What does Fred Hubbell's Younkers experience say about how he would run Iowa?

Jason Clayworth , Brianne Pfannenstiel | The Des Moines Register

Show Caption Hide Caption Register Soapbox: Hubbell talks Younkers experience and farm crisis Fred Hubbell, Democratic candidate for governor, talks about his work at Younkers during the farm crisis at the Register Soapbox.

Fred Hubbell says his track record as chairman of the iconic Younkers department store chain during the 1980s Farm Crisis shows leadership, a commitment to workers and an understanding of rural Iowa.

At a recent campaign event, the Democratic candidate for governor reassured disaffected public school teachers that he learned at Younkers to listen and support his front-line retail sales workers — a lesson he would apply to teachers and others.

"They know why their community is different from other communities — they like short skirts or they like long skirts, or they like pants or they don’t," Hubbell said. "It doesn’t matter what it is — you quickly realize that your business is only going to be as good as those ... people."

The executive experience he gained at Younkers will help him run the state, Hubbell has argued on the trail, in TV ads and on debate stages. The claim lends him an easy credibility with rural Iowans who have fond memories of the uniquely Iowa brand.

But leaning on that business record also has invited closer scrutiny of it.

Under his tenure, stores closed in small towns, employees' hours were cut and others lost their jobs in layoffs — facts that Hubbell’s Republican rivals say undermine his claims that he cares about rural Iowa and working-class people.

Hubbell's history at Younkers

Hubbell, 67, began working for Equitable of Iowa Companies — a company owned by his wealthy family — in 1983. Equitable owned Younkers.

As the 1980s farm crisis rippled through Iowa’s economy, Hubbell said the board at Equitable, which was chaired by his father, asked him to take over management of Younkers and turn around the struggling business. In 1985, he became chairman of Younkers while maintaining his role at Equitable. In 1989, Hubbell was named Equitable's president and CEO.

“We recruited a lot of other new people that had some kind of experience that we needed, and we invested in our sales people to give them support and encouragement that they needed,” Hubbell said in a recent interview.

In 1984 — about a year before Hubbell began his Younkers stint — Younkers earned $679,346 on sales of $188.6 million.

In 1989, Hubbell was named Equitable's president and CEO.

In 1993, at the end of Hubbell's tenure there, Younkers earned $17.6 million on sales of $473.4 million while absorbing H.C. Prange Co.'s department stores and becoming an independent, publicly owned corporation, Register news stories show.

And between 1986 and 1989, Younkers' workforce grew from around 3,000 employees to 4,100.

The store sponsored a 1985 Willie Nelson concert for farm assistance, in 1986 gave more than $300,000 in farm aid scholarships to dozens of students, and provided overtime pay and compensatory time off for about 3,500 employees as the store implemented a new inventory system in 1992.

But the farm crisis and a changing retail landscape also hit the Younkers chain. Smaller department stores were consolidating, being restructured or focusing on urban populations, leaving job losses and rural retail deserts in their wake.

By 1990, Younkers closed three stores — in Ottumwa, Spencer and Newton — in favor of refocusing on larger markets where profit margins were higher. It also laid off about 40 of its 4,100 people, and it reduced hours for many others.

Hubbell was quoted at the time as saying employees working fewer hours "should be happy they still have jobs.” It’s a phrase that’s come back to haunt him, appearing in Republican attack ads and billboards.

“I didn’t say it as artfully as I could have or should have,” Hubbell conceded recently. “And hopefully, maybe today I’m a little wiser.”

But Hubbell said he stands by the hours-reduction decision. Employees and managers decided a reduction across the board was better than large-scale layoffs.

“The reality was, we did save a lot of jobs doing that,” he said.

Exacerbating problems at Younkers was an increased debt load. The chain took on about $30 million of additional debt as part of a financial restructuring intended to let Equitable invest more money in other businesses.

Register archives show Hubbell was paid almost $234,500 in 1986 as Younkers’ CEO and chairman, an increase of almost $89,000 from the previous year.

By 1991, Hubbell was making $703,000. His salary at that time was being paid for his executive duties at Equitable, Younkers' parent company, Register news stories show.

During an interview with the Register, Hubbell said an independent compensation board determined his salary.

“Then when we took a ‘break even, almost going-out-of-business’ business and made it much more successful — and did it by investing in employees and our customers — I think the board of directors was happy with what we did,” he said. “… But I didn’t make those (salary) decisions.”

Anne Brouwer, a retail expert with business management consultant McMillan Doolittle in Chicago, emphasized that Hubbell's tenure as Younkers chairman came as the U.S. retail industry began consolidating.

Brouwer, who was contacted by the Register for this article, said she doesn’t want to get entangled in Iowa politics. But she said any retail review — including an analysis of Hubbell's performance during his Younkers years — must look beyond downsizing or closures.

Before then, department store retailers across the nation were generally smaller in scope and owned privately rather than by national retailers such as J.C. Penney or Sears. But — roughly 35 years ago — regional department stores frequently became acquisition targets of larger retailers.

“One by one, regional nameplates disappeared,” Brouwer said. “You cannot point to what was happening within the financial performance of the regional department stores back at that time and say it has anything to do with where they ended up today.”

Republicans attack his leadership of company

Taken altogether, Hubbell’s critics say his time at Younkers shows the Democrat does not care about rural Iowa and has put profits ahead of people.

"He closed stores and reduced paychecks all in the name of putting profits over people before selling off the companies — and here’s the key — to get a good deal for himself," Republican Party of Iowa Chairman Jeff Kaufmann said at a July press conference. "He shrunk his employees’ paychecks and benefits and he paid himself huge raises and bonuses — sometimes in the very year he was giving his employees cuts."

One of Republican Gov. Kim Reynolds' most recent campaign ads includes four people describing the effects of the store closures on their towns.

"Hubbell couldn't make enough money from us, so we got left behind," one man says.

Iowa Starting Line — a site run by former Democratic campaign staffer Pat Rynard — reported that none of the people depicted in the ad was directly affected by the Younkers closures. Instead, most were Republican Party officials and activists, Register reporting confirmed.

Jackie Steffen of Ottumwa, who was not pictured in the ad, did lose her job after a store there closed in 1985. She learned about the closure through a radio announcement. And although she was disappointed 33 years ago, she told the Register in a July interview that she understands the economic factors behind the move.

Steffen, who identifies as a political independent, has watched retailers come and go from her town since then, including Target, Kmart, MC Sports and J.C. Penney. About two-thirds of Ottumwa’s Quincy Place Mall sits empty.

“I didn’t point a finger or put blame on any one specific person or at Younkers,” Steffen said about her 1985 job loss. “Stores were closing in all small towns.”

Steve Goodhue was quoted in a 1990 Register article as the director of the Spencer Area Association of Business. At the time, he called the closure of the Younkers store there “a blow" to his northwest Iowa community.

Goodhue, in the 1990 article, said he believed the financial restructuring that involved borrowing $30 million as part of a complicated deal with Hubbell’s parent company, Equitable of Iowa, played a role in the Spencer store's closure.

Goodhue, who now lives in Ames, told the Register in July that he remembers Younkers executives had met with Spencer leaders and had taken their concerns seriously. Goodhue, a Republican, declined to comment about his party’s attacks against Hubbell.

“The nature of retail is always changing,” Goodhue said. “I think at the time Younkers was doing what it could to retain the store, and we were doing our best as a community to retain it.”

Tom Gould, a Republican and former Younkers president who worked for Hubbell, called his party’s criticisms of the retail store a “manufactured controversy.”

“I want to tell you something,” said Gould, now retired and living in Florida, “Fred is one of the smartest, savviest business people I’ve worked with. He’s honest, he’s forthright and he’s very direct.”

Political asset turned into a deficit?

On the one hand, the focus on Younkers is an effective attack as the Republican Party shifts toward a more populist message, said Matt Thornton, an assistant professor at Drake University who studies political messaging.

It also takes something Hubbell has portrayed as an asset — his executive leadership experience — and makes the candidate defend it.

“To the extent her campaign can force him to talk about his financial experience or his executive experience in less than flattering terms, about potentially firing people, I think that’s to (Reynolds') advantage,” he said.

But for others, the attacks feel disingenuous coming from a political party that has celebrated business success and has backed businessmen Mitt Romney and Donald Trump.

Both Republican presidential candidates came under intense scrutiny by Democrats for their business practices — Romney for his leadership at Bain Capital and Trump for a range of businesses ventures.

When asked why his party supported Romney and Trump but thinks Hubbell’s business background is disqualifying, Kaufmann — who has called Hubbell “Sir Frederick” and “the Privileged Prince of Polk County” — said the goal is not to “critique business practices” but rather to point out what he said is Hubbell's hypocrisy.

“When you’re running for governor and you’re bold enough to actually tell rural Iowans that you feel their pain because of conversations you used to have at Younkers, and when you’re basically running on wages, you’re basically running on feeling people’s pain … then that thing needs to be scrutinized fully and completely,” he said.

Reynolds, too, has sought to make it clear she’s not attacking Hubbell’s wealth, but rather what that wealth might mean to his ability to relate to working-class Iowans.

“Now, my opponent grew, he grew up very differently from most of us and that’s OK, because we celebrate wealth in this country,” she said at her primary election night party. “The issue isn’t that Fred Hubbell has been rich his entire life, it’s that he has no idea what it’s (like) not to be."

Hubbell has said repeatedly that the Republican attacks cherry-pick key details while eschewing context and nuance.

"(There's) the old adage that perception is reality,” said Thornton, the Drake professor. “So if a candidate is perceived that way — whether it’s true or not — often it can be effective."

The Register's Kevin Hardy contributed to this report

Fred Hubbell business timeline