United Furniture Industries — the Tupelo-based furnishings manufacturer that recently laid off its entire staff via email and text message – received more than $3 million dollars in taxpayer money through business incentive grants since 2009.
The furniture company regularly got sums every few years — ranging from $200,000 to $1.3 million — in exchange for the promise to create jobs.
It was the largest employer in Monroe County. Now, its owner is missing and its former employees are filing lawsuits and hunting for new jobs.
“It’s a disgrace is what it is,” Jackson-based attorney Phil Hearn told Mississippi Today. Hearn is leading a class-action lawsuit on behalf of hundreds of workers.
United was an anchor of the furniture manufacturing hub of Northeast Mississippi — among the dozens of companies benefitting from decades of tax breaks to do business in-state. The companys buildings in Lee County were free from local and state property taxes, another incentive perk. It also likely saved massive amounts of money on its payroll taxes as part of a job creation rebate program and tax credits from a special program for upholstery companies.
When then-Gov. Phil Bryant announced that United would get more than $1.3 million to support an expansion in 2013, he called the manufacturer “a valued business partner for the State of Mississippi.”
In 2015, the company got $500,000 more with similar fanfare. Then, $200,000 the next year and another promise of 100 new jobs. Both the most recent grants were awarded through the state’s “ACE” program – commonly referred to as “deal closing funds” when competition is fierce.
Every celebrated announcement touted jobs, partnerships and keeping Mississippians at work in the furniture industry.
But with one email to 2,700 employees overnight a few days before Thanksgiving, that long-standing partnership shattered. The company wasn’t just closing – it was already closed. No federally-mandated warning to employees that layoffs were coming. No announcement of a sale. No filing for bankruptcy.
Hearn said in his three decades as an attorney handling employee rights cases, he’s never seen anything like this: a total disregard for labor laws, no planning, and limited information available to workers.
“I’ve been with the company through several owners and names,” line worker Jeff Jones told the Daily Journal. “We’ve always bounced back. In the email they made it perfectly clear there’s no bouncing back from this.”
Jones worked for United Furniture for more than 30 years.
Hearn said the state’s history of supporting the company gave employees a sense of security that made the sudden collapse even more shocking.
“It can be difficult to evaluate some of these incentive programs for various reasons,” said State Economist Corey Miller. “A number of companies that get them get more than one incentive, and it’s difficult to untangle the impact of each one.”
Miller said in the case of United, the company’s sudden fall doesn’t mean the millions the state put up to support the company were for nothing.
“I don’t think they necessarily weren’t worth doing,” Miller said. “I haven’t evaluated the whole situation, but it’s possible because they were around for a while, people had jobs, that the state got some return on investment.”
United Furniture was created after a merger between three companies in 2000: Comfort Furniture, Parkhill Furniture and United Chair. Comfort Furniture, the leading of the three, was founded in Mississippi in 1983.
Over the 2010s, the company regularly received state-funded support in grants through the Mississippi Development Authority. In addition to grants, the company was also certified to participate in the state’s Advantage Jobs Incentive Program, which allows companies to have up to 90% of payroll taxes withheld for up to a decade dependent upon the number of jobs it created.
In 2020, the revenue department projected the total cost of the program would be about $18 million and covered a dozen companies in 10 counties – including in counties that were home to United facilities.
Another tax credit program, specific for upholstery companies such as United, allows them up to $2,000 job tax credit per position created since 2010 and covers up to 100% of their income tax liability.
But any details about if United – or any one company – took advantage of either programs and to what extent isn’t public, according to the state Department of Revenue.
By 2017, United had about 3,500 employees and facilities in Nettleton, Tupelo, Okolona, Sherman, Vardaman, Amory and out-of-state facilities in North Carolina and California. The company took over a Belden factory that belonged to a competitor, buying out the Lane brand for an undisclosed amount.
But in July of this year, United announced it was laying off 300 people and closed its Amory plant because it was turning the facility into a distribution warehouse. After the layoffs, the company still had 17 facilities (including one in Vietnam) and about 2,700 employees.
“Our team is committed to the long-term success of our company,” then-Chief Executive Officer Todd Evans said in a statement at the time. “That commitment requires right-sizing at the present time. We are confident that the product, sales, and operational plans that we have established will provide for a successful future.’’
But that success didn’t come.
Miller, the state economist, said the United situation seems like more of an outlier — not an indication Northeast Mississippi’s furniture industry as a whole is in danger.
There has been some slow down industry-wide, Miller said. Companies aren’t seeing the same high demands for home furnishings they were during the pandemic. But most companies aren’t at a crisis level.
The larger economic impacts to the Monroe and Lee counties will depend upon how quickly workers are in new jobs, Miller said.
Nettleton-based furniture manufacturing company Homestretch Furniture hired 15 former United workers at a recent job fair. Ashley Furniture, another company with local manufacturing, has also recruited workers.
MDA declined to make any comments specific to United or its past grants, but Deputy Director Laura Hipp said in a statement that the state agency will “work with local economic development partners on how the needs of the area can be supported.”
Hearn, the attorney, said he’s seen entire families devastated: five brothers who all worked for United, a mother and two daughters – one pregnant – now without health insurance.
His clients largely fall into two categories: eager for another furniture job because it’s all they know, or eager for a change because they’re terrified the same thing will happen at another plant.
His clients range from executive-suite workers to line workers and truck drivers.
“They all have one thing in common,” he said. “They’re scared to death.”
Had United followed Worker Adjustment and Retraining Notification (WARN) laws, it would have given employees 60 days notice before the massive layoffs.
The decision to shutter the company came from Stage Capital LLC, the company’s owners. Head of Stage Capital, David Belford, has been missing since the email closing the company went out.
Hearn said he’s heard company rumors the millionaire – or possible billionaire – ran off to Paris.
United is now facing three class-action lawsuits – which a judge could roll into one case – that accuses the company of failing to follow the WARN Act and still owing workers their last week’s paycheck.
“I’ve never seen anything so callous,” Hearn said.
-- Article credit to Sara DiNatale of Mississippi Today --