Surprised Security Pacific Lends Supplicants an Ear
Just before lunchtime Thursday in downtown Los Angeles, four textile workers from Rhode Island and Virginia scuttled through a parking garage on Flower Street, into a basement elevator and up to the 53rd floor, to Security Pacific Corp.’s headquarters.
They had come to apply some desperate, last-minute pressure that might somehow save their jobs at plants operated by Health-tex, the nation’s second-largest domestic maker of children’s clothing.
Without an appointment, they were in downtown Los Angeles to grab the ear of the highest Security Pacific executives, to ask that the bank not proceed with the anticipated liquidation of their financially-troubled company and its plants in the South and Northeast. They were here to plead for more time.
They were here, too, to portray themselves as a growing cult of victims of failed leveraged buyouts--buyouts that never had a chance to succeed, the workers claim, because banks allowed executives to take on unreasonably high levels of debt.
“We’re just begging for time,” said Myrtle Fitzgerald,, a hemmer for 15 years at a Health-tex plant in Danville, Va., as the elevator rose. “We believe we can turn this company around. Just give this a year.”
The four workers were flown here Wednesday by the Amalgamated Clothing and Textile Workers Union, which has sent national staff members into office towers throughout the country to visit executives of Security Pacific and nine other banks.
The 10 institutions helped finance a leveraged buyout in 1985 in which six Health-tex executives bought the firm from its corporate parent with $230 million in borrowed funds.
Since the takeover, employment has fallen to 4,000 from 9,000 as many plants have been closed. Most of the six executives who coordinated the leveraged buyout left long ago. Health-tex stopped making payments on its loans 18 months ago after signing a temporary agreement with the banks.
The banks’ agreement to defer loan repayment expires June 30. The union claims that by so far refusing to extend the agreement, the banks are planning to call the loans due, shut the remaining plants down and sell the assets.
The union regards Security Pacific, which it says holds 12% of the financing, as a strong voice for liquidation. The banks refuse to comment. The books of Health-tex, now privately held, are not open to public inspection. There are rumors that liquidation may be staved off by outside interests who are bidding to acquire Health-tex, assuming the debts. Still the June 30 deadline looms.
It was in this nebulous atmosphere that the elevator stopped on the 53rd floor Thursday, carrying two young union staff members from New York and Washington and the four Health-tex workers.
An attempt by union staff member John Davis last week to speak directly with Security Pacific’s chairman, Richard J. Flamson III, had been intercepted by a public relations executive. So this time, with the four workers in tow, Davis and staffer Michael Zucker tried to go directly up to the executive suite.
Once they stepped out of the elevator, a scene resembling the movie “Roger And Me” ensued. In the sardonic documentary, filmmaker Michael Moore is told repeatedly by security guards that he cannot take the elevator to see General Motors Chairman Roger B. Smith without an appointment.
Here a security guard made it numbingly clear to the workers that they were not going to see Flamson unannounced. (Although still chairman, Flamson no longer runs Security Pacific, having turned over the chief executive’s job to Robert H. Smith in January.)
“What do you want to do?” the guard said each time representatives of the workers made their pitch to talk to Flamson. “Would you like to be arrested for trespassing?”
“That man is holding our jobs,” said one of the workers, Bill Dickson, an order clerk in a Cumberland, R.I., warehouse who has worked for Health-tex for 22 years.
Finally a public relations staff member broke into the scene and told the group that a meeting with a group of corporate vice presidents would be held for them 30 floors below.
The meeting took an hour. Outside the building a dozen sympathetic members of various Los Angeles labor unions marched in a small circle in the concrete plaza.
“LBOs have got to go,” they chanted.
Well-dressed men and women flooded to and from lunch in the cafes on the other side of Hope Street. A woman wearing a large button reading “I Make People Rich” passed through the plaza handing out investment-opportunity business cards.
Finally the workers emerged, downcast, at street level.
They had been able to make their pitch. They had talked about how the management of Health-tex--which is rather embarrassed by the spectacle of its union airing the company’s financial plight in such an untidy fashion--is struggling to restructure the company.
Earlier this year, Colombe Nicholas, former head of Christian Dior-New York, was named an executive of the company. A month later Health-tex submitted to the banks a turnaround plan with the goal of breaking even by the fall of 1991. Trade sources said last year that the company lost $128 million on annual sales of $265 million.
“We put our plea across,” said Ed Volpe, a Rhode Island forklift operator whose forearms feature tattoos. But he wasn’t hopeful. According to the workers, the Security Pacific executives said they were disinclined to extend the loan nonpayment agreement. The bank said merely that discussions were private.
“To say the least, I’m disappointed. For me it was the last pitch,” said Yvonne Jackson, who has worked in the Danville factory’s cutting department for 20 years and had made this kind of visit last week to NCNB Corp., a Charlotte, N.C., financial institution. “This was it, to do what I could do to save my job. The bottom line is, all the banks care about is profit, not people.
“They were trying to talk about the past (economic failures of the company). We’re trying to talk about the future. But bottom line, we only have nine more days.”
