The economic problems that have plagued Lowell, Mass., in the past several years just got worse: Wang Laboratories Inc., the city's largest employer and taxpayer, yesterday filed for Chapter 11 protection under the U.S. Bankruptcy Code.
Richard W. Miller, chairman and chief executive officer of Wang, said in a statement that the company has been struggling to get back on to its feet for the past three years. It came close, he added, but finally "ran out of time." The filing was made in the U.S. Bankruptcy Court, District of Massachusetts.
Wang, one of the pioneers in the computer industry, was founded in 1951 by Dr. An Wang, a Chinese immigrant who invented the magnetic computer memory. The company was a major player in the computer industry for many years, but began to lose ground in the mid-1980s.
Mayor Tarsy Poulios said yesterday that although the city is distressed and "very concerned," it was not caught off guard.
"We have been taking hit after hit for many years," Mr. Poulios said. "So far we have weathered the storm as best we could, and we are attempting to create job opportunities in Lowell."
At its peak in the late 1970s and early 1980s. Wang Laboratories occupied a three-towered building in the city and employed 16,000 residents. Mayor Poulios said two of the towers are now vacant and the third houses only 4,000 employees.
Lowell has a population of just over 103,000 and an unemployment rate of roughly 10%. The nation's unemployment rate hovers is around 7.8%.
George Garabedian, assistant treasurer of Lowell, add the city is the currently paying debt service on $82 million of outstanding long-term bonds and $39 million of short-term notes.
Mr. Garabedian said Wang is "far and away" the largest single tax-payer in the city, with $2.7 million of annual taxes. The city collects about $52.5 million a year, he added.
Moody's Investors Service has assigned a Baa rating to the city's general obligation bonds. But according to Joan Dougherty, assistant vice president at the agency, the city has been placed under official review.
"Within the next two weeks, we hope to have the review completed", Ms. Dougherty said. "When a community loses a major employer, it is necessary for us to see what else there is to support the debt payments."
Standard & Poor's Corp. does not rate the city's GO bonds, but gives a AAA to Lowell bonds that have bond insurance.
"Chapter 11 may actually help us in the long run," Mayor Poulios said. "This allows Wang a little time to formulate a plan and decide on how to improve their future place in the market."
The mayor also said Lowell is making alternative plans to stimulate job growth.
"We are currently looking at three plans that would create jobs," he said.
According to the mayor, the most ambitious plan involves allowing the Department of Defense to set up one of its payroll and purchase order offices in one of the towers previously used by Wang.
"This venture would employ over 7,000 Lowell residents with a median salary of $35,000 per year," Mr. Poulios said. "We feel we are in a good position to gain this as we would allow the department to use the building at no cost."
The city council has also passed ordinances allowing several new biotechnology products to be made in Lowell. The new laws come after alleviation of concerns that waste-water from the process would pollute city drinking water.
"We're doing an we can right now," said mayor Poulios. "Every option is being investigated to stimulate job growth."