Permira’s Hugo Boss to re-enter talks on plant closure

The company's decision to re-start talks over the planned closure of a plant in Ohio has nothing to do with recent pressure on Permira from two LPs, Hugo Boss said.

Permira-backed Hugo Boss is going back to the bargaining table with employee union Workers United over the planned closure of a production facility in Ohio.

The company has agreed to re-enter negotiations with the union on 8 April after receiving a letter from the US National Labor Relations Board asking for talks to re-start. Hugo Boss said its decision is not the result of pressure from some of Permira’s limited partners, who have contacted the firm expressing concern about the plant closure.

Hugo Boss, which Permira acquired in 2007 as part of its majority investment in Valentino Fashion Group, has been accused by the union of not bargaining in good faith to try and keep the plant open. The plant is located in Brooklyn, Ohio, a city of about 11,000 residents.

“The company is responding to the regional office of the National Labor Relations Board that asked it to provide Workers United with the opportunity to bargain about the company’s earlier offer or some other solution the company finds acceptable,” a spokesperson for Hugo Boss said in an emailed statement.

A closure of the plant would result in the loss of at least 300 jobs. Workers United, which is affiliated with the Service Employees International Union, has enlisted the help of the $50 billion Ohio Public Employees’ Retirement System in putting pressure on Permira to try and keep the plant open. OPERS is a Permira LP.

The biggest pension in the US, the California Public Employees’ Retirement System, also a Permira LP, has expressed concern about the plant closure – and the general performance of Permira’s latest fund – in a recent letter to the firm.

“Our primary focus with Permira is the performance of the fund, but we wanted some reassurance that the decision to close the Hugo Boss plant that would end US jobs was right for the fund,” a CalPERS spokesperson said.

Permira’s European Fund IV had a -36.6 percent internal rate of return as of 30 September, 2009, according to valuation information from CalPERS.