May 3, 2023
Will Someone Buy Universal Douglas?
Plus, updates on layoff notices, agent commissions and Mexico factory protests
Six weeks ago today, private equity company, Atar Capital suddenly shut down Universal Douglas and its brands, Universal Lighting Technologies (ULT) and Douglas Lighting Controls. The abrupt move immediately caused hundreds of employees to be jobless and numerous customers and projects to be left in the lurch.
In the weeks that followed, we’ve reported on other fallout, factory protests in Mexico, a head-scratching memo that was sent to agents and speculation if the company assets will be sold. Here are several updates on those and other related matters:
Will Someone Buy Universal Douglas?
Based on feedback from various companies, we believe that if Atar Capital sells Universal Douglas assets that it will probably be done in pieces, most likely:
- ULT
- Douglas Lighting Controls
- The Matamoros, Mexico factory
Because the value of factory is intertwined with the value of the brand assets – and vice versa – buyers may be unsure if those operations will continue to be interdependent. For instance, a purchaser of ULT wants to be confident that orders can be fulfilled in the Matamoros factory. The new factory owner – possibly a Mexican company that owns other maquiladoras – will likely want assurances, that a capable buyer will revive ULT, thereby kickstarting and maintaining steady demand for factory production.
Four weeks ago, we predicted that the assets of Universal Douglas would be sold within 90 days. We believe that the value of the company assets diminishes over time, so we become less confident of that prediction with each week that ticks off the calendar, but still stand by it.
At least one agent got paid, many haven’t
Many lighting agents who have invested years, and possibly decades, into building ULT and Douglas Lighting Controls business in their local markets have not yet been compensated for 2023 sales after January 31. Monthly commission payments are usually distributed on the 20th of the following month and, as of Tuesday, multiple agents report no commission payments since late February.
Alan Schutz, Principal of Ascend Sales and Marketing, represents ULT in the New York Metro Area. He informed inside.lighting that after delays, he recently received the February 20 and March 20 commission payments. Schutz described himself as a “squeaky wheel” in pursuing the commissions and also may have greased the skids in Accounts Payable by writing an April order in excess of $100,000 to help ULT move some of its inventory.
Four other agents tell us that they haven’t seen commission payments in months. Renfred Miller, Principal of Grace Lighting in Iowa, reports still being owed Douglas Lighting Controls commissions for sales after December 31, 2022 and hasn’t received ULT commissions for sales after January 31.
Layoff notices not yet issued
ULT had hundreds of employees in the United States, with two of the larger locations in Nashville, Tennessee and Huntsville, Alabama. As of today, neither state government has posted a WARN notice associated with the company layoffs.
A WARN notice is a requirement under the United States federal law called the Worker Adjustment and Retraining Notification (WARN) Act. The WARN Act was enacted in 1988 to protect employees, their families, and communities by requiring employers to provide advance notice of significant layoffs or plant closures.
According to the WARN Act, employers with 100 or more full-time workers are required to provide a 60-day advance written notice of layoffs. When a facility or operating unit is permanently or temporarily shut down, resulting in employment loss for at least 50 employees during any 30-day period, a WARN notice is required, with certain exceptions such as unforeseen business circumstances and natural disasters.
Another Atar Capital portfolio company, Metco Landscape, shut down abruptly on July 28, 2022, but the company filed WARN notices in the State of Colorado days later. The company CEO, Paul Tudor, claimed at the time “Metco could not provide notice any further in advance due to significant and recent unforeseeable losses.” Tudor was the CEO of Universal Douglas when the company shut down on March 22.
On Monday, we emailed the PR firm representing Universal Douglas Chief Restructuring Officer, Steve Wybo, asking about WARN notices and received no reply.
Meanwhile in Mexico:
Photo credit: Periódico Expreso
The sudden closure of the Universal Douglas assembly plant, or "maquiladora," in Matamoros, Mexico, which is on the border with Brownsville, Texas, has left more than 500 employees without a paycheck or any assurance they will receive severance.
On Monday, Mexico celebrated "Día del Trabajo" or "Día del Trabajador," which translates to "Labor Day." In Matamoros, affected Universal Douglas factory workers participated in the local parade and called out Universal Douglas and Atar Capital in the process.
Banners in the parade called for the union factory workers to receive the severance pay they are due. One banner photo published by Periódico Expreso on Monday depicts Atar Capital and Universal Douglas management – including three Universal Douglas faces that are no longer with the company:
- Paul Tudor was CEO on March 22, but has since left Universal Douglas and Atar Capital
- Ty Anderson retired as President and CEO of Universal Douglas in 2022
- Larry Churchill also left the company in 2022.
Terminated union workers continue to stake out the Universal Douglas factory around the clock, trying to ensure that the factory assets inside don’t leave the building until they get paid their severance wages.
As the situation evolves, employees, agents and industry stakeholders will be watching closely to see how Atar Capital handles the aftermath of the abrupt closure, and whether it will fulfill its obligations to the employees and agents whose livelihoods were tied to the company. The possible sale of Universal Douglas' assets will no doubt be scrutinized, not just for the financial implications, but also for the impact on the hundreds of workers left in the lurch. The reported lack of communication from Atar Capital and Universal Douglas to those affected adds another layer of tension to this already fraught situation.
