Friday, July 1, 2016

Jobs leaving - townhouses coming

The story reported by Melody Simmons in yesterday's Baltimore Business Journal has all the ingredients of the American narrative that is trumpeted around the country these days: An Asian company buying out an established American company, making promises about jobs, not keeping them and then closing down the plant.
The next chapter are townhouses. (or as in the case of the Solo Cup company in Reisterstown, a Wegmann's). The reality, as always, is more complicated.
Hedwin on Roland Heights in Baltimore near I-83

Most Baltimoreans probably never heard of Zacros (or Hedwin) or of the Cubitainers they make, not unlike the milk cartons we all know. The plastic containers are used for pharma, paints, food and also disaster relief. But the Hedwin company was founded right here in Baltimore in 1946. Like may other things that came from Baltimore (for example, the crowncork invented here) the company started with ingenuity. Tom Winstead had developed a patented process of forming and sealing sheets of plastic with heat that was suitable for mass production. (He proceeded with a number of other inventions).

Hedwin has been once before in danger of being bought up and moved. But in 2004 employee stock was issued to avert the sale and an employee owned company ensued. But then the company went bust and in 2014 Hedwin was bought by Fujimori Kogyo for $22.2 million at a bankruptcy auction and the word was that the 300 Baltimore jobs would move to Delaware. various reasons were given at different times. The company had outgrown the Baltimore location with six buildings and a warehouse according to the company's spokesman, who also said in Delaware that they had the best workforce. In Baltimore it was told that the Japanese owner's strict standards for purity in the plastic products could not be met at the current leased plant.
Emergency water containers

A search for a new location led to Newark’s Pencader Corporate Center in Delaware, where another plastic molding company had left a 158,000 sf facility after it had folded into another company from Illinois. The company was awarded a Strategic Fund Performance grant and a Capital Expenditure grant of $703,505 from the Delaware Economic Development Office (DEDO) to offset costs associated with relocating its operations to Delaware. “Our goal is to partner with the State of Delaware and the community,” Hedwin’s vice president and COO, Maurice LeCompte told the Delaware Business Times in 2015. He added that proximity to primary customer Siemens Healthcare Diagnostics and Delaware’s commitment to manufacturing played heavily into the company’s decision to relocate.

The swooping in of a mean Asian Tiger that grabs American assets seems to feed the narrative. But Fujimori and Hedwin collaborated since the 1960s when the Japanese had bought a Hedwin license to produce the Cubitainers in Japan. The relocation was fueled by a competing state's incentive payments and by locational advantages
Cubitainers: Wine from a box

Now in 2016 the time has come that the remaining but dwindling Baltimore jobs will disappear altogether. Technically the employees could have re-applied for the work in Delaware, but most selected not to do that. Delaware's DEDO Director Alan Levin is happy: “Adding jobs to the manufacturing sector will provide a major boost to, and help to diversify, our economy,” he said about the company's move. “What we really liked about Zacros’ Hedwin division is that they have the desire and the ability for future expansion."

It is an open question if Hogan's "open for business" policies would have made a difference in 2014. Those manufacturing stories are never simple.It seems to me, what we need to do is foster and retain the inventors and innovators of today. They are still here and right under our noses.

Klaus Philipsen, FAIA

the article is compiled from press reports and press research.

BBJ 2016
Delaware Business Times 2015
Baltimore Sun 2014

NOTE: During the summer months articles on this blog will become less regular due to travel, conferences and book writing