United Furniture to save money and time with out-of-date building
WINSTON-SALEM, N.C. — United Furniture Industries is trying to ensure that taking over the historic Weeks manufacturing plant — once the world’s largest textile factory — is more of an economic blessing than a money-pit curse, according to the Winston-Salem Journal.
The Mississippi furniture maker confirmed on Wednesday it is leasing the 850,000-square-foot plant off 401 W. Hanes Mill Road, where it plans to invest between $5.2 million and $11 million, and create 200 full-time jobs over three years. The company has an option to buy the plant.
It has been made eligible for up to $300,000 in local incentives and a matching amount from the state’s One North Carolina Fund.
United specializes in making promotional upholstery (lower-cost items used to draw customers into a store) and vinyl furniture in the $299 to $699 range. It already makes product in Lexington and Glenola in Randolph County, where it has combined 940 employees.
United is dedicating 281,700 square feet to distribution, 217,600 square feet to manufacturing and 127,600 square feet to storing furnishings kits from Chinese suppliers. That leaves about 225,000 square feet of additional space, mostly basement and second-floor administrative, that is not needed, at least in the short term.
“We look at the plant as an elephant that has to be taken on in small chunks to gain the efficiencies we need to make it work at the level we need,” said Robert Cottam, a consultant for United Furniture Industries. Larry George, United’s president, has made Cottam the company’s public-relations face.
United accepted that the Weeks plant presented infrastructure challenges when choosing it over other Triad and out-of-state options.
“There’s an increasing shortage of large manufacturing plant space in the Triad, whether existing or spec space, as the economy continues to recover,” Cottam said. “But there were similar challenges in out-of-state sites we considered.
“We were basically given some former furniture plants in the Triad, but we couldn’t it work because they were multi-level plants and not suited for modern manufacturing needs.”
Leasing from Mooresville entrepreneur Michael Bay allows United to save up to $30 million on what it would have cost to build from scratch a 1 million-square-foot manufacturing and distribution center.
On the other hand, resurrecting and upgrading a 54-year-old plant built for a different production, infrastructure and logistical era is likely to yield a series of unexpected costs as the company plans to begin production by late October.
“Old plants all have their challenges when you peel back the onion layers,” Cottam said. “They’re tough and expensive to bring up to current regulatory coding. We’re going to make it work although it may be painful for a while.”
Although Hanes Hosiery Mills Co. spent about $30 million on the plant that opened in 1960 – about $240.3 million in today’s dollars – it is dated in several key infrastructural areas compared to today’s needs.
For example, the company is rebuilding a large number of dock doors and support areas to accommodate the current length, weight and maneuvering needs of today’s tractor trailers and forklifts. That means pushing out about 20-25 more feet into the parking lot in several areas, requiring the sawing down of several large trees in the way.
The hardwood floors at those docks are being replaced with material that’s better able to support heavier forklifts. A new heating and cooling system, as well as electrical and communications, are being installed.
Altogether, United plans to add or reconfigure at least 30 dock doors. There are plenty of regulatory coding challenges to meet as well.
The tradeoff for taking the older space is that the company is getting a mostly blank canvas. Hanesbrands removed fixtures from the building when Bay bought the property for $3.2 million in September 2012, and Bay conducted a tear-down for several months before deciding not to go through with plans for a massive home furnishings showroom and leasing or selling land for outparcels.
United gained a major head start when Bay agreed to allow it to move raw furnishings material from China, as well as finished product, into the plant in July. Last week, United had about 250,000 furnishings kits – about eight to 10 weeks’ worth of supply – and the distribution space nearly was full from product made in Lexington, Archdale and Glenola.
That enabled United to shift 47 jobs from a Union Cross Business Park distribution center, which will allow MOM Brands Inc., formerly known as Malt-O-Meal, to begin distribution in that space by late September.
Bay said he had several options for taking the plant once his showroom plans fizzled.
“We decided to go with United Furniture as it would use the entire property and create more jobs than other candidates,” Bay said.
“We believe they will continue to grow over the next five to 10 years, and it will be good for the local economy. We feel good about the outcome since we became the catalyst to turn the property into a better use quickly.”
United keeps its overhead costs down by buying and rehabbing used equipment, sometimes from competitors who have gone out of business.
Cottam said United expects to increase its N.C. production by 25 percent to 30 percent at the Weeks plant, “but a lot of that will depend on the quality of the new workforce we can attract.”
United’s aggressive expansion plans are not surprising, said Jerry Epperson, managing partner of Mann, Armistead & Epperson, a financial-services company based in Richmond, Va.
“It has a successful, well-funded owner, and it is a low-cost supplier,” Epperson said. “That strategy has worked for them.”
Cottam said one reason why United chose the Weeks plant is the expectation of attracting production workers from rural and urban parts of the Triad within an hour’s drive.
“We could eventually get up to 500 employees if we can get the right level of employees,” Cottam said.
“We realize furniture remains a discretionary purchase, and that’s reflected in our pricing, but also in the production efficiencies we need to make those prices profitable.”
Cottam acknowledges United will face challenges in attracting and hiring qualified production employees given that other Triad manufacturers, both traditional and advanced, are dealing with similar obstacles.
That’s why the company has hired Debbie’s Staffing to handle much of the applicant screening process that will lead to a temporary-to-permanent training and hiring. Debbie’s will handle the screening at three offices. Contact information is (336) 776-1717 or go towww.debbiesstaffing.com.
Cottam said United officials have had “frank talks” with Commerce Sec. Sharon Decker about the skill training assistance that manufacturers need to establish an efficient workforce.
Echoing comments made recently by officials at Caterpillar Inc., Atrium Windows & Doors, Deere-Hitachi Construction Machinery Corp. and Herbalife Ltd., Cottam said “we have to convince young people that manufacturing is not a dead-end job.”
“Yes, it is hard work, but it can offer good pay toward a middle-class life and upward mobility.”
Cottam said the average wage for production workers could be higher than what United pledged in its incentive request of an average annual salary of $28,420 plus benefits, or $13.66 an hour.
“They could make $15 to $18 an hour depending on their efficiency and work ethics,” Cottam said. He said most production workers will be given a daily work load.
“We are working with a large group of public partners to develop a regional work force development program to better prepare individuals for manufacturing jobs.
“Such a program is critical to the success of United and all manufacturing firms in North Carolina.”