Baker administration tries to reclaim $2.1 million in tax credits from Brooks Brothers

Apparel company's Haverhill plant is slated to be closed within days, leaving hundreds without jobs

BOSTON, MA - 7/08/2020: BROOKS BROTHERS on Newbury Street Boston. Brooks Brothers is the oldest men's clothier in the United States files for bankruptcy during the COVID-19 coronavirus pandemic. (David L Ryan/Globe Staff ) SECTION: BUSINESS TOPIC:David L. Ryan/Globe Staff

To help Brooks Brothers expand its manufacturing operations in Haverhill, state officials awarded the company $2.1 million in tax credits nearly six years ago.

Now that the factory is being idled and 400 or so workers left without jobs, the Baker administration is asking for the state’s money back — all of it.

Annamarie Kersten, of the state’s Executive Office of Housing & Economic Development, sent a letter on July 16 to Golden Fleece Manufacturing, a division of New York-based Brooks Brothers, to inform the company that state officials intend to “claw back” all of the $2.1 million in tax credits it received. Such a move is unusual: It has only previously happened twice in the state.

Kersten wrote that the state wants the money back because of the company’s failure to comply with the job creation and job retention agreements established in the original tax deal signed in December 2014.

The tussle over the tax credits is just one part of the bigger drama surrounding Brooks Brothers, a two-century-old name in the clothing business. The apparel retailer filed for Chapter 11 bankruptcy earlier this month in Delaware after its Italian owner, Claudio Del Vecchio, previously couldn’t line up a buyer for the business, which has struggled during the COVID-19 pandemic.

Brooks Brothers is continuing to seek a buyer that would keep it in business, albeit likely in a smaller form in the United States. The chain said it is closing about 50 of its US stores, including the one on State Street in Boston, by using bankruptcy to exit dozens of leases. The company’s three US factories, including the one in Haverhill, are slated to close by next month, although the Wall Street Journal reported that one potential buyer, a group led by Milan-based Giglio Group, plans to keep the three plants if it wins the bidding.

The sale process could take several months to be completed, and the Baker administration isn’t waiting around. The original 2014 agreement with the state called for Brooks Brothers to expand into a former Lowe’s store across the street, retain 468 jobs, and eventually add 70 new ones by 2018.

The expansion did happen. But records tracked by the state economic development office show the plant was already falling short on its employment goals, well before the decision was made to close the suit factory. As of 2019, the company employed 454 people in Haverhill, while the company had promised 538.

Ethan Snow, chief of staff with Unite Here’s New England Joint Board, said the closure affects about 400 members of his union. The plant shut down temporarily when the pandemic hit in March, but was reopened to make face masks with a limited staff, between 40 and 50 people, Snow said. Then in May, the company announced the plant would close for good. Now, only about 10 people work there, he said.

Unite Here has been pressing Brooks Brothers for severance pay. The union contract doesn’t provide for it, but the union argues that the workers deserve that protection. The plant was originally slated to close on Monday, but Snow just learned that it will stay open until the end of the month.

“It’s a fantastic move by the administration, just another way to tell the company you can’t treat people this way,” Snow said of the decision to claw back the tax credits. “We need to be more forceful in the punishment of companies that do this and leave workers out in the street.”

A spokeswoman for Brooks Brothers declined to comment about the tax-credit issue. She said it’s critical that any potential bidder “aligns with our core values, culture, and ambitions.”

The original state incentive package was accompanied by an agreement to provide $4.4 million in relief from local property taxes over 20 years. Mayor James Fiorentini of Haverhill said city officials are still trying to calculate how much in property tax relief the company has already received. He has reached out to state Attorney General Maura Healey for help in pushing the company to return the money if it closes the plant for good.

“We gave the tax credit so the jobs wouldn’t go overseas,” Fiorentini said. “I’m hoping, to be frank about this, that this will put additional pressure on them to sell to one of those companies that wants to maintain these jobs.”