COLUMBUS, Mississippi — Three-quarters of the 230-person workforce at bankrupt toilet seat maker Sanderson Plumbing Products will be out of a job by the middle of next weel unless an investor steps in with money to keep the company running.
The layoffs likely would have occurred already but for a federally required 60-day plant closing notice that expires April 29. The prices at which box retailers such as WalMart sold the well-known Beneke and Tuffy brands toilet seats could not match the costs of making them, according to CEO Tom Whitaker.
“I expect the layoffs at the end of April,” he said Thursday.
Workers who remain at the plant will fill remaining orders before a total shutdown occurs, Whitaker said.
Potential buyers have shown interest, according to Whitaker and Fred Cross, managing director Heritage Equity Partners, an Erie, Pa., firm that specializes in selling distressed properties.
Whitaker said one scenario is that a potential buyer could inject money into the plant to keep it operating and viable until a full purchase can be made. He added he does not see that a happening in the short term.
Buyer interest, according to Cross, has come from bath-and-kitchen manufacturers as well as investment groups look to enter the fixture business.
A month-long auction on the plant and equipment closes at noon Friday. Cross indicated the auction has not produced a viable buyer.
A dozen years ago, Sanderson Plumbing Products was Columbus’ largest manufacturing employer but lower product pricing attributed to Chinese competitors forced the company to file for Chapter 11 bankruptcy protection on Oct. 30.
Sanderson Plumbing has two main lenders — the Mississippi Development Authority (MDA), which has an approximate $1.5 million first lien on the company’s 360,000-square-foot building, and New Orleans-based BizCapital BIDCO II LLC, which has a $1.9 million first lien on the plant’s equipment, inventory, patents and other assets, bankruptcy court documents show.
The MDA also has an $800,000 second lien on equipment and other assets, according to the court filings.
The MDA and Small Business Administration-backed loan from BizCapital came as part of a purchase of the company in 2012 by Whitaker and other Sanderson executives. They have operated Sanderson under the Beneke Magnolia name..
In the two years since, big box retail customers such as HomeDepot and Walmart have refused to pay higher prices to accommodate increased costs Sanderson incurred in making the toilet seats and in importing foreign-made seats for U.S. distribution, Whitaker said.
Sanderson has moved half of its production to China since 1999. The seats made in China came through Sanderson and on to the market. “Then the customers started going directly to China and cutting us out as middleman,” he said.
When the 58-year-old Whitaker and the other investors bought the company in 2012, they believed the price pressures from the direct buying of lower priced toilets seats had gone as far as they would go, Whitaker said.
“We kept thinking things would turn around.”
Today, Chinese manufacturers can make the product, ship it to the United States and distribute it for sell at prices lower than Sanderson can make the seats, Whitaker added..
The CEO said he expects the long-established Beneke and Tuffy brands to live on. “Everybody we’ve talked to is interested in the Beneke and Tuffy names,” he said.
BEFORE YOU GO…