Although the future of Fairfield’s oldest manufacturer isn’t entirely certain after Harper Brush Works was bought by an Ohio company out of bankruptcy, city leaders are breathing easier.
Cequent Consumer Products of Solon, Ohio, bought the 112-year-old company’s assets in a bankruptcy auction late last month, indicating plans to keep the premium broom and brush manufacturer in Fairfield.
Harper Brush Works is Fairfield’s oldest manufacturer, Fairfield Mayor Ed Malloy said, and an important part of the southeast Iowa community’s economy.
“We think Cequent is going to be a good partner for retaining the jobs that are here and continuing to rebuild and grow the business here,” said Malloy, who met with Cequent leaders last week.
The current employment level of 44 is about half the number Harper Brush Works employed only two years ago, according to Tracy Vance, executive director of the Fairfield Economic Development Association.
Equity Partners CRB, which helped find potential buyers for Harper Brush said the company’s revenues had declined from over $50 million per year to under $7 million, and the company was losing more than $200,000 per month.
Cequent had a specific interest in Harper Brush. The company, known mainly for aftermarket automotive products such as trailer hitches and roof racks, is creating a new business cluster in cleaning products. Cequent purchased Laitner Brush, an even older broom and brush manufacturer, in February. The addition of Harper Brush will give Cequent a modern production facility, a premium line, and a good list of clients.
Harper Brush Works filed for bankruptcy protection May 29 after the loss of a major retail account, Home Depot, caused cash flow problems.
The prospect of keeping the brush works in operation takes some of the sting out of losing a $300,000 financial assistance package extended to Harper Brush in 2011 to persuade it to consolidate operations from a North Carolina factory in Fairfield, according to Vance. The package included $160,000 from the Iowa Economic Development Authority, $32,000 from the city, and a $108,000 loan from the Fairfield Economic Development Association.
Fairfield leaders can only hope that Cequent, a division of publicly traded Trimas Corp., will be able to keep the Fairfield operations humming and be as community-minded as the Harper family members that owned the business before the bankruptcy.
Fairfield Brush was founded in 1900 by 20-year-old Alphonso “A.K.” Harper who had the inspiration to improve on the cleaning tools his mother used around the house.
Family members had been involved in the company its entire century-plus existing, however Vance said it was clear early in the bankruptcy process that the family would be giving up control.
“I think everybody just resigned themselves to that,” he said.
The company’s assets were auctioned off by the bankruptcy court. Iowa State Bank of Fairfield, which held real estate loans of the company, bought most of the buildings for an additional $450,000 and the assumption of $64,000 in unpaid real estate taxes.
Bankruptcy Judge Anita Shodeen accepted Cequent’s winning bid of $3.45 million for Harper Brush’s non-real estate assets, which included equipment, inventory and intellectual property. Cequent also assumes up to $100,000 in Harper Brush’s debt.
In a statement released by Cequent Consumer Products, President John Aleva talked about the strategy of the deal.
“Acquiring Harper, who has a strong brand name in the cleaning tool business, gives us an opportunity to add to our cleaning tool product offerings,” Aleva said. “We have been leaders in the automotive market for years and now we are strategically paving the way to become the leading manufacturer and distributor of cleaning tool products for both residential and industrial markets.”
Fred Cross, managing director of Equity Partners CRB, called the result of the sale “better than anyone expected,” in a statement provided to The Gazette. He said the deal brought many synergies for Cequent and a far greater recovery to creditors than the creditors would have received if the company had been liquidated.
Malloy said Cequent leaders spoke at last week’s meeting with Fairfield officials about how the company has grown through acquisitions and how it managed the brands it acquired. He said the company also discussed how Harper Brush, with its strong brand image and manufacturing capabilities, would fit into its growing concentration of cleaning products.
In addition to knowing about how to manage acquisitions, Malloy said he thinks Cequent has deep enough pockets to fund the business’ recovery and growth.