Leslie Fay Shuts 4 Factories, Citing Strike Costs

NEW YORK -- Admitting that the costs of the strike by the ILGWU have "continued to mount," The Leslie Fay Cos. said Thursday it has closed its four dress factories in the Wilkes-Barre, Pa., area.<BR><BR>At the same time, the ILGWU and Leslie Fay have...

NEW YORK — Admitting that the costs of the strike by the ILGWU have “continued to mount,” The Leslie Fay Cos. said Thursday it has closed its four dress factories in the Wilkes-Barre, Pa., area.

At the same time, the ILGWU and Leslie Fay have agreed to resume talks today with federal mediator Irwin Gerard regarding their contract dispute.

Gerard said the talks are scheduled for 11 a.m. at the mediation service offices at 1633 Broadway here. Gerard had recessed the negotiations Tuesday following two days of discussions, but Leslie Fay officials requested a meeting with the mediator and the union.

A Leslie Fay spokesman said while no major breakthrough is expected, “we are interested in keeping the talks going.”

The ILGWU has been on strike against Leslie Fay since June 1, after their contract expired and the two sides failed to agree on a new three-year pact. At the heart of the issue is the fate of the dress factories in the Wilkes-Barre area, where 1,200 jobs are at stake.

Leslie Fay said the four dress plants — a main sewing factory in Plains Township, and three satellite facilities, in Kingston, Throop and Tuscarora — had not been producing goods since the strike started, but had remained open.

“The costs of the strike have continued to mount, and since we weren’t making anything there anyhow, there was no use in keeping the factories open and incurring the costs of keeping them open,” a Leslie Fay spokesman said.

The spokesman said the factories will reopen only if an agreement is reached with the union that calls for them to reopen.

He reiterated the firm’s position that the strike has not adversely affected production or shipping.

The company says it has shifted dress production to 807 production and other imports. The spokesman added that Leslie Fay’s main distribution center in Laughlin, Pa., continues to operate with a combination of management and nonunion personnel and that there are no plans to close it. He said most of the management personnel from the factories have been reassigned to the distribution center and other administrative offices in the area.

However, David Melman, executive assistant to ILGWU president Jay Mazur, said, “The closure of the factories is an acknowledgement that the strike has had a tremendous effect on the company’s ability to operate. We hope the company reconsiders this ill-fated decision and works with the union to save these jobs.”

Another key point in the controversy is the company’s challenge of an arbitrator’s agreement of last year that called for the firm to maintain current job levels at the factories through May 1995. Leslie Fay has attacked the validity of the agreement, saying it never got the approval of the bankruptcy court.

Leslie Fay has been in Chapter 11 proceedings since April 1993, forced to take that step when its credit dried up in the wake of a massive accounting scandal that rocked the company two months earlier.

The company said Thursday that a report on the scandal has been filed by attorney Charles Stillman — a court-appointed examiner — but that it had been sealed by Bankruptcy Judge Tina Brozman, who is presiding over the case.

Leslie Fay had asked the court to appoint an examiner to review the conclusions of Arthur Andersen & Co., which had been hired by the company’s audit committee to conduct an investigation. According to the company, the Andersen report, which has never been made public, cleared current senior members of management of any wrongdoing in the accounting fraud. The company asked for the latest review to address “any lingering concerns” about the audit committee’s probe. A clerk for Judge Brozman would not comment on why the report is sealed. He said the judge has a strict policy not to comment on any matters that are presently in litigation.

Still another key point in the contract dispute is the union’s long-standing provision for liquidated damages, which are fees that unionized manufacturers pay the ILGWU on garments they import above an agreed-upon level of their total production. Leslie Fay has filed a suit against this policy, claiming these payments are a violation of labor law.