11th-hour deal saves 100 Franklin manufacturing jobs
In a move that could save nearly 100 jobs and keep a Franklin factory from closing, an English-based company struck a deal early this week to purchase the assets of the Whitley Products plant, a struggling metal manufacturer.
For nearly $3 million, Tricorn Group bought Whitley’s Franklin factory and equipment owned by the company, some of it located at another plant site in Indiana, according to a press release from Tricorn. The property was valued at more than $4 million and had been held by a third party receiver since January.
The Whitley plant manufactures precision metal products such as tubing for use in equipment and vehicles made by companies like Caterpillar and Volkswagen. The plant is one other one of the largest employers in Franklin, and one of the last big manufacturers in the area. The announcement of new ownership was made to plant workers on Tuesday.
The Whitley plant was almost certainly destined for permanent closure last week before government entities became involved in the talks and offered economic incentives to Tricorn to make the purchase.
Now the deal is being applauded by local and state government as a victory for economic development in the state and a demonstration of government cooperation with private enterprise. Last week, the deal to purchase Whitley nearly fell through before the N.C. Department of Commerce, Franklin and Macon County officials stepped in to offer incentives to the potential buyer and bridge the difference between the asking price and the offer made by Tricorn.
“There was a little bit of difference between what the new buyer was willing to pay and what receivership was willing to take,” said Franklin Alderman Verlin Curtis.
Curtis said the factory has been in the area for nearly two decades, and when the prospect of the closure became public, keeping those jobs in the town became a priority of the local governments.
Both the town and county government passed resolutions last week offering incentives to the buyer in the form of a forgivable loan and other incentives over a five-year period.
County Commission Chairman Kevin Corbin said the town and the county offered $67,000 in a forgivable loan toward the deal, split equally between the two. The receiver, which is charged with managing Whitley’s assets, also agreed to forgive about $33,000 of the sale price, bringing the total offering to $100,000, Corbin said. That amount was enough to facilitate the purchase of the plant.
“They were only $100,000 short,” said Corbin. “That’s what separated the buyer and seller — but they were both willing to walk away from it.”
There are also other annual incentives of $14,000 offered together by the town and county to Tricorn over the next four years. But the agreement stipulates that Tricorn must maintain a certain number of employees over that time and pay an accumulated $16 million in payroll for the incentives to be doled out and for the loan to be forgiven.
“You’ve got 100 families making income from that property, and if we can step in and save that property you’re making $16 million with a small investment,” Corbin said.
Furthermore, the operational factory is projected to contribute a combined $20,000 to the town and county in tax revenues annually over the next few years, before accounting for the incentives.
The N.C. Department of Commerce also made available a grant of up to $56,000 to the Tricorn Group from the One North Carolina Fund, according to a press release from the governor’s office. The money is contingent upon creating jobs and local funding matches. However, it offered no money up front for the Whitley deal.
The deal will keep the 600,000-square-foot plant operational under a subsidiary called Franklin Tubular Products and possibly grow the business. Tricorn’s other operations specialize in manufacturing parts similar to those made by Whitley and already employ about 300 workers worldwide. Last year, the company opened a manufacturing plant in China. The Franklin factory is another step in its global expansion.
“This is an ideal platform from which to increase sales in the U.S. for the Franklin facility,” a press release from Tricorn stated. “The directors of Tricorn believe that the acquisition is highly complementary and significantly enhances the growth prospects for the Group.”
The company could add about 30 jobs there over the next five years — a stark contrast to the 100 or so that would be lost if the plant closed. The average wages for the new jobs will be about $32,000, per year, in addition to benefits.
The company also expressed an interest in investing millions of dollars in plant upgrades to make the operation more efficient and expects the new acquisition to make “an increasing contribution” to Tricorn’s earnings by 2014.
The new developments are far different from what many employees of the factory were expecting. At the start of the 2013, the outlook at the Whitley was grim. It temporarily closed the factory doors in late January, laying off about 100 workers and threatening to remain shuttered. The plant’s officials had cited funding shortages as one of the reasons it closed. The Tricorn press release also indicated that Whitley, which also operates a plant in Indiana, posted a $2.2 million net loss in the year ending May 2012. At least one other company, Old Dominion Freight Line Inc., had filed a lien on Whitley’s assets.
However, several days after the closure, the plant had reopened and began courting buyers, but when no deal could be reached with Tricorn early last week, the plant threatened a final closure by late April or early May.
County Commissioner Ronnie Beale said he was relieved the purchase was made just in time to save the factory jobs. He also welcomed the new owners to the county.
“This secured a lot of good jobs for Maconians for years to come,” Beale said. “We’re very appreciative of company and excited to see them come to community.”