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New Era Cap reaches severance agreement with workers, will close plant at end of March

New Era Cap has taken another step in its plan to shut down the company’s Derby manufacturing facility next month.

New Era sources told The Buffalo News the company last week reached a severance-package agreement with the Communication Workers of America, the union that represents most of the company’s 200-plus workers in Derby.

Under the terms of the severance, employees will receive one week of salary for every year of service, up to 26 weeks.

Company officials told The News that the average tenure of employees in Derby is 19 years.

The agreement also requires New Era to continue paying its contribution toward employees’ health insurance premiums for five months after the plant closure.

In addition, employees will be compensated for benefits already outlined in their contract, including bonuses and unused vacation time and paid time off.

The severance agreement reinforces a decision New Era announced in November to close the plant in Derby. New Era has approximately $750 million in revenues globally.

Debora M. Hayes, the upstate New York area director for CWA, told The News that the settlement “is the best we believed we could do under the circumstances.” But it wasn't nearly what the union wanted. Hayes said the CWA sought a year of health insurance coverage, rather than the five months it received, and one week’s pay per year of service, without the 26-week cap. The most-senior unionized employee in Derby, Hayes said, has been with the company 48 years.

“It was disappointing to us that a company that is extremely profitable like New Era wasn’t willing to do more for its workers,” Hayes said. “CWA feels these employees have committed their lives and their careers to make New Era a success over the years, and I don’t understand why a company as profitable as it is couldn’t go a little bit further with the settlements.”

New Era produces about 65 million baseball caps per year. The Derby plant produces up to 4.5 million of those caps annually; the rest are made overseas by third-party manufacturers.

As New Era gives official plant-closing notice, other companies are hopeful to hire

Soon, the manufacture of nearly all of those caps will be outsourced to companies in China, Vietnam, Bangladesh and Haiti. The move is part of what New Era officials describe as a shift in the company’s business model: Long a hatmaker, the 99-year-old New Era is now stepping away of the manufacturing business and fashioning itself as a branding and marketing company. New Era sells caps, apparel and accessories around the world, and operates more as a fashion brand – think Nike or Under Armour, but smaller – than as a manufacturer.

Flex team member Sharon Sager attaches the panels together at the New Era factory in Derby.  (Mark Mulville/Buffalo News)

The one exception: New Era’s pact with Major League Baseball to provide all of the headwear that players wear on-field during games requires those caps to be made in the United States. To fulfill that requirement, New Era is shifting manufacturing of its MLB game caps to a company-owned facility in Miami that specializes in screen-printing apparel.

Critics of New Era’s decision are focusing on that baseball agreement, as well as the company’s exclusive licenses with the National Football League and National Basketball Association. The Buffalo-based Coalition for Economic Justice planned to lead a protest this week outside the company’s downtown headquarters calling for baseball Commissioner Rob Manfred, as well as the baseball, football and basketball players associations, to intervene on New Era’s decision. In a news release, the coalition said: “Local leaders will be calling on Major League Baseball (MLB) Commissioner Manfred, as well as MLB, NFL and NBA players associations to come to Buffalo NY to save the family sustaining jobs at New Era Cap.”

The protest was originally scheduled for the afternoon of Feb. 12 but, hours before it was to begin, was rescheduled for Friday, Feb. 15. The coalition has for weeks led rallies outside the company’s downtown headquarters, Derby plant and the Buffalo Bills store at New Era Field.

New Era officials told The News they have been keeping Major League Baseball abreast of the company’s plans since announcing the closure, and that the manufacture of on-field headwear will shift to Miami in April, after the Derby plant closes. Until then, employment and production levels in Derby are expected to remain steady.

You asked, we answered: Why is New Era Cap closing its Derby plant?

When the closing was first announced, New Era was contacted by several local and regional manufacturers interested in hiring workers. The state Department of Labor has been providing job-placement services and workshops. Last month the company hosted a job fair that included 26 companies looking to fill a collective 400-plus jobs. New Era officials told The News that 200 interviews have been scheduled.

The CWA's Hayes, however, expressed concerned about how realistic it will be for many of the workers to transition into new positions.

“Unfortunately, we believe many of these extremely skilled workers will have difficulty finding comparable jobs elsewhere,” she said. “Their skills are the sewing and construction of ballcaps, and their bodies have really been beat up over the years. We have many members that have carpal tunnel syndrome, other repetitive-motion diseases, and trouble with their shoulders and their neck. It makes you wonder how much success they’re going to have finding employment elsewhere.”

Here is New Era's statement on the Derby plant-closing agreement:

"Over the last several weeks, New Era has been in negotiations with the Communications Workers of America (CWA) and can now announce that we have reached a plant closing agreement with the CWA that  includes comprehensive severance benefits for our employees in Derby.

This is an important step in New Era’s transition away from owning and operating manufacturing plants. The Derby plant closure will occur at the end of March.

We are very grateful to all our employees for their years of service. We recognize that this is a difficult time for them and New Era is continuing to work with the New York State Department of Labor and several regional companies to help secure employment opportunities for those affected by the Derby closure."

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