Buffalo News, November 20, 2009, Friday

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Buffalo News (New York)

November 20, 2009, Friday

HEADLINE: Uncertain future for New Era's local plant; Either site in Derby or Alabama will close

BYLINE: By Matt Glynn - NEWS BUSINESS REPORTER

BODY:
New Era Cap Co. is cutting back its U.S. manufacturing and will soon choose which one of two manufacturing plants to keep open -- in Derby or Demopolis, Ala.

The Buffalo-based hat and apparel manufacturer says it needs only one plant, not the three it currently operates, to meet reduced consumer demand. New Era has already determined it will close a plant in Jackson, Ala., in the first quarter of next year.

The company will also shut a distribution center in Mobile, Ala., probably in the second quarter of 2010. New Era's Delaware Avenue headquarters and a distribution center in Harrisburg, Pa., are unaffected.

New Era is famous for its Major League Baseball hats but also has diversified its product line.

The company said the recession has cut into demand, most significantly for custom-design hats sold in smaller lots to retail stores. Customers are holding back on spending, and a number of stores that sold New Era's specialized hats have folded amid the recession, said Peter Augustine, New Era's president.

Company executives say they will compare the performance of the Derby and Demopolis plants on measures such as efficiency, cost, quality and on-time delivery to decide which one to keep. The plant that loses in the process is expected to be shut in the second quarter of 2010. Augustine would not specify how soon a decision would be made but indicated the company does not want the sense of "uncertainty" created by the process to last longer than necessary.

New Era's Derby plant is about 20 miles south of Buffalo and has 334 workers, about 30 percent of whom are on layoff. The Demopolis site has 355 workers, including laid-off employees.

New Era opened its Derby factory in 1960 and added the Demopolis location in 1998, when the company began a production push into the South. The two plants are similar in size.

Workers at both sites are represented by the Communications Workers of America. The Derby plant workers joined the CWA in 1998, while the workers at the Demopolis site voted in favor of CWA last year.

The two Alabama facilities being closed are both represented by the Teamsters union. The Jackson facility has 322 employees, while the Mobile warehouse being closed has 70 workers. A Teamsters representative could not be reached to comment on the planned closings.

Apart from the U.S. manufacturing sites, New Era also has products made in China and Vietnam.

David Palmer, the CWA's director for upstate New York and New England, said CWA representatives from the Derby and Demopolis plants and the company will start discussions next week about New Era's review. He said New Era's plans to reduce its U.S. manufacturing are a fallout from a poor economy. "It surprised me that the business fell off as much as it did."

Palmer said labor relations between the CWA and the company have improved greatly since an 11-month strike at the Derby factory ended in 2001. The company has stressed it will assist workers who are displaced from whichever factory it decides to close, he said.

"They're going to do it the right way, but it's still going to be painful," he said.

The plant chosen to be kept open is expected to eventually increase its employment by about 100 jobs, once the economy improves and production levels pick up again, Augustine said.

Chris Koch, New Era's chief executive officer, said it will be a very difficult decision.

"It's no secret that I grew up in Derby and that's the plant I spent a lot of time in," said Koch, whose family founded New Era in Buffalo in 1920. Despite his personal connections, Koch said New Era has to evaluate which of the two manufacturing operations will best serve its needs.

And he noted that while Demopolis may not be where New Era started, the company has had operations there for 11 years. "It's not like we just moved there," he said.

Sen. Charles E. Schumer said he spoke to Koch this week about the company's problems. "I said, 'Look, my num-ber one concern is keeping the jobs in Western New York,' and that I would do anything I could to be helpful," Schumer said.

"I pushed for Western New York, and he seemed very sympathetic, but he certainly made no commitment," Schu-mer added.

Art Wheaton, director of labor studies at Cornell University's School of Industrial and Labor Relations in Buffalo, said it would make sense for the company to keep the Derby plant open.

"You're closer to your headquarters," Wheaton said.

Three years ago, New Era moved its corporate headquarters back from Derby to downtown and opened its flagship retail store at the same location.

e-mail: mglynn@buffnews.com

LOAD-DATE: November 20, 2009