The Monday before Thanksgiving, United Furniture Industries, the parent company to Lane Home Furnishings and one of the largest manufacturers in the country, terminated more than 2,700 employees overnight, bringing operations to an abrupt halt. Since then, a few details (as well as a number of lawsuits) have emerged. Here’s what you need to know.
Employees were shocked
On November 21, emails and, in some cases, text messages went out notifying all employees that they had been terminated. The email read: “We regret to inform you that due to unforeseen business circumstances the company has been forced to make the difficult decision to terminate the employment of all its employees, effective immediately.” The decision was swift, and without any of the cushion that often accompanies corporate layoffs. In fact, the email specifically noted that the layoff “is expected to be permanent and all benefits will be terminated immediately without provision of COBRA.”
Some employees who reportedly hadn’t checked their emails didn’t realize what had happened until they showed up to work to find the doors locked. A former employee who spoke with Business of Home under condition of anonymity says that they have still not been allowed in to collect their things. “Most of us understand that losing our jobs and health insurance can’t be undone, but keeping everyone from their personal belongings is pretty unacceptable,” says the former employee. “Some of us kept priceless things in our offices, like college diplomas and pictures of family that we could never get back if we’re not allowed to retrieve them. One of my co-workers had a chalkboard in her office that was written on by her children right before they tragically passed in an accident. That chalkboard is probably worth $5 to anyone else, but it’s priceless to her.”
Orders are in limbo
Drivers were instructed to immediately return their equipment and inventory to the company’s locations in North Carolina, California or Mississippi—the notice specifically told drivers not to complete any additional deliveries. Consequently, many retailers are left with no indication of what will happen with their orders, but the outlook certainly seems bleak.
Lawsuits are coming
A major factor that makes the abrupt closure so shocking is that UFI hadn’t filed for bankruptcy, a step that most companies in dire financial straits would have taken, particularly with thousands of jobs on the line. There were a few signs of trouble over the summer, when, in June, the company brought in a new CEO and CFO. In July, the company laid off 300 employees and closed several facilities, but no further steps were taken. “We all pretty much knew another round of layoffs could come soon if sales didn’t improve, but none of us thought a complete shutdown was coming,” says the former employee. Since the layoffs, several of Lane and UFI’s vendors have come forward with shared experiences of late or unpaid invoices, but, generally, they all seem just as surprised as the company’s employees.
UFI also didn’t file a Worker Adjustment and Retraining Notification, a U.S. labor provision that requires companies with more than 75 employees to provide 60 days notice of planned closings or mass layoffs—the lack of which has triggered a class action lawsuit by former employees. The suit, which was filed in the United States District Court for the Northern District of Mississippi Aberdeen Division and names more than 30 plaintiffs, is asking for 60 days’ pay plus any accrued vacation pay, as well as any applicable court and attorney’s fees. A second class action suit has been filed by UFI’s employees in California.
The owner speaks
The drama surrounding the layoffs was exacerbated by the lack of a statement from the company. UFI’s owner, David Belford, made his first public comments on December 12, weeks after the news broke—a delay that prompted the New York Post to speculate that Belford had fled to Europe after initiating the mass firings.
Belford told Columbus Business First that he was devastated by the decision, while also adding that he was a “passive investor” in the company with limited insight into its finances. “Only very recently did I learn just how dire the situation had become, how limited the company’s options were,” he said. “Unfortunately, the reality of UFI’s circumstances were brought to the board far too late.”
Belford also reported that the remaining UFI employees are working with lenders to wind down the company and liquidate its assets, with proceeds allegedly going to creditors and former employees. “Those who know me know how much this company meant to me,” said Belford. “They know the efforts made to save the company. And they know this is not the outcome anyone could ever have imagined.”
BOH’s anonymous source said that the company’s C-suite was terminated along with the rest of the employees. The only communication from any executive until Belford’s weeks-late missive came from Lane Home Furnishings former CEO Todd Evans, who was let go along with everyone else, and who sent an email to former employees on November 21 thanking them for their dedication and wishing them well. Evans has not commented publicly on the layoffs.
The industry is buzzing
The home furnishings industry is struggling to make heads or tails of the abrupt shuttering.
Is this a sign of the broader economic downturn or a shocking one-off incident? Until a public statement is made or a bankruptcy filing surfaces, the answer seems set to remain a mystery. Speaking with Furniture Today, Gabriele Natale, the president of UFI competitor Manwah USA, declined to speculate on what might have caused UFI’s dramatic end but acknowledged that it’s been a tough six months for most in the sector. “Reasons as to how this happened will eventually come out when they decide to tell their story,” he said. “Our economy will continue to have ups and downs, and strong companies find ways around the roller coaster ride of the economy.”
There’s now a hole in the market
While answers remain elusive as to what caused the collapse, a larger question remains: Who’s going to take over Lane and United’s estimated $550 million market share? Some are speculating that Ashley Furniture Industries would be a natural candidate to assume both the retail and supply side of Lane’s business, though Ashley has made no moves to do so. Natale expressed openness in his interview with Furniture Today about acquiring some of UFI’s assets. “United/Lane has several assets that will be of value to different companies in this industry,” he said. “Manwah has maintained its focus on expansion and continued growth, so looking at assets if they go on sale will always be a possibility.”
Home News Now spoke with several importers who are in the process of working with UFI’s overseas factories to help flow goods to customers in the States. Mike Wurster, president of case goods and upholstery resource Elements International, which shares some factories in Southeast Asia with UFI, told HNN that his company was trying to be helpful to both United’s customers and suppliers. Wurster added that many of UFI’s vendors hadn’t been paid for months. “The question is, how do we now help them facilitate getting orders to customers? To the extent we can help and get involved here, we will.”
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