Organ maker's collapse leaves many in the lurch

'IT'S NOT A VERY HAPPY STORY'

November 08, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Hagerstown -- When the First Presbyterian Church of Sioux City, Iowa, decided to refurbish and upgrade its 62-year-old pipe organ, excitement spread through the congregation.

"They were thrilled. We were going to get a fine new instrument," recalls John D. Mayne, the chairman of the church's organ committee.

But after spending $225,000 -- and waiting more than a year for the refurbishment -- the church is left with a big, black void in the front of its sanctuary.

Today, hymns are sung to the accompaniment of a grand piano. Efforts to attract new members to the congregation have suffered. And to complete the project, the church likely will have to pay much more than the $450,000 it had originally budgeted.

First Presbyterian is one of the many victims of the collapse of Hagerstown-based M. P. Moller Inc., the world's largest pipe organ maker. Today, parts from the church's organ lie scattered throughout Moller's shuttered factory.

The demise of Moller, once a source of pride in this Western Maryland city, followed decades of corporate neglect, symbolized by hopelessly outdated equipment and increasingly bitter labor relations. The end of the 117-year-old company came under new owners who were undercapitalized and deeply in debt.

As new orders dried up, the company shut down the factory in April, then filed for bankruptcy reorganization in August. Proposals for a buyout by employees fell through. Now, Moller's owners want to liquidate the company.

"It's not a very happy story," Paul J. Coughlin Jr., Moller's chairman and chief executive, said last month.

Moller's collapse threw 115 people out of work and left suppliers with hundreds of thousands of dollars in unpaid bills. It left many churches, including First Presbyterian, in the lurch. And it marked the demise of a local corporate empire built by a 19th-century entrepreneur.

The organ factory, which stretches for two blocks, is a monument to the industrial ambitions of Mathias Peter Moller, a Danish immigrant who founded the company in 1875. A devote Lutheran, Mr. Moller wanted to make pipe organs available to any church that wanted one.

Moller built 12,000 organs, including pipe organs for West Point, the U.S. Naval Academy and the U.S. Air Force Academy. Other prominent customers: the National Shrine of Immaculate Conception in Washington and Lincoln Center in New York.

Moller's early fortunes were given a great boost in the teens and the twenties when silent movie houses were clamoring for organs to accompany films. "What was a tiny little industry skyrocketed for 10 or 15 years, then died right down," says Mathias Peter Moller III, grandson of the founder.

The company struggled during the Depression, but got a shot in the arm during World War II when it made airplane wings and other military equipment for nearby Fairchild Corp.

Moller continued to prosper in the next two decades, supplying 30 percent of the pipe organs sold in this country in the 1960s. But its decline began in the 1970s, and that trend accelerated in the 1980s. As the company's financial strength dissipated, labor relations became more bitter.

Failure to modernize

With its hardwood floors, old wooden work benches and decades-old equipment, the 97-year-old Moller plant looks more

like an industrial museum than a factory that was still operating a year ago.

Instead of electric soldering equipment, each desk in the pipe shop has a small, gas-heated oven used to heat soldering irons. All the machine tools and fabricating equipment are mechanical, even though computer-assisted devices have replaced such machines in other companies.

The need to modernize was evident decades ago, says Mr. Moller, who was the company's purchasing agent from 1975 until 1988, when he had a stroke. But family member who were running the company failed to act.

"I don't think they kept up with the times," Mr. Moller says, adding that the company should have moved to a more efficient factory long ago. "It was not economically feasible, in my opinion, operate in those old facilities."

During the 1980s the company only had one profitable year, according to documents filed in bankruptcy court. Then, in 1988, the factory was closed for five months in what was called a lockout by the union that represents workers.

Two months after the labor dispute ended, the Moller family sold the company to a group of investors led by Mr. Coughlin and Roland F. Funk, a Hagerstown financial planner.

Mr. Coughlin's tall, trim good looks and confident manner convinced many workers that he was just what the company needed. They were particularly impressed with his philosophy of "inclusive" labor relations.

As chairman of the Foundation for Manufacturing Excellence, a non-profit group that promotes modernization in manufacturing, Mr. Coughlin has spread his ideals through the state. He is also chairman and principal owner of the Washington Aluminum Co., a Baltimore aluminum fabricating firm.

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