The devastating fallout from Blackstreet Capital Management LLC’s sudden closure of Somerset, PA based FTCA (Fleetwood Folding Trailers) may not – on the face of it – be as destructive as the fallout from the Fukushima nuclear plant in Japan, but the effects of the closure on FTCA’s 130 workers and 300 plus dealers have proved to be equally toxic. When Blackstreet Capital Management – a Chevy Chase, MD based private equity fund – decided to close the doors on FTCA – formerly Coleman’s popup folding trailer division (1966-1989) – they did so not only absent the necessary Worker Adjustment and Retraining Notification (WARN) Act[i]notification but also with such a singular lack of grace that many of the workers – some of whom had more than three decades of service at the Pennsylvania plant – have been indelibly scarred by the experience. Worse still, many have been burdened with healthcare bills that should by rights have been underwritten by Blackstreet.
Blackstreet’s abrupt closure of FTCA, coupled with the company’s failure to pay their January health insurance premium to Highmark Inc.[ii] – whilst apparently allowing workers to labor under the misconception that medical insurance was still in place – not only left many FTCA workers without medical cover but denied them access to the three months continuing coverage that would have been available to them through Cobra[iii]. In a move that exasperated former FTCA employees the group insurance premiums that were deducted from employee paychecks during the month of January were subsequently refunded by the now defunct FTCA Inc. “They sent back my insurance premiums…I didn’t want my insurance premiums back…I wanted my insurance,” said Mark[iv]– a former FTCA employee – whose family now faces a $63,000 medical bill, “I dread going to the mailbox every day,” he said. In Mark’s case his spouse was literally being wheeled into the operating room when he received a frantic call from his niece telling him that workers had been locked out of the FTCA plant. “This company gave us no warning at all,” said Mark who clearly remains angry about the treatment meted out to his family by Blackstreet.
In the absence of FTCA’s January premium payment one can’t fault Highmark for denying medical claims filed by former FTCA employees subsequent to January 1st– even those claims that were previously pre-approved. Nonetheless, the end result is that many former FTCA employees have been saddled with medical bills that they simply cannot pay. It’s still unclear whether the non-payment of January’s group health insurance premium – by Blackstreet-FTCA to Highmark – was an act of commission or omission. According to Wayne Ranick, USW Communications Director, FTCA’s failure to pay the monthly premium, “could not have been an oversight or an accident. The employers were told when the shutdown was announced that the company [Blackstreet-FTCA] didn’t have money to make the payment even though it was twenty days past when they were supposed to make it.” As a consequence of this – and numerous other – alleged violations of the National Labor Relations Act (NLRA) the AFL-CIO-CLC (United Steelworkers) filed an unfair labor practices action (Case number: 06-CA-037227) against Blackstreet Capital Management LLC through the National Labor Relations Board (NLRB). The case – which was filed on February 9th, 2011 – cites Blackstreet Capital Management and FTCA Inc as follows. “Refusing to engage in effects bargaining, failing to fumish information requested relevant to effects bargaining, making unilateral modifications to its collective bargaining agreement with Charging Party United Steelworkers, and repudiating said collective bargaining agreement.”
Blackstreet’s conduct is viewed by many former FTCA employees and USW officials as being unconscionable in this day and age. Ranick said of Blackstreet “they gut the company, they sell the assets, and they don’t pay any of the bills and obviously they leave the workers in dire straits…they shut the doors and walk away from any responsibility.” That Blackstreet could not apparently bring themselves to inform workers of the upcoming closure reflects poorly on their standard of ethics whilst their failure to pay the group health insurance premium – coupled with their inability to observe the provisions of the WARN act – casts serious doubt on their business judgment. The WARN act is explicit in its requirement “that an employer must give notice if an employment site will be shut down, and the shutdown will result in an employment loss for 50 or more employees during any 30-day period” [U.S. Department of Labor]. A review of information held at the Pennsylvania Department of Labor and Industry website confirmed that neither Blackstreet nor FTCA filed a WARN notice with the state of Pennsylvania in January, 2011.
Whilst some employees from the Somerset Plant have been able to find jobs and others have elected to take training programs, many are still struggling to find a suitable position in a county where unemployment is currently running at 9% (the statewide unemployment average in January was 8.2%). “Unemployment is pretty high in Somerset County…some of the [FTCA] people have found work…some are going on to school to be retrained,” said a spokesperson for PA CareerLink. “We’ve been holding workshops. We’ve been trying to help the workers as much as we can, which is what we do for any dislocated worker.”
Blackstreet is not the first company to operate at the fringe of acceptable corporate behavior and nor will it be the last. Indeed, America’s corporate history is replete with businesses that chose to operate absent any kind of moral compass. Whilst it might be unrealistic to expect 21st century companies to build a modern day Utopia for their workers it is certainly not unreasonable to require that they observe all applicable laws and follow broadly accepted ethical principles. This would begin with the simple exercise of good manners and extend to encompass all facets of the corporate social responsibility playbook. There was once a time when the majority of companies trading in the western hemisphere would have provided a clear counterpoint to the unprincipled behavior of a handful of rogue companies, but today – in spite of talk of social responsibility and ethical investing – it’s difficult to find companies that operate under a truly enlightened business model. At the end of the day companies like Blackstreet operate in such a cavalier fashion because society lets them – and that regrettably is the crux of the problem.
Note: At the time of publication Blackstreet had not responded to an e-mail request – sent to their PR company – seeking clarification of the non-payment of the Highmark group medical insurance premium or the failure to file a WARN notice.
Help for FTCA employees: The Office of Public Affairs, U.S. Department of Labor suggests that former FTCA employees requiring assistance should contact the Employee Benefits Security Administration’s Philadelphia Regional Office at 1-866-444-3272. This office will be able to determine what can be done.
[i]The Worker Adjustment and Retraining Notification Act (WARN) was enacted on August 4, 1988 and became effective on February 4, 1989.
[ii]On behalf of the Pittsburgh-based Steelworkers Health and Welfare Fund. The Fund provides a wide range of employee benefit plans to more than 40,000 participants and their families.
[iii]The Consolidated Omnibus Budget Reconciliation Act, 1986.
[iv] Surname withheld to protect confidentiality.
Acknowledgements: Highmark, The United Steel Workers Union (Pittsburgh), USW Local 2632, The National Public Affairs Office, The National Labor Relations Board and PA CareerLink.
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