CALIFORNIA – The colorful journey of Kelly-Moore Paints is fading out as the paint giant closes the lid on its can for good.
On Jan. 12, the company announced it will be commencing an orderly, out-of-court winddown of nearly all of its business. This is due to insurmountable legal liabilities arising from asbestos litigation, which have already drained over $600 million from the company in the last two decades, along with an additional $170 million in projected future litigation expenses.
Founded in 1946 by William Kelly and William Moore, Kelly Moore has been a household name in painting – as ubiquitous as Sherwin Williams. The current owner, Pleuger Chemicals, acquired the faltering company in 2022. Pleuger attempted to restore the company’s luster following 30 plus years of asbestos litigation. By 1981, Kelly Moore had discontinued using asbestos in its cement and texture products. But the damage had been done.
In a Jan. 12 Business Wire article, CEO Charles Gassenheimer said, “I’m extremely disappointed and saddened by this outcome, as the entire Kelly-Moore team made incredible efforts to continue innovating and serving the unique needs of professional painting contractors.”
He added, “We simply couldn’t overcome the massive legal and financial burdens that have been weighing on the Company for many years.”
The company announced it would be furloughing approximately 700 employees and it would stop production at its operational facility. The company will attempt to fulfill previously placed customer orders from its Union City distribution center. It will close all retail stores.
“My deepest sympathy goes out to our local employees, customers, industry partners and the communities where we do business, who have supported Kelly-Moore through its long history,” said Gassenheimer. “Unfortunately, this was the only viable alternative remaining for us after evaluating all other potentially feasible options.”
Prior to furloughing its workforce, the company sought investors to inject much-needed capital into the struggling painting giant. Gassenheimer said the company met with a number of interested investors but, ultimately, none came forward with an offer. He said the company could not secure the funding needed to continue operations.
In an effort to cut costs, the company planned to relocate its headquarters from California to Texas. Unfortunately, the costs from litigating asbestos claims were too high and the court cases showed no signs of decreasing.
The financial hemorrhaging due to ongoing asbestos litigation prevented the company from being able to reinvest in the business. Conditions were exacerbated by supply chain issues caused by the pandemic. In addition to the costs from litigation, when Pleuger purchased the company, it discovered the former owners owned millions of dollars in unpaid sales and use taxes.
Asbestos stuck to the company’s reputation like a scarlet A. According to Business Wire, Pleuger conducted an “exhaustive process that included pursuing opportunities for new capital investment, a potential sale, merger or reorganization.” But, due to the litigation hanging over the company, it was impossible to attract any funding or anyone interested in recapitalizing, restructuring or reorganizing the business.
BY THE NUMBERS
At one time, Kelly-Moore was the country’s largest independent paint company. The company produced 10 million gallons of paint per year. It had over 80,000 contractor relationships and 17,000 designer and architect partners. It maintained over 280 retail outlets. Nearly half of its employees – 45% – had been with the company for over 10 years.
Kelly-Moore paint was used in numerous high-profile projects, including Apple’s spaceship headquarters in Cupertino, Stanford University, San Francisco 49ner Levi’s Stadium, Facebook facilities and the Monterey Bay Aquarium.