More than 70 at Mt. Gilead, Ohio plant also lose jobs. In recent years, Core Systems, LLC was seen as a success story, creating jobs after getting public loans.
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More than 300 at Core Systems, LLC, are laid off when company closes after losing contract with Whirlpool Corp. Another 72 employees at facility in Mt. Gilead, Ohio also lose jobs.
PAINESVILLE, Ohio - When Core Systems LLC closed, more than 300 people lost their jobs and the city lost one of its largest private employers.
The injection molder on Renaissance Parkway abruptly shut its doors Feb. 22, ending a several-year effort by city, county and state officials to support a company that until recently appeared a solid example of economic development and job creation.
Losing a contract to build home appliance parts for the Whirlpool Corp. was a major reason the company shut down, according to public officials and court documents. Bill Loebbaka, Core Systems' president, did not return calls from The Plain Dealer on Wednesday.
Late last year, the company lost its contract, which represented about 40 percent of its business, said John Loftus, former head of the Lake County Port Authority and currently its strategic development director, whose agency had worked with the company since 2009 to obtain public loans and other support.
Whirlpool represented all of the work produced by the Core Systems plant in Mount Gilead, about 45 north of Columbus, where 72 employees were laid off earlier this month, according to a letter filed Feb. 4 with the Ohio Department of Job and Family Services. By law, companies are required to notify the state of facility closings.
The company has not notified the department of the closing in Painesville, according to spokesman Benjamin Johnson.
Bob Dawson, program administrator with Lake County Job and Family Services, said the company gave county officials the names of more than 300 laid-off employees.
Whirlpool filed suit against Core Systems on Jan. 24 in U.S. District Court in Cleveland, demanding that Core System return tooling equipment used in making 170 parts the company manufactured for the appliances giant.
In the suit, Whirlpool describes the supplier as a company that was consistently late and did shoddy work.
"During one 10-week period, Core failed to meet its delivery deadlines nine separate times, including one instance in which Whirlpool had to shut down an entire line and send workers home, at considerable expense to Whirlpool," the suit said.
"In addition to its poor delivery performance, Core has also had extensive quality problems, repeatedly delivering nonconforming goods to Whirlpool," the suit said.
Public officials viewed the company as a success story. Since 2010, Loftus said, the port authority gave the company $250,000 in loans to buy equipment and machinery so that it could secure contracts with appliance makers. The state also gave the company a $500,000 loan, The Plain Dealer reported in 2010.
"It was paying off extremely well," Loftus said. "I believe as of October of last year they had over 600 people working between their two facilities."
Cathy Bieterman, Painesville's economic development coordinator, said the company created at least 65 jobs after getting the loans and other support.
Despite the lost contract and the suit, public officials hoped that Core Systems would survive by reorganizing, perhaps by securing new investors and contracts.
Then early Friday, the shocking call came from the company to the county: the business would close that afternoon.
Loftus is convinced Core Systems could have survived had its bank, Wells Fargo, sought to work with the company, including not freezing bank accounts
"It became a major action to get the bank to approve any payments," he said. "They basically took a bad situation and compounded it."
Jason Menke, vice president of communications for Wells Fargo Regional Banking, said customer confidentially prevented him from discussing specifics.
"It's always unfortunate when our customers find themselves facing financial difficulty, and we strive to be a resource for them during these times," he said in an email. "We're successful when our customers are successful."
Bieterman said losing 300 jobs will have a "pretty significant impact" because of lost tax revenue. She said figures weren't available Wednesday.
For now, officials will focus on helping laid-off workers find jobs.
The county will have a job fair Tuesday, open only to former Core Systems employees. Twelve employers have signed up, said Dawson, at Lake County Job and Family Services.
"There are a lot of employees in Lake County that have job openings," he said. "There could be a silver lining in some of this."
Loftus, at the Port Authority, holds on to the last glimmer of hope for Core Systems, no matter how rapidly it appears to be evaporating.
"If there is anything we can do to help salvage any part of the business, we'll do what we can," he said.
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