When manufacturing companies hit bankruptcy, often the plants are shut down and workers are thrown out of work. But sometimes workers fight successfully to keep the plants open and save their jobs. Recently, several thousand workers at Hartmarx waged a campaign to keep production going in North America, and took on the giant Wells Fargo in the process.
In January 2009, the Hartmarx Corporation, one of the nation’s largest suit manufacturers, filed for bankruptcy in Chicago where its headquarters and largest plant are based. Hartmarx had fallen into financial problems over the last year due to the recession, and it had difficulty receiving ongoing financing from its lenders. The company employed over 3,500 workers in Illinois, New York, Indiana, Alabama, Pennsylvania, and Ontario, and is perhaps best known these days for providing a number of custom-made suits for President Obama.
Hartmarx is the successor company to the famous Hart Schaffner & Marx, which was founded over 120 years ago in Chicago. The company was first organized in an historic strike of tens of thousands of workers in 1910. Led by a young Sidney Hillman, they achieved a groundbreaking settlement with the company and would go on to form the Amalgamated Clothing Workers of America several years later.
Today, several thousand Hartmarx workers are represented by Workers United, the main apparel and textile workers union in North America, and the successor union to the Amalgamated Clothing Workers. When the company filed for bankruptcy, it became apparent fairly quickly that the main creditor Wells Fargo (who had several months earlier acquired Wachovia, the previous creditor), which was owed over $100 million, was favoring liquidation of the company in order to get back as much of its money as possible. The union launched a campaign to save Hartmarx and preserve thousands of well-paying manufacturing jobs. This campaign was heavily supported by the Illinois State Council of SEIU, with whom Workers United had affiliated. Many press articles about the campaign can be found on the Workers United website. The workers’ hope was that a buyer for the company could be found that would maintain the domestic operations. Several companies appeared to be interested, but the fear was that they would buy the company’s brand names and then close the factories and outsource the work to cheaper sweatshop contractors overseas, as is common in the global apparel industry.
An important principle guided this fight. Wells Fargo, as a recipient of over $25 billion in TARP bailout funds, had a social responsibility to help work out a solution that would preserve the company as an ongoing business that maintained employment. This was reminiscent of the famous Republic Windows & Doors fight, also in Chicago, where Bank of America was pressured to acknowledge responsibility for the workers left abandoned when their company shut down late last year.
Taking inspiration from the Republic fight, in May over 500 workers at the main Des Plaines, Illinois Hartmarx plant outside Chicago voted to occupy their factory in the event of liquidation. Soon after, 500 workers at the Rochester, New York plant of Hickey Freeman, a Hartmarx subsidiary with a long history in the industry, also voted to occupy their factory. The workers at both plants also held a number of demonstrations and the Chicago workers sent a delegation to the Target annual meeting at the end of May in Milwaukee to confront Wells Fargo CEO Richard Kovacevich, a Target Board Member. The day before, Workers United sent a letter to Kovacevich asking for a meeting to discuss the Hartmarx situation. In the letter, the union stated,
Kovacevich, perhaps fearing the confrontation, failed to show up at the Target meeting.
The workers also had significant national and local political support in this fight. Leading the support effort was Representative Phil Hare, a former union member who worked for 13 years at Hartmarx’s Rock Island, IL facility and now represents that district. He organized a group of over 40 House members to sign onto a letter to Treasury Secretary Tim Geithner expressing concern about Wells Fargo’s behavior. The letter stated,
In New York, Representative Louise Slaughter, who represents the Rochester area, and Senator Charles Schumer were also supportive, both reaching out to Wells Fargo to discuss the situation. In Illinois, the State Treasurer Alexi Giannoulias, sent a letter to Wells Fargo threatening to cut the state’s business with Wells if Hartmarx was liquidated. The New York State Comptroller Thomas DiNapoli sent a similar letter of concern as well.
The pressure was on Wells Fargo, but there still needed to be a buyer for the company. In May the right buyer emerged – Emerisque Brands, a British private equity company, and their partner SKNL North America, an Indian company. Emerisque saw value in a Made in USA label and promised to maintain North American production. Workers United supported the Emerisque bid in a letter to the U.S. Bankruptcy Court at the end of May, saying,
Wells Fargo was initially resistant to the $119 million Emerisque bid, which they determined was too low, but some intense negotiations and a slightly higher offer from Emerisque resolved Wells’ concerns. The court approved Emerisque as the opening “stalking horse” bid at the beginning of June, and several weeks later, Hartmarx finally won approval for the sale to Emerisque for $128 million. In an emotional court hearing, the U.S. Bankruptcy Court Judge Bruce W. Black was reported to have addressed the workers that packed the courtroom, saying “it sounds like you have jobs to go back to and we’re all happy about that.” The workers have celebrated their victory, but now comes the difficult work of turning around this troubled company in a tough economy