keystone was in negotiations with Hugo Boss. Instead, they used phrases such as a “viable option is being pursed.”
People were becoming suspicious. By this time five years ago, the campaign to save the plant was in full stride. To make matters worse, the company was still trying to get workers to sign the severance documents they brought to the plant when the layoff was announced. The company had sweetened the deal, offering a $1,000 bonus.
“They were thinking that we were lying,” Navarro said of her co-workers. “They were thinking that it was not going to go through. They were saying that we are going to be without a job at the end, and we are not going to have this money. People were getting out of hand sometimes. Emotionally, it was really bad.”
Then in March, it appeared the plant had been saved. Keystone and Hugo Boss held a news conference, saying an agreement had been reached. It would be finalized in the coming weeks.
The union signed a three-year contract. The givebacks had been restored. Instead of tying raises to performance, workers would get increases of 2 to 2.5 percent a year depending on salary.
Just when it seemed things were looking up, a few weeks later Milko, who heads the union in Northeast Ohio, got a call from Beasley, the international president. He said the sale was falling apart.
“I said, ‘Oh, my God!” Milko said. “That scared the hell out of me. They were so close.”
A new beginning
Eventually, all of the parties were able to come to agreement, but it took until April.
“When all of the support came together in the first go round, it wasn’t enough,” Williams said. “We had to say to everybody, ‘We want to do this, but if everybody doesn’t want to do it together, it is not going to happen.’
“Everybody had to go back and do some soul-searching about what this factory meant to their community,” he said.
For example, Cuyahoga County, which initially proposed a $500,000 loan, ended up approving one for $650,000, said Nathan Kelly, the county’s interim director of development. Brooklyn gave $150,000 in grants and JobsOhio made a $420,000 grant.
Keystone also increased the amount of money it put into the deal. Williams declined to say how much his company put into the deal or the amount the company paid in acquiring the operation, which included purchasing the plant.
But according to public real estate transaction records, the building sold for $1.8 million.
Ultimately, deciding to support the Keystone facility with public funding came down to whether the company would save, as well as create, jobs.
Hugo Boss was making about 70,000 garments a year, Williams said. He added that Keystone will make about the same, but the potential to increase capacity is great.
“We also believe there is an opportunity for an additional 150,000 garments,” Williams wrote in an email. “This would come from securing a major contract and securing additional qualified sewers to make the garments.”
He said the company also intends to partner with local vocational educational institutions to train skilled sewers in hopes of never dealing with another shortage again.
The county’s Kelly said Williams showed his commitment to retaining jobs, especially with Keystone’s decision to pay workers the difference between their unemployment checks and their salaries while the plant was closed a few months for retooling.
“We looked at A) it was the right thing to do,” Williams said. “And B) we needed to do it because we need every single person to come back for our business to be successful.”
With all the funding in place, and other acquisition issues resolved, the deal went through. Milko called Navarro and told her the good news. She poured a glass of Bacardi and had a toast.
“The nightmare is over,” she said. “I am able to breathe again.