Heritage Glass to begin production by July
By Jeff Keeling
State and local officials made the announcement April 29: Local investors are purchasing and restarting the Blue Ridge glass plant that AGC North America mothballed in late 2012. The move by the newly formed “Heritage Glass Co.” could create 120 jobs by mid-summer and nearly 250 within five years. Ten private investors, the majority of them former AGC employees, bought the equipment and contents inside the 450,000-square-foot, 94-year-old plant for $2.25 million. The Kingsport Economic Development Board will backstop the endeavor, having closed May 2 on purchase of the land and building. Heritage is in a 15-year lease-purchase agreement with KEDB that should make taxpayers whole, with interest, when all is said and done. Meanwhile, Tennessee’s Department of Economic and Community Development is providing a $700,000 grant — $500,000 in cash and $200,000 in job training.
Heritage’s two principals, CEO Chris Cording and President Eric Kerney, both have a long history with the plant. In a May 3 interview with the Business Journal, they exuded confidence that the company can quickly recapture markets, producing roughly 120 tons of finished glass on an average day and generating about $30 million in annual revenue. Read on for background into the facility’s rejuvenation and the people behind it.
Ready to hit the ground running
A quick tour by golf cart around the Heritage Glass manufacturing plant seems to substantiate its new owners’ claim that the idled facility can be producing again by July. Huge bags of Italian dolomite, a key raw material in the manufacturing process, sit in rows on the shop floor, left over from AGC’s departure. Equipment for tempering, cooling and other steps in the process to produce the patterned glass that rolled out by the truckload until fall 2012 looks ready to put back into service in fairly short order. Pallets of solar glass still sit too, waiting for shipment out by Heritage, since it now owns them.
Listen to Cording and Kerney, and it also becomes clear that finding about 120 qualified employees to begin producing for the solar and architectural markets won’t be difficult. Many of Heritage’s workers are likely to be experienced at the trade and familiar with the plant and equipment itself. Local employees produced glass in some form or fashion at this location from 1920 until AGC ceased operations nearly two years ago, laying off nearly 150 people in two phases.
AGC cited inexpensive imports of Chinese solar glass at the time, but Cording and Kerney are convinced Heritage can compete. They said quality issues, transport costs of the extremely heavy product, and expectations of strong growth in the market for low iron glass for concentrating solar power give them confidence in their job creation and revenue projections.
“We’ll be taking market share from other countries, really,” Cording said. “As this plant was closed, people didn’t have a source anymore, so they had to start buying from overseas.”
Restarting a long run – but with local control
“Corning Building in South” read the headline in the Oct. 25, 1919 “National Glass Budget,” a trade journal. The article, available online, referenced the Bristol Herald of Oct. 16, and reported New York-headquartered Corning’s decision to produce Pyrex glassware on the site of the former Edgewood Arsenal “to be in close proximity to the purchasing markets of the entire South.”
The Herald article referred to plans to begin operations in 1920 with 300 employees, and reads like a who’s who of early Kingsport. “Speeches … were delivered by J. Fred Johnson, President of the Kingsport Improvement Corporation, and Col. William Roller, one of the oldest residents and perhaps the largest individual property owner of the city.”
The Herald indicated Corning chose Kingsport from among many competitors, and that the workforce there “will be increased rapidly as labor … can be trained.”
Corning’s owners, the patrician, New England/Upstate New York Houghton family, may or may not have endorsed the assessment that concluded the Herald article, but these were heady times for the young Model City: “The company is now unable to fill all its orders … The work of the ‘Pyrex’ products, already nationally recognized, and the sales for which have been stimulated by much advertising, is expected to result in the rapid enlargement of the Kingsport plant until it becomes one of the largest industries of the city.”
Production at the site proceeded through a series of outside owners, right up through AGC. Kerney and Cording, who are among 10 primary investors in Heritage, are graduates of Sullivan South and Sullivan Central high schools, respectively, and Heritage will be a private company with local ownership. Cording, an engineer, had just begun working for ASG when AFG purchased the plant in 1978. He stayed on through AGC’s purchase in the mid-1990s. Kerney’s father started Heritage Manufacturing in Kingsport in the late 1980s, and the company ended up the main supplier of crating and shipping containers for the plant, where Kerney spent several years working after college before joining the family business.
How things dried up
At a certain point, AGC turned the bulk of its attention to clear glass like that it produces at its much larger Greenland plant in Church Hill. That facility, which may have absorbed some of those laid off from Blue Ridge, can produce up to 1.2 million pounds of “float” glass a day, and sends it into the automotive and architectural markets.
Eventually the company began focusing entirely on solar glass at Blue Ridge, abandoning the additional market stream of patterned architectural glass – and even the solar segment, Cording said, wasn’t high on AGC’s priority list.
“We knew that AGC was not that interested in this particular market,” Cording said. As AGC, a Japanese corporation, began to close some of its other patterned glass facilities around the world, Cording made a bid for the still-open plant, but AGC said no thanks.
Meanwhile, with his own company losing business due to slowdowns at Blue Ridge, Kerney had a clear interest in some type of turnaround there. Having worked at AGC, picked up small glass production orders from them and completed them at Heritage Manufacturing, and even audited their product in the final days, Kerney too was convinced the plant’s productive, profitable life span didn’t have to end just shy of the century mark.
Eventually, AGC told Cording that if his interest in a purchase remained strong, he might be best served separating his employment with the company. Two other Heritage partners left at the same time. Not long before the shutdown, Kerney learned about Cording’s interest in a buyout and the two began talking in the summer of 2012.
“I contacted him and asked him if I could be his box vendor at the new corporation,” Kerney said. “He said yes, a couple of months went by and I got really (gutsy) and said, ‘Hey Chris, besides me doing boxes how about letting me buy in on this deal?’ I wound up becoming president of this corporation because of him.”
Both Cording and Kerney speak well of AGC as a corporation and are quick to point out its past and ongoing contributions to the Kingsport-area economy. That said, they believe that when the Blue Ridge plant became a proverbial red-headed stepchild in the corporate hierarchy, it showed in quality control and the diligence with which AGC worked to keep the plant competitive in the market.
“We could tell this was not their core interest anymore,” Cording said. “I had worked at this plant for years, Eric had worked here, and we just did not want to see it end.”
Putting it all together: Cue the other local heroes
Believing a moribund manufacturing plant can still make money and provide jobs and making it happen are two different things. Cording and Kerney said officials ranging from the mayors of Kingsport and Sullivan County to the EDB and recently retired NETWORKS Sullivan County CEO Richard Venable all played crucial roles in the leadup to May 2.
Most importantly, Venable stepped in at Kerney’s behest after a key investor dropped out in early 2014.
“Richard Venable’s the one that helped revive this when we thought it was dead in the water,” Kerney said.
Assuming a payroll exceeding $3.5 million, and considering that even during its lease period Heritage will pay full property tax, Cording believes local leaders “crafted something that was beneficial to the city and to us at the same time.”
“It’s all about jobs,” added Kerney, the more politically connected of the pair. “That’s why everybody came together and put their egos to the side. That was the first question when we were soliciting this money – how many jobs? You put that number 120 out there, they start sliding to the table. Kingsport needs this. Politicians were doing their jobs.”
Kerney, Cording, local officials and additional investors are confident the operation can restart and quickly recapture markets not just in solar glass, but also in architectural patterned glass.
“To see the trend in manufacturing jobs return to this great nation can only be beneficial to our city that depends so much on this industry,” Kingsport Mayor Dennis Phillips said when the Heritage deal was announced.
KEDB Chairman Bob Feathers thanked Kerney, Cording and company for their investment, but like Phillips, he recognized the multiple parties involved.
“The continued cooperation and partnership with the state of Tennessee continues to yield high quality private investment affirming the governor’s strategy to make Tennessee the best place for new business,” Feathers said.
Onward to making, selling and shipping glass – the easy part?
Whatever the true level of quality concerns may have been during the latter days under AGC, Cording and Kerney are both highly confident the product coming out of Heritage Glass will be top-notch, and something customers will desire. Both are also quick to credit AGC for the investment the company made (and continues to make at its Greenland Plant in Church Hill) in the local community.
Cording and Kerney didn’t flinch under repeated questions about the viability of their plan. Cording said with a strong, committed management team in place, product quality should be top-notch at a facility he said once produced more than 95 percent of all glass made for solar panels worldwide.
Heritage will produce two types of solar glass, one with an anti-reflective coating and one without. All of it will have an extremely low iron content, which maximizes conductivity and thus energy efficiency of the panels built by that segment of Heritage’s customer base. Global growth projections for solar are robust, and Cording said “this time around” continued improvement in panels’ efficiency and output make demand less contingent on public subsidies.
He and Kerney also are confident Heritage can recapture some of the architectural patterned glass markets that AGC abandoned in the late days of the Blue Ridge plant. Kerney’s company actually produced smaller runs of some of those items, cutting, edging and drilling glass for such applications as shower doors and patio furniture. They again point to a couple of key variables, starting with transportation costs.
“You’ll never see a truck pull out of here that doesn’t have a minimum of 42,000 pounds of glass on it,” Kerney said.
Quality is the other primary issue.
“That’s why everybody wants to come back to the United States if somebody will supply them, and that’s because of the quality issues,” Cording said. The length of time it takes to receive product from overseas is yet another factor in an age of tight inventories and efficient supply chains. “It becomes a problem real quickly to not have a rapid source of supply.”
Cording said he hopes a successful venture at Heritage can become a model for the metro area.
“There is starting to be a trend of where small industries have gone under, people trying to go back in and restart them, because usually you can get them for low capital costs,” he said.
In addition to expected growth at Heritage Manufacturing, Kerney’s other company, Kerney said the project should have a ripple effect, as several of Heritage’s top suppliers are local.
“We truly appreciate the help we’ve gotten locally and from the state, but we think we’re providing a good deal,” Kerney said. “120 jobs are being brought back into town and it’s only cost the taxpayers statewide $700,000 – that’s a cheap price to put a factory in and this many people to work.”
On the local end, Kerney said, “if we fulfill our agreement it costs the taxpayers nothing, and at the end of the lease agreement they’ve made a little money.”
Providing jobs and economic impact at a time when both are clearly needed – Heritage has had close to 1,000 job inquiries – will be a nice side effect of the company’s main reason for firing up the furnaces on Lincoln Street.
“We’re glassmakers who like to make glass, and want to do it, and that’s what we’re here to do.”