This is the first part of a four part series examining the last years of operation at Dempster Industries, Beatrice's oldest and at one time most prominent manufacturing company. What's left of the once world-famous Dempster Windmill Manufacturing Co. is an empty factory along U.S. Highway 77 and memories of better times from former employees and customers.

For the better part of 130 years, Dempster Industries was Beatrice’s largest and most recognizable business.

Proudly boasting more than 500 employees at its peak in the first half of the 20th century, Dempster was as reliable and sturdy as the line of windmills, water pumps and agricultural equipment it manufactured.

Over time, the company’s sales stagnated and consolidations and acquisitions siphoned away much of the workforce. But Dempster remained a staple of Beatrice’s manufacturing heritage, moving into production of recycling trailers and submersible pumps.

Then in 2008, Wallace and Felicia Davis purchased the company for $3 million.

Wallace Davis, who claimed 20 years of experience in the manufacturing world, promised a new horizon for Dempster in the 21st century, new lines of manufacturing to produce wind turbines and other green technologies while maintaining the products Dempster was best known for in its fertilizer spreaders and water pumps.

What he accomplished was the opposite.

Five years after acquiring the company, Dempster Industries’ liabilities far exceed its assets, its list of debts swelling and its credit lines and business partnerships evaporated.

All that remains of the once-proud Beatrice manufacturer is a growing debt, a 240,000-square-foot building in ruins, and a group of former employees wondering where everything went wrong.

‘Something is wrong here’

Everything changed in summer 2008 at Dempster Industries, materials and service manager Russ Behrens said.

Behrens, who began at Dempster in 1984 and rose to the rank of materials and service manager, said within the first six months of Davis taking over the company, it became evident that the CEO’s approach was “spend money to make money.”

“Right away, you could tell he was throwing money around left and right,” Behrens said. “He was trying to grow the company as fast as he possibly could.”

Using a series of loans from UMB Bank in Kansas City, Mo., including $200,000 for capitalization, Davis hired several salespeople and bought three brand new Chevrolet HHR station wagons to be used on sales trips.

At the same time, at the urging of Dempster employees, Davis did away with the company’s distributors, choosing to work directly with its customers instead.

The spending continued beyond the Beatrice headquarters as well, with Davis choosing to expand its Springfield, Mo. water pump, recycling trailer and agricultural machinery warehouse shortly after acquiring the company.

Davis set his sights on a brand new, 10,200-square-foot facility under construction by Skye Development in a new industrial park in Springfield.

Building owner Clint Johnson said Davis signed a 10-year lease with two five-year options for $4,250 per month.

It was a big step up from the $1,500 per month Dempster was previously paying for its 2,200-square-foot distribution center.

But using the company’s $4.5 million in annual sales, Davis was able to leverage Dempster’s reputation as a solid manufacturing company into signing a new lease.

While Dempster seemed poised to expand its footprint, the financial practices of the Davises began to tell another story by the end of 2008.

On Oct. 20, 2008, Dempster entered into an agreement with Norfolk Iron and Metal for nearly $14,000 in fabricated materials for Dempster products, but Dempster failed to make a payment on the delivery for two years.

Other bills started running overdue at an alarming rate.

Davis authorized purchases of metal parts from Northern Agri-Services, a Henderson foundry, totaling more than $23,000 in 2009 and 2010; $10,600 in equipment and merchandise from the Earle M. Jorgensen Company throughout 2010; $3,400 in parts from Axis Products in Indiana; and so on.

The credit lines with the fabricators and parts suppliers Dempster had done business with for decades soon ran dry, Behrens said. Many companies whom Dempster had a long, prosperous relationship with ended poorly.

“We had 60-70 vendors we had been dealing with for years because they were the vendors with the cheapest products,” Behrens explained. “Some of them just put a stop to Dempster buying from them at all.”

“They said, ‘Pay your bill and then you’re never buying from us again,’” he added.

As business relationships soured, Behrens said Dempster had to go out and find new vendors -- often with higher prices.

“We would find a new vendor and usually have to pay more for the stuff and then (Davis) would go jack them around again, he wouldn’t pay the bill and then it was back to finding new vendors again,” Behrens said. ”It’s like we were just trying to piss everybody off.”

All the while, Dempster employees worked to get products out the door and seemingly provide the necessary cash flow to pay off vendors.

But the payments were never made.

Tim Taylor, a welding and press shop supervisor, said he was given a cashier’s check to pay a vendor in Omaha for a fabricated piece of steel.

“I drove up to Omaha to pick up the piece of steel and Davis gave me a cashier’s check to pay for it and the guy would not accept it,” Taylor said. “He wanted cash only from us. I sat there for three hours and the guy would not let me have the material until he had green cash.”

When the vendor asked Taylor to endorse the check himself and take it to the bank, Taylor refused. He had an idea the check wouldn’t clear the bank.

“So I turned around and drove all the way back home,” Taylor said.

Brian Walters was put into a similar situation at a parts manufacturer in West Point.

When he presented a cashier’s check to pay for the parts, the vendor showed suspicion.

“I sat in the parking lot for 45 minutes waiting for them to load me while someone took that check down to the bank to make sure it went through,” Walters said.

Walters said the West Point supplier still has parts manufactured for Dempster sitting in its lot, waiting for checks to clear.

While Dempster continued spending money on warehouse space, salespeople and vehicles for the sales team -- payments to vendors ceased entirely -- employees were forced to take pay cuts.

In a May 6, 2009 memo to Dempster employees, company vice president John Weichel wrote that “unforeseen circumstances” caused Dempster to cut salaries and wages to all employees.

Salaried employees like Behrens received a 10 percent pay cut, while hourly employees were cut from 40 hours per week to 32 hours per week.

It was the first sign that Dempster’s money troubles were spreading.

The remaining employees had no idea how far it would ultimately go.

Cuts beyond the pocketbook

Wages were only the beginning of cutbacks made at Dempster under the direction of Wallace Davis.

Other cuts Davis made without notifying his employees had potentially dire consequences.

Dennis Buhr, an 18-year Dempster employee who assembled recycling trailers and drove a truck delivering finished items to Springfield, was returning home from a run to West Point in 2004 when his chest tightened at the intersection of Sixth and Court streets in downtown Beatrice.

Buhr, 64, later learned he had suffered a mild heart attack. Doctors told him the damage was minimal and after a minor surgery, he was back to work at Dempster three days later.

To this day, Buhr takes a combination of blood thinners and cholesterol medications every day.

For seven years between his heart attack in 2004 and early 2011, the medications were covered under his health insurance provided by Dempster Industries.

In late January 2011, however, when Buhr tried to refill his prescriptions, he discovered his Blue Cross Blue Shield health insurance was no longer there.

“They just said your insurance is no good,” Buhr said. “That’s it. It didn’t state it was from non-payment or whatever, but my insurance had expired and that was the only answer we got.”

Buhr told his co-workers at Dempster who dug into the issue with Blue Cross.

The last premium paid by Dempster, they learned, was on Nov. 24, 2010. Two months had gone by before the employees learned their insurance net was no longer there.

Behrens said he called Davis immediately. Davis denied knowing the insurance had been allowed to expire.

“He said, ‘No way, no way, I paid that bill, you guys have always had insurance,’” Behrens recalled.

Buhr said he couldn’t take the chance of trying to buy his own health insurance, especially with his prescriptions costing nearly $400 per month.

“When you get up there at my age, I can’t take the chance at going without a carrier,” he said. “I definitely have to have it otherwise my pre-existing condition -- my heart attack -- comes in.”

Other Dempster employees began to learn -- painfully so -- that Blue Cross Blue Shield was no longer covering them.

Daniel Leseberg, a machinist with the company, said a grandson on his insurance was denied coverage for cold medicine in spring 2011.

“(The pharmacy) just said that we weren’t covered,” Leseberg said. “I said we were definitely covered and they said we definitely weren’t.”

And although Rosemary Heble, the office manager who worked for Dempster since 1972, had heard of her coworkers’ misfortunes with Dempster paying insurance premiums, an infection in her retina required surgery, her doctor said.

The frightening part about it wasn’t the surgery itself. It was whether insurance would be there to help pay the costs. Heble tried to investigate whether her insurance coverage was available before the August surgery date.

“I even had the secretary at the time -- I couldn’t read the emails myself -- email Felicia (Davis) for me,” Heble said. “I was thinking about delaying the operation if insurance had lapsed and she never responded at all to our request.”

Heble called Blue Cross Blue Shield to determine if the insurance was paid to date but the insurance company was also unsure.

The premium checks were so sporadic it has hard to determine if insurance was up to date or not. The checks received often bounced, Heble learned.

Despite that knowledge, Heble went forward with cataracts surgery on Aug. 8, 2011. During the procedure, surgeons discovered a staph infection had destroyed the retina.

Blue Cross Blue Shield paid the claim until the carrier learned Dempster had missed another payment, informing Heble that due to a lapse in coverage the eye surgery -- nearly $20,000 in all -- would be billed directly to her.

To make matters worse, Heble still couldn’t see out of her eye.

“The whole thing was in vain, but who knew at that time,” Heble said.

Following the surgery, Davis issued a company-wide memo stating: “Any claims dated July 1, 2011 through August 31, 2011 will NOT be covered,” adding that Dempster would be changing health insurance carriers on Sept. 1, 2011.

“If you have claims during the non-covered time period (as stated above) please provide a copy of the invoice to (human resources staff) Lisa (Moritz) or Felicia Davis as Dempster will be responsible for paying those claims in full.”

Heble paid for the surgery out of her own pocket. She was never reimbursed by Dempster.

The beginning of the end

When pay cuts and cancelled insurance premiums weren’t enough to solve Dempster’s “unforeseen” money crunch, Davis began delaying employee paychecks.

It wasn’t uncommon for Davis to write paychecks a week late all the way back to 2008 when he took over the company, Leseberg said.

Near the end of 2010 and throughout 2011, however, employees were rarely paid on time.

Weeks would go by without paychecks, if the paychecks would come at all.

Both Leseberg and Behrens said they went eight weeks without a paycheck in mid-2011.

After two months without a paycheck, Behrens looked into taking a loan from his retirement account.

That’s when he learned Davis had been withholding retirement contributions as well.

“We all knew he wasn’t contributing, so I called him up and talked to him, and after getting into my account and researching it we knew,” Behrens said.

Leseberg said Davis took advantage of his employees’ loyalty to the company.

“There were several of us including me who wanted nothing more than someone to come in and buy the place,” he said. “That’s where we wanted to stay the rest of our lives and retire from.”

Behrens was laid off from the company due to “lack of work” on July 25, 2011; Leseberg was downsized on Sept. 12, 2011 for the same reason.

Eventually, all employees save one -- Rosemary Heble -- were laid off or left the company.

Heble continued coming to work even after receiving her last paycheck on Aug. 29, 2010.

With “nothing else to do,” the rural Odell woman continued to drive into Beatrice with her son to continue mailing parts to thousands of Dempster windmill or spreader owners, answer phone calls and emails and to pick up the mail.

“A lot of the customers were just farmers, just individuals who had a windmill on their farm that broke down,” Heble said. “Some of the parts you can make yourself, but some of them needed parts to rebuild spreaders.”

For the next 16 months, Heble would mail parts to anyone who called in and requested them. She estimates selling as much as $160,000 worth of parts in a little over a year.

The money she made wouldn’t go back into the business.

“The electric bill would go down to the last day and they threatened to shut it off several times, but he would come up with the money at the last minute,” Heble said. “Where he got it, I don’t know. He should have got it from the parts I was selling.”

Finally, on December 28, 2011, Davis called Heble to tell her she was no longer required to come into work. Her tenure as a 40-year employee of the manufacturing company, at one time Beatrice’s greatest company, had come to an end.

Heble was never paid for her last year of work.

***

Twelve former employees of Dempster jointly sued the company and Davis for lost wages, insurance costs, retirement contributions and other lost income on Sept. 21, 2011.

The case remains open in Gage County District Court.

Neither Wallace nor Felicia Davis returned phone calls seeking comment on this story.

Reach Chris Dunker at cdunker@beatricedailysun.com. Follow him on Twitter @ChrisDunkerDS.

0
0
0
0
0

News editor and staff writer for the Daily Sun.

Load comments