Editorial: Furniture Brands' woes felt most by workers
Sewage flows downhill, a cleaned-up version of an old saying goes.
Furniture Brands International workers and retirees probably have a renewed sense of why that saying endures.
Furniture Brands certainly was not alone in making massive layoffs in the past decade. But while individual brands within Furniture Brands seemed to be recovering from the recession in recent years, the company overall lagged the industry. Investors and analysts began moving away, and the company’s $40 million loss in the second quarter of 2013 signaled the beginning of the end.
The title of the Aug. 7 report by investment firm Raymond James, “Oh My! Circling the Drain – Faster and Faster,” pulled no punches.
Following the company’s bankruptcy filing last week, all that is certain is the uncertainty of what the end will look like and how long it will take to get there.
Oaktree Capital Management, the investment firm that has agreed to buy nearly all of Furniture Brands, seems an unlikely final owner. Investment firms generally make their money by making deals.
And whether it’s Oaktree or someone else, the new ownership is going to have to make changes – that $40 million second-quarter loss proves that something somewhere is wrong.
That means weeks, at least, of uncertainty for workers at the local plants. Until a new owner is in place and has made final plans, no one can be sure what will happen.
But retirees, and those nearing retirement, suffer not only uncertainty – because of the $200 million in pension obligations that Furniture Brands listed among its unsecured debt – but perhaps also mixed emotions. An underfunded pension fund can mean scaled down retirement plans, or delayed retirement, or worse, and the best chance of getting the money needed for the pension fund may be to split up the company by spinning off its brands, Winston-Salem lawyer Edwin Allman III told the Winston-Salem Journal in August.
Not one resident of Caldwell County made a single choice or decision that contributed to Furniture Brands’ financial problems, but hundreds of local residents have been suffering the consequences of bad decisions emanating from St. Louis, the company’s headquarters.
Don’t hold your breath waiting for any current or past leadership from the top of the hill to suffer along.