Things were looking up for Norwalk Furniture.
The union voted to accept concessions to keep the recliner line local. And the company announced that it was bringing two production brands — Hickory Hill and Jaclyn Smith Home collections — to the Norwalk plant.
But then the company’s more than 500 local employees were notified they were getting Monday off.
In an announcement that went out Friday, Norwalk Furniture told employees not to bother coming into work on Monday.
“As we continue our business restructuring efforts and discussions with our lender, we have made the difficult decision to temporarily suspend operations effective Monday, July 21st until further notice,” the announcement said.
One longtime union member, who asked for anonymity to avoid upsetting his employer, said employees are worried.
“It’s a lot of anxiety and wondering what’s going to happen,” he said.
Speculation is swirling in Norwalk. Some people say this is the end of the road. Others are more optimistic, though not by much.
When it gets down to it, the union member said, most people — including managers — have no clue what the future holds.
All Norwalk Furniture Corp. employees were instructed they were not to go to work at the beginning of this week.
The message was sent to employees of both the Norwalk plant and the one in Cookeville, Tenn.
“It’s an indefinite suspension and we’re working as quickly as we can to bring it to an end, but we don’t have a specific end date yet,” Jim Gerken, chairman of Norwalk Furniture Corp., told the Register. “If we were closing, we wouldn’t have called this a temporary suspension.”
A problem with the company that arose Friday is what led managers to suspend plant operations. Without particularly identifying the source of the troubles, Norwalk Furniture officials said the turmoil in the banking industry has affected the company’s operations.
“The furniture industry is really driven by home purchases, whether new or existing homes,” Gerken said. “That obviously is in a pretty depressed state right now. People have also got in the habit of financing furniture with home equity loans.”
Russell Bienenstock, editor at Furniture World Magazine, said he does not know what specifically is going on at Norwalk Furniture. Generally speaking, however, he said domestic furniture companies are going belly up.
“Business is kind of lousy. If you look at reports of the major chains, retail sales are off for a lot of them in the area of 10-plus percent,” Bienenstock said.
Poor economic conditions put so much pressure on the profit margins of these companies that many U.S. manufacturers have moved their operations overseas to reduce production costs, he said.
“The furniture just isn’t made here anymore,” Bienenstock said. “It’s like we’re down to the last holdouts, who really wanted to keep their local companies. It’s the hardest thing for a furniture manufacturer to do — when they close a plant, they have to fire all their friends.”
No one has said the plant is closing, but technically, the employees are laid off, the union member said.
“They are looking at the day as a no-production day, which is a lay-off day, so people can go ahead and file for unemployment,” the employee said on Monday.
Another employee, who also spoke on the condition of anonymity, said his phone has been ringing off the hook. Everyone wants to know when they will be back to work.
“I don’t know,” he said. “Nobody knows anything at this point.”
Bethany Dentler, Norwalk’s economic development director, said city officials are working closely with state representatives and company managers to resolve the situation.
“American manufacturing is definitely facing challenges on a number of different fronts, but on a local level, we’re doing all we can to support the company that here in Norwalk is the second-largest employer,” Dentler said.
At 1 p.m. Wednesday at the Ernsthausen Performing Arts Center, the Huron County Department of Job and Family Services and the Ohio Department of Job Services will host a meeting for Norwalk Furniture employees.
“We’ll be meeting with any Norwalk Furniture employee who cares to attend to hear more about the layoff benefits that would be accessible both through the county and the state,” Dentler said.
Afoul federal law?
One question on the minds of Norwalk Furniture employees is whether the layoffs run afoul federal law.
The Worker Adjustment and Retraining Notification Act requires that companies provide employees with at least 60 days notice of a plant’s closure or mass layoffs. The WARN Act applies to companies with more than 100 employees.
“Advance notice provides workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market,” according to the Ohio Department of Job and Family Services.
But there are several exceptions to the act, such as unforeseeable business conditions, and Gerken said he believes the law doesn’t apply here. He said he couldn’t comment at this time why it wouldn’t.
According to Hoovers, a company that tracks business information, Norwalk Furniture Corp. had $147.4 million in sales in 2007 and 1,350 employees, 515 of whom work at the Norwalk plant.
Gerken said sales of the Norwalk brand fell $8 million from 2006 to 2007.