Williamsport-based Shop-Vac blames 400+ layoffs on COVID-19. Workers say that’s not true

Shop-Vac Corp., a brand that is to wet-dry vacuums what Kleenex is to tissues or Band-Aid is to adhesive bandages, is shutting its doors after 53 years. Based in Williamsport, Pennsylvania, the company began laying off its staff of 427 on Sept. 15.

In termination letters, the company blamed COVID-19 and a buyer who “without warning walked away from the deal.”

Those familiar with Shop-Vac’s finances say the pandemic is being used to justify the rapid liquidation of a company that employed some workers for decades.

“It wasn’t because of COVID,” said Candice Gair, 36, who worked as a treasury associate with the company for five years, which involved tracking payments and invoices. During the pandemic, orders increased and “we had the best sales in years,” she said.

Instead, Gair and others say the closure is a result of long-term financial troubles, and that rather than give warning, the company is hanging employees out to dry without health care, notice or severance pay during a recession and global pandemic.

“This isn’t right,” she said.

While other businesses shut down in March and April, the state classified Shop-Vac’s manufacturing facility and warehouses in Williamsport as “essential,” allowing the company to continue operating.

Now, the layoffs will contribute to the already bleak economic picture in Pennsylvania, which experienced record-high unemployment earlier this year. Shop-Vac was the 11th largest employer in Lycoming County at the beginning of 2020. The most recent state data available puts the unemployment rate in the county above 13%.

On Monday, Gair organized workers who have already been laid off and those winding down plant operations to protest in front of the Reach Road facility. Dozens filtered through during the day, carrying signs with slogans like “No Notice!” and “Worked during COVID – now no job.”

“This is a nightmare,” said Tia Fisher, 48, a customer service representative whose layoff took effect Sept. 18. “You walk in one day and they give you papers and say, ‘You’re done.’”

Unexpectedly losing health care benefits and a job also put many workers in a bad position.

“I have three boys, I’m a single mom,” said Fisher. “That was hard, telling my boys, ‘I lost my job.’”

‘We knew that things were bad’

Shop-Vac was at one time emblematic of Pennsylvania’s local manufacturing tradition. The Miller family founded Shop-Vac in Williamsport in 1953. Production facilities eventually spread to Binghamton, New York, as well as Canada, Vietnam and China.

Four people inside and outside the company who were familiar with Shop-Vac’s finances asked not to be named, either because they were not authorized to speak about the matter publicly or due to fears it would hurt their ability to find work in the future.

Their stories all align around a sequence of events that resemble a slow decline, not a pandemic-induced tailspin.

Shop-Vac extended itself by opening new facilities in Asia in an attempt to bring down its production costs. Those moves were expensive, however, and the company wound up deeply in debt. Before the coronavirus pandemic gripped the globe, the company was looking for a buyer with the understanding that operations would continue.

“We knew that things were bad, we could see it,” said Fisher, of how the regular workforce perceived the company’s financial picture.

Demand picked up during the pandemic, boosting morale, but the revenue wasn’t enough to offset debt.

KPS Capital Partners, a private equity firm based in New York, made an offer to buy the company — an offer Shop-Vac’s bank, J.P. Morgan, rejected.

“I think someone in the room looked at the numbers” and realized they could make more from liquidating the company, said one person familiar with the company’s finances.

KPS and J.P. Morgan both declined to comment for this story. No one answered the phone at Shop-Vac’s Reach Road facility, and messages and emails sent to the company’s human resources staff were not returned.

In official documents, representatives of the company gave other reasons for the abrupt closure.

“We regret that we were unable to provide you with more notice. The current global pandemic and economic crisis has left the Company in dire financial conditions,” wrote Allison Leta, director of human resources and payroll, in termination letters to employees. “We fully anticipated the sale to be completed and for the buyer to hire all employees. This unforeseeable business circumstance has left us with no choice but to close our facilities.”

In a mandatory closure notice provided to the Pennsylvania Department of Labor and Industry, Leta wrote that all three facilities in Williamsport would be closing, and that the “wind-down” period would continue through Nov. 13. It did not say what would happen to Shop-Vac’s overseas entities.

Some employees also question whether Shop-Vac violated the federal Worker Adjustment and Retraining Notification (WARN) Act, which requires that companies with 100 or more employees provide 60 days’ notice before plant closures or mass layoffs.

The exceptions to the 60-day rule are “faltering company,” “unforeseeable business circumstances” and “natural disaster.”

Workers like Fisher said at a minimum, they expected more transparency from a company that had been a long-standing part of the community.

“They left us in the dark for so long … they looked at us like we were just peons,” she said. “What I hope to get out of this is for them to realize they hurt so many people.”