Late last summer, after churning along through the pandemic with only a two-week pause, managers at FreightCar America called hundreds of workers into the break area at the company’s factory near Muscle Shoals, Alabama, to tell them that the plant was closing for good.
A paper mill in northeast Washington state called Ponderay Newsprint, for example, went bankrupt and laid off 150 workers, two months after being approved for a $3.46 million loan. Its bankruptcy trustee John Munding said the money was used to pay workers and the government forgave the loan, while the company’s assets were acquired by a private equity firm.
A Nebraska aircraft parts manufacturer called Royal Engineered Composites was approved for $2.74 million in April 2020 in order to support 250 jobs, but laid off 99 workers by mid-May. The company declined to comment.
Canadian-owned Supreme Steel took $1.69 million in May 2020 for its plant in Portland, Oregon, which it closed five months later, terminating 112 employees. Spokesperson Rhandi Berndt said that “the closure was the result of market forces” and declined to answer further questions.
For example, Ledvance LLC, a Chinese-owned global lightbulb manufacturer operating in the U.S. under the brand name Sylvania, was approved for a $9.36 million PPP loan in April 2020. Then, between May and July, it laid off 50 people while closing down a distribution center near Bethlehem, Pennsylvania. Ledvance spokesperson Glen Gracia said in an email that the layoffs were “unrelated to the pandemic and in full compliance with LEDVANCE’s participation in the Paycheck Protection Program.”
Then there’s Chick Master Incubator Company, which took $1.34 million in April 2020. In June, its corporate parent — a Zurich-based private office that invests the fortune of a long-established industrialist family — announced it would combine Chick Master with its other hatchery holdings and close the plant, laying off 68 people in Medina, Ohio, by year’s end. Chick Master didn’t reply to a request for comment.
One type of applicant, however, still likely should not have qualified: companies controlled by private equity firms whose total holdings exceed the SBA’s size standard for the borrowers’ specific industries. Cadence Aerospace, a supplier of aerospace and defense parts that itself has bought three companies in the last three years, is majority-owned by Arlington Capital, a private equity firm managing billions of dollars. Cadence was approved for a $10 million PPP loan in April 2020, and later that month laid off 72 people at its Giddens Industries subsidiary in Washington state, according to a notice filed with the state. Arlington Capital did not respond to a request for comment.