Colibri Group shuts its doors

[BlueHavanaII]

Jewelry manufacturer Colibri Group shuts its doors, laying off 280

01:00 AM EST on Friday, January 16, 2009


EAST PROVIDENCE –– The Colibri Group, one of the region’s best-known jewelry makers, unexpectedly shut down yesterday, laying off its 280 employees and preparing to sell all remaining jewelry, gold and silver to pay creditors.

The abrupt decision brought a sudden end to a nationally known producer of clocks, jewelry and cigarette lighters that had operated for 81 years.

“The Colibri Group is simply out of money,” Timothy P. Gallogly, the company’s general counsel, said.

Colibri’s owners, New York-based Founders Private Equity SBIC, yesterday in Superior Court, Providence, successfully asked Judge Michael A. Silverstein to appoint a receiver to sell the company’s assets to repay creditors. Colibri owes about $14 million to HSBC Bank and a similar amount to Sovereign Bank, according to the receiver, attorney Allan M. Shine.

Starved of credit and beset by rapidly falling sales, Colibri had spent months pleading with lenders for loans and trying to arrange a merger. Those discussions continued through Wednesday.

But employees were surprised by the closure. Some found out late Wednesday through a company e-mail or phone call. Others, however, did not learn until they reported to work yesterday at the East Providence headquarters or the manufacturing plant in Providence. (The distribution complex in North Smithfield is not regularly staffed.)

Colibri’s corporate partners also had not expected the closure.

Businesses that sell Colibri’s jewelry tried to call the company yesterday and visited its locked headquarters. “We were just as surprised as the employees,” Jeffrey S. Brenner, a lawyer for Colibri lender HSBC, told Silverstein.

Employees, including 250 in Rhode Island and 30 salesmen nationwide, will be paid through yesterday.

The layoffs worsen the state’s already dismal unemployment rate. As of November, unemployment in Rhode Island had reached 9.3 percent, one of the worst figures in the country. Bankruptcies and layoffs have starved the state of tax revenue and nearly emptied the public fund for unemployed residents.

“The current economic conditions and credit market are such that Colibri cannot sustain its current operations,” James E. Fleet, the company’s president and chief executive officer, told employees in a note posted in the darkened entryway of the Fairmount Avenue headquarters.

Even before the economic downturn, Rhode Island’s manufacturing sector was disappearing, the state’s rivers lined by shuttered mills. The high labor costs and competition from foreign firms did not spare the state’s historic jewelry industry. By 2006, only 7,500 people at 1,000 firms still worked in the industry, according to the state Economic Development Corporation.

But Colibri, powered by prized brands such as Seth Thomas and Movado, remained profitable.

In 2003, Colibri acquired a New Jersey jewelry company. Two years later, owner Fred Levinger, of Providence, sold the company to three private-equity firms. At the time, it had 500 employees and reported $100 million in annual sales.

Steep, recent declines in consumer spending, however, quickly eroded revenue. In 2007, Colibri’s $80 million in sales did not come close to covering expenses, resulting in a $10-million loss, Shine said. Last year, company sales dropped to $64 million and loses again totaled $10 million.

“Before that, the company was doing quite well,” Shine said yesterday in an interview at Superior Court. “The business deteriorated. The major economic downturn has impacted the business very unfavorably.”

As the nation’s housing market collapsed and stocks slumped, demand for Colibri’s $1,500 cufflinks and $100 cigarette lighters dried up.

“It’s an easy purchase to defer when you’re tightening your belt,” Gallogly said. “We tried our best. We just weren’t able to get through this.”

A year ago, Colibri hired Phoenix Management Services, a crisis management consultancy, to rescue the foundering business. But sales did not recover and merger negotiations fell apart when potential partners could not find capital to invest. (Colibri declined to disclose the companies it approached.)

Fleet, who attended the court hearing yesterday alongside lawyers for HBSC and Colibri’s landlords, declined to comment.

To control costs, Colibri made temporary layoffs last month. Product designer Kelly Fusaro, 43, of Providence, lost her job. But she said she was sure she would return in the new year.

“Our customers aren’t ordering because no one is buying,” Fusaro said. “It’s really sad.”

[Buddha024]

This really sucks. I have a Colibri and really love it. You've got to feel for all of those employees too. No notice or anything.

[QBear]

I'm certainly sympathic to their employees for the jobs lost.

That said, the company has earned exactly what they deserved as they've been putting out totally crap products that have been wayyyyyyyyyyyy overpriced for quite a few years.

[HAZMAN]

Originally Posted by QBear

I'm certainly sympathic to their employees for the jobs lost.

That said, the company has earned exactly what they deserved as they've been putting out totally crap products that have been wayyyyyyyyyyyy overpriced for quite a few years.

I agree, I so sorry for there employees.

With that being said I have a drawer full of Colibri lighters that don't work. I do have one cheap firebird that has worked for a while but I have at least a half dozen that were just shitty including a triple flame model that cost me $75 off the devil site.

[audio1der]

Sad for the employees, but glad to hear they won't be pawning off thier crap lighters on our BOTL anymore.

[PerpetualNoob]

It's definitely a tough time to be in the luxury business, but I'm still surprised. Their lighters definitely won't be missed, judging by the hundreds of posts about them on here. I recently got one for free from CI, and so far it works great, but I've only had it for a few weeks. I keep expecting it to die, actually. Maybe they should have contracted Ronson to do their manufacturing?

[wolfmonk]

Originally Posted by QBear

I'm certainly sympathic to their employees for the jobs lost.

That said, the company has earned exactly what they deserved as they've been putting out totally crap products that have been wayyyyyyyyyyyy overpriced for quite a few years.

Exactly. I have a few of their lighters - some work and some don't. When I buy something I don't want it to be a coin toss as to whether or not it will actually work. My Blazer, OTH, has been very reliable.

[Kayak_Rat]

They made fancy looking crap. Very few people(who are not sponsored by them) like thier products. Very bad for the emplyees though.

[d_day]

I feel bad for the employees. Hopefully they find work soon.

As for Colibri, I'm actually sort of sorry to see them go. I couldn't stand the lighters, but who amongst you did not want a Movado watch?

[cafe con leche]

This is not the first time a business closes its doors without notifying the employees and not the last either.
Colibri was once king _ but it is true I have one Colibri and besides the price dropping ( which I am not going to get into here) from the original price tag I bought it for it does not work.
Xikar will be seeing more business , and besides they are of better quality

[sacmore21]

Originally Posted by QBear

I'm certainly sympathic to their employees for the jobs lost.

That said, the company has earned exactly what they deserved as they've been putting out totally crap products that have been wayyyyyyyyyyyy overpriced for quite a few years.

Definitely agree with this. I'm just feeling fortunate that I was able to have mine repaired a few months ago, or else I would just have a $40 paperweight. Very unfortunate for the employees especially.

[JCK]

That is a shame. I've owned a few colibris in my life. A few soft torches in the late 80's, one of the extreme lighters when they were first released.

The last colibri I own and currently still use is remarkably working still after almost a year.

I like this one because of it's cutter and it's a small compact lighter to carry.

[icehog3]

I agree with the majority of you....Sympathy for the people who will be out of work, but happy that no one else will waste their hard earned cash on Colibri's POS lighters.

[QBear]

Circuit City is the latest in line to close its doors: Circuit City says will liquidate assets | U.S. | Reuters

I don't think either Colibri or Circuit City's demise is altogether a bad thing, well, except for their employees. We're definitely going through some hard times now with the economy being what it is. IMO, this is going to get worse before it gets better and won't be short lived. If I'm correct, there's going to be a LOT of "separating the wheat from the chaff". In the long run, that's a positive thing as there's going to be a bunch of companies who've continued to stay in business with poor products and/or poor customer service that will shortly no longer be in business.

[themoneycollector]

I feel bad for the employees.

But their products were junk and closures like this across all markets will hopefully create a leaner, better economy.