By Reggie Ellis
A wave of debt finally came crashing down on Waterman Industries, Inc. last week which resulted in the company suspending operations and laying off 180 employees on Feb. 6. Just four days later, the irrigation equipment manufacturer announced its overall debt was approximately $19.3 million and that it was filing for Chapter 11 bankruptcy.
Daymon Qualls, human resources manager for Waterman, said unanticipated cost overruns associated with shutting down the foundry in 2002, market conditions, substantial increases in workers' compensation and benefit cost increases combined with lower than expected sales due to insufficient cash to fill existing orders all contributed to Waterman's current financial crunch.
"As a result, revenue failed to meet expectations and drained resources for the company's core business," Qualls said.
"These efforts are undertaken to enable the company to continue to develop and provide innovative and cost effective water control products and solutions to its customers and markets it has been serving for more than 90 years. Our continuing confidence is rooted in our strong customer relationships and excellent workforce."
According to the United States Bankruptcy Law, Chapter 11 allows a company to continue its business operations through a reorganization plan. The company can restructure its finances so that it can continue to operate, provide jobs, pay creditors and produce a return for its stockholders. Its intent is to extend or reduce the company's debt, or drastically reduce operating costs, until the company can return to a prosperous situation, which is often more economical than liquidating.
Riley Walter, counsel to Waterman, said filing Chapter 11 is necessary to restore Waterman's ability to purchase raw materials, fund payroll and produce customer orders. The company is currently seeking court approval to use cash collateral to fund post-petition operations.
"While under the protections of Chapter 11, the company will formulate and propose a reorganization plan for payment of its creditors," Walter said. "This process will take some time but the company desires to move forward as soon as possible."
Last week, President and CEO David Appling said a small crew of administration and sales staff, 22 people, will continue to work while the company attempts goes through the bankruptcy reorganization. Appling said hiring employees back would be gradual and he isn't sure how many positions will be retained. During an announcement on Feb. 5, Appling told employees that the some positions may be eliminated permanently.
"As we enter this process and continue to focus on our customers and core competencies, we plan to maintain our commitments to quality products," Appling said in a released statement. "The company intends to continue to service and support its customers throughout this entire process. Our goal is to emerge from this reorganization with a healthy financial structure with a focus on restoring and preserving the customer relations that have made Waterman Industries, Inc. a leader in the industry."
Located on Spruce Road just north of Lindsay, Waterman has been family owned and operated since 1912. In addition to Exeter, Waterman manufactures and sells water control gates, valves and other irrigation components at plants in Cairo, Egypt; Lubbock, Texas; Memphis, Tenn; Boise, Idaho; Garden City, Kan.; and Grand Island, Neb.
