Wednesday, September 30, 2009

Republic Windows & Doors redux: Can you spell k-a-r-m-a?

All’s well that ends well

December 5, 2008: It wasn’t supposed to work like this. Days after getting a $45 billion bailout from the U.S. government, Bank of America shut down a line of credit that kept Chicago’s Republic Windows & Doors factory operating. The bosses, who knew what was coming, had been sneaking machinery out in the middle of the night. They closed the factory and sent the workers home. Then something surprising happened: Republic’s workers occupied the factory and refused to leave.

The above quote was taken from Kari Lydersen’s new book, Revolt on Goose Island: The Chicago Factory Takeover, and What It Says About the Economic Crisis, which documents one of the nation’s largest labor sit-ins. At issue was Republic's clear violation of the WARN Act, which requires companies to give employees at least 60 days' notice before closing a plant or initiating mass layoffs.

After receiving widespread media attention, as well as support from the public, Chicago police, and state and national politicians, the six-day sit-in staged by 200 members of United Electrical Workers Local 1110 ended peacefully when Bank of America and JPMorgan Chase set up a fund to pay them what they were rightfully owed.

In February 2009, the company was purchased by Serious Materials, a California-based manufacturer of eco-friendly building products. Although a lot fewer workers than they had hoped by this point have been hired back, the company has a new contract with the union and has promised to respect past seniority.

But, wait—there’s more!

Money laundering, mail fraud and robbery, oh my...

If you caught the above reference to the bosses sneaking machinery out of the plant in the middle of the night, then you might have already surmised that the plot has since thickened. But, that may be an understatement because, on September 11, the other shoe dropped with a giant thud. As reported by the Chicago Tribune, prosecutors charged—in a detailed 56-page filing—that former CEO Richard Gillman and two other executives, anticipating the imminent results of Republic’s crushing debt, stole its assets, laundered the money through shell corporations, paid off luxury car leases for themselves and secretly trucked the equipment from the plant to a new, non-unionized operation in Red Oak, Iowa.

In a recent interview on, however, Lydersen, a Washington Post reporter, indicated that the media’s portrayal of the sit-in as a spontaneous event was not entirely accurate. The reality, she says, was much more significant. Machinery was disappearing and, since the workers sensed that something was up, they decided they needed a strategy. They were willing to do what it took, Lydersen said, noting that they had even some more radical ideas in their brainstorming sessions than the occupation. “It’s sort of a combination of the workers’ willingness to really go out there and then the UE’s kind of long-term strategy and meeting with the Canadian autoworkers, who had had some successful factory occupations just in recent years, in the past five years. So they were fully ready, you know, when this all went down.”

Here’s an interesting tidbit: unbeknownst to the workers at the time, barricaded in the executive offices with them was a PowerPoint presentation that laid out how the conspirators sought to “remove, conceal and convert collateralized manufacturing equipment without the consent of Republic’s creditors.” (Oops.)

In fact, prosecutors alleged Gillman and the others defrauded company creditors who were owed at least $10 million and stole more than $200,000 cash from the company. I'll let the Tribune paint the picture of what happened next: “After a judge hit former company CEO Richard Gillman with a whopping $10 million bail, he was led away to Cook County Jail while wearing a pin-striped suit, white collared-shirt and a dazed expression on his face.”


Last week, though, Gillman’s bail was reduced to $5 million and he was released from jail with the condition that he be electronically monitored. But, what about the Red Oak, Iowa, window company? Gillman had taken it over at the beginning of 2009 with promises to continue the operation that had begun in 1985. Work soon slowed, however, and the company that had employed 120, including the mayor’s wife, closed only a month and a half later. Many of those employees had to leave Red Oak after the small town suffered this devastating loss and, the Tribune adds, one-fourth are still looking for work.

1 comment:

  1. Gillman and his cousin Spielman with Spielman's father provided jobs for Chicago people for over 45 years. The company was in trouble as early as five years ago, and Gillman bailed it out. Unfortunately it went sour when the new construction sales softened two years ago. It lost almost 80% of its new construction business, and that just kept draining cash. I seriously doubt that he did anything intentionally illegal; to destroy a company that was "blood in his veins"? On the other hand, look at the financing behind the Red Oak Iowa purchase. Mr. Smith, the money, just pulled the plug and left Gillman hanging. All the facts will come out eventually and somethings may have been illegal or, just foolish mis-guided desperation.