|Romney's Burning Bed Problem?|
In an attempt to find some details about what happened, The Daily Bellwether has tried to contact former U.S. Sen. George Voinovich, who was Ohio's governor when Sealy left Cleveland. Voinovich might be able to shed light on the move -- he was trying to hold onto jobs at the time and may recall what incentives the state offered the bedding maker to stay. But Voinovich could not be reached for comment.
Sealy -- which operated as the Ohio Mattress Company for more than 80 years -- had been a strong and profitable corporation until it was gobbled up by leveraged buy-out operators during the junk bond era of the 1980s. A string of deals over the next 9 years eventually landed the company in Bain Capital's hands. On the day Ohio Mattress Company's sale was announced in 1989 to the first private equity owner, the New York Times reported it had dominated "the nation's bedding business for much of the last three decades . . ." Financial records and analyst reports show the publicly traded company was healthy -- it had an 18% annual growth rate between 1984 and the first private equity sale. But the junk bond sale went south because costs to repay the debt were high. Ohio Mattress went through a "flurry of changes" in corporate ownership, according to Case Western Reserve University's encyclopedia of Cleveland History. The online encyclopedia is available by clicking here.
In 1990 Ohio Mattress, which also owned the Stearns and Foster mattress company that started in Lockland near Cincinnati, changed its name to Sealy. Bain Capital acquired its [controlling] stake in the firm in 1997. The bedding business had about $800 million in annual sales. By March 1998, Sealy's top executive, Ron Jones, said Cleveland was out of the picture, and the company was moving to a 68-acre site in North Carolina. Jones had a home near the new headquarters and had been commuting to Cleveland, according to a report in the Greensboro News & Record Sealy's announcement said the corporation wanted to be closer to the furniture retailers who populated the High Point region -- the area is known as the center of the U.S. home furnishings industry. So Ohio lost. North Carolina gained. And it looks like Romney has some explaining to do
-- Research by Bellwether Contributor James McNair
UPDATE 1/12/2012 8:30 a.m. -- The Plain Dealer's Steve Koff adds more detail to Bain Capital's operations in Ohio, including a list of firms in which it held stakes. Koff makes it clear that Romney's buy-out firm will be an issue aired in the presidential campaign. As for Sealy Inc., Koff confirmed The Daily Bellwether's report that the firm had moved from Cleveland to North Carolina. His reporting fleshed it out with this:
"The connection includes Bain's purchase and subsequent move of Sealy Corp., the mattress maker that had been based in Cleveland. Bain and other investors bought Sealy in December, 1997.Within months of its acquisition, Sealy was reporting a loss of $32.2 million compared with $1.2 million in net income in the same period a year earlier. It attributed the loss to the restructuring of debt and equity in connection with the Bain purchase, and to expenses for accelerated vesting of stock options and other employee compensation, according to Plain Dealer reports at the time.By March 1998, Sealy, under its new ownership, announced it was moving its headquarters to North Carolina so it could be near the nation's furniture manufacturing center. State and local North Carolina officials offered $600,000 in incentives to make the move attractive.This affected the jobs of about 130 employees who worked in the Halle Building on Euclid Avenue. Another 15 were affected at a Sealy research and development center in Middleburg Heights.The company said it offered all the workers the right to relocate or take severance packages. A North Carolina newspaper subsequently reported that 45 Ohio workers made the move."
UPDATE 1/29/2012 3:09 p.m. -- Matt Evans at The Business Journal in North Carolina's furniture making region has poked around into Sealy Inc.'s operations under Mitt Romney. He finds that the N.C. region gained jobs, but noted state incentives were used to lure Sealy from Ohio to North Carolina. He reports, "Romney's opponents could characterize [the state subsidy] as a government handout that cost Ohio jobs." Business Reporter Evans cited and inked to The Daily Bellwether to flesh out his story.