Saturday, August 04, 2001
Mosler slams door on 300 workers
Safe maker ran out of time, money
By Mike Boyer
The Cincinnati Enquirer
Hamilton's Mosler Inc., which became famous in the 19th century for its bank safes, suddenly shut its doors Friday after an 11th-hour sale of the company collapsed.
The move eliminates the jobs of 300 employees at the Hamilton headquarters and 1,500 jobs at almost 60 Mosler U.S. service centers. It also wipes out retirement savings of a couple of thousand retirees and former employees.
In a brief statement Friday, the company said a massive debt burden limited its financial flexibility and forced it to stop operations and begin liquidation of its assets. A spokesman said the company would seek federal bankruptcy liquidation soon.
Employees, notified Friday, were sent home with their current paychecks and the promise that their medical insurance would be paid through the end of the month.
Mosler service technician Camp McCrary of Columbus clears some items out of his company truck outside the Hamilton office Friday.|
(Ernest Coleman photo)
| ZOOM |
It's tough, said Mel Less, president of the Greater Hamilton Chamber of Commerce and a Mosler retiree.
We knew things were bad. There were a lot of rumors, but we didn't expect it would turn out this way.
Said Jim Crow, a senior service technician: Hard to believe it's gone. We had a feeling trouble was coming.
I should have left five years ago. Next month, I'd have 32 years of service. Now, here I am at 57, looking for a job again. How many people want to hire a 57-year-old?
The company which once employed more than 1,000 in Hamilton traces its roots to a safe company started in Cincinnati in 1867 by Gustav Mosler. In the 1950s, Mosler built a custom safe for the U.S. government's display of the Declaration of Independence, the Constitution and Bill of Rights in Washington.
Al Rabasca, Mosler's senior vice president for human resources, said that as late as 3 p.m. Thursday, the privately held company controlled by affiliates of Kelso & Co., a private New York City investment bank expected to be sold to an unnamed third party which decided not to complete the sale. It was at least the second time since June that a prospective sale had collapsed, he said, and the company's lenders said the liquidation had to begin.
The banks said we've run out of cash, and now we've run out of time, he said.
IF YOU GO
Mosler Inc. traces its roots to the Mosler-Bahmann Safe Co., started in 1867 in Cincinnati by Gustav Mosler, an Austrian immigrant.|
By 1891, the company had outgrown its factory and moved to Hamilton to have access to rail and barge service.
In the early 20th century, Mosler built the first fire-resistant safe. It was also the first company to develop lighter but stronger manganese steel to replace heavy cast-iron safes and vaults.
During World War I, Mosler built gun carriages in Hamilton for the U.S. military.
In the 1920s, the company marketed the first Underwriters Laboratory-listed Class A alarm system, marking the company's entry into electronic security.
In the 1940s, Mosler developed the first drive-in banking system and built Sherman tanks during World War II.
In the 1950s, Mosler built a custom safe for the U.S. government to display the Declaration of Independence, the Constitution and Bill of Rights in Washington.
Since former chief executive officer Michel Rapoport resigned in March, a new management team had been brought into Mosler to restructure the business for sale or possible liquidation, Mr. Rabasca said.
The new management thought it had about a year to restructure and find a buyer, he said. But within a week of coming on board, the banks indicated the company had to immediately seek a buyer or begin liquidation, he said. Mr. Rabasca declined to identify the company's lender or the size of its debts. But Mosler's most recent filings with the federal Securities and Exchange Commission indicated that the company's total debt was $200 million.
A class-action lawsuit filed on behalf of shareholders in U.S. District Court in Cincinnati blames Mosler's financial problems on mismanagement by Mr. Rapoport, who was named CEO in 1995, and managers of Kelso who served as Mosler directors.
Mr. Rapoport led Mosler's biggest acquisition, its 1998 purchase of LeFebure Corp., an Iowa-based competitor, for $34 million from De LaRue Plc, a British-based bank note printer.
Although the acquisition was expected to increase Mosler's sales by more than $100 million, current and former employees said the company had difficulty integrating the two companies.
Mosler's closing announcement said problems implementing a new computer system and difficulty with recent acquisitions accelerated the company's financial problems.
Under Mr. Rapoport, who couldn't be located for comment Friday, Mosler also made a major push away from its traditional metal-bending business of making bank vaults and doors into acting as packager and installer of sophisticated computerized security systems, not only for banks but also government agencies and corporations.
In 1996, Mosler shut down its safe manufacturing plant in Hamilton, eliminating about 160 jobs. Two small plants that Mosler operated in Canada and Mexico aren't affected by Friday's shutdown, Mr. Rabasca said.
Despite Mosler's high-tech push, former employees said the company had difficulty staying on the cutting edge.
The suit was filed on behalf of about 2,200 Mosler shareholders, including current and former employees who acquired stock in the company through the Mosler Employee Stock Ownership Plan, or ESOP, as part of their retirement plan, said Robert Steinberg, one of the attorneys who filed the suit.
The company's closing is personally devastating for people who spent 30 or 40 years of their lives building the company, but the lawsuit will go forward against the company's directors, he said.
The suit seeks damages on behalf of the shareholders stemming from an 80 percent reduction in the value of their shares disclosed in December. Mr. Steinberg said the company never explained why the shares were devalued.
As recently as February, Mr. Rapoport told employees in a letter that the company wasn't for sale and was making money but acknowledged that it struggled with a huge debt load and reduced cash flow, the suit says.
To make vendor payments, the company had to forgo interest payments to its bond holders, the suit says.
Mr. Steinberg said employees and stockholders had warned the board of directors for several years that the company's condition was deteriorating.
Although saddened by the company's sudden closing, some former employees said they weren't surprised.
Cincinnatian John Gazdik, who retired from the company a couple of years ago after 30 years, said he didn't think the board adequately supervised the company's management.
Mr. Gazdik, who said he stands to lose a lot through the collapse of the company's stock in the ESOP, said, I'm bitter, but I don't dwell on it, because it doesn't do a heck of a lot of good.
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