Pressure on UK buyout house Permira continues to increase as another of the firm’s LPs, this time the Pennsylvania State Employees’ Retirement System, has asked it to rethink its plans to close a Hugo Boss plant in Ohio.
The state treasurer, Robert McCord, who is a member of the PA SERS board, said he has “serious concern” about the planned plant closure, which has been slated for this month.
“Hugo Boss’s plan is problematic on many levels. Not only would it cost hundreds of jobs in a neighboring state – therefore affecting a regional economy already hard hit by the recession – it implicates PA SERS, since PA SERS has invested in the partnership whose portfolio company is planning to close the plant,” McCord wrote. “Other PA SERS board members and I do not wish to invest in regional job loss or in a global ‘race to the bottom’”.
The planned plant closure, which would result in the termination of at least 300 jobs at the Brooklyn, Ohio-based facility, could result in “brand” damage to Hugo Boss, McCord said. Permira acquired a stake in Hugo Boss after investing in the Valentino Fashion Group in 2007.
“Already, a celebrity boycott of Hugo Boss at the Oscars results in a severely diminished Hugo Boss profile at the crucial showcase of the recent Academy Awards – and generated negative media attention across the US and overseas,” McCord said.
Permira has already received letters from the $50 billion Ohio Public Employees’ Retirement System, which said it may have to re-think its relationship with the firm, and the California Public Employees’ Retirement System, which expressed concerns about the plant closure and the general performance of the firm’s latest fund. Permira IV closed in 2006 and had a -36.6 percent internal rate of return as of 30 September, according to CalPERS documents.
After receiving the CalPERS letter in late March, Hugo Boss decided to go back to the bargaining table with Workers United, an affiliate of the Service Employees International Union, which represents many workers at the plant. The company said its decision to re-engage the union stemmed from contact from the US National Labor Relations Board, which encouraged the firm to re-enter talks.
At least one US politician has added his weight to the debate. Ohio Senator Sherrod Brown sent a separate letter to Permira about the plant closure, and has announced plans to convene a Congressional hearing on private equity and the Hugo Boss plant closing.
Pennsylvania pension adds voice to Permira protest
Pennsylvania State Employees’ Retirement System, a Permira LP, has expressed ‘serious concerns’ about the firm’s planned closure of a Hugo Boss plant in Ohio.