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Despite Ruling, Still No Hints on Monaco Future

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May 26, 2009 by   Leave a Comment

Despite a bankruptcy court judge’s ruling late Friday (May 22) approving the sale of Monaco Coach Corp. to a unit of Navistar International Inc.,  it remains unclear whether Navistar will resume production at any of  the plants in Oregon or Indiana or rehire any of the 2,000 employees laid off just before the company filed bankruptcy.

U.S. Bankruptcy Judge Kevin Carey approved the $50 million sale after learning there were no other bidders for the assets of the RV manufacturing company, which has major manufacturing plants in Coburg, Ore., and northern Indiana, according to The Register-Guard, Eugene, Ore.

“We don’t have any answers either – no tangible answers,” said Mike Johnson, a middle manager at Monaco’s Coburg plant until he was laid off in March. “It’s just a big question mark.”

During Friday’s court hearing, Monaco attorney Malhar Pagay told the judge an “ancillary benefit” of the sale could be some rehiring.

“(Monaco’s) former employees may be called upon by Navistar to restart some of the plants that were shuttered,” Pangay said. “I also note that the debtor’s former dealers will enjoy a revitalization of the Monaco brand, and depending upon Navistar’s determination, may have a relationship with Navistar.”

The sale is scheduled to close June 2.

Roy Wiley, spokesman for the $14 billion truck and engine builder, declined comment on the fate of the Coburg plant. Navistar has 17,000 employees at plants in Ohio, Alabama, Arkansas, Oklahoma and Canada.

“It’s not done until it’s done. It’s a step in the process,” Wiley said. “Ask me after June 2, and I’ll probably be able to tell you more.”

Options for Navistar might include restarting some of the factory production now, keeping everything idle until the economy improves substantially, or shifting Monaco production to some of Navistar’s existing facilities.

Navistar’s $52 million purchase price would not be enough to repay Monaco’s secured creditors, including the $38.2 million owed to lender Bank of America and $37.4 million claimed by lender Ableco.

The sale dims the chances that unsecured creditors will recover any of the money Monaco owed to them.

Unsecured creditors – those who have no legal hold on a company’s physical assets – typically are paid only after secured creditors have been satisfied.

The sale might eventually benefit local suppliers, though, if Navistar restarts RV production.

Because Friday’s ruling carried no definitive answers about whether the Coburg plant would reopen, workers and community members reacted to the news with muted optimism.

“We look at all of this as potentially good news. That’s how I view it,” said Coburg Mayor Judy Volta.

Kevin Penn, a former team leader at Monaco, has been working part time in landscaping and has signed up for some summer classes, but he said he’d be ready to go back to the plant.

“It would be really good if they could get the company going again. I’ve seen a lot of people from the company who still don’t have jobs,” he said.

Former Monaco supervisor Sandy Kadash has been looking for work.

“Nothing has come up so far,” she said. “We made a pretty good living there and it’s kind of hard to think about taking a step backwards.”

Kadash said she keeps in contact with Monaco’s human resources department.

“It sounds like they’re getting stuff ready, but I’m not sure anybody knows for sure what that means yet,” she said. “From everything that I’ve been told, it’s a good thing.”

During the bankruptcy proceedings, Monaco has kept an administrative and sales staff at the headquarters.

It would be nice, Kadash said, if the sale meant the end of limbo for Monaco employees, who were put on unpaid leave for months before their official layoff.

Kevin Gallagher, who fabricated doors for the motorhomes, said he doubts Navistar would hire anything close to the whole Monaco crew back.

“I still think the market is terrible for motorcoaches,” he said. The market won’t rebound until the national housing crisis has passed and RV buyers can again tap into their home equity for cash. “I’m not going to get overly whoop-de-do about it,” he said.

 

 

 

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