Tuesday, April 10, 2018

As Boston Store hangs in the balance, where is Walker and WEDC?

My wife and I were hanging in a bar near Miller Park around 5pm Friday night when I saw the news flash across the wires about the parent company of Boston Store filing a notice with the Wisconsin Department of Workforce Development saying that it might close all of its locations in Wisconsin, as well as its co-headquarters in downtown Milwaukee.

I immediately headed to the WARN notice from Bon-Ton to get more information. It said that over 2,200 employees statewide could lose their jobs as a result, including over 700 at Bon-Ton’s corporate office in Milwaukee. That’s on top of the 9 stores and hundreds of job losses that Bon-Ton announced at the end of January that’ll likely be closing in the next few weeks.

How much longer will that sign be on that building?

A massive shutdown of those stores would be a horrendous blow to the economy in many Wisconsin communities, and the loss of a corporate headquarters and significant employer in downtown Milwaukee would be a big blow for Wisconsin's largest city. But there’s hope that the worst may not occur, as the Wisconsin State Journal’s Judy Newman reports a new owner may allow most of those Boston Stores to stay open.
The parent company of Boston Stores says it has received a “signed letter of intent” from an investor group to buy the company and keep its stores open.

DW Partners, Namdar Realty Group and Washington Prime Group are bidding to buy Bon-Ton, which filed for bankruptcy in February.

Details of a purchase agreement are still being hammered out, Bon-Ton said in a news release Monday night.

…Last Friday, Bon-Ton filed notices in Wisconsin and in the other states in which it operates saying it could close all of its stores and its Milwaukee headquarters, with layoffs starting in June. But the company held out hope it could avert the closings if a buyer came through.
We’ll see if Bon-Ton keeps itself afloat after being bought, or if its debt holders get their wishes and forces Bon-Ton to liquidate. > That question is up in the air as of today, and the auction of Bon-Ton is still scheduled for next Monday as it stands today.

We have seen success with another sizable Wisconsin employer that was bought out of dire straits in recent months – Appleton Coated manufacturing in the Fox Valley.
Industrial Assets bought Appleton Coated at a receivership auction on October 10. It agreed in a court hearing at that time to operate the mill for 90 days as it sought a new buyer to run the mill as an ongoing operation rather than scrap it.

A fraction of the company's 600 were retained to keep the mill in an idle state.

But instead of keeping the mill idle, Industrial Assets began to restart machines in December and recall workers….

Of the 230 employees at the mill now, about 45 are management and 185 are hourly. The company signed a new two-year contract with United Steelworkers.

"The two-year union contract is significant because it shows they're transitioning from a temporary basis to a, we hope, long-term basis," said [Outagamie County Executive Tom] Nelson. "There's clearly more hope and confidence. We've heard some of their old customers came back and they're bringing in new customers who are purchasing the brown grades."
This is great news, and I’ve noticed County Exec Nelson actively being involved in these discussions about Appleton Coated’s future along with the possibilities of retooling the plant to better fit needs in the 2010s.

But you know who I have heard very little in the Appleton Coated and Bon-Ton situations, despite there being thousands of jobs at stake? The Wisconsin Economic Development Corporation (WEDC), whose public-private nature was allegedly supposed to be more “flexible and nimble” enough to step in and deal with these potentially destructive mass layoffs. Well, unless WEDC’s real purpose isn’t to preserve and improve things for current Wisconsin employers (cough- GOP SLUSH FUND- cough).

Conversely, other than a failed attempt to have Foxconn 2 a Kimberly-Clark bailout in the Legislature to try to keep another 600 jobs from going away, we really haven’t heard much from Scott Walker and WisGOP on this, either. Instead, we see a lot of PR releases from Walker, WisGOP and WEDC like this.

Call me crazy, but maybe we need a governor and Wisconsin economic development officials that care more about the businesses Wisconsin already has over spending big amounts of taxpayer dollars to grab headlines and stop breaking our bank to “win” some corporation’s favor. And this goes well beyond the Fox-con, as just last month we saw WEDC hand out $7 million to help a company in Cudahy add up to 125 jobs in the next 7 years.

And of course, those WEDC handouts are on top of the “big giveaway” M&A tax credit for manufacturers that lower a company’s tax liability to near-zero. Meanwhile, the future of Bon-Ton and its thousands of statewide employees are up in the air, along with the prospect of local property taxpayers paying higher property tax rates due to empty storefronts in a sector that doesn’t get the tax giveaways that manufacturers get, and WEDC is MIA.

That seems upside to down to me, but it probably makes more sense in Walker World, where PR and campaign donations are much more important than, you know, JOBS AND COMMUNITIES.

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