Massive Seattle gear producer's sons fire all without notice, to cash out

[Mcgyver]

you can always have a wingnut then all bets are off, but from a dispassionate analytical view my guess is earnings weren't high enough to make a sale as going concern produce a high enough value compared to liquidation. Add into that that at lot of management would have been exiting on the sale, well, it just might have been a tough sell. Who knows if the union was an issue or not but they are not usually viewed as beneficial to a business so there is a better chance it was a least a factor in close vs sell than not.

Sounds like they were maybe a little dense on the PR side and could have handled it better, but then again if you do give notice lots of bad things can happen. As heartless as it seems, the "you're terminated and will be walked off the property" has its merits. Their business, their call....and of course they will and should have to pay whatever severance they are obligated to.

Like the rest of you, I hate to see good machining business close and guys lose their jobs....but I also can imagine it being a scenario where its the logical thing, as in "what else were we suppose to do?". I hope I get mine to the point where it is worth more as a going concern so closure isn't the best option. The President being on holidays at the time though makes me think a lot less of him, obviously that was planned and he should have been there.

 

[SteveBausch]

I understand the option to pay penalties instead of fixing machinery.

Penalties are fixed, unknown damage is an unknown liability.

This is similar to losing control of a “landmark” building. Better to build ugly buildings, to prevent some old geezer stumbling up to the podium at a public hearing and tearfully relating how he met his dear departed wife in the lobby “and all that I have to remember her is this grand old building “.

 

[TDegenhart]

Wiggle Room

This is what the WARN act says,

" The exceptions to 60-day notice are:

(1) Faltering company. This exception, to be narrowly construed, covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business, and applies only to plant closings;

(2) unforeseeable business circumstances. This exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required; and

(3) Natural disaster. This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm."

Tom

 

[9100]

Re unions, I was once a member of the IAM, later was in two companies that unionized while I was there. When the first went union I had recently moved to salaried status so I didn't have to join the union but the people who did were my co-workers and I understood their concerns. Both of the unionizations were the result of the same thing- a manager who mistreated the workers. People voted the union in because they were sick of being screamed at and cursed for doing their jobs. From there, it was back to kindergarten. Back then, in the 50s, everyone smoked while working. Then we got a designated smoking area. Soon some realized that as long as they had a cigarette lit they didn't have to work. Then we got formalized breaks with bells signaling the start and end and yellow lines on the floors.

Unions like the IBEW started because working conditions were unbearable and it was organized in a room above dance hall in South Louis. It was necessary but then abuses by union members became as prevalent as abuses by companies. The bottom line is that there are as many assholes in the working force as there are in management. Until we solve that, the beat will go on.

Bill

 

[otrlt]

Management-Labor Dance;
Management pays just enough that you don't quit.
Labor works just enough to not get fired.

Why dump now? Management knows something.

 

[davehud]

Damn!
They do nice work:

Gear Manufacturing & Gearbox Repair | Machinists Inc

 

[UncleFrank]

Generally, there's size requirements to require WARN:

Fact Sheet - The Worker Adjustment and Retraining Notification Act

Sounds like maybe this company isn't large enough? I didn't look at any state level requirements or read any of the linked articles.

A place I worked did the WARN thing several times. In the beginning they placed the workers, hourly and salary, on 60 day notice and expected them to work. The company discovered that wasn't happening as WARN affected employees spent most of the 60 days looking for new jobs using company assets, networking, goofing off, etc.

On subsequent WARNs the company just gave 60 days paid time off in most cases but did retain some personnel for the 60 days on what they called a "working WARN". Those employees that didn't follow the rules during the working WARN got immediate termination with no severance package.

 

[Ries]

One thing most of you guys dont realize- this is Seattle. That means the real estate alone, in this neighborhood, is worth a LOT. The building is probably worth 2 million or more. (I just looked at what 2 million buys you in that neighborhood, and now I think its a lot more- probably closer to 4.)
A crappy little house in that neighborhood, on a 50x100 lot, is worth around $400k. The Gear Works building is much bigger, and has power, parking, and is not a 100 year old wood frame bungalow.

My guess is most of the machinery is 50 to 80 years old, and, at auction, would go for peanuts.

this deal was about the real estate, putting the competition out of business, and picking up the client list.

 

[Mcgyver]

this deal was about the real estate, putting the competition out of business, and picking up the client list.

The client list pretty much evaporates on shut down, phone isn't answered, new name and people causes things to get re quoted etc. I agree on the real estate.

On subsequent WARNs the company just gave 60 days paid time off in most cases but did retain some personnel for the 60 days on what they called a "working WARN". Those employees that didn't follow the rules during the working WARN got immediate termination with no severance package.

We call that notice in lieu of severance. The problems you note are real which is why closures this way while they seem heartless can be the best way. Anyway you cut it the company has a severance liability that if not sold as an operating business has to be dealt with. I've seen it done as you describe so that jobs get finished off and with select employees getting a bonus if they stay until completion. Your severance requirements seem so light, here its 1-2 weeks for year worked but can be a lot more for white collars based on the logic it can take a lot longer to find a job.

 

[gustafson]

Historically I have never been a big union fan

However, it is possible to be quite profitable with a union

https://www.cnbc.com/2017/04/27/ups-set-to-report-first-quarter-earnings.html

They made a billion dollars last year, and senior drivers can make six figures


I am not going to try and justify the 'union attitude' but trust me, the attitude does not require a union.




Relying on a bunch of guys in a Wall Street board room to determine what fair wages are has proven historically to be a bad idea


I don't know specifically about this WARN act, but generally severance equals notice.

I imagine the company bought their competitor to put them out of business, once they sell the property, they will probably be in good shape

 

[steve-l]

I have read a lot of really myopic views in this thread. For whatever reasons the owners have decided to sell the business, it is their decision alone. This is not illegal nor is it morally wrong, if retirement and severance obligations are kept and the owners did state they would. Of course there was a great deal of planning involved. Remember,when making a sale, both the seller and the buyer must be satisfied with the deal or it doesn't happen. I am certain there was a lot of give and take negotiations on both sides.

It is also important to remember the value of the sale is not just the property and machinery, but the value of the existing contracts and order book. These contracts also have obligations to their customers, which must also be honored. To do that, the health of the required machinery and all time constraints for product delivery must be insured. Sabotage is a very real threat and must be avoided at all costs. I suspect many of the workers will be employed by the new owner, some will not. The rules of the new owners will prevail, whatever they are. Employees are not owners.

 

[SIM]

I guess that the sentiment is that owners are not allowed to retire, they must die while keeping jobs alive for others. Much like the pope?

Nope, the last Pope retired.

 

[Ries]

The client list pretty much evaporates on shut down, phone isn't answered, new name and people causes things to get re quoted etc. I agree on the real estate.

not in this case. The City of Seattle, for example, when it needs a new gear for a 100 year old drawbridge, will call Gear Works, and get referred to Machinists. In fact, the website already automatically refers you. Same thing with Boeing, and the Alaska Fishing Fleet- small cranes, winches, pumps, and engines on most 60' and larger boats, and Seattle is where they get their gears. The direct transfer of a long trusted business is definitely worth something.

 

[gbent]

In fact, the website already automatically refers you.

This is interesting. I wonder if (which, how many) courts have ruled about websites as an asset of a business. Is a website something that can be purchased, just like a machine or a piece of real estate, with no ties to an ongoing business? Or could continuation of a website be used as proof the new buyers purchased the business as an ongoing concern, not simply the physical assets of a business?

 

[Mcgyver]

The direct transfer of a long trusted business is definitely worth something.

agreed, it just usually cannot be done that way. A properly done asset deal can be indistinguishable from a share deal but not if you shut down - the lack of continuity etc. i.e. if the name and people are the same the trust, may still be there, but you cannot hand someone's trust over to your neighbor; its not yours to give.

Referrals otoh are a proxy of trust and have value, often paying to the referring party. But if the business is gone/closed, there's no one on the receiving end of the trust to proxy it.

There are some shades of grey here in that the one son now works for Motion works - that suggests some continuity of things and trust moving over to Machinists.

Given how few shops manufacturer large gears, the two, getting a list or eliminating a competitor, probably start to look pretty much the same. You likely know the particulars here far better than I. I coming at it from a business perspective and think the benefit Machinists are receiving sounds more like that from eliminating a competitor than getting a customer list (but as i say if there's a lack of competition that may be the same thing)

 

[gustafson]

I have read a lot of really myopic views in this thread. For whatever reasons the owners have decided to sell the business, it is their decision alone.

Of Course

This is not illegal nor is it morally wrong,

certainly not illegal

moral,hmmmm

So you have a group of men, working for a company that is making money, probably a sh*t ton of money, that is an ongoing concern.
Men[and women] who have mortages and car loans
college tuition and retirement plans
roofs to fix and man caves to build
grandchildren and ex wives

People who made the decision to not start their own company making RC car parts or selling medical marijuana because they had a good paying union job at a good company.


And the owners made a decision that maximizes their profit over the lives of their employees


Legal, absolutely


Moral?

only in trumpworld



An old coworker and friend, Rigobert Carte, former lawyer from Haiti[then a test technician] said to me one night as we watched our computer terminals blink test results

The law is not a moral code, it is merely the law

 

[gustafson]

This is interesting. I wonder if (which, how many) courts have ruled about websites as an asset of a business. Is a website something that can be purchased, just like a machine or a piece of real estate, with no ties to an ongoing business? Or could continuation of a website be used as proof the new buyers purchased the business as an ongoing concern, not simply the physical assets of a business?

Same as a phone number or business name I would think

Bad lawyer if you left out the website in the contract

 

[Mcgyver]

So you have a group of men, working for a company that is making money, probably a sh*t ton of money, .

that's a almost beyond huge assumption, why would you say that?

If it was making a ton of money it would have had a higher value as a going concern than a liquidation

 

[DDoug]

Well, I'll bet that you can't just bring in anybody to do gear work.
So the kids don't think much of "the help", and their actions proved this.

Second point, the "Get them out quick so they don't sabotage the shop"
Can be addressed by simply sending everyone home, and locking the doors.
Their employment status not changing (paid time off), until this get's
sorted out.

 

[gustafson]

that's a almost beyond huge assumption, why would you say that?

If it was making a ton of money it would have had a higher value as a going concern than a liquidation

Until we know the terms of the deal, yours is as large an assumption