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Published: Monday, 9/27/2010

SHUT DOWN & SHIPPED OUT

Archbold factory workers fell victim to corporate cleaver

BY JOE VARDON
BLADE PROJECTS EDITOR

CARTHAGE, Mo. - Nestled in the woods on his 56-acre estate is Felix Wright's sprawling, multiwinged, stone house.

On a sweltering southwest Missouri afternoon last month, a drive through Mr. Wright's stone gates, past wide-open pastures and an impressive horse statue, and down a paved driveway that winds through a small forest ends in front of his secluded home.

From his front porch, Mr. Wright could have watched the gardener take a rowboat across a pond to trim the weeds on a mini island - all within Mr. Wright's $705,000 property.

But Mr. Wright wasn't home that afternoon, nor was he tending to any other of the 274 acres he owns in Jasper County, Missouri. The retired chief executive officer of Carthage, Mo.-based Leggett & Platt Inc. was en route to his cattle farms that stretch across more than 4,000 acres valued at $6.2 million in Palo Pinto, Texas.

Life indeed does move on after a factory closes.

Reached by cell phone, Mr. Wright said one of the toughest decisions he made at the then-Fortune 500 Leggett & Platt was to close plants such as Archbold, Ohio's Young Spring & Wire in 2006, cutting the jobs of about 150 unionized factory workers who made wire supports for automotive seats.

Those jobs were shifted primarily to a nonunion facility in Chattanooga, Tenn.

"When you have to start shutting down plants and disrupting people's lives and their future, it's terrible," Mr. Wright said, agreeing to answer only one question because of confidentiality agreements he said he has with Leggett & Platt. "Let me tell you what. I am 75 years old, and it's one of the worst things we ever had to think about trying to do."

The year Mr. Wright and other Leggett executives had to think about closing the Archbold plant - the announcement to close the facility was made in 2005 - he was due salary, bonus, and other compensation of almost $2 million, according to federal filings. Leggett & Platt saw its sales grow 4 percent to $5.3 billion, enjoyed a dividend increase for the 34th consecutive year, and acquired 12 new companies in 2005.

The next year, Cindy Russell, 32, a machine operator at the Leggett plant in Archbold, lost more than her $17-an-hour job. She was one of many who lost their homes and, in her case, had to move in with her parents in Bryan.

"It was financially the worst thing that's ever happened to me," Ms. Russell said during an interview from the Atlanta area, where she now lives with her sister and makes about $11 an hour as a medical transcriptionist.

Over the last several months, The Blade tracked the aftermath of Leggett's 2006 closure in Archbold to illustrate the long-term effects when almost any large, out-of-state or foreign company closes a factory here. The Blade reported yesterday that about 170 factories with 20 or more workers have closed since 2000 in northwest Ohio and southeast Michigan, claiming 21,500 jobs and wreaking hundreds of millions of dollars in havoc on the regional economy.

For the workers who lost a job at the Leggett plant, months or years of unemployment, reduced salaries and benefits, lost homes and cars, emotional strife, and marital problems followed.

For Leggett & Platt, it's been four more years of buying and selling companies, closing factories, and awarding lucrative payouts to executives. Company officers strive to please shareholders with higher stock returns, they write checks to Republican politicians who advance their interests, and they do what they can to protect the company's large operation in its hometown of Carthage - while eliminating jobs for plant workers in places such as northwest Ohio.

"Leggett & Platt is like hundreds of other corporations," said Brian Bisbee, who runs a homeless shelter in Carthage that now operates out of a building donated by Leggett. Mr. Bisbee said he is friends with some of the company's top executives. "They buy and sell corporate structures in pursuit of profit. It's the weakness of capitalism … it can be a ruthless environment."

Charles Durbin, 52, of Wauseon, was a 28-year veteran of Young Spring & Wire making $19.80 per hour as a maintenance worker when the plant shut for good in June, 2006.

Now working for $8 an hour at a machine shop, Mr. Durbin has moved to Texas and back, filed for bankruptcy, and worked odd jobs making no more than $10 an hour since Leggett & Platt pulled out of Archbold.

“I didn't have a plan back then because I didn't think I'd have trouble getting another job,“ said Mr. Durbin, whose girlfriend, Arlene Carrick, also lost a job at the Leggett factory. “For a while we were doing pretty good. Now, we're not doing so good.”

‘I don't think they gauge the impact of what closing a plant really means,' says Beverly Sidle. The 51-year-old Stryker, Ohio, woman was making $16.59 an hour after 25 years at Archbold's Young Spring & Wire when it closed. ‘It was like a death or a divorce.' ‘I don't think they gauge the impact of what closing a plant really means,' says Beverly Sidle. The 51-year-old Stryker, Ohio, woman was making $16.59 an hour after 25 years at Archbold's Young Spring & Wire when it closed. ‘It was like a death or a divorce.'
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The Blade attempted to contact each of the 146 workers affected by the Leggett closure in Archbold, speaking directly to 60 displaced workers or their spouses. Based on interviews, at least 65 are either unemployed, making less money at their new jobs, or collecting Social Security before age 65.

Nineteen people disclosed that they are still concerned about losing their homes, digging out of massive credit card debt, or paying off soaring medical bills because of a loss of health insurance.

Ten reported ongoing depression and other mental-health issues related to the plant closure. Five said they had either gone through a divorce or experienced marital problems after the stress caused by losing a job.

Thirty-three workers have since moved out of their homes.

"I don't think they gauge the impact of what closing a plant really means," said Beverly Sidle, 51, of Stryker, who was making $16.59 an hour as a machine operator after 25 years at Young Spring & Wire. "It was like a death or a divorce."

Behind each statistic are individual stories of pain and sacrifice that can't be told by number crunching alone. And some of the worst stories - years of joblessness and loss of a home - belong to people who asked not to be identified.

One of those former workers said he, his wife, and six children spent two summers living in tents to save enough cash for temporary, indoor living during the winter. Another said he never found another job and has borrowed more than $30,000 from friends to pay his bills.

Ms. Sidle now makes several dollars less per hour at her current job and her husband is retired. She said losing her Young Spring & Wire job meant piling up credit-card debt, no more vacations down south, and refinancing her home.

For Dan and Mary Lenz, Leggett & Platt's decision to close the Archbold plant meant not finishing their home.

The couple both worked at Young Spring & Wire and began building their new house in Bryan just before the plant closure was announced. They planned to install a floor in the main living room, put air conditioning in the home, and tile the master bathroom with the wages they expected to make at Young Spring & Wire.

Although Mr. Lenz, 38, was able to get a better-paying job at Bryan Metals after the Archbold closure, he's been laid off several times. Mrs. Lenz, 43, is now a hairstylist who said she made $16,000 in 2009. She said she made about $42,000 a year at Young Spring & Wire.

Mr. Lenz said he had to sell his Ford F-150 SuperCrew truck to finish the living room floor and install central air.

"My dad worked at [General Motors], my mom was a nurse, so I've seen middle class growing up," Mr. Lenz said. "We had a cottage, we had extras, we had vacations. Now, it's like you struggle to make it through the week."

After 20 years at Young Spring & Wire, Joann Barlow went from making $17 per hour to $10.25 at a convenience store. She said she has no health insurance now because she simply can't afford it.

 

On Dec. 5, 2005, a letter was sent by Leggett & Platt to the UAW explaining its decision to close Young Spring & Wire.

The letter, signed by William MacDonald, Leggett's director of human resources, said: "The decision to close YSW was not made in isolation. The facility has succumbed to the general market pressures affecting manufacturing in North America."

Leggett officials denied or did not respond to numerous requests for interviews for this report. But according to dozens of factory workers and middle managers, Young Spring & Wire was still making a profit.

The Archbold plant had recently undergone a $1.2 million expansion to accept work from a plant in Kentucky that Leggett closed. Workers say after a year of smoothing out the kinks, Young Spring & Wire rebounded to rank near the top of Leggett's eight-facility automotive division in profitability and quality.

"That factory should never have closed," said Michael Stamm, 63, of Pettisville, Ohio. Mr. Stamm spent 41 years working in the Archbold plant. "Our plant was a gold mine. If the company wasn't thinking we were any good, why would they pick us for the addition?"

According to Mr. MacDonald's letter, Leggett's consolidation within its automotive group meant the closing of Young Spring & Wire and Schukra Manufacturing in Etobicoke, Ont. Mr. MacDonald wrote that the Archbold plant was closing because it didn't have engineering and other professional functions and was not strategically located near customers.

Mr. Stamm and his former co-workers dispute Archbold's location was a reason for closure, citing several Young Spring & Wire customers in Ohio and Michigan.

According to former workers at Leggett's Archbold plant, the company provided severance packages that varied by job tenure.

The publicly traded Leggett & Platt (NYSE: LEG) grew to the diversified, multinational manufacturer of home, office, and automotive furnishings it is today in large part through a strategy conceived by former chief executive Felix Wright and his successor, David Haffner.

Their strategy: Buy, sell, and consolidate.

Young Spring & Wire was Mr. Wright's first acquisition in 1990. Leggett acquired 226 smaller companies or operations through 2009. Today the company claims 19 business units, 20,000 employees, and 140 manufacturing facilities in 18 countries - from Wittenbach, Switzerland, to Guangzhou City, China.

Mr. Haffner, who was president and chief operating officer of Leggett when the announcement was made to close the Archbold plant and was promoted to CEO the following year, spearheaded a shift in strategies in 2007.

Using total shareholder return to gauge performance instead of sales growth, Leggett executed an ambitious divestiture of operations, selling off seven divisions, closing several facilities, and eclipsing its goal of an after-tax profit of $400 million from those actions. The moves forced Leggett out of the Fortune 500 in 2010.

"Our shareholders deserve the benefits that we expect from these actions," Mr. Haffner said in a press release in 2008.

One of the facilities Leggett sold in 2008 was Modern Industries LLC in Chattanooga, Tenn. - where less than two years before Leggett had transferred most of the work when it closed its Archbold facility.

Mr. Haffner received $1.9 million in compensation in 2007, $3.2 million in 2008, and $7.3 million last year, according to federal filings. He and his wife live in what Carthaginians interviewed for this report called a modest home in town, worth about $265,000.

Mr. Haffner's executive vice president, Karl Glassman, who was also a corporate executive at the time of the Young Spring & Wire closing, has tallied total compensation of $8.3 million since 2007.

Mr. Haffner, Mr. Glassman, Mr. Wright, and the company's political action committee all give some of their cash to Republicans candidates for federal office with records of protecting their interests. According to federal filings dating to 2000, none contributed to Democratic candidates for federal office.

Since 2000, the Leggett & Platt Political Action Committee has contributed $179,500 to GOP candidates and causes. Mr. Haffner donated $17,500 during that same time frame, while Mr. Glassman ($20,400 total) and Mr. Wright ($10,500) also made significant contributions.

The most prominent beneficiary of the executives' generosity was former President George W. Bush, who received $1,000 over three donations from Mr. Glassman. But the politician who received the most money from Leggett & Platt is former Missouri secretary of state, current U.S. representative, and Republican U.S. Senate candidate Roy Blunt.

Mr. Blunt has received $63,350 from Mr. Haffner, Mr. Glassman, Mr. Wright, and the Leggett PAC since 2000. He voted in 2009 against letting shareholders vote on executive compensation. The year before that vote, Mr. Blunt voted against a measure that would've closed a corporate tax loophole.

Mr. Blunt voted in favor of numerous trade agreements, including normalizing trade relations with China and the Central American Free Trade Agreement, which are blamed for the loss of many thousands of jobs in Ohio.

And this year alone, Mr. Blunt has cast at least four "no" votes against extending unemployment benefits - which affected several former Young Spring & Wire employees - and against the Senate's "jobs bill." He also voted against a federal bailout of the automotive industry and oversight of Wall Street.

"Many of the CEOs and business people, they don't want us playing on their golf courses," said Ken Lortz, regional director for the UAW in Ohio. Workers at Leggett's Archbold plant were organized through the UAW. "They don't want us eating at the same restaurants where they eat."

Historic U.S. 66, known to many as the Main Street of America, runs right through Carthage, Mo. Signs, T-shirts, posters, and coffee mugs, all marked with the U.S. 66 logo, can be found throughout a town that burned during the Civil War.

Just off the old highway sits Leggett & Platt's corporate headquarters, one of at least six Leggett facilities in Carthage that employ a combined total of 1,936 workers in a city of 14,000 people.

The company's roots date to 1885 in Carthage, when brothers-in-law J.P. Leggett and C.B. Platt patented and began to manufacture a spiral steel coil bedspring. Seemingly every Carthaginian in every office building, antiques store, or sleepy coffee shop is tied to Leggett & Platt in some way.

"Growing up, we all thought Leggett & Platt was almost like this magical place," said Sabrina Drackert, president of the Carthage Chamber of Commerce. "When you talk about Carthage to another Carthaginian, we all think of Leggett & Platt."

The town's mayor, J. Michael Harris, is a demand manager at one of Leggett's plants in Carthage. Jim Honey, a Jasper County commissioner whose office is in the county courthouse in Carthage, is a Leggett stockholder who counts many company officials as friends and acquaintances.

Mr. Haffner, the CEO, grew up in Carthage and is essentially a town celebrity.

At the Carthage Deli across the street from the courthouse, a gathering of local folk who call themselves the Kool Koffee Klub (sic) is quick to reveal what they know - or think they know - about Mr. Haffner. Everything from his days as quarterback at Carthage High to his hobbies as a banjo player and knife maker.

"He's very low key, really regular people," said one Klub member who asked not to be identified because he lives near Mr. Haffner.

Last year, Mr. Haffner rescued a motorist from a burning car that crashed in front of the CEO's home, only adding to his personal lore. But most of Mr. Haffner's reputation has been carved through his role as the top executive at the city's largest employer.

Manufacturing makes up one-third of all employment in Carthage, according to the chamber of commerce, and Leggett's local employment total is virtually equal to Carthage's other five manufacturers combined.

"Obviously, Leggett & Platt is vitally important to this town," said Mayor Harris, who has worked at the factory now owned by Leggett for 41 years.

The company's importance to Carthage stretches far beyond paychecks.

Brian Bisbee runs a homeless shelter in Carthage that operates out of a building donated by Leggett & Platt. ‘I can't speak to Leggett's involvement in other communities, but here they care deeply and are very strong supporters of many charitable causes,' says the former Michigan man whose daughter lives in Toledo.
Brian Bisbee runs a homeless shelter in Carthage that operates out of a building donated by Leggett & Platt. ‘I can't speak to Leggett's involvement in other communities, but here they care deeply and are very strong supporters of many charitable causes,' says the former Michigan man whose daughter lives in Toledo.
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Brian Bisbee was standing at the front counter inside the Carthage Crisis Center last month, wearing a University of Toledo T-shirt.

Originally from Michigan and with a daughter and son-in-law who live in Toledo, Mr. Bisbee directs a faith-based homeless shelter and supply distribution center on the edge of downtown Carthage. The building he works in every day, a 43,000-square-feet structure with a full basement, was donated by Leggett & Platt in 2007.

"This is a corporation that cares intensely about this community," Mr. Bisbee said during an impromptu interview with The Blade.

Leggett & Platt is known throughout the community for its philanthropic endeavors, from executives and employees alike.

The company is a national sponsor of Relay For Life cancer research fund-raisers and has many participants at the local event each year. Leggett is an annual sponsor of the Carthage Maple Leaf Parade and makes large yearly contributions to the local United Way.

"I don't know what we'd do without them," said Jenny Mansfield, director of the Carthage Area United Way.

Ms. Mansfield said the company engages in a major fund-raising drive with its employees each year, receives significant contributions from executives such as Mr. Haffner, helps the United Way produce its video, and assists in printing the chapter's brochure. She said last year, through pledges and other donations, Leggett & Platt raised more than $90,000 out of the $188,000 the Carthage chapter received from area employers.

A wellness center at the McCune-Brooks Regional Hospital in Carthage and a basketball arena at Missouri Southern State University in nearby Joplin, Mo., are both named after the company.

The Carthage Crisis Center building used to be a Leggett company training facility. Mr. Bisbee said the building was worth $450,000 when the company donated it and is now worth much more. "I can't speak to Leggett's involvement in other communities, but here they care deeply and are very strong supporters of many charitable causes."

In a 2008 interview with the Carthage Press newspaper, Mr. Haffner touted Leggett & Platt's divestiture and increase in market share as positive news for the company's local operations.

But Carthage was not spared entirely during the recent global recession, as at least 65 Leggett employees were laid off in 2008 and 2009. By and large, though, the company does its wheeling, dealing, and cutting far from its home.

The coffee-shop dwellers in and around Carthage know Leggett & Platt for who it is and what it's done to become the company it is today.

"They do what they have to do to survive in this economy," said Bob Herbst, a Carthaginian who had just finished breakfast at CD's Pancake Hut. "If you look at any industry, making decisions to close and consolidate is often necessary for survival. I think Leggett & Platt has gone out of its way to protect jobs here."

Contact Joe Vardon at:

jvardon@theblade.com

or 419-724-6559.



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