WALTHALL - Supervisors have sought assurance from Front Line Apparel Group officers that the company will not "cut and run" if it sets up production in Webster County.
Also of concern at their Oct. 3 meeting was Front Line's ability to handle lease payments to the county if it moves into the Red Kap building in Mathiston.
"We're ready to go today," FLAG President Ron Levine told the supervisors during discussions to finalize the transaction.
Front Line, based in Sterling, Conn., has been negotiating with local officials for a year to possibly manufacture military clothing at the vacant Mathiston plant. The Board of Supervisors has applied for a $750,000 "CAP" from the Mississippi Development Authority to buy the building from Vanity Fair. The county proposes to lease the facility to FLAG for at least 7.5 years to retire the debt and the company will have an option to buy the building. The loan application had not been approved as of press time.
Joining Levine were Victor Winogradow, vice president/chief financial officer, and Jerry Riggan, plant manager, a position he also held at Red Kap when it was open.
Others present for the discussions were Planner George Crawford and Gloria Bagwell-Rowland, WIA Workforce Investment-Programs director and Workforce Investment Act district planner, both with the Golden Triangle Planning and Development District; and Joey Roberts, MDA project manager.
MILITARY CONTRACT
Levine told the board last week that he had received verbal confirmation that the company had been awarded a contract to make a new style of Army combat uniform trousers as a preferred vendor for the federal government.
He said the company would be certified through a Small Business Administration program that allows the government to make direct awards to minority and small disadvantaged businesses to grow through a program of federal contracting preferences and set-asides. Through the program, eligible firms can be awarded government contracts on a sole-source, non-competitive basis.
Levine said the initial contract would be for 120,000 pairs of trousers, with new contracts to be issued upon completion of each order during the nine-year program. The cap on sales for each contract is $5 million, with a lifetime cap of $100 million.
"Basically we have a nine-year entry into the government without having to bid on anything," said Winogradow.
He said all military services would eventually be changing over to the woodland style of camouflage uniforms, with the opportunity existing to produce uniforms for the other branches also. He also said the company would be making gloves if it locates here.
Levine and Winogradow said the company would first have to pretrain employees on components, followed by on-the-job training. After that, they said the first contract could be completed within six months.
"With a good workforce we could be at 150 within the first quarter," Winogradow said.
They said FLAG would probably start off with 75 employees and hire more workers in increments of 75. Riggan said the company hopes that average earnings will be around $8 an hour.
SECURITY PLEDGE
Crawford had told supervisors in August that it was important for them to obtain some security from the company, preferably an irrevocable letter of credit. Winagradow, responding on Sept. 21 to a letter from board attorney Buchanan Meek Jr., said he and Levine did not have the capability to issue a letter of credit but were willing to issue a personal guaranty for the lease/purchase contract.
When Board President Larry Crowley inquired last week if specific assets would be pledged for security, Winogradow said none would. He said their personal guaranty was based upon their financial strength, projected income sources and "moral obligation."
"We've been morally committed to the project since the beginning," he said, adding that this was also the case with their previous operations in Connecticut.
"We think 350 employees would fill the building and that's where we're going," Levine replied.
They also stressed the "most-favored status" of the SBA program designation.
When Supervisor Casey Weeks asked if the company might leave after only two or three years, Winogradow said the personal guaranty could have provisions for penalties, but added, "We're not leaving." He also said the proposed monthly lease payment of $9,316 was manageable.
Crowley said, "We want our people we represent to feel comfortable with this business deal. ... We don't want to put the county in the position of having a $750,000 debt. We don't want you to cut and run."
Supervisors took no final action but Meek was to prepare a lease-purchase memorandum of understanding based upon the previous proposal outlining assurances that the county would require from Front Line to satisfy the lending agency and the board.
The Webster County Development Council hosted a luncheon that day at the Magnolia Tea Room for Levine and Winogradow, supervisors and others involved in the negotiations. Levine and Winogradow then met with Roberts, the PDD officials and representatives of the WIN Job Center at the Eupora Depot
Supervisor Mart Salley, who is president of the WCDC; Chancery Clerk Russ Turner and Meek joined in a conference call with MDA officials and Crawford on Oct. 4 concerning the county's application for the CAP loan. No decision was made that day but supervisors have said they do not anticipate a problem in receiving the loan. The board next meets on Monday.
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