Get ready for the Democratic assault on Tom Foley’s jobs record. Foley’s management of Bibb was an issue in the 2010 gubernatorial campaign. From the Malloy campaign camp:
Tom Foley plans to hold a press conference in Lisbon playing politics with the job losses at Fusion Paperboard. But Tom Foley wasn’t lamenting the jobs lost at the Bibb Co. after his management of Bibb Co. drove the company into bankruptcy leaving hundreds out of work.
He and his partners at a private equity firm were able to walk away with about $20 million while hundreds of Bibb’s workers lost their jobs.
Mark Bergman, Senior Campaign Advisor, released the following statement in advance of Foley’s press conference:
“Governor Malloy cares deeply about the workers who lost their jobs at Fusion Paperboard and is working to make sure they have the resources to get through this transition. But, we won’t let Tom Foley’s hypocrisy stand. He will try to play politics, pretending to care about these jobs. His record says something else. After his management in a private equity firm drove Bibb Co. into bankruptcy, hundreds of jobs were lost. He and his partners were able to walk away with millions in their pockets while hundreds of hard working families lost their jobs, their savings and their future. Don’t be fooled by today’s political theater–what happened at Bibb Co. is Tom Foley’s record and what he’s all about. When it comes to protecting the jobs of hard working Connecticut families, Tom Foley just can’t be trusted.
Tom Foley continues to root for Connecticut to fail, ignoring the steady economic progress made under Governor Malloy with over 55,000 jobs created under his leadership, unemployment reaching a five-year low, and 14,000 small business jobs created or retained. Connecticut’s economy is coming back under Governor Malloy, but Tom Foley would return Connecticut to the failed policies of the past.”
Tom Foley made millions of dollars during his management of Bibb Co, while laying off hundreds of employees, cutting workers pay and eliminating benefits for workers including wiping out their retirement plans.
Tom Foley Made millions from slashing payroll and driving Bibb to bankruptcy.
In 1985, Foley left Citi Group to found NTC and purchase Bibb Co., a “laggard in textiles”
Foley Called Bibb A “Laggard In Textiles,” And That NTC “Went In There And Turned It Around; Now We’ve Paid Down More Than Two-Thirds Of The Acquisition Debt.” Mr. Foley, who is 36, worked for Citicorp Venture Capital for four years doing leveraged buyouts until 1985, when he decided to go on his own and buy Bibb in a $90 million deal. ‘Bibb was a laggard in textiles,’ he said. ‘We went in there and turned it around; now we’ve paid down more than two-thirds of the acquisition debt.'” [New York Times, 4/27/88]
Foley and NTC restructured Bibb, getting rid of marginal operations and facilities, selling off the yarn division, “recapturing cash” from the pension fund, and importing products from overseas and ceasing in-house production
Bibb’s Restructing Plan Also Included “The Possible Sale Of Bibb’s Carpet Yarn And Industrial Products Divisions And The Recapture Of Cash From An Overfunded Pension Fund” And “Importing Certain Commodity-Type Products From Overseas And Discontinuing Their In-House Production.” “In addition to concluding that Bibb’s book value is sound, Kelso also found that the company is planning to restructure and had made preliminary plans to generate as much as $25 million to $30 million in cash from a number of sources, according to the letter. The restructuring would call for getting rid of marginal operations and closing marginal facilities, reducing corporate overhead, focusing the firm’s efforts on its higher-margin lines of business, and making capital expenditures to lower production costs of these lines of businesses. The cash could be raised through reducing inventory with better controls, the possible sale of Bibb’s carpet yarn and industrial products divisions and the recapture of cash from an overfunded pension fund, according to the letter. In addition, Bibb is contemplating ‘certain strategic moves’ to generate more cash, including importing certain commodity-type products from overseas and discontinuing their in-house production. This would allow the firm to convert the funds and to sell related real estate and other assets used in this area.” [Daily News Record, 7/1/85]
Foley’s First Priorities When He Bought Bibb, “Raise Money And Cut Costs … Foley Struck A Deal To Sell Bibb’s Unprofitable Carpet Yarn Division For $ 11.5 Million; That Lopped The Payroll By About 1,000.” “Foley was on his way. First priorities: raise money and cut costs. Even before the buyout closed in October 1985, Foley struck a deal to sell Bibb’s unprofitable carpet yarn division for $11.5 million; that lopped the payroll by about 1,000. He scrapped management’s plan for a $35 million capital expansion program–more savings–and contracted with two mills to supply Bibb with woven goods. He brought in new managers who responded quickly to Foley’s incentive compensation plans. More than $7 million in bonuses have been given. As if from a textbook, Bibb worked as Foley said it would. Pre-Foley net earnings were $6 million. Last year: $11 million.” [Forbes, 9/5/88]
Unfortunately for Foley, Bibb continued to struggle and additional layoffs were required as they were “desperate for cash” by 1995
Charlotte Observer: “Bibb’s Profit Margins Pale In Comparison To Those Of Its Competitors …” “Bibb sells towels to hotels, motels and retailers, including J.C. Penney Co., to market under their own labels. Bibb’s profit margins pale in comparison to those of its competitors, which sell more higher-priced goods directly to consumers. Last year’s floods idled some of Bibb’s Georgia plants, helping drive sales for the first nine months down 6 percent to $79.7 million–nearly half of the total $170.5 million in revenue. The waning popularity of Barney, a Bibb license, also hurt sales. Rising raw material prices and restructuring charges also have reduced Bibb’s profitability. Some of the company’s factories need to be modernized and there is stiff competition from the industry’s heavyweights.” [Charlotte Observer, 1/11/95]
April 1995: Bibb Laid Off 27% Of Its New York Staff Because “They Are Desperate For Cash.” “The Bibb Co. has downsized its New York office by 27 percent, giving the boot to eight of 30 employees. The move was financially motivated, according to a former Bibb Co. executive. ‘They are desperate for cash,’ he says. ‘Tom Foley [chairman and chief executive] has to pay a $9 million balloon interest payment in April.'” [HFN, 4/3/95]
· A Former Bibb Executive Said Of The New York Staffing Cuts: “In Many, Many Cases They Were Just Reducing Head Count Dramatically Without Looking At Who They Are And What Their Talents Are.” “The dismissals–at least one of the fired employees had been with the company more than 20 years–affected sales, closeouts, design and secretarial staff, and eliminated the advertising and public relations department. ‘In many, many cases they were just reducing head count dramatically without looking at who they are and what their talents are,’ says the executive. The executive notes that two of the company’s nine salespeople were laid off. ‘One of them better than doubled the company’s business with Mervyn’s last year, and they just cut her out.'” [HFN, 4/3/95]
In April of 1995, Bibb missed a $9 million balloon payment to its bondholders and Foley cut the workforce from 6,000 to 5,5000–all while NTC was given $4 million in annual management fees
HFN On Bibb: “The Company Missed A Deadline In April To Pay A $9 Million Balloon Interest Payment It Owes Bondholders.” “The appointment of Hammer, formerly the division’s senior vice president of merchandising, came last week and is one of the first signs from Bibb that it is about to make some major changes in its operations. This is obvious when Hammer describes his role. He uses phrases often used by company executives trying to turn a company around, phrases that demonstrate there is a long road Hammer and Bibb, it’s a difficult, but exciting time. He has a job that’s not going to be easy as the company tries to restructure its debt. The company missed a deadline in April to pay a $9 million balloon interest payment it owes bondholders.” [HFN, 5/8/95]
Retail Professionals Claimed Bibb Had “Trouble Servicing Accounts” And That They “Don’t Have A Lot To Fall Back On.” “One of Hammer’s first jobs has to be improving Bibb’s ability to deliver products to stores without delay, said Joe Bruni, a divisional merchandise, manager at Spiegel. ‘Delivery is probably the number-one challenge,’ Bruni added. ‘Otherwise, he will have nothing. Bibb has had trouble servicing accounts.’ Hammer will also have to enhance Bibb’s name, said a retail executive. He’ll have to focus on developing department store and specialty store business. ‘They don’t have the power of a name like some of the other mills do,’ the retail executive continued. ‘They’ve got to do it with merchandise. They don’t have a lot to fall back on.'” [HFN, 5/8/95]
When Bibb Struggled, “Foley Decided It Was Time To Step In … The First Thing He Did Was Cut Costs.” “In the next few years, the market changed in ways that Foley hadn’t planned. In 1990, a recession started. That was followed by intense price competition in the towel business, which hurt margins in the new division. In 1993, Sears decided to emphasize branded products and Bibb lost 98 percent of its $40 million private label program. And last year, sales plummeted for Barney, Bibb’s most lucrative license in 1993. Then, last summer, Foley decided it was time to step in. He accepted the resignation of Edgar Davis, president and chief operating officer, and in his role as chairman and chief executive officer began actively managing the company. And that’s when the plan started. The first thing he did was cut costs.” [HFN, 5/22/95]
Under Foley Bibb Cut Costs By Reducing The Workforce From 6,000 To 5,500 And Salaries Were Reduced Or Cut. “Bibb has cut overhead by $10 million since last summer”