“They treated people like they were family, not a number,” said Pawluk, 62. “We had the best health benefits. We had HR people who really cared about us.”
But Pawluk said things deteriorated soon after OpenGate Capital acquired Hufcor, a family-owned company founded in Janesville 120 years ago. “They basically told us ‘We don’t want to get to know you’ in so many words,” Pawluk said.
In late May, things took a turn for the worse. The company announced it was shuttering the sprawling plant and moving operations to Monterrey, Mexico, wiping out the jobs of 166 workers.
“They told us, ‘We can make a lot more money in Mexico. The labor is too high here. Parts cost too much here,’” Pawluk said “They’ll get away with paying dirt wages in Mexico.” Until she was laid off last week, she earned $20.92. Union officials now estimate that Hufcor’s workers in Mexico will make less than one-fifth that.
“I wasn’t so worried about myself. I’m close to retirement,” Pawluk said. “I’m more worried about the others. The rest of us are like family. We know each other’s kids. We know each other’s grandkids. Some friends have 30 years in, and they’re now forced to find another job. That sucks.”
The workers and their union – the IUE-CWA, the industrial division of the Communications Workers of America – sprang into action to try to get OpenGate to reverse itself. They held protests that called OpenGate a “vampire” private-equity company. They asked lawmakers to pressure Los Angeles-based OpenGate. They ran a full-page ad in the Los Angeles Times. They framed things as greedy Wall Street against needy Main Street.
Some friends have 30 years in, and they’re now forced to find another job
“It was definitely trying to pressure them to change their mind,” said Tom Casey, the president of the factory’s union local. “Hufcor has been in this community 120 years. OpenGate really didn’t have a stake in the community.” Casey has worked at the plant for 31 years, his mother worked there for 38 years.
Janesville, a city of 64,000 in south central Wisconsin, was slowly recovering from repeated plant closings and the pandemic. In 2008, General Motors closed its huge assembly plant in Janesville, costing more than 2,500 jobs, while Parker Pen, founded in Janesville, closed its factory in 2009.
“It seems like we were finally able to bounce back. But it seems like this will have a big effect on Janesville,” said Michelle Hilt, who has worked at the factory for 23 years, while her husband worked there for 36 years. They met at the plant.
Founded in 2005, OpenGate has made many acquisitions, the most famous being TV Guide. On its website, OpenGate says it “strives to acquire and optimize lower-to-middle market businesses” and “leverage our in-house investing” to “drive long-term value creation”.
OpenGate and Hufcor defended the decision to close the Janesville factory, saying in a statement: “Hufcor is suffering significant negative economic effects related to the Covid-19 pandemic … When considering these impacts, and Hufcor’s aging manufacturing facility in Janesville, the future of the entire business is in jeopardy. Therefore, to ensure Hufcor’s survival and long-term viability, the difficult decision was made to relocate manufacturing to an alternate facility.” Hufcor says it’s keeping its R&D and customer service operations in Janesville.
Casey, the union president, said management appeared to be making preparations to shut the plant even before Covid hit: “It wasn’t a complete shock because we had researched OpenGate and knew what we’re dealing with.”
The Janesville closing isn’t the first time OpenGate has angered communities and workers.
In 2013, OpenGate suddenly closed the Golden Guernsey Dairy in Waukesha, Wisconsin, providing no advance notice to the 100-plus workers who showed up at work and found the doors locked. In 2014, it shut Fusion Paperboard in Connecticut, soon after receiving a 10-year loan from the state and signing a six-year union contract. In 2015, OpenGate again without advance notice, closed the PennySaver newspaper in California, laying off 678 workers.
The Wisconsin senator Tammy Baldwin wrote to OpenGate, saying it “has a history of shutting down businesses and giving workers pink slips in Wisconsin”. In a Facebook post, Baldwin wrote: “It’s clear to me we need to take legislative action in Congress to rip up the predatory playbook that these private equity firms use to leave workers with nothing but pink slips and lost livelihoods.”
Rosemary Batt, the Alice Cook professor of women and work at Cornell and an expert on how private equity affects workers and communities, said: “OpenGate Capital does the same playbook we’ve seen again and again from private equity.” She said those firms buy out companies with good fundamentals and then cut costs and stop investing in new technologies and in maintaining and modernizing facilities. “Their financial tactics set this up and weakened the company so that the next step is Mexico,” Batt said.
The factory closing has many workers wondering what they will do next. “At first I was scared and then I was angry and now my anxiety level is through the roof,” said Michelle Hilt, alarmed that both she and her husband are losing their jobs. She plans to study to become a radiology assistant.
If there’s any silver lining, it’s that the Hufcor workers will receive federal trade adjustment assistance to help return to school. Pawluk plans to study accounting. Richard Hampton, a Hufcor worker for 14 years, hopes for some small business aid to open a soul food restaurant. “As soon as they [OpenGate] came in, they said we’re overpaid,” Hampton said. “It really sucks. They take our jobs and move them to another country.”
The workers still haven’t given up: “We’ve all been fighting this like crazy,” Hilt said.