United Furniture Industries Inc. has stopped production abruptly at its five Triad facilities — where it was reported to have had between 530 and 600 employees — as part of what appears to be an overall shutdown of the business.
Multiple media reports say employees in Winston-Salem, Verona, Miss., and Victorville, Calif., as well as delivery drivers, received emails from United’s board of directors late Monday and early Tuesday.
United, based in Okolona, Miss., makes promotional to mid-priced upholstered furniture in the U.S. under its brand and the Lane Home Furnishings brand, which it acquired in November 2017 from Heritage Home Group. The manufacturer also imported wooden bedroom and dining furniture.
According to Lane’s website, it had two facilities in Lexington and one each in Archdale, Trinity and Winston-Salem.
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The most recent workforce count had a combined 245 employees affected in Archdale and Trinity, along with a combined 220 in Lexington and between 50 and 70 in Winston-Salem at its 401 E. Hanes Mill Road facility.
United had about 360 employees in Winston-Salem at its employment peak when it had 10 full production lines.
Company officials could not be immediately reached for comment.
As recently as July, United had about 3,000 employees in 18 plants, offices and distribution centers in California, Mississippi, North Carolina and Ho Chi Minh City in Vietnam.
Multiple media outlets in Mississippi are reporting Tuesday that 2,700 employees have been affected companywide.
Robert Cottam, a former United consultant, said Tuesday the company has placed padlocks on all of its Triad facilities.
N.C. Commerce Department spokesman David Rhoades said the department has not received a WARN Act notice from United as of noon Tuesday. Winston-Salem Mayor Allen Joines said his office has not been sent a WARN notice.
The current largest job cut in the state so far this year has been 475 involving the Denso Manufacturing N.C. Inc. plant in Greenville, according to WARN Act notices filed with N.C. Commerce,
WXII reported it was forwarded two emails sent to employees, the first at 11:49 p.m. Monday and the second at 12:42 a.m. Tuesday.
The first email read “we ask that all employees not report to their work locations tomorrow November 22, 2022.”
The second email informed employees that “your layoff from the company is expected to be permanent and all benefits will be terminated immediately without provision of COBRA.”
The company ended the memo citing the “difficult and unexpected situation” that industry analysts said likely includes inflation, high gas prices and the war in Ukraine as key factors.
Trade publication Furniture Today reported that in June, United fired its chief executive, chief financial officer and executive vice president of sales. It named former Standard Furniture president Todd Evans as chief executive.
Cottam said the board is likely to file for either Chapter 7, which signals the liquidation of its assets, or Chapter 11 bankruptcy protection with the intent of staying in business.
Cottam said it’s possible that Big Lots, which was among United and Lane’s top retail customers, may attempt to acquire the finished-goods inventory, if not considering buying the production assets in a potential bankruptcy proceeding.
“Many furniture manufacturers were having gang-buster sales in 2021 with the pandemic,” Cottam said. “But, when those inflationary factors hit hard, it really put a squeeze on the discretionary spending of those who purchase promotional furniture.”
First WARN notices
United filed on June 30 separate WARN notice for its Winston-Salem and High Point plants.
United general counsel Andrew Payne said in the June WARN notice to N.C. Commerce that both Triad plants had been affected by United business customers that chose not to buy home furnishings they had already ordered and which had already been made. The company cited a similar reason in the Mississippi WARN notice.
The end of manufacturing in United’s 850,000-square-foot plant at 401 W. Hanes Mill Road, formerly known as Hanesbrands’ Weeks plant, affected 199 of 272 employees at that location. Production was slated to end July 29.
Multiple Mississippi media outlets reported the Winston-Salem facility would be converted into an East Coast distribution center.
Meanwhile, United’s High Point plant at 315 Kettering Road was shut down, affecting 72 employees.
At that time, United was listed with about 880 employees in the Triad.
Cottam said he understood that United “had been winnowing down” the Triad workforce to the 600 range.
United filed a similar WARN notice in June for operations in Amory, Miss., affecting another 220 jobs.
There had been industry speculation since the filing of the June WARN notices that United was in negotiations with its lenders that may have led to the abrupt decision to shut down operations.
“Retail, especially at low- and lower-middle price points, has really slowed” among home-furnishings stores, said Ken Smith, director of furniture services for High Point-based Smith Leonard PLLP.
“I don’t know for sure, but I would guess maybe some standing orders may have been canceled.
Payne said in the June WARN notice that “although United would have preferred to have provided more notice of this plant closure and mass layoff, United was not able to do so before now due to an unforeseen business circumstance.”
“Specifically, major customers of United’s unexpectedly decided not to purchase from United a substantial amount of inventory United manufactured pursuant to those customers’ forecasts,” he said.
Payne said those decisions set off a domino effect “that led to a significant financial crisis that United believes cannot be realistically addressed without implementing the plant closure and mass layoff described above.”
The fact that United expanded rapidly to 17 domestic factories and fixed contracts with five Asian factories meant “it couldn’t slow (production) down quickly, said Jerry Epperson, managing partner of financial-services firm Mann, Armistead and Epperson of Richmond, Va.
United’s production decision “is really a demand issue, not a supply chain issue,” Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said in July.
“We are starting to see a major reduction in consumer sentiment, and the first goods this tends to impact are expensive discretionary items, such as furniture.”
The production and workforce cuts come about three years after United said it planned to add 500 employees companywide, including 70 to 90 in the Triad, to meet heightened demand for its products.
In 2017, United said it was dedicating 281,700 square feet to distribution at the Winston-Salem plant, 217,600 square feet to manufacturing and 127,600 square feet to storing furnishings kits from Chinese suppliers.
It also has production and distribution facilities in Lexington and Glenola in Randolph County.
The federal WARN Act requires employees to notify state economic officials and the mayor’s office of the affected community of mass layoffs of more than 50 employees or a complete operational shutdown.
The act requires companies that are planning large job cuts to notify affected workers at least 60 days in advance.
The act provides certain benefits to laid-off workers, such as 60 days of pay and benefit contributions if the closing is immediate, as well as access to COBRA insurance benefits for 60 days.
It also triggers emergency employment and job-training services from N.C. Commerce.
However, the act lacks enforcement teeth.
Several studies have shown that it has lots of loopholes and virtually no enforcement authority from federal, state and local officials.
Employees must file a lawsuit in federal court to assert WARN rights, which has produced occasional success, such as in 2016 when former employees of the closed Yadkinville hospital were able to secure a settlement with the hospital’s for-profit operator.
One recent local example involved Alpha Aluminum, whose operators shuttered the plant
The shuttered Alpha Aluminum LLC plant in Winston-Salem has been put up for sale by its owner.
The 380,000-square-foot plant at 1300 Cunningham St. closed without any fanfare in July 2016, affecting at least 28 employees.
There was no voluntary WARN Act filing to local and state officials, and no statements to local media by co-operators Robert Gamba and Josh Hoyt.
Michael Walden, an economics professor at N.C. State University, said WARN lawsuits could be moot if the company is depleted of assets and funds.
“That’s the likely case since they have ceased operations,” Walden said.
“If the lawsuit goes forward, and even if it is successful for the plaintiffs, it could be an empty victory if there are no monies for compensation.”