We spoke recently with Huntsville Mayor Tommy Battle about one of the biggest economic development coups in state history. In February, gun manufacturer Remington Outdoor Co. announced plans to locate a factory in Huntsville that will employ 2, 000 workers.
Incentives offered Remington by state and local governments totaled $68.9 million. The city of Huntsville and Madison County partnered to buy, for $10.5 million, a former Chrysler Electronics plant and turn it over to the gun manufacturer. The city and county also offered $2 million for equipment and another $2 million for meeting employment benchmarks.
Remington, which built its first plant in Ilion, N.Y. in 1828, has been moving operations to the South in recent years. The company moved its headquarters from New York to Madison, N.C. in 1996. In 1997, it opened a firearms plant near Mayfield, Ky. to supplement the Ilion plant. Huntsville will be the third facility making Remington guns.
The Huntsville plant comes in response to a booming growth in company sales. “With demand for our products at a historic high and more new product launches planned for 2014 than ever before in our 200-year history, we are investing in the future, ” said Remington Chairman and CEO George Kollitides.
The Huntsville plant is scheduled to open in 2015 with 280 full-time workers. Employment is projected to reach 2, 000 by 2021.
It was brought in by one of the industrial recruiters who works for the state in this area. At first, they were looking to build something from the ground up. Then they met with Shane Davis, in our urban development department. In his conversation, while looking at locations in Limestone and Madison counties, he mentioned the building, and they looked at it. We had used the Chrysler building for other projects, telling prospects they could achieve their goals of quick production with a good building you could buy a lot cheaper than building it. That was kind of the key to making this work: a building they could get into quickly — that and building the workforce.
They interviewed with 10 advanced manufacturing companies in the area, asking them, “Do you have the workforce, will we have trouble filling jobs?” And they also looked at the wage and hour issue. And they wanted to see the community’s response to a company that sells firearms. They had been in communities in which the officials had said some things that were not complimentary. We educated them on the community, and they felt very comfortable here.
The facility is 850, 000 square feet on 144 acres. It had been the Chrysler Electronics plant, and then Siemens used it to produce some electronics. There are production and training areas and a large set of offices. It gives them room to expand. Also, when they looked at it, it was time for them to get into production. They need the pneumatics in place, the electricity in place, and, according to the engineers, it has all the production items they are looking for. The tools and the pneumatics to run their production site, a clear set of lines down to the warehouse area, and all of the electrical requirements are already met in the building.
Remington’s plan was to ramp up employment ultimately by 2021 to 2, 000 employees. They signed a note to us for the amount of money we put into the project, $12.5 million, and each year if they hit their employment goal, they are forgiven on that note. After the 7th year, they will start being invested in the building, 25 percent each in the 7th, 8th, 9th and 10th years, for providing the employment numbers. They have goals they meet every year, and there is an amount that they owe us if those goals aren’t met. This is the cleanest way to do clawbacks with a building asset. Several industrial attorneys helped shape and mold these agreements, and the city financial officer, a very shrewd person, who has worked through these agreements for a number of years, also was a consultant, as well as the chamber of commerce.
Remington fits very much what we are looking for: advanced manufacturing companies. We already have a number of them — Toyota, Adtran, Avocent/Emerson — throughout the area, although we are known more for engineering and technology. Remington has some sales to the government, but they are not government-dependent. So they gave us diversification of our manufacturing base. With 2, 000 jobs earning $40, 000 a year, it adds $80 million a year to our economy. It is a very big industrial prospect for us and brings a lot to the table that we haven’t even considered yet. There will be 2, 000 people who — like those 37, 000 working at Redstone Arsenal — will live in a 14-county area across north Alabama and south Tennessee and be coming into Huntsville to work.
AIDT is known worldwide as the best in the business, so AIDT was a big plus for us. The education of our workforce was a plus for us, and the cost of living, 10 to 15 percent lower — from payroll paid to what it costs you to buy groceries and houses in this area. Then ease of working with state and local government was a key.
First is education. Three years ago we had a school system with $20 million in debt and no path forward. The superintendent now has a $29 million surplus, and the whole community is seeing the city move forward, with a system that is nationally recognized. Second, we have the infrastructure. We keep up the road system. We have $330 million in road projects planned over the next five years. We also have office buildings that offer the capacity to grow into: the second largest research park in the country, some capacity there, and also in the first four buildings completed of the 42 buildings and 4 million square feet of office space planned for Redstone Gateway, located at Gate Nine of Redstone Arsenal. Beyond that, we have the capability for data transfer, sewer and water in place — all the infrastructure items that are a key to growth.
Union representation was not a factor in our conversations with Remington. We’ve worked with a number of companies across the board, including a number with union representation, but most of the companies we end up with don’t have union representation. Part of that has to do with the nature of Alabama state law, Right to Work law. But it was not mentioned as a factor in the Remington proposal.
There is still plenty of room for growth, but we want to have smart growth, planned growth.
Chris McFadyen is the editorial director of Business Alabama.
interview by Chris McFadyen • photo by Dennis Keim