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Bristol Compressors Hire and Fire Antics

by Lewis Loflin

  
  

Bristol Compressors is the largest private employer in Washington County, Virginia and has done what companies across America are doing: getting millions in tax breaks and outright cash payments to buy and keep jobs, then producing layoffs instead. While I don't believe this was intentional, the public should be angry and call local government to account for this. This story had a happy ending as of May 2010.

This whole sorry layoff saga began in Allegheny County, N.C. Bristol Compressors closed a 7-year-old plant, firing 440 workers, around 2001 claiming "weak economic conditions and overseas competition." At almost the same time according to local press reports company officials announced new production lines in Washington County, Virginia.

N.C. officials knew they had been had and sued Bristol Compressors saying it breached a $15.5 million economic incentive contract. Bristol Compressors got the trial moved to neighboring Wilkes County and won.

Bristol Compressors said it would invest $45 million in tools and machinery in its Washington County plant and add 350 full-time employees which employed about 2,300 at the time. In 2001, Bristol Compressors received $500,000 of Tobacco Commission funds, $250,000 from the Governor's Opportunity Fund and $250,000 from Washington County to help with its proposed expansion for a total of $1 million. But why would a local/state government give a million dollars for job creation to a company that just fired 440 workers in a neighboring state because of an admitted economic slowdown? This should be looked into.

The agreement obtained by me from Washington says clearly Bristol Compressors is in default on the agreement and must pay back the funds. Other news reports claim the county doesn't want to even try to get the money back. Yet state and local officials waffle on the issue. "We regret to see this (layoff), but we're hoping the company will rebound before the April 1, 2004, deadline," said Ellen Qualls, a spokeswoman for Gov. Mark Warner back in 2003 when over 300 layoffs occurred. Now we have an additional 320 layoffs in 2004 and nowhere near what is needed to keep the $1 million shelled out by state and local taxpayers.

Quoting Assistant Washington County Administrator Christine Parker, "the county and Bristol Compressors may have some flexibility, however." "Obviously, we want (Bristol Compressors) to succeed, and it doesn't help anybody if they have to repay this money. We've never had a company not honor a performance agreement. It is a legally binding agreement, but there is room to work. An extension of the grant agreement is one option." They never tried to get the funds back.

As usual, why were local officials in the dark about the latest layoffs? We should note these layoffs involve full time positions and workers I know from the plant claim the company is replacing them with temps at lower pay and no benefits. Bristol Compressors is also reputed to be among the lowest paying employers in Bristol and suffers a high turnover rate. The company wouldn't verify this and I will state that Bristol Compressors has done nothing illegal.

Rumors of Closing

There seemed to be one bad news report after the next. The timeline is as follows:

Washington County News Nov 5, 2003 announces 300 layoffs at Bristol Compressors. To quote, "will employ 1,900 after the layoffs...Company President Wayne Kennedy said poor market conditions and competitive pricing by foreign manufacturers led to the layoff decision...Officials promised to rehire workers as jobs become available, but...the layoffs "permanent, for now."

Bristol Herald Courier October 22, 2004 announces "Bristol Compressors will lay off 320 full-time employees. Company officials blamed the cuts on lower-than-expected sales and increased costs of raw materials and energy..." These layoffs are being treated as permanent layoffs...City Manager Paul Spangler said word of the layoffs came as a surprise to him, while attempts to contact Washington County officials were unsuccessful..."

The Bristol Herald Courier announced December 14, 2005, "Rumors not true says company president." "Widespread rumors of an uncertain future for Bristol Compressors aren't true, the company president said Tuesday. In recent weeks, the plant, its workers and the community have been inundated with speculation about a plant closure in the wake of the $3.2 billion merger agreement between Bristol Compressors' parent firm York International and Johnson Controls...It was part of York since 1986. "Bristol Compressors has no plans to close its operation here in Southwest Virginia," company President Wayne Kennedy said.

Officials continue formalizing plans for next year, and Kennedy said those plans would be shared with employees in early January. Repeated attempts to contact Johnson Controls officials were unsuccessful...During the second quarter this year, Bristol Compressors sales were $108.4 million, compared to $139 million during the same period in 2004..."

Bristol Herald Courier January 21, 2006 announces, "For Sale: Bristol Compressors." "The Bristol area's largest employer has been put up for sale. Officials of Johnson Controls, which recently bought the plant as part of a $3.2 billion acquisition of York International, announced the plans Friday. The news followed a Jan. 9 announcement that nearly 300 of the plant's workers would be laid off by March. The plant has a work force of about 1,650. "We have retained William Blair and Co. to market the business for us,"

John Barth, chairman and chief executive officer of Johnson Controls, said of the Chicago-based international investment banking, research and brokerage firm. "We expect to begin offering memoranda to interested parties within a week," he said. "We've been working on this for quite some time." He declined to speculate when a sale might occur. Bristol Compressors lost $1.9 million during December. Officials value the Bristol plant at $100 million...

News Channel 11 January 6, 2006 announces, "Bristol Compressors to Lay Off 290" "The Twin-Cities largest employer is undertaking it's third round of layoffs in the past five years. 290 employees of Bristol Compressors were told this morning they will lose their jobs...City leaders are expressing concern tonight...mayors of both Bristols are trying to work together to lessen the economic blow. "We're going to do all we can. I mean the trickle down effect, there's no question about it," said Mayor Doug Weberling of Bristol." It's apparent they didn't see this coming again.

Bristol Herald Courier January 7, 2005 announces "Bristol Compressor layoffs won't be temporary." Bristol Compressors announced layoffs affecting about 18 percent of its work force Friday morning after months of speculation about the future of the plant. Bristol's largest employer will lose 290 of its 1,650 workers by about March 1...The move will save money for the Milwaukee-based firm, which acquired the Bristol factory when it bought out York International, the previous parent company, last month.

The layoffs won't be temporary...It's a change of strategy compared to previous layoffs. In 2003 and again in 2004, Bristol Compressors laid off about 300 people, and each time, officials announced that some of those who lost their jobs might be rehired if the market improved. Fortune said he was not aware of any of those previously laid off being hired back. For employees, the announcement didn't come as a surprise..."

January 12, 2006 Kingsport Times-News U.S. Rep. Rick Boucher is working to assist the 290 workers who are expected to lose their jobs as a result of layoffs at the Bristol Compressors plant in Bristol, Va. Currently, Boucher is coordinating with Bristol Compressors officials in the submission of a federal petition to the U.S. Department of Labor for workers' assistance...

The funds Boucher is working to secure will provide job outreach services, career counseling, job search and job development assistance, a range of job training including classroom training (such as adult basic education and GED completion), meal allowances, and transportation assistance. Boucher is also seeking health insurance assistance under the Health Coverage Tax Credit (HCTC) program, and displaced workers over 50 years of age may also qualify for additional aid through the Alternative Trade Act Assistance (ATAA) program.

Including those jobs lost in North Carolina, Bristol Compressors has fired almost 1500 workers and with rising electricity and materials costs, prospects were bleak by 2007.

Another $1 million Tax Dollars and KPS Capital Partners

Kingsport Times-News 03/05/2007 announces, "Gov. Kaine says Bristol Compressor deal saves 1,000 jobs." Down to 1000 workers at Bristol Compressors, they hope to them through the purchase of Bristol Compressors by KPS Capital Partners, a New York-based investment firm. The KPS transaction will provide access to substantial capital to be invested in the further development of Bristol Compressors International, the company?s new name under KPS ownership.

The Virginia Tobacco Indemnification and Revitalization Commission and Washington County committed a combined $1 million to assist KPS with the transaction...David Shapiro, a Managing Partner of KPS, said, "We are excited to be the catalyst that transforms Bristol into a thriving competitor in its industry. Bristol successfully developed market-leading products that will enable it to prosper under our ownership and continue as Washington County's largest employer...

From http://www.reliableplant.com/article.asp?articleid=5103 on their view of this latest "sale"

KPS Capital Partners LP (KPS) announced March 5 that a newly formed affiliate, Bristol Compressors International Inc., has acquired the assets of Bristol Compressors Inc. from Johnson Controls Inc. Financial terms of the transaction were not disclosed...Bristol's senior management team will implement a business plan developed in partnership with KPS focused on improving manufacturing operations, productivity and supply chain management. The KPS investment will also provide the company with access to substantial capital to continue new product development...

Rick Izor, chief executive officer of Bristol, commented, "This transaction marks the beginning of a new era for Bristol, with a new owner that has a track record of elevating good companies to achieve world-class operating performance. KPS's manufacturing expertise and capital resources will advance Bristol's position as a leading manufacturer and distributor of compressors. I would like to thank our customers, vendors and employees for their continued support."

Back from the Brink

Many expected KPS to break the company up or ship its production to Mexico. KPS did nothing of the kind. They sent in a new management team that thought "outside the box" from the way many older manufacturing companies operate in this region.

Instead of relying on a cheap, unskilled workforce with high turnover, they invested time and capital into improving the quality of their workforce. By working with the local community college system they greatly improved overall workforce quality. Their workers received direct training in the their needed skills sets in addition to being cross-trained.

In addition they tightened up their quality control to meet more rigorous EPA regulations and produce an overall better product. The results, even with an economic downturn and higher electric rates, Bristol Compressors has retained its 1000 employees and is still open for business producing a quality product.

Bristol Compressor along with a few other local manufacturers have gotten away from the usual attitude of cheap unskilled labor easily disposed of on a whim and have put capital towards its labor force. This produces real productivity gains and not a small upfront savings that may cost far more down the line. Congratulations to Bristol Compressors.

Bristol Compressors website is at www.bristolcompressors.com.

Updated May 19, 2010.

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