Photo above: Virginia Governor Terry McAuliffe presents Merchant House International Ltd., Chairwoman and Founder Loretta Lee a flag from the Virginia Capitol Building as company executives, economic development officials and local dignitaries look on.
By Scott Robertson
Hong Kong-based Merchant House International, Ltd., subsidiary American Merchant will invest $19.9 million in a towel-making plant in Bristol, Va., in 2018. The company plans to create up to 405 new jobs at the former Ball Corp., facility on Old Abingdon Highway.
“Virginia has a rich history of manufacturing textiles for hundreds of years,” said Loretta Lee, Merchant House chairwoman and founder. “With retailers increasingly challenged by e-commerce competitors, speed-to-market is vital. Therefore, manufacturing and warehousing in Virginia will be a great advantage, and we are delighted to return our industry to this beautiful state.
“We will produce the best product using American material, because you have beautiful cotton. We will work with American workers and we will sell to the American market. When we produce towels, we want to produce the best towels we can do. We will make this place, our beautiful home, this beautiful land, even more beautiful.”
The Dec. 12 announcement was a huge piece of good news for a city that has lost manufacturing jobs and spent itself into a debt crisis chasing retail development over the last several years.
“The city needed this,” Mayor Kevin Mumpower said. “This is important.”
Mumpower and the Bristol City Council have been working to restructure millions of dollars in bond debt accrued during the rush for retail. At one point, in 2014, Virginia had to step in to provide $10 million to bail out the city. But Governor Terry McAuliffe, who approved that bailout, said at the American Merchant announcement he is pleased to see Bristol stabilizing itself. “I would not have recommended this to Loretta unless the city had their affairs in order because the state has its reputation on the line as well,” McAuliffe said. “They do, and I’m very proud of the work Bristol has done.”
Chris Piper of the Virginia Tobacco Region Revitalization Commission, added, “I’ve had the opportunity to learn about the hard times Bristol has faced over the last few years. So when the opportunity came up for Merchant House to come to Bristol with 405 jobs, the members of the commission and our staff were very excited. It’s important to understand that what’s good for Southwest Virginia is good for the entire Commonwealth.”
Mumpower said Bristol has shifted its focus from retail to manufacturing because, “for every manufacturing job you create, you create five additional jobs. You have machine shops. You’ll have maintenance and support companies. You’ll have supply chain folks. It’s good to see this starting to come together.”
The long game
Investment in American market share by Hong Kong has been growing over the last few years, with Virginia taking the lead in chasing that foreign investment. The American Merchant deal is an example of the Commonwealth staying diligent in those efforts, McAuliffe said.
“Yeah, this one we have been working on for a while. This has been literally over a year and a half of a lot of people working – VEDP and our Commerce folks. I had Loretta up to the governor’s mansion and met with her in my office several times with the local folks, the mayor. She came to see me about three months ago and I believe at that time it was down to about three states. The great workforce here, I think, really pushed it over the top. To come invest $20 million and take over a gigantic plant like this you have to know that community can deliver the workforce.”
Mumpower said Bristol was focused on showing American Merchant its ability to deliver the qualified workers it would need. “There was a series of meetings at city hall and here at the facility between summertime and now that led up to the culmination of the deal. We showed them the community. We showed them the training we had available at the Center of Excellence in Abingdon. We showed them the school system. The first thing a company looks at for a site,” Mumpower said, “they say, ‘Where are the workers? Where are the people with the skill set to support it? A company like this with a lot of automated equipment– the first thing they’re going to look at is, ‘Where are my industrial maintenance folks going to come from?’ Well, with the Center of Excellence, which the Tobacco Commission gave money for, they have the support structure here to train and certify those folks.”
In addition to those workforce reassurances, the Commonwealth also provided incentives. The Virginia Economic Development Partnership worked with the City of Bristol to secure the project. McAuliffe approved a $300,000 grant from the Commonwealth Opportunity Fund to assist the city with the project. In addition, the Virginia Tobacco Region Revitalization Commission approved $590,000 in Tobacco Region Opportunity Funds. American Merchant is also eligible to receive additional grants and state benefits from the Virginia Enterprise Zone Program and Appalachian Regional Commission, both administered by the Virginia Department of Housing and Community Development. Funding services to support the company’s employee training activities will be provided through the Virginia Jobs Investment Program.
In all, Virginia competed successfully against seven states for the project: Rhode Island, Georgia, Florida, Arkansas, Mississippi, North Carolina and South Carolina.
Timeline moving forward
American Merchant will not employ 405 individuals on day one. The former Ball Corp., plant is currently a shell that must be fitted with equipment for weaving, cleaning, dyeing, cutting, sewing, packaging and shipping towels.
The company will take the first line employees it hires to Germany and China to train on existing machines identical to the ones they’ll be working on in Bristol, said Robert Burton, chairman of the board of American Merchant. Those employees will then return to the U.S. to train the rest of the Bristol workforce. The equipment for the plant will begin arriving in early July.
Mumpower, who is better capable of forecasting the actions of an industrial interest than most mayors because of his own experience as vice president of Product Development Engineering at Bristol Compressors, said, “They’ve got to have a good program management staff. They have to hire somebody to drive this project. There’s a lot of technical work that’s got to be done on the front end. They have to get this infrastructure ready. They’re going to be hiring electrical contractors to drop power. They’re going to be hiring mechanical contractors to mark floor, make sure they know exactly where equipment’s going, drop air services – they’ll take several months planning that out and having that happen. Once they get that equipment in shipment, then it becomes, ‘Here we go.’ Because once it goes, it goes. They’ll have riggers in here moving equipment and powering it up. So for six or eight months, you’ll see them getting everything installed, and then they’ll spend a couple of months training the new employees. They’ll do some hiring and pretraining so folks are ready when the equipment is ready. Then they’ll produce their first product and make sure it’s to spec – pilot run their process and make sure everything’s right. Then they’ll turn the switch, say, ‘We’re ready to ship,’ and start taking orders.”
In the meantime, the governor said, the American Merchant announcement will catch the eye of other manufacturers, essentially putting Bristol on their map. “This allows you to get other companies. It’s a real game-changer for Bristol.”