Something sucked the air out of Shop Vac Corp., and 437 Pa. employees and a storied firm are out of luck

Tia Fisher was hired two years ago to work in the warehouse at Shop Vac Corp. in Williamsport, but she advanced quickly to customer service. She learned just about everything there is to know about the company’s signature product, the wet-dry vacuums that occupy a place in millions of American workshops.

Fisher, 48, was proud to work for a family-owned business such as Shop Vac, a rare company headquartered in north-central Pennsylvania with global reach. Shop Vac employed about 1,700 people worldwide, including more than 400 people in Williamsport alone, according to previous company social-media posts.

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But not all was well at Shop Vac. Last year the company hastily shut down a warehouse in New York state, leading to lost orders, Fisher said. Its manufacturer in China went on strike. Bills went unpaid. Promised pay increases were delayed. There were layoffs before Christmas, and more this year after the coronavirus hit.

Still, the workforce was unprepared for what happened Sept. 15, when supervisors called employees in by teams and informed them Shop Vac was closing immediately because a sale of the company had fallen through. The managers said the pandemic and the weak economy left the company no choice.

“We all came out crying, the whole floor,” said Fisher, who was paid $12.60 an hour. “We were just devastated because we knew it was bad, but we didn’t know it was really bad.”

Shop Vac’s chief executive, Jonathan Miller, 72, whose father had founded the company in 1953, had already left Williamsport without a word and moved to California, employees said. His daughter, Felice Miller, 41, who was named president and chief operating officer a year ago, also left town. She maintained a residence in California’s Bay Area.

The Millers left behind a swirl of rumors and a sense of betrayal about what happened to a company whose name is synonymous with rugged workshop canister vacuums that can suck up spilled liquids or a pile of nails. Political and business leaders said they learned about the closure only on social media.

“We’ve all heard they’ve had problems over the years and there were issues, but we didn’t know the extent until now,” said Scott L. Metzger, chairman of the Lycoming County Commissioners. Community leaders said they had tried to engage the Millers in the past, and were rebuffed, and would have rallied support to assist the company.

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“We didn’t have much of a relationship,” said Jason Fink, president of Williamsport/Lycoming Chamber of Commerce. “Actually, we had no relationship with them. They were very private.”

The Millers left it to the head of human resources to deliver the bad news to 437 employees in Williamsport, most of whose pay and medical insurance were cut off in days. The company offered to retain some employees to fill outstanding orders through the end of October. Those who declined said the offer included a pledge to not sue the company for failing to give 60 days’ notice about layoffs.

“I’m a single mom," Fisher said. “I have three boys. We just had the rug ripped out from underneath us."

Evan Foulkrod had been promoted to line leader on the factory floor just three days before his supervisor handed him a letter and packet with instructions on filing for unemployment. “My irritation got the best of me and so I decided to take [off] for the rest of the day and didn’t go back to work there,” he said in an email.

The news broke during a heated presidential election, so political pundits were quick to ascribe the closure to the failings of one political party or the other — on President Donald Trump’s trade policies or Gov. Tom Wolf’s COVID-19 lockdown order. But employees and local community leaders believe Shop Vac went astray on its own: The company remained open during the pandemic, and some employees even worked overtime to fill orders.

“I don’t see COVID being an issue because a lot of our big retailers were still open,” said Kathleen RoseAnn Johnson, 31, who led a team making disposable filters for the vacuums. “Lowe’s was still open. Walmart was still open. Amazon was still shipping. I think COVID was a way for them to try to get out of giving us notice.”

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Johnson was among several dozen employees who organized a picket on Sept. 28 in front of Shop Vac’s 236,000-square-foot headquarters and production plant, trying to draw attention to their grievances and the lack of notification.

They also reached out to the Raisner Roupinian LLP law firm in New York about suing the company for violating the Worker Adjustment and Retraining Notification Act, which requires 60 days' written notice for certain employees in certain mass layoffs. No suit has been filed.

“There is a big question mark as to what happened,” said Jack A. Raisner, the lawyer who specializes in WARN Act violations. He said his firm is still investigating the circumstances around Shop Vac’s closure, but he, too, discounted the impact of coronavirus.

The WARN Act allows some exceptions to providing a 60-day notice, including if a company closes because of “unforeseeable business circumstances.” Shop Vac used exactly those words in its notification to employees that a potential sale of the company had collapsed unexpectedly.

“We fully anticipated the sale to be completed and for the buyer to hire all employees," Allison Leta, director of human resources and payroll, said in the termination letter to the workforce. "This unforeseeable business circumstance has left us with no choice but to close our facilities.”

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Fink, the Chamber of Commerce president, is also skeptical that coronavirus is the culprit, since the home improvement sector had thrived with millions of Americans working remotely. Wet-dry vacuums also typically sell well after natural disasters, such as hurricanes, floods and storms.

“I hate to say it, but in talking to some of the folks who are still there with management, it sounds like it was poor ownership decisions that led them down this path,” Fink said.

He said Shop Vac ran into cash-flow problems with big-box retailers, which account for most sales of the smaller Shop Vac model, many of which are manufactured in China. Its Chinese supplier went on strike after learning that Shop Vac was planning to shift manufacturing to a Vietnamese site, Fink said.

"There was a strike and that shut down production and then on top of that COVID then hit and they were delayed by that, so they got real far behind,” he said.

Shop Vac owed nearly $50 million to its bank, JP Morgan, and hired Getzler Henrich & Associates LLC, a New York turnaround consultant that works with distressed companies, according to sources who were not authorized to speak about the company.

KPS Capital Partners, a private equity firm based in New York, made two offers to buy Shop Vac, but they were rejected, presumably because the sellers thought they could get a better price, even if the assets were liquidated.

The Millers relinquished control of the company’s board. Shop Vac’s ownership status is unclear, and it has not filed for bankruptcy protection. The status of its production facilities in Binghamton, N.Y., and in Asia are unclear, as are its distribution warehouses in Canada, Mexico, Australia and China.

The Williamsport plant also manufactured wet-dry vacuums for other companies, including Craftsman. And it manufactured motors, air movers, fans, blowers, trash cans, and mop buckets under its brand.

Representatives of JP Morgan and KPS declined to comment, and spokespersons for Getzler Henrich did not respond to inquiries. Efforts to reach Shop Vac officials or the Miller family were unsuccessful.

Founded by 1953 by Martin Miller as an offshoot of Craft Tool Co., Shop Vac took off after it introduced a household canister vacuum in 1969. The elder Miller died in 1992. Miller’s two sons, Jonathan and Matthew, succeeded their father and later shared ownership and leadership.

In 1990, the Millers acquired McCulloch Tools, a maker of garden equipment. It was not a good fit, and Shop Vac sold McCulloch in 1995 and booked a $120 million loss.

The McCulloch debacle forced Shop Vac to turn to public debt markets for financing, forcing it to submit its financial reports for several years to the Securities and Exchange Commission, a rare glimpse at the private company’s internal workings. At the time, Shop Vac said it had more than half of the $275 million domestic market for wet/dry vacuums, and its annual worldwide sales were about $200 million.

In 1998, it divested its European operations, which were overseen by Matthew Miller. He sold a controlling interest in Shop Vac to his elder brother, Jonathan, according to SEC filings.

Shop Vac’s destiny suffered a blow in 2006 when Jonathan’s son Charles, 30, the president and chief operating officer of the company, was found dead of an undisclosed cause at the family home in Williamsport. The family’s obituary described the eldest of the two children as "the little boy who wanted to follow in the footsteps of his father and grandfather in the family business.”

One former employee, who asked not to be identified, said the company seemed to drift after the death of the heir apparent.

Felice Miller, a lawyer who assumed a seat on Shop Vac’s board after her brother died, became president and chief operating officer last year after working in various roles at the company for more than a decade. The company’s announcement described her as “a key architect of the company’s long-term vision, strategy and financial objectives."

But the company’s long-term vision now seems finite and limited. In October, Shop Vac retained Hilco Global, a Chicago liquidation company whose affiliate, Hilco Redevelopment Partners, bought the bankrupt Philadelphia Energy Solutions refinery this year.

Hilco is said to be entertaining offers for the company, and local officials hope a new buyer will resume manufacturing in Williamsport. “Hopefully we can find someone who will keep it in the area,” said Metzger, the Lycoming county commissioner.

“Hilco Global will be assisting the company with selling all assets, including intellectual property, real estate, inventory, and machinery and equipment,” the company said in a statement. “In addition, Hilco Global will be consulting the company on winding down its manufacturing production and collecting outstanding accounts receivable.”