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Republic Resurrected: A Small Biz Stakes Success On The Stimulus

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These days, it doesn't take too much effort to find a business set to prosper in the stimulus economy -- just follow the contrails of Air Force One and Two. Last week, for instance, President Obama headed to Newton, Iowa, to highlight a company making towers for wind turbines in a factory originally built for Maytag. But it was Vice President Biden's visit to Serious Materials in Chicago on Monday that was most satisfying.

Serious Materials is a California company that makes sustainable, green building products. This year, anticipating the new Administration's emphasis on energy efficiency -- if not the $8 billion worth of weatherization grants as well as more generous tax credits in the stimulus bill -- Serious has gone on a serious shopping spree. In January, it purchased the manufacturing assets of a bankrupt Pennsylvania factory and then rehired many of the 150 workers who lost their jobs. Then, in March, it bought the assets of Chicago's Republic Windows and Doors, which abruptly shuttered in December.

You might remember that episode. Republic's owner, a Chicago businessman named Richard Gillman, said that because his bank refused to extend his credit he just couldn't afford to give his employees, many of them immigrants with decades of service at Republic, the notice of shutdown that they were legally entitled to, nor pay them severance benefits they were entitled to. The employees, backed by the United Electrical, Radio and Machine Workers of America, staged a sit-in, won national attention, and eventually the banks agreed to extend money to the bankrupt company to finance the back pay. But though Gillman's accusation, that the banks had received TARP money but apparently weren't willing to loan, resonated across the country, it was really a red herring: he had simultaneously formed another company to buy a factory in Iowa and appeared to be using the closure in Chicago to stiff his workers there.

Biden's visit signals a happy ending for those folks. For one thing, in March the National Labor Relations Board concluded that Republic formed "an alter-ego entity in order to avoid its collective bargaining obligations with the UE," according to the independent Chi-Town Daily News. Last week, the agency issued a formal complaint, and is seeking $1.5 million in back pay. More importantly, after retooling the plant for high-efficiency products, Serious Materials hopes to ultimately more than double the 260 employees fired by Gillman. And the union that staged the protest is returning with the workers, who will see their pay and seniority respected by the new boss, who is decidedly not the same as the old boss.

As for that old boss, the NLRB is an obligation he may or may not pay, just one more piece of collateral damage left behind in Gillman's trail of (creative?) destruction. The move to Iowa, it turns out, didn't go so well. On February 20th, Gillman announced that the Iowa plant would close immediately. That factory's original owner, which sold the building and real estate to an associate of Gillman -- and self-financed the sale -- has now foreclosed on the property and is seeking to sell it, according to the feisty and invaluable Chi-Town paper. (Details here and here.) And lawyers on behalf of workers there are contemplating a suit of their own: Gillman may have violated the same federal notification laws that brought him so much national notoriety last December.

Yet while Gillman appears to have shafted his employees, legions of creditors, and possibly even his associate/investor, it's not clear that he will suffer personally. It appears that he owned the Iowa company's machinery and inventory, and these were sold to still another window company, in Tennessee. Those left Iowa almost immediately.

Last updated: May 1, 2009




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