Hugo Boss Reverses Course, Will Keep Ohio Factory Open

After over a month of protests and on-again/off-again negotiations, Hugo Boss and workers at its Brooklyn, Ohio-based suit-making plant have reached an agreement that will keep the facility in business. No specifics have yet been disclosed about the new labor contract, which was ratified this morning.

To be honest, this is more than a bit shocking. When I first began covering this story last month, sources close to Hugo Boss said that the shutdown decision was final and would not be revisited. The Brooklyn, Ohio shop was profitable, they acknowledged, but not competitive in either the short or long-term (Hugo Boss does not have any other apparel factories in the U.S.).

Moreover, Hugo Boss majority shareholder Permira said it would not intervene in operational decisions, despite vocal opposition to the shutdown by a number of public pension funds that serve as Permira limited partners (read recent letters from Maryland and New York City).

We do not yet know the terms of the new contract, which would help us better understand which side did more blinking (updated below). Hugo Boss originally wanted the workers to take a 25% pay cut from $12 to $9 per hour, and was not initially persuaded by various tax incentives offered by state officials. An SEIU spokesman said that he hopes to get details to me later today.

For now, we have a handful of official statements. This includes one by Permira, which maintains that it was not involved in the original shutdown decision, nor its reversal.

Bruce Raynor, president of Workers United:

“Against all odds, we have saved a critical U.S. apparel manufacturing facility in Brooklyn, Ohio. This is a tremendous result that we attribute to our Hugo Boss members who stood up for their jobs. We thank Governor Strickland, Senator Brown, Congressman Kucinich, Danny Glover, all of our allies in labor, and other leaders in the community who stood beside us to maintain good jobs in Ohio.”

Hugo Boss:

“Our employees are important to the company and the future success of the facility.”

Permira

“We are pleased that the company has been able to reach an agreement with the unions after many weeks of intense discussions. This is a good outcome for both the employees and the Company. This step will contribute to the continuing long-term success of Hugo Boss. Negotiations have taken place between the Hugo Boss management and the unions about the competitiveness of the Cleveland plant for more than a year. We have not been involved in those discussions.”

UPDATE Workers United just sent over the following additional statement:

The three-year agreement should allow the employees to have full time employment. The agreement maintains their defined benefit pensions, their health care benefits, their paid holidays, and their summer and winter vacation periods. In addition, the agreement includes a piece work system that should allow workers to earn $10 or more per hour.