Perma-Flex employees got no notice, no paycheck

Published 12:00 am Monday, August 6, 2012

By Emily Ford
SALISBURY — Tim Enochs, 59, went to work for Perma-Flex Roller Technology when he was 22 years old.
As a grinder, he helped make rotating cylinders used in the manufacturing process by tobacco, textile, steel and paper companies.
Thirty-seven years later, Enochs arrived at work July 20 to learn that another company had bought the building that Perma-Flex leased and many of the company’s assets. Enochs and 24 other employees had a few hours to gather their things and leave.
Enochs said they walked out stunned, with no notice and no paycheck.
Perma-Flex owes him about $1,000, said Enochs, who has no health insurance and no unemployment benefits. He is applying for disability for lung disease.
Hourly workers have not received their final two paychecks, and salaried employees are owed one paycheck, said Linda Elkins, the former controller. Elkins said she has the checks but can’t issue them because she no longer has access to Perma-Flex’s bank accounts, now controlled by Finzer Roller.
Some employees have not been paid since June 30, she said.
Owner Mike Berwick called employees together at 6 a.m. July 20 and told them the locks would be changed at noon, Enochs said.
Berwick dubbed the purchase a “hostile takeover” by competitor Finzer Roller, based in Illinois. CEO John Finzer disagrees with the characterization and said Perma-Flex had been poorly managed for years.
Finzer plans to sell the 53,000-square-foot building at 1415 Jake Alexander Blvd. S.
Workers had to walk away from rollers on the floor, ready to be shipped, and a $400,000 backlog of orders, Elkins said.
“We had no idea this was coming,” Enochs said. “We should have had some advance warning. Instead he dumped it in our laps.”
Berwick could not be reached, and the Greensboro law firm representing him would not comment.
Enochs’ wife Doris has Medicare, but recent surgeries and medical procedures to treat two intestinal blockages will leave the couple with thousands of dollars in out-of-pocket expenses, he said. They already owe $800 for one hospital stay.
“I have no money coming in,” he said. “Those last two paychecks would have helped me get through this.”
Allen Hutchinson and his brother, Frank, have been selling their possessions and working odd jobs since Perma-Flex shut down.
“We’re trying to sell whatever we’ve got, silver and things we’ve collected all our life,” said Hutchinson, who began working for the company 32 years ago when he was 19.
Perma-Flex owes him close to $2,000 and three weeks’ vacation, not to mention $100 for steel-toed shoes he bought in February, Hutchinson said.
He has applied for unemployment benefits but hasn’t received a payment yet.
The union representative for the plant, Hutchinson said union attorneys are determining how best to help employees recover their lost wages.
Finzer said contractually, his company has no responsibility for Perma-Flex wages, vacation, 401K or pensions. Finzer purchased Perma-Flex’s assets but took on none of the liabilities, he said.
While Elkins said Perma-Flex made a profit for the first time in 2011 since the recession, Finzer said years of late payments caught up with the company.
“It’s clear that they struggled to pay their bills and also clear that you can’t limp along the way they did forever without paying your creditors,” Finzer said.
Finzer said his company is “working cooperatively with Perma-Flex to attempt to get the employees paid,” but there is a secured creditor in front of employees who is being paid first, he said.
“As the accounts receivable are accepted by the company, this secured creditor is capturing these funds until that debt is satisfied,” Finzer said.
Finzer Roller bought the building Perma-Flex leased from Voith AG of Germany. Voith sold the Perma-Flex company in 2001, when Perma-Flex had four plants in North America, to Berwick and Douglas Angel but kept the building.
Finzer also bought some equipment and intellectual property.
Voith approached Perma-Flex last year about buying the building, but Perma-Flex couldn’t get a bank to finance the purchase due to longstanding groundwater contamination on the site, Elkins said.
Voith then approached Finzer, who paid cash for the building. He said he does not expect environmental issues to prevent him from selling the property and has several potential buyers.
When Finzer arrived on July 21, the company spent a week deciding whether to keep the plant open or close the facility and steer the work to Finzer’s eight plants, Finzer said.
After an evaluation, Finzer decided to close the facility and relocate the available work to Finzer locations, he said.
Finzer is trying to reach all customers with open accounts, he said, and many have been receptive to Finzer completing the work.
Finzer has encouraged employees to apply for jobs with the company, although they would have to relocate. The closest plant is in Kernersville.
“I hope people who used to work here quickly land on their feet,” Finzer said.
Elkins said she has been blocked from all financial aspects of Perma-Flex, including issuing paychecks and paying vendors.
The sale came as a surprise to Elkins, who worked at Perma-Flex for five years and said the company struggled during the recession but was making a comeback.
“We had pulled together and worked hard and really struggled like everyone else did, but we started an upturn last year and we were really feeling good about things,” she said.
The company was making deadlines and paying bills, she said. Perma-Flex still owed Voith more than $1 million, she said.
During the recession, Elkins said she made promises to vendors willing to help Perma-Flex and now can’t make good on them.
“If it could have just been done under a timeframe to … let us take care of the vendors we had committed to,” she said.
While Elkins said employees are “at the mercy” of Finzer, the new owner of 1415 Jake Alexander Blvd. S. said the responsibility for Perma-Flex employees rests solely with Perma-Flex.
Enochs said he doesn’t know who to blame for the mess. Ultimately, employees just want to get paid, Hutchinson said.
“All we know is that we were due money when we left,” Hutchinson said.
Contact reporter Emily Ford at 704-797-4264.