Union officials left scratching heads

Six hundred workers lost their jobs when the RSF Ecusta plant in Transylvania County closed its doors after the owner declared bankruptcy. The closure and the layoffs seemingly marked the end of a long, bitter labor dispute between the unionized workers and plant owner Nathu Puri.

But a new chapter in this saga was written Feb. 18, when a court-appointed auctioneer liquidated the assets of the plant as part of an effort to repay the plant’s creditors. County officials, former Ecusta workers and officials of the union that represents them (the Paper, Allied-industrial, Chemical and Energy Workers International Union, a.k.a. PACE), had been clinging to the hope that someone would step forward at the auction and buy the plant in its entirety, reopen its doors, fire up its machinery — and regain its foothold as one of Transylvania County’s biggest employers.

That hope faded, however, when no single bidder stepped forward to buy the entire operation, forcing the auctioneer to offer up the various parts of the plant in separate sales in order to extract the maximum value from the assets. At that point, the auctioneer’s gavel began acting more like an ax, chopping the plant into chunks and parceling out those vital components piecemeal. The biggest surprise came when a single bidder bought 10 of the 11 available lots, including the machinery and the intellectual property rights that protected the process of making the fine, flax-based paper (used for cigarettes and Bibles) that Ecusta workers had been turning out for years. The only lot this high bidder didn’t buy, in fact, was the raw materials used by the plant — leaving many people wondering why someone would want the equipment, facilities and know-how to make paper but not the wherewithal.

Surprise quickly turned to suspicion, however, when it was revealed that the bidder was none other than Ajay Badhwar — Puri’s nephew. “We have no idea why the Puris would want to stay involved with Ecusta,” PACE Region Four Vice President Robert Smith told Xpress in an interview after the auction. He added that the union’s “rank and file are upset that there’s another Puri there. There’s a lot of suspicion; some feel that Puri has run this plant into the ground and that, somehow, this is a way for him to avoid paying his bills.”

When asked if union members are concerned that Puri might be a corporate raider, Smith replied: “It is a concern. Why would he want to do this when he’s had so much trouble with Ecusta?” Smith also noted that as a union official, he’d never before seen an owner or a relative of an owner who’d filed for bankruptcy buy assets at their own bankruptcy auction. “It’s usually a group of investors, a consortium or another company that bids,” said Smith, adding, “I’m worried about things, but [the Puris] have the same legal rights as everyone else.”

The union has sparred with Puri ever since his firm, Purico Ltd., bought Ecusta from P.H. Glatfelter Company in August 2001. Soon after, Puri demanded a reduction in the workers’ pay and benefits. In the beginning, Smith told Xpress, “Puri was asking for a 37.5-percent reduction in wages and benefits, and after extensive negotiation, we got that down to a 20- to 30-percent cut.”

That still wasn’t acceptable to union members, however, and they went on strike on Oct. 15, 2001. “We weren’t trying to squeeze more out of Puri; we were just trying to hold onto what we had,” said Smith. That November, the workers agreed to return while negotiations continued — well into the following year. On the first day of August 2002, the company made a final offer, giving the workers two weeks to accept it or the owners would close the plant. The workers refused the offer. Two weeks later, the plant stopped operating, and on Oct. 23, RFS Ecusta filed for bankruptcy.

Asked to characterize the negotiations, Smith pointed out: “Under the ownership of Glatfelter, we had 15 years of good relations and labor peace. But under Puri, all that changed; we got nowhere with him in negotiations. He was never willing to sincerely negotiate — it was always his way or the highway. It’s like the kid who says that if he can’t play the game his way, he’ll take his ball and go home. And you know how that situation goes.”

Xpress has been unable to contact Puri, Badhwar or any member of Ecusta’s former management team. But in an interview with the Hendersonville Times-News in November 2002, former Ecusta Chief Financial Officer Steven Smith commented: “My only opinion is that company management styles have had to change in order to stay competitive. For many entities, this competition has become global. In my opinion, some unions just refuse to recognize the environment in which their company must compete and remain stubborn enough to see companies destroyed and jobs lost, just to say they held the party line.”

In any case, the Ecusta saga appears to be far from over. As Xpress went to press, Puri had defaulted on payment for the plant and therefore apparently forfeited his $1.6 million deposit. Auction company Daley-Hodkin is once again seeking a purchaser and the state has sought legal guarantees that Ecusta will continue to operate environmental protection systems pending completion of the bankruptcy process.