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PA Builder Announces Bid to Purchase Wood-Mode, Reopen Factory

KREAMER, PA — Wood-Mode may have found its much-anticipated White Knight, after all.

Nearly two months after the sudden closure of the custom-cabinet manufacturer stunned the kitchen and bath industry, a Middleburg, PA businessman announced last week that he is working on a deal to acquire Wood-Mode’s name and corporate assets, with an eye toward saving the company and reopening its factory sometime in the next few weeks.

Bill French, owner of Professional Building Systems of PA, a manufacturer of custom modular homes, notified former Wood-Mode employees via the “Wood-Mode Friends” Facebook page that he had secured a non-binding agreement in principle to purchase the iconic, 77-year-old company from owners Robert and Brooks Gronlund, and that he expected an agreement with Wood-Mode’s prime lender, New York-based Great Rock Capital, to be finalized no later than July 19. Although terms of the tentative transaction were not disclosed, French said he hopes to have Wood-Mode’s Kreamer, PA factory up and running a few weeks after the acquisition is complete.

“Over the next few weeks we will begin to offer jobs to Wood-Mode employees, a few positions at a time,” French wrote on the 1,400-member “Wood-Mode Friends” Facebook page. “I look forward to working with many of you to build a successful company.”

French, who did not reply to an inquiry by Kitchen & Bath Design News, was quoted as saying that he made the tentative acquisition public in an effort to allay the concerns of former Wood-Mode employees, who’ve faced severe hardship in the wake of the mid-May closure.

Stunned employees, assured on multiple occasions that Wood-Mode would be spared from closure, were notified of the abrupt shutdown at their workstations shortly before being escorted from the company’s 1.3-million-sq.-ft. facility by state, county and local police. They were notified days later that their benefits had been terminated, impacting not only them but their families.

Former employees, since that time, have been buzzing about the closure at public gatherings, in media interviews and on social media, expressing a wide range of emotions – among them a sense of betrayal, bitterness, frustration and nostalgia – as questions continue to swirl about the contributing factors that led to the apparent demise of what had been perhaps the industry’s most highly respected cabinet brand.

French was quoted last week as saying that hiring 200 workers would be a realistic benchmark in the months ahead, and that a workforce of up to 500 employees could potentially be achieved in reopening the Wood-Mode factory. The company employed 938 people at the time of its closure. At its height, prior to the 2008 recession, Wood-Mode employed some 2,000 people, many with longstanding work histories that spanned several generations of family.

Although two former Wood-Mode executives were said to be part of a new management team being assembled by French, it is not known whether Robert Gronlund, who served as Wood-Mode’s chairman/CEO, or his son, Brooks, the company’s president/COO, would remain with the revivified company – and, if so, in what capacity.

Neither of the Gronlunds, nor company spokesman David Scarr, have commented publicly since Wood-Mode’s closure, which continues to reverberate through the kitchen and bath industry as dealers, sales reps, suppliers and former employees attempt, eight weeks later, to cope with the fallout. The Gronlunds, in particular, have been the focus of much of the former employees’ anger.

While a relative unknown within kitchen/bath industry circles, French is a prominent figure within the home-building industry. His company, founded in 2000, has grown to become one of the largest modular manufacturers on the East Coast, producing more than 1,000 custom modular homes, schools, dormitories and light-commercial structures per year, according to the corporate website. French, in 2016, was also one of 23 lesser-known candidates who paid $1,000 to the state of New Hampshire for a chance to participate in a televised forum and have his name placed on the ballot in the New Hampshire Democratic presidential primary.

COMPANY FATE UNCERTAIN

But while French’s presidential bid drew only limited support in New Hampshire, his bid to acquire Wood-Mode has sparked more than casual attention, particularly in hard-hit Snyder County, PA, where the cabinet company has been a major employer and community presence – although its closure had been foreshadowed for some time.

Indeed, for several years prior to its closure, Wood-Mode had experienced significant financial challenges, leading to salary cuts, elimination of bonuses, cash-flow shortfalls and a range of cost-cutting moves. The company had also been steadily downsizing, and two years ago secured a multi-million-dollar financing package enabling it to restructure debt and generate liquidity while operating under the bailiwick of a financial-turnaround team.

In recent months, Wood-Mode said it had been seeking additional financing and other options, including a potential acquisition that would have enabled the company to continue operations. Those efforts collapsed, however, when at least one prospective buyer backed away and Wood-Mode learned that its prime lender was unwilling to provide the funding necessary to move forward. Corporate officials announced at that time that they had no choice but to abruptly shutter the Wood-Mode factory, blindsiding employees, suppliers and government officials, as well as Wood-Mode’s extensive network of U.S., Canadian and South American dealers, many of whom had long-term, exclusive relationships with the company.

While no less than a dozen prospective buyers reportedly made inquiries into potentially acquiring Wood-Mode’s assets in the wake of the shutdown, it seemed increasingly likely as the weeks went by –and none of the acquisition inquiries bore fruit – that the company was moving toward ultimate extinction. French’s announcement about a potential acquisition, in contrast, provides the first palpable glimmer of hope that the company can yet be saved. His announcement, both inside and outside of industry circles, has been met with a mixture of skepticism, celebration and cautious optimism.

However, even if French is successful in his acquisition bid, the jury remains out on whether Wood-Mode can truly be resurrected – and whether the revivified company could be anything more than a shadow of its former self.

Founded during World War II, Wood-Mode established a stellar, decades-long reputation as a custom-cabinet innovator known for its quality, customer service, craftsmanship and loyal, long-term dealer base. As a privately held firm, the company’s finances, even now, remain shielded from public scrutiny, but Wood-Mode, at its height, reportedly generated annual sales that placed it among the top ten cabinet manufacturers in North America. Even at the time of its closure, the company was said to have a considerable number of cabinet projects (along with accompanying deposits) in various stages of the production pipeline, and many of its dealers expressed surprise that a lack of sales could possibly have been a contributing factor in the company’s apparent demise.

A revivified company – under French or any new ownership – would likely be operated on a far-smaller scale than Wood-Mode’s previous iteration. Simply getting the company up and running again would doubtless be a daunting, months-long task, fraught with numerous – perhaps insurmountable – challenges. Aside from assembling an experienced management team, rehiring both new and laid-off employees, and navigating through a maze of complex legal and financial issues, ownership would need to regain the faith of both laid-off employees and a dealer network that was severely shaken by the company’s sudden closure.

French, it was reported, was planning to reach out to Wood-Mode dealers in an effort to preserve relationships and secure future business. However, many dealers – once exclusive to Wood-Mode and its semi-custom line, Brookhaven – have since turned to replacement cabinet lines and begun the arduous process of redefining their own corporate identities, reassessing showroom displays and dealing with the impact of the closure on anxious, bewildered customers. Many, having been burned by Wood-Mode’s closure, would presumably be hard-pressed to assume the risk of continuing an exclusive relationship with any cabinet vendor, let alone one fraught with such uncertainty.

“Wood-Mode was all I knew and loved, so this has been tough,” wrote one dealer, who’d been exclusive to Wood-Mode for 20 years but has since moved on to another custom cabinet supplier. “I do love seeing the bonds of Wood-Mode still strong; it was more than just a cabinet company,” the dealer wrote on Facebook. “After such an unexpected event of their closing, I’ve realized I can never speculate what my future will hold. Now it’s truly one day at a time for me.”

A similar mixed bag of sentiments apparently holds true for former Wood-Mode employees, many of whom, while guardedly optimistic about a potential reopening, have expressed bitterness, disillusionment, skepticism and frustration over the way the closure was handled.

Although Wood-Mode said that its notice of closure was official pursuant to the conditions of the Worker Adjustment and Retraining Notification (WARN) Act, there have since been accusations that the company failed to comply with the statute, which requires companies of Wood-Mode’s size to provide employees with 60 days warning prior to plant closures. Lawsuits filed by several former Wood-Mode employees charge that the company violated WARN by failing to provide workers with the requisite 60-day written termination notice. The lawsuits seek class-action status and the payment of wages, vacation time and benefits for the 60 days prior to the closure.

According to Pennsylvania officials, state resources including unemployment compensation, financial counseling, job training-and-search initiatives and social service programs – have been made available to former employees. Food banks, job fairs and other charitable initiatives have also been mobilized, as have other forms of assistance.

Many still-unemployed former employees who’ve been holding out hope that the Wood-Mode factory could somehow reopen said they welcomed French’s acquisition bid and would welcome a return to work. Others have moved on to other jobs. Still others – puzzled, embittered and disillusioned by the closure – seem uncertain about a potential return to work at a company that many once held in the highest esteem. Stung by a sense of betrayal and frustration, they say they’re adopting a guarded, wait-and-see approach to any potential acquisition.

The weeks ahead will likely provide answers to many of their questions, while determining in large part an outcome to Wood-Mode’s ultimate fate. Until then, however, the only certainty is that time will tell.

— Eliot Sefrin

KBDN Publisher Emeritus

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