A number of legislators and union officials decried New Era’s plan to close its manufacturing plant in Derby, NY, the company’s only headwear-manufacturing facility in the U.S.
In its statement, New Era said it was “considering the discontinuation” of the facility, which employs 219 workers, effective March 2019. That leaves open the possibility that New Era may be open to keep the plant open if it somehow earns tax breaks or wage concessions from the state or union. But the tone of the statement indicated the closing was more than likely to happen for competitive reasons.
“This contemplated decision is part of the company’s ongoing effort to more closely align its business model with its competitors in the global sports, lifestyle, and apparel industry by moving away from owning an operating manufacturing plants,” New Era said in a prepared statement.
Most production of sports apparel is now done by third-party contractors overseas in China, Bangladesh and Vietnam.
“This is an extremely difficult for me. I grew up in Derby and worked in the facility, which has had a long, productive history with the company,” said Chris Koch, CEO of New Era, in the statement. “Even as other sports apparel brands moved away from running their own manufacturing plants, we continued making caps at our facility in Derby. But I have an obligation to our employees, partners and customer to ensure the long-term success of this company and we need to keep up with changes in our industry.”
Among the legislators putting out statements on the potential closing was the Senate Minority Leader Charles Schumer, who represents New York. He said, “This is devastating news for Buffalo. I sincerely hope that New Era, a hometown Buffalo company, will reconsider. Instead of closing down the Derby facility, New Era should immediately sit down with me, New York State and other elected officials to craft a package that would keep these jobs right here in Derby, where they belong. We hope New Era will reevaluate and take us up on this offer straightaway.”
Erie County Executive Mark Poloncarz said in a statement, “I was very disappointed today to learn of the impending closure of New Era’s Derby manufacturing facility, a move that hurts more than 200 families here in Erie County. New Era is such a homegrown success story that its name now adorns the professional football stadium owned by the people of Erie County. As such, the announcement of the closure took my administration by surprise because no one from New Era contacted my administration or the Erie County Industrial Development Agency to notify us of this decision or to explore potential ways to keep New Era employees working in Derby. Nevertheless, I have reached out to New Era CEO Chris Koch directly to determine if any action can be taken to preserve these jobs. I hope there is still time to avoid this outcome and will work with New Era, should they choose to do so, to find a solution that is better for Erie County workers.”
The Associated Press reported that New Era said the Derby plant, near Buffalo, makes about 2 percent of its total product, including the caps worn by MLB players during games. MLB player caps will continue to be made in the U.S. at a screen-printing plant in Opa Locka, FL, outside Miami, operated by 5th & Ocean, New Era’s fan apparel brand. On field baseball caps are made in the U.S. per an agreement with Major League Baseball.
The Derby plant reportedly produces between 2 million and 4.5 million caps a year. The plant, measuring 101,367 square-foot, has been operating since the early 1960s.
Of the 219 workers at the plant, 192 are represented by the CWA Local 14177. In accordance with the collective bargaining agreement, New Era said it has informed the union of its contemplated decision and expects to meet with the union to discuss the matter in the coming weeks. New Era said it is prepared to offer the affected employees benefits and severance at levels beyond what is required in the current agreement.
Not unsurprisingly, union officials were dismayed at the news.
“It is, to say the least, a very disturbing announcement,” Richard Lipsitz, Western New York Area Labor Federation AFL-CIO president to Buffalo Business First “It is certainly not good for the economy, especially in that part of the county, where so many of those workers live. Nobody, and I mean nobody, wants to see Derby lose 200 jobs.”
Erin Bowie, CWA Local 14177 staff representative, told the business newsletter, “None of us saw this coming. We’re talking about people who worked there for 40 years and, in some, cases it was the only job they ever had.”
Depending on their length of employment, the average union employee at the New Era Cap plant earns approximately $20 per hour.
Tax breaks and incentives were approved by the Erie County Industrial Development Agency in 2010 but expired two years ago. The tax breaks amounted to $239,000 that triggered a $3.1 million expansion of the Derby plant.
The Derby plant had survived a number of past closures that came just after the last recession. In November 2009, the company announced it was closing its plant in Jackson, AL, eliminating 322 jobs. In January 2010, New Era announcing it was closing its facility in Demopolis, AL, affecting 351 jobs.
In September 2013, New Era confirmed reports of a 25 percent reduction in the workforce set for later that year.
Some reports of the plant’s possible closing and some legislators remarked on the timing of New Era’s announcement coming as Amazon announced that it would open a second headquarters in Long Island City in Queens. The New York Times said New York state promised Amazon $1.525 billion in incentives, including $1.2 billion over the next 10 years as part of the state’s Excelsior tax credit. The state also pledged to help Amazon with infrastructure upgrades, job-training programs and even assistance “securing access to a helipad.”
New York’s Sen. Cathy Young said in a statement, “Today we received the devastating news that Erie County manufacturer New Era Cap will close its Derby plant in March, putting over 200 workers out on the street. Contrast this with today’s news from the other side of the state, that Long Island City in Queens will become the site of one of Amazon’s highly publicized ‘HQ2’ operations.
“Touted as a win by the Governor and New York City officials, it comes at a high price: a staggering $1.525 billion dollars, the largest financial incentive in state history, and all for a global corporate giant valued at nearly $1 trillion,” she said.
Young noted that overburdened New York taxpayers, particularly those in upstate who are seeing their communities and families decimated by job losses and lack of opportunity, have every right to be outraged by this massive Amazon giveaway.
“In Western New York, the unemployment rate in many counties hovers around 4.2 percent, far higher than the statewide rate of 3.8 percent. Our hardworking dairy farmers are seeing their farms and futures disappear before their eyes. And a still-declining manufacturing base and cutbacks in other industries are continuing to drive record numbers of upstate residents to other areas of the country,” she said. “Strong, strategic economic development efforts can be nothing short of transformative when properly deployed. Upstate New York desperately needs such a transformation to assure its long-term survival.”
She continued, “That recognition should be the guiding force in our economic development policies. Instead, we are ‘celebrating’ an enormous gift to a corporate giant that does not need it, to locate in a region of the state where job opportunities are plentiful. The winner in this deal isn’t New York and it certainly isn’t the taxpayers.”
Some reports indicated that tariffs on China’s imports were likely part of the reason behind the decision to close the plant. In an August 8 letter to President Donald Trump’s top trade official, Koch wrote, “If the tariffs on headwear go into effect, the new costs will force us to make immediate and significant cuts to our U.S. operations, including workforce reductions.”
The Trump administration slapped a 10 percent tariff on an estimated $200 billion in Chinese imports on September 24. But New Era in a statement to Buffalo News denied that tariffs were involved in the consideration to close the plant.
“New Era’s contemplated decision to discontinue operations at its Derby facility was not the result of the tariffs that went into effect on Sept. 24,” New Era said. “Today’s announcement is about a change in the long-term operating footprint of the company in order to focus on emerging areas of growth, like e-commerce and social marketing.”
New Era said in its media statement that it remains committed to Western New York, including its headquarters in Buffalo. The company’s statement read, “Over the last decade, New Era has had impressive job growth at its Delaware Avenue headquarters, where 337 people currently work. The company’s headquarters is not affected by the contemplated decision, and the company expects to further grow its HQ footprint as it moves more aggressively into areas like e-commerce and social marketing.”
In 2006 the company moved its corporate offices from Derby back to downtown Buffalo, the city where the company was initially founded in 1920. With $750 million in annual revenues, New Era has been run by the Koch family for four generations and is one of Buffalo’s largest, privately-held, family-owned companies.
Image courtesy New Era
