Wednesday, March 4, 2015

Ashley Furniture's mess, updated

Hmmm, looks like Scott Walker's favorite furniture store isn't quite so "open for business."
Ashley Furniture Industries plans to return more than $250,000 in job-related tax credits to the state of Wisconsin and pull out of another program that would have given it $6 million in tax credits for an Arcadia flood-control project.

The Arcadia-based global manufacturing firm characterized the moves, announced Tuesday, as intended to "better align … aggressive growth strategies with the local job market and other economic conditions in Wisconsin."...

In 2012, Ashley received WEDC approval to earn credits on taxes paid based on its promise to expand the Whitehall employment base by 225 new positions by this year.

It has spent more than $200,000 to recruit workers but the number of new jobs stalled at 87 because of the limited number of potential employees in the area, the company said.
Huh, wonder why they didn't have the money to expand and couldn't find people to work there. It couldn't have anything to do with the story that came out last month that showed it was literally costing people an arm and a leg to work there, could it?
The U.S. Labor Department socked Ashley Furniture with one of the largest safety fines in history Monday after alleging repeated safety violations over 36 months that caused more than 1,000 worker injuries, including several ­amputated fingers.

The $1.77 million fine resulted from an Occupational Safety and Health Administration (OSHA) inspection last year of Ashley’s ­Arcadia, Wis., factory. Inspectors “identified 12 willful, 12 repeated and 14 serious safety violations.” Those are in addition to violations found during previous visits, U.S. Labor Department Assistant Secretary David Michaels told the Star Tribune on Monday.

“We rarely issue a fine that is more than $1 million,” Michaels said. “Having 1,000 work injuries in three years is proof positive that safety in this plant needs tremendous ­improvement.
May I remind you that this time last year, Ashley Furniture's founder (a significant Walker donor) held a thinly-veiled Walker campaign event to celebrate an expansion at his plant in Arcadia, with Ashley workers as a captive audience. And note what he also had as a handout.
Ashley and the DNR came under fire from environmental watchdogs for a 2005 addition there that required filling 13.5 acres of wetlands. Without that expansion, the company said later, most of the company’s 2,000 Arcadia-based jobs would have been moved out of state.

From a table of literature spread out for visitors, [Ashley Furniture founder and board chair] Ron Wanek grabbed a flyer decrying federal regulations, including environmental, workplace and health care rules, saying, “This is what’s going to kill industry in the United States.”
Actually, having an unsafe workplace and paying shit wages are what's going to kill industry in the United States, because no one will be able to buy anything, and no one will want to risk life and limb working for such crappy employers.

Flash ahead one year, and look at this quote from Gov Walker, as he glad-handled other mediocre, arrogant businessmen at today's Wisconsin Manufacturers and Commerce "Business Day" in Madison.

Yep, just like how it's worked in the case of Ashley Furniture, who can't find skilled workers, is maiming the ones they have left, and fails to come through on their promises of prosperity and expansion. Combine that with badly-lagging job growth, and an exploding budget deficit leading to disinvestment in education, and what's not to like?


  1. I remember the wetland debacle. This company is a public nuisance.

  2. If they want more workers, maybe they should raise the wages they are offering?

  3. Jake, you realize that your column here on Ashley is perhaps the most in-depth examination of this company's expansion plans among all Wisconsin media?

    Of course, the MJS and the WSJ employed their usual story-generation techniques (stitch together any press releases from the company and the Walker Administration, and then interview Vos and Barca, shake well, and the thing types itself) to develop the usual story line: "beleaguered Wisconsin firm that is just trying to do the right thing, is repeatedly hampered by bureaucrats and environmentalists, and (in this case) people in Wisconsin who refuse to procreate in sufficient numbers, or move to a remote section of the state, to provide a sufficient workforce--shame on us all."

    Of course, within two minutes (that's what it took for me) you could turn to other news sources and industry press and learn this: (from the Winston-Salem Journal of October 21st, 2014)--On Friday, the Ashley expansion project was celebrated with much fanfare at a grand opening ceremony marking the completion of the $80-million, 2.8-million-square-foot manufacturing and distribution center, which includes the just-completed 1.1-million-square-foot addition. The facility is designed to serve customers in East Coast states including Virginia, West Virginia, the Carolinas and parts of Georgia and Florida. These markets are currently served by the company's Arcadia, Wis., and Ecru, Miss., production facilities.

    As for those pesky environmentalists, it seems that there were similar issues in NC, but according to Furniture Today of April 13, 2013: "Ashley recently received a permit from the Army Corps of Engineers to resume construction on its facility, said Bill Koslo, an attorney who has represented Ashley for several decades. Company officials were pleased to have resolved the wetlands issues and be resume construction on the facility, which is eventually expected to employ more than 500 workers." Gee, the CoE here in Wisconsin are villains, while there in NC the CoE is thanked for their work--does anyone see an inconsistency here?

    While Ashley wraps badger fur around itself here at every opportunity and goes on about hometown Wisconsin values, pioneers, etc., etc.,, it would be well to remember that the founder of Ashley furniture lives in an $8.4-million mansion in St. Petersburg, FL he bought in 2013:

    So what is really going on? Well Ashley Furniture's unique structure (it is only a manufacturer--all the stores are franchises) requires that it be close to where the homes are being built to keep shipping costs under control. So it choose to move to NC near the fast-growing SE, and if you read deeper, you'll see that there is plenty of room for expansion on the NC site--a former tobacco plant. It is smack in the middle of the NC furniture belt with plenty of people in the Advance, NC (10 miles from WInston-Salem). So no need for expansion of the Arcadia facility. Note that the NC facility has been planned since 2010, it has grown in step with Walker.

    The important thing to note is that the HQ of Ashley could easily be moved to NC which would solve a lot of recruiting issues. So I assume that within 3-4 years that will be happening along with a wind-down of the Arcadia Facility. How that will be spun to attack democrats and environmentalists since the introduction of the M&A Tax Exempt status for manufacturers will be a delight, but I'm certain that the editorial boards of the MJS and WSJ are up to that task.

    Dr. Morbius

  4. Oops. . . . forgot this. So why ask for $6-million in tax credits and the other jobs-tax credits? Well those would have paid for the house in St. Petersburg, number one; and number two, given the state of the WEDC who would have expected that they would have actually enforced any tax credit agreement provision?

    Once it became evident that the Walker Administration had been embarrassed enough times by the incompetence and dishonesty at WEDC so that it was unbelievably going to enforce the provisions of agreements, Ashley wanted the now infamous we want money, but we want to be able to reduce our workforce by half as well, provision. That became public and raised all sorts of questions about Walker, Ashley, the WEDC. So the back-out was inevitable.

    But it was also probably inevitable because as a private company the M&A credit could easily flow-through to the owners, so why do you need tax credits when you are exempt from Wisconsin taxes-unless the credits are refundable or you can sell them to another party (ala Kestrel Aviation--another proven job creationist project)?

    So yes, this all signals a death knell for expansion of the Arcadia Plant and an early warning that the HQ is moving as well.

    Dr. Morbius

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