On Tuesday, Dec. 2, the roughly 240 employees of Republic Windows and Doors, a manufacturer of vinyl windows and patio doors located on Chicago's north side, were informed that their jobs would be terminated and the company closed by the end of the week.
On Friday, Dec. 5, the employees voted to occupy the plant and announced through their union that they would not surrender the premises without a guaranteed payment of severance and vacation days they said they were owed. At press time, Republic Windows and Doors management could not be reached for comment.
The action by members of Local 1110 of the United Electrical, Radio and Machine Workers of America (UE) against Republic became a national news story in the first weeks of December as unemployment rolls lengthened in many areas and industries throughout the U.S. In written statements, Republic Windows and Doors officials laid their decision to cease operations at the door of Bank of America, the company's major creditor.
In a statement, Bank of America acknowledged cutting the company off from its credit line but denied advising the Republic's management to let workers go without severance or back pay owed. "When a company faces such a dire situation, its lender is not empowered to direct the company's management how to manage its affairs and what obligations should be paid. Such decisions belong to the management and owners of the company," the bank said, in a statement it released.
On Dec. 8, Republic responded by issuing, through public relations firm Lake Effect Communications, a chronology, including yearly sales figures dating to 2003. That document indicated that on three occasions in October and November Bank of America rejected plans submitted by the window company that would have provided for severance and back pay, and which would have scheduled the company's operations shutdown for January of 2009, in compliance with the Worker Adjustment and Retraining Notification (WARN) Act, which requires that furloughed workers be given either 60 days notice or 60 days pay. According to union officials, the company would owe about $6,250 to each worker.
Round of Closings
Republic's closing adds yet another name to the list of window companies that have either cut production by closing plants or gone out of business altogether. Manufacturers with national or extensive regional distribution that have recently closed plants as part of a production consolidation move include Silver Line Building Products, an Andersen subsidiary, which announced in October that it was closing its Durham, N.C., production plant, and Milgard Windows &Doors, which also in October announced it was closing its production facility in Marysville, Wash. On Oct. 27, Kensington Windows, in Vandergrift, Pa., outside Pittsburgh, shut down its plant, laying off approximately 150 workers and filing for Chapter 11 bankruptcy protection. In a statement, the company indicated that it had been cut off from its credit source and without cash couldn't meet basic business expenses. "Kensington Windows has been attempting to obtain financing to permit it to continue operations, but was unable to do so and has been informed that its secured lenders have decided to terminate funding to the company immediately," company officials said in a letter released to the news media at that time.
The closings come at a time when demand for windows, especially vinyl windows, has decreased. According to Ducker Worldwide a market research company in Troy, Mich., window shipments in the U.S. peaked in 2005, when nearly 70 million units were shipped to both the new-construction and remodeling markets. A year ago Scott Shober, of Ducker Worldwide, projected that that figure would fall to just over 50 million units by the end of 2008. Both Ducker Worldwide and The Freedonia Group, another market research firm, project a slight increase in window shipments in 2009.
Republic Windows and Doors' own sales history perfectly follows that arc. In 2003, the company's $67.7 million in sales was divided between $45.1 million in remodeling and $22.6 million in new construction. By the end of the third quarter of 2008, total sales had slipped to $40.3 million, with $34 million to the remodeling market and just $6.3 million to new construction, an 80% drop in new-construction sales. Along the way, Republic became the major window supplier to home improvement retailer Pacesetter Corp., of Omaha, Neb.
Pacesetter's 2005 bankruptcy left the Chicago window manufacturer with $4 million in unpaid invoices and prompted a change of ownership at Republic, with Rich Gillman, previously a minority shareholder, assuming ownership in 2006. In November, the Gillman family reportedly formed a new window company called Echo Windows.
Scrambling for Product
For window replacement companies that depend on custom orders from suppliers, the sudden closing of a plant or a company often comes without warning. Mark Belto, owner of Alamo Exteriors, in San Antonio, found out that Kensington Windows was closing when he heard it on the news. But Kensington was one of three window lines that Alamo Exteriors carried, and sales of the product accounted for less than 5% of his window business, Belto says.
On the other hand, Republic Windows and Doors was a major supplier to Mulligan Windows, Siding, & Roofing, in Farmington, Mich. Its president, Cory Habucke, says that he had no warning that Republic, which filled orders for Mulligan Windows for 17 years, was planning to close. "It's a challenge," he says. Within days, many window manufacturers anxious to sell Mulligan came calling, and Habucke says he was fortunate that the closure came in December, a traditionally slow month for selling and installing replacement windows. "So I have time to look for a new relationship."
But the national publicity around the Republic closure ? which included stories on major news networks ? prompted calls from previous customers concerned that their warranty would disappear with the Republic name. Habucke assured them that Mulligan Windows, Siding, & Roofing, which has been in business since 1965 and now offers a diversified one-stop-shop of exterior products, would honor the warranty. "I wish they were still in business," he says, "but we have to move on."