Irving-based Kelly-Moore Paints is shutting down operations nationwide, just days after it cut 700 jobs and halted production at its Hurst manufacturing plant.
The company said on Friday that the 77-year-old had tried unsuccessfully to attract new investors to keep the company afloat amid “significant legal and financial burdens that have weighed on the company for many years”.
Kelly-Moore immediately closed retail stores and manufacturing facilities, including a 330,000-square-foot plant in Hurst that opened in 2017. The company said it plans to fulfill as many customer orders as possible from its inventory in Union City, California. , distribution unit.
Employees will be paid for the time they work, the company said, and it has vowed to continue collecting bills to cover accrued benefits such as paid time off.
“Our owners took significant financial risks in acquisitions last year,” Kelly-Moore CEO Charles Gassenheimer said in a statement. “Unfortunately, despite their extraordinary efforts after acquiring this challenging business, they simply could not overcome the major unforeseen challenges and will be going out of business.”
Miami-based investment firm Flacks Group acquired Kelly-Moore in late 2022. Kelly-Moore at the time had annual revenue of $400 million and 1,200 employees. It sold paint through 157 company-operated stores and dealers.
One of the first things the company did after the acquisition was to move its headquarters from San Carlos, California to Irving. Gassenheimer said at the time that his goal was to increase revenue from $800 million to $1 billion.
The paint maker has been battling lawsuits for years over the use of asbestos in its cement and texture products. The practice, banned in 1981, has cost the company more than $600 million to settle lawsuits. The company estimates it will face another $170 million in future asbestos liabilities.
“Due to the cumulative cash drain created by the legal settlements and ongoing litigation defense costs, the company’s ability to reinvest in the business, including the investments needed to address historic supply chain challenges exacerbated by the recent pandemic, has increased significantly. has been limited for a long time,” the company said in a statement.
Clayton Tageson, a 33-year store manager in Clovis, Calif., said he learned he was out of a job Friday afternoon via email. He started with Kelly-Moore as a part-time driver and worked for more than 10 years.
“I feel comfortable now,” he said. “It’s better than sitting in the dark or hoping something can change knowing nothing will change. At least now I have the opportunity to find another job.”
Tageson said he and his colleagues had doubts about the company’s finances because his store had been operating for months with limited inventory. “But no one answered our questions,” he said.
“We had to constantly tell customers that we didn’t have what they wanted. Can be [Flacks Group] “We saw that the funding decreased, but this message did not reach us.”
Gassenheimer said the company had exhausted all alternatives to save the business. Even filing for bankruptcy or liquidation won’t save it, he said, because the company has run out of money, leased out all of its facilities and has no assets to pay creditors.
“My deepest sympathies go out to our dedicated employees, customers, industry partners and the communities in which we do business, who have supported Kelly-Moore throughout its long history,” he said.
The company said the move to Texas was intended to set the company up for the future by exploring new supply chain partnerships, planning technology and store upgrades, and settling multiple asbestos claims. But attracting investors or buyers with additional asbestos suits over the company’s head proved futile.
Gassenheimer said he was disappointed with the result.
“The ownership group’s commitment from day one was to fix it if we could,” he said. “Unfortunately, as great as the reputation of the Kelly-Moore team, products and service is, we simply could not handle the massive legal and financial burdens placed on the company for many years.”
Kelly-Moore was one of the nation’s largest independent paint companies, selling 90% of its products to professional paint contractors and other trade professionals.