QUESTIONS YOU MAY HAVE

The following questions have been asked by employees since the original Questions and Answers were posted December 12, 2008 at the bottom of this new posting. If your exact question does not appear, it has been combined with other similar questions, it required a personal response or it is still being processed. Thank you for your participation. We hope these answers will help clarify why the recent downsizing was necessary. After reading these questions and answers, you can submit new questions here.

December 18, 2008 Questions

1. What factors were taken into consideration in deciding which employees were directly impacted by the down-sizing?
   
   Answer: Per the contract with our unionized workforce, it was primarily seniority that was used to make the decision, with the least senior being laid off first. The one exception granted the company per our labor agreement is the ability to exempt individuals from the layoff based upon the company's current need for their skills. We did choose to exempt from layoff a number of welders who are critical for current production vrolumes in the CVI and Airolite plants in Schofield. In a recessionary economy, meeting customer expectations and the ability to deliver product faster than our competition results in business. We made those exceptions for welders so that we would not damage our production capacity in areas with strong order backlog.
   
   The office staff was reduced as a result of each business unit or function evaluating future work priorities and making critical determinations on the essential skills and abilities needed to continue to carry out their basic mission. Given the requirement to reduce operating expenses, existing staff was then evaluated versus those needs and the difficult choices were made.
    
2. It seems like some of the recent events at Greenheck were implemented only to make the company more attractive to an outside buyer. Is the company for sale?
   
   Answer: It is absolutely not for sale. Dwight Davis and the Robert Greenheck family have every desire to continue to run Greenheck as a private, independent company. The actions of the past several months have been taken to reduce operating expenses in an effort to strengthen our profitability so that we can continue to meet our debt and investment obligations which are critical to our long-term growth and success. The recent decision to reduce our staff was the result of the deepening recession and its continuing impact on Greenheck and its markets.
    
3. Why didn't the company try to cut back on other spending before employees were cut?
   
   Answer: The Company has been cutting back on spending. As early as July, all functions and business units were asked to reduce spending and cut unfilled positions from their budgets. As the orders continued to soften and profitability began to erode, in late September all areas of the company were again asked to further reduce operational spending, capital spending and eliminate more of their open positions. By October we began to see a positive impact of reduced spending. Unfortunately, the reduction in operating expenses has not been enough to offset the growing earnings pressure that has resulted from a continuing deterioration in order intake caused by the worsening economy. All expenses are under continued scrutiny.
    
4. Have any of our competitors been affected by the current recession? Is Greenheck losing market share in any of its product lines?
   
   Answer: Since most of our competitors are private companies, we do not know their sales for sure. However, what we do know is that according to our trade association, AMCA (through which all members report their sales), our overall market share continues to grow. If our market share is growing in a shrinking total market, we must be taking sales away from our competitors. We have to assume that our competitors are seeing the same softening in the market and are making similar adjustments to their expenses and capacity that we have had to make.
    
5. Will profit sharing and the 401(k) match still be paid out this year?
   
   Answer: The amount of the 401(k) match is tied to the company's profitability for the entire year and cannot be determined until the end of our fiscal year, which is March 31, 2009.
   
   Our profit sharing plan is also tied to the company's profitability for the fiscal year so it is not possible at this point in time to determine if a payout will be possible since we still have over three months remaining in the fiscal year. As the year progresses, we will keep employees informed of the status of this program.
    
6. Will the Company be issuing a list of the office employees that were placed on permanent layoff?
   
   Answer: No. We have weighed the issue of privacy versus need to know. We believe that everyone in the various business groups and functions know who among their co-workers was adversely impacted by the need to reduce staff. We will soon be issuing new phone directories, organization charts, etc. which should help to clarify reporting roles and areas of responsibility on a go-forward basis. Additionally, we know that all areas impacted by these decisions are actively engaged in reassigning critical tasks and will soon be communicating those changes.
    
7. How was the severance package for the office employees decided on?
   
   Answer: Greenheck does not have a "standard" severance package, but instead, develops a package such as this one based on our current business situation. Many factors were taken into consideration to ensure that the severance package that was offered to the office employees was fair to everyone. If you looked externally at the norms in business you would find the amounts offered our departing office staff were on the upper end of what is typically provided.
    
8. Why weren't the reductions in the office staff even across the whole company? It seems like the Business Units were not impacted as much as the shared service functions.
   
   Answer: All business units and shared service functions were treated the same. Reductions were not limited to full-time employees, as part-time employees and open positions were also included in the workforce reduction. Because of this, some areas may not appear to have been impacted as much as others, but that is only because these areas had a significant number of open positions that were able to be eliminated in this process.
    
9. Instead of laying off the union employees, why can't we just move them to the business units that have a lot of orders such as CVI?
   
   Answer: The company routinely moves shop employees from one plant to another to aid in reducing backlogs or filling in for employees who are on vacation. For the past several months, as new orders declined in only one or two plants, we were able to keep everyone working by constantly monitoring and adjusting the workforce by plant. Now, faced with a significant decline in orders across essentially the entire company, there is simply no plant available to move the employees to.
   
    
10. Why is the company no longer loyal to its employees like it had been during the past 10 or 20 years?
    
    Answer: While it is true that during the last 10 or 20 years Greenheck has not had a workforce reduction, it is also true that we are in the midst of the worst economic crises the company has ever been faced with in its 61-year history. The current drop-off in orders is significant and unprecedented. When the economy improves and our order stream improves, we look forward to being able to recall a number of the laid off workers.

December 12, 2008 Questions

1. How many people does Greenheck employ and how many are being
   laid off?
   
   Greenheck's worldwide workforce numbers 2,800 people which is now being reduced by 164 (111 factory; 53 office). The majority of laid off employees are at the company's Schofield, WI location, which is the largest employment center.
   
   During the last three years, the company has experienced tremendous growth, which lead to the creation of 710 new jobs, 450 of which were in Schofield.
   
   
2. Greenheck has been able to grow substantially in recent years, and was still hiring just a few months ago. Why the abrupt change?
   
   Greenheck's sales through November are up close to 15% over last year. This success has been achieved despite a downturn in the U.S. non-residential construction market that started a year ago. However, as the worldwide economic crisis has worsened in recent months, new orders have been declining in some Greenheck business units.
   
   The company was staffed to meet the order demand it was achieving in July. Now, with orders rapidly slowing as the worldwide economy falls deeper into recession, we have no choice but to reduce our workforce.
   
   We must all remember that we are living through the worst financial crisis since the Great Depression, and the worst in the 61 year history of Greenheck! Nevertheless, Greenheck is growing, and driving hard to continue growing!
   
   
3. Last February and March the company used voluntary furloughs to reduce its' workforce. Why isn't this approach being used now?
   
   Last February and March we decreased our workforce by around 60 people in response to an order slowdown in one of our larger business units. We felt the problem was short-term. This proved to be the case. As a result, we used voluntary furloughs and were able to call all furloughed people back to work in only a few months. In fact, by early summer we were achieving growth beyond our expectations and added many new workers!
   
   The situation we face now is very different! Now, we have seen a slowdown in new orders in some of our businesses, this has been especially dramatic in November and December. As the worldwide economic crisis grows worse by the week, we are expecting a continuing adverse impact on non-residential construction. The only hope is that the various economic stimulus actions will start to have a positive effect. With all the uncertainty of the current situation, we must protect the financial strength of the company and reduce our workforce immediately.
   
   If we are able to continue growing, and the various governmental actions restore business and consumer confidence, we look forward to recalling many laid off workers.
   
   
4. Greenheck has had a long history of not participating in recessions - is this no longer management's belief?
   
   Yes, all members of the Greenheck Team, past and present, are proud of the fact that we have experienced steady growth for decades, despite many economic downturns and recessions. This is still the case! The company's sales are up close to 15% over last year, despite a downturn in non-residential construction that started a year ago. In fact, the last report we had in late summer showed U.S. non-residential construction down around 13% from the prior year. Since that report, the worldwide financial crisis has exploded. We are sure the next report will show much more decline in construction activity in the U.S. and throughout the world.
   
   So, the fact is Greenheck is still growing despite this deepening recession! However, the size of our workforce is based on a higher growth rate - which we were realizing during the spring and summer of this year. Now we must reduce our workforce in response to the rapidly deteriorating economic conditions over which we have no control!
   
   
5. Most of the people being laid off were hired in the past year, and some only a few months ago. Why couldn't management see this downturn coming and have avoided hiring these people?
   
   In late summer our order backlog and new order rates overall were above our expectations. In July, overall new order volume was up 18% over the prior year. We knew we were in an economic slowdown, but our growth strategies were delivering beyond our best estimates!
   
   By September the U.S. economic crisis was exploding beyond anyone's expectations. Most economic experts did not see the severity of what has now become the worst economic crisis since the Great Depression!
   
   Even with the bad economic news of early fall we had no idea things were going to become as bad as they have. In addition, we had an order backlog in many of our businesses that required most of them to work overtime to meet customer delivery expectations.
   
   It wasn't until November and December that we saw new orders really begin to seriously decline in some business. Even now, we still have businesses, such as Innovent, experiencing substantial new order growth. (Innovent manufactures and sells large custom energy recovery and air handler equipment).
   
   So, with these realities we had to staff up to meet the demand our sales strategies were delivering. Now, with the worsening worldwide economic crisis, we have to "down shift", although the company is still growing overall.
   
   
6. How are our competitors doing?
   
   Since most of our competitors are private companies, we do not know their sales for sure. However, what we do know is that according to our industry trade association, AMCA (through which all members report their sales), our overall market share continues to grow.
   
   
7. Will there be more layoffs?
   
   We certainly hope not, but simply do not know for sure. We are aggressively focused on doing everything practical to keep Greenheck growing profitably. We are confident that the Greenheck Team of employees, loyal sales partners, and suppliers will press hard to keep winning, and keep people working!
   
   
8. Why is the company starting a new plant in Reno in the midst of this economic crisis, and when valued employees are being laid off?
   
   The new plant in Reno is in response to our rapidly growing outdoor air product business. The core of this plant will be Innovent products, which are in high demand given their contribution to energy efficient building operations. They are a part of Greenheck's overall "green" capabilities.
   
   With the continuing order growth we see at Innovent, as well as the demand for our other energy efficient products, we feel taking this investment risk is one more example of how we can keep Greenheck growing despite difficult economic times.
   
   It is also important to realize that these products are large (generally the length of a semi-trailer), and to be competitive they must be made close to the market. To ship one of these units from Reno to California versus from the mid-west saves thousands of dollars in freight costs.
   
   Finally, every Innovent unit and other energy recovery or make-up air product uses Greenheck fans and dampers which come from our Schofield plants. So, the growth we can leverage in Reno by better serving customers in the western U.S. market, enables jobs in Schofield.
   
   
9. Will Greenheck still be recruiting while valued employees are on lay off?
   
   Laid off factory workers will be called back to work based on work demand. Their call back rights are governed by their union contract.
   
   With regard to office workers, we expect to do very little hiring given all the uncertainties of the worldwide economic situation. However, as we have needs for specific skill sets, we will review the skills of laid off office workers and determine whether we need to recruit a new employee, or can call back a laid off employee.
   
   
10. What can all members of the Greenheck Team do to drive growth?
    
    The Greenheck Team has a long history of overcoming tremendous odds to keep the company growing profitably. This "can do" attitude, coupled with the support of loyal sales partners and suppliers has created a legacy of success through good and bad times.
    
    It is likely we are in the midst of our greatest challenge ever! We are still growing with sales up 15% over last year. We have many growth initiatives that are showing good promise. Yet, all members of the Greenheck Team must rally every day, in every way with a relentless commitment to win. We must deliver for our valued customers with high quality products, on-time shipments, and superb service. We must drive to achieve productivity gains necessary to protect the company's profitability.
    
    Finally, we must stay true to our values, which are the foundation of OUR success, they are:
    
    • Easy to do business with
    • Ongoing investments in People and Operations
    • Making a Difference in the Community
    • Mutually Beneficial Partnerships with Sales Representatives and Suppliers
    • Integrity and Professionalism
    • Continuous Improvement Through Learning, Innovation and Teamwork