Hobbico's deferral of payout upsets, confounds ex-workers

Hobbico's deferral of payout upsets, confounds ex-workers

CHAMPAIGN — On Saturday, Hobbico posted to Facebook a thank-you note to customers for making 2016 a great year.

The day before, it sent a message with a different tone to current and former employees.

"Hobbico has experienced many difficulties this last year, such as intensified competition and what appears to be a hobby-industry recession," Hobbico President and CEO Wayne Hemming wrote in a letter obtained by The News-Gazette.

"As a result, important sales, operating expense and productivity goals were not achieved. It is expected that 2017 will also be a challenging year for the business."

As a result of the rough year, Hobbico also announced in the letter several changes to its employee stock-ownership plan, a retirement system in which employees are given shares of the company, which are to be reimbursed after they leave.

It dates back to 2005, when then-owners Clint Atkins and Bruce and Jeri Holecek announced they were selling the company to its employee stock-ownership plan as a way to encourage employees to think like owners.

"Distributions that were scheduled to be made in 2016 from the ESOP to you and other terminated Participants will be deferred to a later date," Hemming wrote.

Two employees who left the company in 2010 and were expecting to receive their payment as a lump sum this past year now aren't sure when they'll get that money.

Tim Thilmony, who worked at Hobbico for over 10 years, said he has more than $50,000 wrapped up in the program that he was hoping to get back this past year.

Nina Sibley-Richardson, who worked at Hobbico for 11 years, was expecting to receive just over $27,000 from the employee stock-ownership plan.

"I was hoping to pay down debt and put a down payment on a house," she said.

Thilmony and Sibley-Richardson were supposed to wait five years to get their money back, and tried to do so in 2016.

Sibley-Richardson said she tried during the summer and kept waiting for the payment to arrive.

The financial group managing the plan "agreed it would be processed no later than Dec. 31," she said. "During November, I contacted them again, and they said it would be no later than Dec. 31. Then again Dec. 29, they said no later than Dec. 31."

She then received the letter from Hobbico and has been trying to get answers from Hobbico on what it means for her.

"The letter was very vague. The payments were deferred, but it doesn't say to what date," Sibley-Richardson said.

Hobbico did not return multiple calls for comment from The News-Gazette.

In its letter to current and former employees, Hobbico cited a "hobby-industry recession."

The model hobby distributor is the 12th-largest employer in Champaign County with 495 employees, according to the Champaign County Economic Development Corp. But that's down from a team of 700 in 2011.

While board members of the Hobby Manufacturers Association said that competition is indeed tough in the hobby industry, they didn't believe it was in a recession.

"It's pretty much been a flat market, but there is optimism for growth in 2017," HMA President Bob Wilke said.

"I don't see it as a recession," said HMA Treasurer Fred Hill, who also owns The Coach Yard, a manufacturer and retailer of model trains in California. "I haven't seen it with my business."

HMA membership has shrunk a little bit, but Wilke said that's mostly because it hasn't done a national trade show lately.

The industry is facing competition from manufacturers overseas, Hill said, since they sometimes steal designs and sell them directly.

"The American manufacturers design it," Hill said. "And the overseas manufacturers are copying them and selling direct. ... It's very frustrating."

The internet has also been a challenge for the hobby industry.

"Everyone had to make a big change and had to embrace the internet," Hill said. "Consumers just don't want to get in a car and drive to a store and shop."

Despite the challenges, Hill believes interest in hobby equipment is as high as it has been, with trade shows drawing thousands of attendees and drones gaining in popularity.

"Interest continues to grow," Hill said.

Hobbico was formed in 1986, when Atkins combined two companies he bought: Don Anderson's Great Planes Model Distributors and Bruce Holecek's Tower Hobbies, which was founded in 1971.

According to its website, Hobbico has 12 different facilities, including five in Champaign-Urbana and others in Germany, the United Kingdom, California, Colorado and Nevada.

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CULater wrote on January 05, 2017 at 2:01 pm

A hobby recession? I'd almost dare to call it a resurgence with drones flying off the shelves.

Cubbers wrote on January 05, 2017 at 3:01 pm

Hobbico doesn't take care of their employees while they are employed there. Why should anyone think they would be concerned for them after they leave. Number of shares owned in the mismanaged company will not change, but after the upcoming evaluation, the value may be zilch. What a shame.

nubiangoddess wrote on January 05, 2017 at 3:01 pm

The only thing in recession is the former employees' benefits.  I'm sure upper management's pocket books haven't realized any drawbacks from the supposed "industry recession".  Just another way to deny hard working people the benfits they earn.  People work over a decade, the company does massive lay-offs so they can re-hire those same positions for less pay, then they stick it to the former employees one last time by withholding their benefits. The company is still hiring now. Why if you had such a bad year?  And why are you still listing the ESOP as a benefit if you can't actually pay out when the time comes?