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Home > About BNE > Press Room > 2010 Archive > January > New Era to Keep Factory in Derby

New Era to Keep Factory in Derby

330 jobs saved; union set to vote

By George Pyle

anuary 28, 2010

 The decision to maintain the company’s factory in the Western New York community of Derby — along with its 330 jobs—was nothing personal, strictly business, said New Era Cap Co. CEO Christopher Koch.

The region has been home base to the iconic baseball brand since its beginning. Its headquarters remain in Buffalo, and the company has been led by members of his family since Ehrhardt Koch borrowed $5,000 from an aunt to open a factory on Buffalo’s Genesee Street in 1920.

But, Koch said Wednesday, the choice of whether to retain the Derby facility or close it in favor of another plant in Demopolis, Ala., came down to a matter of dollars and cents.

“I did not weigh in at all in any way with the people who were looking at the matter,” said Koch, a Derby-area resident. “I kept my mouth shut and let the numbers speak for themselves.”

Those numbers include a tentative cost-saving deal with the Communication Workers of America, which represents the plant’s work force, and a package of government assistance that includes $3 million from the state’s Empire State Development program.

Union members are to vote on the new contract Tuesday. Details have not been announced, as both the company and union leadership wanted time to discuss the prospects with workers. If the Derby deal is ratified, the Demopolis plant, a 12-year-old facility that had employed as many at 350 people, will be closed in the second quarter of the year.

Koch said the consolidation of production in Derby should allow the plant to recall the 100 workers that have been on lay-off there, with the first returning in June and others through the rest of the year. By the end of the year, he said, the hope is that economic conditions will have improved enough that another 100 workers may be hired, with those who are losing their jobs in Alabama given a chance to claim the new spots.

Dave Palmer is director of the CWA for New York and New England. Either way the company’s call went, he said, would be a loss for union members.

“It really was not a situation to jump up and down about,” Palmer said. “But we think we have put a deal in place to allow the company to go forward.”

Palmer said that the more experienced work force in Derby, where average seniority is 17 years, was a factor in the choice, as was the package of economic incentives offered by local and state governments.

Some details of that package are still being worked out, according to a statement Wednesday by the office of Gov. David A. Paterson. Possible benefits for New Era include income tax credits through the state’s Empire Zone program, energy efficiency financing from the state Energy Research and Development Authority, assistance in finding and training workers from state and county programs, property tax agreements with the Erie County Industrial Development Agency, Town of Evans and Lake Shore School District, as well as infrastructure aid from National Grid.

“Keeping New Era’s manufacturing facilities open in Derby was of the highest importance to New York State, as it is a local, home-grown business of global recognition,” Paterson said. “I am very grateful for the close working relationship New York State has with New Era and am very pleased with their decision to maintain their facility in Western New York.”

In the Town of Evans, Supervisor Francis J. Pordum also celebrated the news.

“We’ve been working very hard in our community to see that this happy day would come,” Pordum said. “I thank the governor and his economic development team for reaching out and working so diligently.”

Pordum also credited the willingness of the company, union and ECIDA, as well as lobbying from Sen. Charles E. Schumer.

Schumer’s office issued a statement giving credit to the plant’s workers.

“Today the workers can breathe a sigh of relief that their jobs are safe and all of the Buffalo area can be proud that their region will continue to manufacture the caps that we see on ball fields across the country,” Schumer said. “It is a testament to the skill of the Western New York worker that this plant stayed open.”

New Era, the exclusive supplier of caps to Major League Baseball, announced in November that the recession had so reduced demand for the replica caps and other consumer market products that it was closing two of its three U. S. production facilities.

The decision to close the factory in Jackson, Miss., came immediately, while company officials began the process of figuring out whether the sole survivor of the downturn would be the company’s plant in Derby or Demopolis. What followed was intensive conversations with the CWA, which represents the workers in both facilities, as well as state and local government officials in both places.

The economic incentives offered in Alabama, Koch said, were significant but not enough to overcome the fact that the Demopolis plant would have to be significantly enlarged and upgraded in ways that would be both expensive and disruptive to production. The Derby plant, the CEO said, is larger and in better shape, much more capable of taking on the added workload without disruption.

Though only the caps actually worn by Major League Baseball players on the field are required by contract to be produced domestically, Koch said that the option of closing all three production facilities and having all of New Era’s caps and apparel made overseas was not considered.

“There’s never been any thought to doing that,” Koch said. “We are hopeful that we are right-sizing to the point where we are ready to move ahead.”