He didn’t have full control over his decision, or over his script. He’d made a mistake by agreeing to come into the company as “interim” CEO. His authority was clipped, his offices crowded by Monomoy’s John Stewart—to whom he had to report—and the consultants from Alvarez & Marsal who had Stewart’s ear. He couldn’t fire or hire on his own initiative. Yet he was now the face of the company, a public company with Securities and Exchange Commission oversight.
Erica Bartsch, an agent with Sloane and Company, Monomoy’s New York public relations firm, began the earnings call with the kind of straining, upbeat “Good morning, everyone!” that was designed to make listeners think the morning was fantastically good. She read some boilerplate disclaimers about forward-looking statements, then introduced Solomon.
He spoke in the tongues of business: “While getting to know the team, I met with key customers and suppliers. We also prioritized the initiatives that we believe will drive free-cash-flow generation, free cash that can be used to invest in the business and pay down debt. This, of course, is all underscored by iconic brands: Oneida and Anchor Hocking.”
He admitted that the team wasn’t satisfied with 2013’s full-year results. He provided the required warning about the possible breach of loan covenants but quickly softened the news with the cure. “Our largest shareholder provided the company with an equity commitment letter, which demonstrates their dedication and enthusiasm for the business. Their commitment also provides us the operational flexibility we need to maximize free cash flow and de-lever the business.” He used terms like “customer value,” “accelerate,” and “laser-sharp focus.” Then he introduced Bernard Peters, EveryWare’s CFO.
The analysts didn’t ask many questions about the numbers, but when they did, Peters replied with vague answers, refusing to provide specifics. Joseph Altobello, of Oppenheimer & Company, teed Solomon up to deliver an optimistic soliloquy by asking what drew the new interim CEO to the company.
“What drew me to EveryWare is this is a fantastic brand with a combination of manufacturing, sourcing capabilities, as well as deep, long-standing customer relationships. If you look at my prior experience, that’s exactly the kind of business that I successfully transformed at Coleman, a division of Jarden. And also the kind of experience I used to reinvigorate the Craftsman tool business at Sears Holdings. I see all of the right foundational elements for this to be a very successful company going forward. We simply, in the near term, have to focus on the blocking and tackling necessary to build a solid foundation for growth.”
This may have been puffery—and Solomon knew the legal line between permissible puffery and lying—but none of these sentences, on their own, were untrue. They just didn’t add up to anything. They were air. In the press release of the day before, the one people in Lancaster saw, he was quoted as saying, “I’m excited about the company’s prospects.”
The $12 million commitment from Monomoy wasn’t used. Unfortunately for Anchor Hocking, its workers, and Lancaster, it wasn’t used because it didn’t come close to filling the financial chasm. Sam Solomon’s more immediate problem turned out to be not the breach, but cash: EveryWare ran out.
Solomon was told that, despite its debts, EveryWare had plenty of liquidity, thanks mainly to the Wells revolving loan. But Wells Fargo was under no obligation to keep lending money out of the revolver. When EveryWare asked for $20 million more, the bank turned off the spigot. Of all the problems he faced, Solomon said, “I didn’t expect that we would run into the big aha! of ‘What do you mean you don’t have any more money?’ Nothing shuts down a party like running out of alcohol.”
* * *
On Thursday, May 15, 2014, six weeks after the earnings call, Chris Cruit worked the early shift. He was a burn-off specialist. Burn-off men weren’t the highest-paid employees in the plant, but they weren’t the lowest, either. Cruit liked his job, but what he really wanted to do was show-biz wrestle. The wrestling he’d done on a small-time circuit was written on his face. It was a dark, handsome face, but his nose had been rearranged, a tooth had gone missing, and his ears showed the early blooms of cauliflower. A guy could knock around the Midwest for a few years and scratch out a living getting slammed into wrestling mats, but Cruit knew he was never going to be Hulk Hogan. Attitude wasn’t the problem: He was a naturally sweet guy, but he’d been a bouncer once and had learned to fake badassery. He couldn’t fake his size, though, or his age.
Cruit was a born-and-raised west-sider. He lived right around the corner from Plant 1. He enjoyed giving wrestling lessons to some kids in the neighborhood, so he began to think about starting his own wrestling school and about maybe getting into the wrestling-show-promotion racket by bringing some touring wrestlers into the fairgrounds. He needed money for that, though, plus he had a wife and son to support. Cruit tried selling cars, “but you gotta be a special kind of person to sell cars, and I didn’t do so good,” especially once the Great Recession hit. Cruit estimated he’d walked by Plant 1 “eight billion times,” but had never thought of working there. Then, in September 2008, he applied and was hired, and had worked there steadily ever since.
His shift ended at 2:30, and he left the plant. Cruit had been home a couple of hours when his phone started to ring. “They were going, ‘Hey! Anchor Hocking’s gonna shut down.’ And I was like, ‘Whaddya mean Anchor Hocking’s gonna shut down?’ ‘They shut down. They’re closed, and they don’t know if they’re gonna reopen.’”
While Cruit was on the phone, Joe Boyer stood in a small space by the guard shack at the main Plant 1 entrance. He and some other union leaders had been called off the floor for a special meeting. By now Boyer had worked under three different ownerships. Not much of anything surprised him anymore. But when the plant bosses started handing confidentiality agreements to the assembled union leaders, Boyer knew something surprising was about to happen and that it wasn’t going to be good. He didn’t want to sign the agreement, but the bosses said that he and anyone else who refused would have to leave. Until everybody signed, they couldn’t even know what it was they were supposed to keep secret. Boyer thought that was ass-backwards, but he signed it.
Unbeknownst to Boyer and the other union men, as they were signing their names to confidentiality agreements, operations executives were walking through the plant, telling workers like Brant, Swink, and Brian to go home. The plant was shutting down. Rank-and-file workers thought the union officers, now separated from them in a secret meeting, must have been warned. But the union officers had no idea what was happening, either.
The agreements Boyer was forced to sign said the reps “weren’t allowed to discuss any specifics with any of our people,” he recalled. “They were giving us facts and figures on some of the money, what was going on. We were not allowed to discuss any of that with anybody. While they are telling us all that, what was going on, they are shutting the place down!”
A “big-time” lawyer came in and started talking numbers. Boyer and the other union reps were skeptical. They’d long murmured among themselves, not always joking, that management kept two sets of books—one they showed the union and the real one. Whatever the real numbers were, they knew Anchor Hocking had been mismanaged for years, and now the big-time lawyer was telling them EveryWare Global had run out of money. And there was another message: If the plant was ever going to reopen, “they were gonna want concessions from us, and all this, and we were gonna have to make up our mind what was gonna happen.”
With the exception of the Cerberus furloughs, Anchor Hocking had gone 109 years without a long-term unplanned shutdown. It remained open through every economic, political, and war crisis. During the Great Depression of the 1930s, Anchor Hocking cushioned Lancaster. In 1933, its payroll of 2,565 employees amounted to $1.8 million. Now it was closing, maybe for good. More than nine hundred people suddenly lost paychecks.
When Solomon issued a release saying the shutdown might last four weeks, Lancaster clung to that figure as if it were gospel. A co
uncilman estimated that if the shutdown lasted a month, the city would lose $75,000 in income tax revenue—a significant enough dent in a small town’s budget to require cutbacks in the police, fire, and streets departments. Thank goodness, though, it would only be for four weeks. Four weeks was bad, but manageable. What would happen beyond that was anybody’s guess.
Anchor’s workers, salaried and hourly alike, felt ignored by the residents of the city that used to celebrate them. Now, some in Lancaster shrugged as if to say, “Well, finally.”
Others exhumed the old Lancaster civic initiative and tried to buck up the workers. Stores offered discounts. Restaurants donated a free lunch to people with Anchor Hocking ID cards. The local office of Ohio’s Job and Family Services set up a dedicated phone line to teach workers how to file for unemployment. It gave résumé tips and helped with job searches.
Jeff Couch, a firefighter, started a group called Save Anchor Hocking. His dad had worked for Anchor twenty-five years before but had been fired in one of the layoffs, plunging the family into poverty. So Couch knew what the workers faced.
“I started the group because this is not just about Anchor Hocking,” he told me. “I am tired of watching the country go downhill, and nobody ever takes the time to stop and say, ‘Hey! No! What is going on is unacceptable.’ I decided maybe we could try to do something.”
Thirty-four people joined his group. Couch and a few others decided the only way to save the company was to buy it. Lancaster had built its own hotel, its own hospital, its own gas company, and its own schools—and Couch didn’t see any insurmountable obstacle barring it from taking over its biggest private employer, not if everybody banded together and pooled their money. He wasn’t sure how much money a buyout would require, but somebody had to do something. He turned to online crowdfunding. Save Anchor Hocking raised pledges for a few thousand dollars.
Mayor Dave Smith offered to let the company extend utility payments, but there wasn’t much more the town could do. The city didn’t have $20 million. May turned into June. There was still no word on when the plant might fire up. Wall Street analysts predicted doom.
On June 6, three weeks after the shutdown, EveryWare sent a WARN (Worker Adjustment and Retraining Notification Act) letter to Mayor Smith, the Fairfield County Commissioners, and Ohio Job and Family Services stating that while some lender relief had been extended to June 30, there was no savior in sight.
Federal law requires WARN letters be sent to labor and government officials sixty days before a plant closing or layoff, not three weeks into one. (Cerberus was forced to pay workers $480,000 for not providing a WARN notice when it closed that Connellsville, Pennsylvania, bottle plant.) There are exceptions to the WARN requirements, including “unforeseeable business circumstances.”
Anyone who knew what Solomon and Monomoy knew would have a rough time arguing that EveryWare’s situation was unforeseeable, but Monomoy had a history of flouting the WARN Act. In July 2008, Monomoy bought Kurdziel Industries, an iron foundry located in the village of Rothbury, Michigan, that manufactured cast parts for construction equipment makers like John Deere. Monomoy changed the name of the business to Carlton Creek Ironworks and swept up state and local tax breaks and funds to train employees.
When it announced the purchase, Monomoy partner Justin Hillenbrand said, “This is a great deal for us. Carlton Creek is a market leader for iron castings that will continue to be essential to infrastructure repair and expansion in North America over the next 10 years. After planned improvements in manufacturing and sourcing, Carlton Creek will be better positioned to continue providing its global customers with a high-quality, cost-effective product and should grow substantially over the next few years as it re-acquires volume from Chinese foundries. This transaction is a great win for the company’s customers and employees, for the state of Michigan, and for North American manufacturing.”
Five months later, in December, Monomoy began mass layoffs, leading to a complete closure. More than two hundred employees lost their jobs, crippling Rothbury. In September 2009, Carlton Creek workers sued Monomoy for violating the WARN Act. As is typical of PE firms, Monomoy argued that it was not the employer, though it owned the company. Carlton Creek was the employer.
John Philo, an attorney with the Maurice and Jane Sugar Law Center for Economic and Social Justice, who represented the workers, argued that Monomoy was indeed the employer. “The PE folks are making the decisions,” Philo told me.
Monomoy settled the case out of court. It later settled another one of Philo’s WARN cases, this one involving Hess Industries of Niles, Michigan. “My impression is that they make that decision because they do not want to be bogged down in litigation for two or three years,” Philo said. “One thing with the WARN Act is that it’s fairly clear: You’ve either given the notice or you did not. Each time they were offering the fig leaf of ‘unexpected business circumstances,’ but if we got into trial, that would require them to show all the business stuff in the background, and they don’t want that public discussion.”
EveryWare’s board met three days later, on June 9. First it had to figure out what to do about Sam Solomon. He’d been “interim” for six months and had found the uncertainty damaging. The board offered Solomon a new employment agreement, making him CEO and president of EveryWare Global, with a base salary of $600,000, stock options, bonuses, and $100,000 in moving expenses.
Perhaps because the incongruity between that decision and the alarm around Lancaster was so jarring, the board also announced that a few workers would be called back to Plant 1. That wasn’t much to celebrate, though. There was no mention of how long those few people would have jobs. EveryWare also announced that it would “complete a reduction in force at its Lancaster, Ohio, facility over the next few weeks and will seek additional ways to conserve cash and reduce expenses through continued cost cutting measures.”
The people of Lancaster, largely in the dark about the goings-on inside Anchor and EveryWare—even middle management wasn’t aware of many details—developed theories about how the situation had become so dire. Some blamed China, Mexico, and cheap imports. Some suggested that Anchor Hocking was just old and tired, ready for the fossil beds. Maybe it was the housing bubble and the recession, or the unions, or Obama. It was complicated, that was for sure.
* * *
On June 12, local ministers and other volunteers held a rally for the workers on the West School playground, one block from Anchor Hocking’s front gate. There was food—hot dogs, popcorn—and a bounce house for the kids. Police chief Dave Bailey, Mayor Smith, the fire chief, and the sheriff all attended. Service groups set up stations to explain how workers could find help to pay bills, secure health insurance, and qualify for food assistance.
Michele Ritchlin, executive director of the West After School Program, loaded up a little cart with a canopy and some pamphlets on the program’s free summer lunches and wheeled it across Garfield Street and onto the playground.
The tutoring program started by Rosemary Hajost and the other volunteers had grown to meet an ever-increasing need. Children on the west side didn’t just require tutoring; they had to be fed. They needed a safe place to be after school. They needed attention—and not just for a day, but for all five days of the school week. The program expanded all across the city, too, because the problems of the west-side children had spread outward to all compass points.
Now headquartered in a converted house on Garfield Street, just across from the West School playground, it survived on government grants, donations, and income from after-school childcare services. Finding money to operate was a constant struggle that required all the doggedness Ritchlin, a thirty-nine-year-old body builder and a brash blond whirl of energy, possessed. Now the Anchor shutdown threatened to stress her little agency more than ever.
Ritchlin’s grandfather, father, and uncle had worked at Anchor Hocking. But that was then. When she first heard about the closing, she thought, “Oh my God, things are jus
t going to get worse.” Already too many of the children she served had one or both parents in jail, out of work, addicted. They went home when her center closed at six o’clock to not much of anything, including food. Or they were being raised by an aunt, or a grandparent, who was doing the best she could but who was probably poor herself. Fairfield County had one of the highest rates of children in foster care in the state of Ohio.
She handed out flyers to the employees at the playground rally. A free lunch for the kids wasn’t going to solve anything; she knew that. But it was something. “Those people were devastated,” she thought. “What are they going to do? They live paycheck to paycheck anyway.”
The sheriff and the police chief picked up a microphone and said a few words of encouragement. Then a minister took the mic. He asked the crowd to pray for the workers, for Anchor Hocking, for the owners of EveryWare Global. The attendees on the playground bowed their heads.
Brian wasn’t there. He spent his forced time off skating, listening to music, making art in the studio, and out at Hilltop, where he began gathering rocks for a cabin’s foundation.
In July, EveryWare and Monomoy presented the union with an ultimatum. Monomoy would provide liquidity by investing $20 million in EveryWare, in return for preferred shares and transaction fees, but only if the unions in both Lancaster and Monaca agreed to roll back wages, to give up the company contribution to their 401(k) plans, and to pay increased health insurance premiums. If the unions didn’t agree, Monomoy would shutter Anchor Hocking.
Some workers thought Monomoy was bluffing and wanted to call it. (Solomon himself wasn’t sure if it was a bluff or not.) Others were just angry and wanted to use their vote as a middle finger to management. “All or nothing,” Chris Nagle recalled of the terms. “Presser called me up on the phone,” he continued, referring to Monomoy cofounder Stephen Presser. “‘Nagle,’ he says, ‘if you can get the concessions in Lancaster, I will help you out.’” Nagle phoned Steelworker union reps. A couple of them “was sayin’, ‘Fuck them. We’re gonna put ’em down. [Any concessions] are just a Band-Aid anyway. We’re gonna put ’em down.’ And I said, ‘Oh, fine. I wanna job at Anchor Hocking. You have to get your ass out of bed and start talkin’ to Presser or we will find us another international member now.’”
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