Kitchen & Bath Design News

JUL 2019

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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KREAMER, PA — The recent closure of the Wood- Mode factory continues to roil the kitchen and bath industry, casting a cloak of uncertainty over the ultimate fate of the custom-cabinet manufacturer while leaving dealers, sales reps, suppliers and former employees struggling to cope with the fallout. The abrupt closure of the iconic, 77-year-old com- pany is also sparking a wide range of emotions – from bitterness and confusion to sadness and frustration – as questions swirl about the contributing factors that led to the apparent demise of what for decades had been perhaps the industry's most highly respected cabinet brand (see related Editorial, Page 5). Impacted most dramatically by Wood-Mode's clo- sure, aside from former employees, is the company's extensive network of U.S., Canadian and South Amer- ican dealers, many of whom had long-term, exclusive relationships with the Kreamer, PA-based manufacturer and now have been left pondering the fate of their own businesses. While some are contemplating closure themselves, others – determined to demonstrate their fortitude, adaptability and resilience – say they're scrambling to find replacement cabinet lines and redefine their cor- porate identity, even as they deal with the impact of the closure on anxious, bewildered customers. Similarly in limbo is the status of cabinet orders in various stages of production, along with the fate of showroom displays and consumer deposits for cabinets that may never be delivered. While dealers say they are being allowed to have completed orders picked up, the question of what happens to the unfinished cabinets and their accompanying deposits remains unanswered. Unanswered, too, are questions about whether Wood-Mode may possibly reopen. According to reports, Maurice Brubaker, of Brubaker Group LLC, a tax and accounting firm, was spearhead- ing the formation of an investment group to finance the purchase of Wood-Mode's assets and reopen the factory. Other prospective buyers have reportedly made similar inquiries. The status of any such talks, however, remained unclear as of press time for Kitchen & Bath Design News, and it seems increasingly likely that Wood-Mode is headed toward bankruptcy, its reputa- tion and relationships damaged if not destroyed, with opportunistic competitors stepping in to fill the breach. IMPACT ON EMPLOYEES Former Wood-Mode employees, in the meantime, continue to bear the brunt of the factory shutdown. Employees were notified of the closure early in May, before being escorted from the company's 1.3-million- sq.-ft. facility by state, county and local police. They were notified shortly afterward that their benefits had been terminated. The company employed 938 people at the time of closure, many with long work histories that included several generations of family members. Because of the scope of family coverage, some 2,000 people were said to have lost benefits. Wood-Mode, the cabinet manufacturer and industry icon that recently closed its doors after 77 years, produced cus- tom cabinetry for the kitchen and bath, supplying dealers nationwide. Ever since the closure, former employees have been expressing a wide range of emotions, among them a sense of betrayal and frustration over an alleged lack of transparency by corporate executives. Neither Wood- Mode's owners – chairman/CEO Robert Gronlund and president/COO Brooks Gronlund – nor company spokesman David Scarr have commented publicly since the shutdown. Although Wood-Mode said that its notice of closure was o™cial pursuant to the conditions of the Work- er Adjustment and Retraining Notification (WARN) Act, there have been accusations that the company failed to comply with the statute. Companies of Wood- Mode's size are required to provide employees with 60 days warning prior to plant closures, although WARN provides for exemptions, including one for faltering businesses that are for sale or unable to access financ- ing, according to labor o™cials. Wood-Mode, at the time of closure, reportedly in- formed state o™cials that the company was unable to provide advance notice of the closing since manage- ment believed that a sale would go through and that its lender would continue to provide financial support through that process. However, lawsuits filed by several former Wood- Mode employees charge that the company violated WARN by failing to provide workers with the requisite 60-day written termination notice. The lawsuits seek class-action status and the payment of wages, vaca- tion time and benefits for the 60 days after the closure. Complaints to county o™cials and law enforcement in the wake of the closure have also reportedly been referred to the state attorney general. According to Pennsylvania o™cials, state resources – including unemployment compensation, financial counseling, job training-and-search initiatives and social service programs – have been made available to former employees. Food banks, job fairs and other charitable initiatives have also been mobilized, as have other forms of assistance. DEALERS BLINDSIDED Although Wood-Mode's closure was sudden and unex- pected, cabinet industry insiders had been aware that the company was experiencing financial challenges. Employees had witnessed salary cuts, elimination of bo- nuses, cash flow shortages and a range of cost-cutting moves in recent years. The privately held company had also been steadily downsizing, and two years ago se- cured a multi-million-dollar financing package enabling management to restructure debt and generate liquidity. In recent months, Wood-Mode said it had been seeking additional financing and other options, includ- ing a potential acquisition that would have enabled the company to continue operations. Those e¡orts col- lapsed, however, when an unidentified prospective buyer backed away from the deal and Wood-Mode learned that its prime lender was unwilling to provide the funding necessary for the company to continue operations. But despite those financial struggles, most people did not anticipate that the custom-cabinet supplier would shut its doors so abruptly. Corporate o™cials had denied rumors of a potential closure. State and county o™cials, suppliers and even longtime dealers were blindsided by the news. Dealers, Others Struggling to Cope With Closure of Wood-Mode Factory 12 Kitchen & Bath Design News • July 2019 INDUSTRY UPDATE NOTEWORTHY DEVELOPMENTS IMPACTING THE KITCHEN AND BATH MARKET

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