After year, Maumee ex-Ford plant still idle
22.08.2008 10:03
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- Source: toledoblade.com
One year after would-be automotive executive Keith Obey proposed reopening a closed Ford Motor Co. parts plant in Maumee, machines still stand idle and many questions remain about how the project will be financed. "We're all antsy," said Mr. Obey, a former executive of the plant who wants to revive production of parts for the Detroit Three automakers and other customers. "There is a lot of frustration.
It's been a very long haul." Deadlines have come and gone since Mr. Obey revealed plans to buy the factory from Ford and resume production as part of an employee-owned company to be called Maumee Authority Stamping Inc. He now says he wants to complete the purchase of the plant by Oct. 13. But 12 months after the initial announcement, financing for the $16 million deal hasn't been nailed down and Mr. Obey has made major modifications to his plans. In an interview yesterday, he told The Blade he has decided not to operate under a form of worker ownership known as an Employee Stock Ownership Plan because of the complexities and limitations of such arrangements. Also, National City Bank, which was to have provided a $3 million loan and $5 million credit line, is no longer involved. "We don't need them anymore," he said. Still, he is seeking a $1.5 million loan from members of the Lucas County Commission, which they are considering. He said he has collected about $1 million of the $5 million he planned to raise from employees. He expects an additional $500,000 to come in by the time the plant opens, and more later. But he acknowledged that the decision not to operate as an employee-owned business has raised legal barriers to accepting funds from members of his work force. Eileen Turner, spokesman for the Ohio Department of Development, said the agency was aware Maumee Stamping had decided not to operate as an ESOP. "They are keeping us informed of their efforts and we are currently reviewing them," she said. Ohio's main economic development agency has offered the firm a $5 million loan, but first wants Maumee Stamping to line up nonemployee investors as a way of demonstrating that the private marketplace regards the firm's business plan as viable. Mr. Obey said is negotiating with three potential investors, but acknowledged that no deals have been concluded. He refused to confirm that the group includes Industrial Realty Group LLC, of Downey, Calif., a name that surfaced amid questioning from the county commissioners meeting. Stuart Lichter, president of that firm, couldn't be reached for comment. The firm specializes in redeveloping and leasing vacant industrial properties. The only private investment Mr. Obey has publicly discussed involves an unnamed firm that would buy the former Ford plant and lease the real estate and equipment back to Maumee Stamping. The purchase price is expected to be $14 million, according to state documents. But it is unclear if that landlord-tenant relationship would meet the state's demand for a private investor. "It doesn't - black and white - meet the guidelines of the term sheet we have with Maumee stamping," said Kelly Schlissberg, a Development Department spokesman. "It is definitely a step in the right direction. But all this depends on what kind of money is coming in from the investor." Acknowledging that his agreement with the state stipulates that Maumee Stamping buy and own the real estate, Mr. Obey said he is working on an arrangement under which the local firm would acquire the machinery and substitute it as collateral against the state loan. But it is unclear whether the state will agree to that. The Toledo-Lucas County Port Authority offered a month ago to arrange a $3 million loan through the U.S. Small Business Administration, said Lisa Wagner, director of financing programs. But the agency hasn't heard if Maumee Stamping is interested. Port officials have heard that Mr. Obey has obtained private financing and may not need the money the agency has offered. Mr. Obey stressed yesterday that the $5 million state loan is crucial to his plan. He also spoke of raising money from wealt hy Toledoans, but conceded that no funds have been nailed down. He remains optimistic that his plan is workable, despite continuing financial turmoil in the U.S. auto industry. He has projected initial-year sales of $40 million, which is down from $45 million to $100 million he forecast in recent months. Mr. Obey said prospective customers remain interested, partly because he would be able to sell plastic and metal parts for less than competitors. However, he said in the spring that he had to have the plant purchased by the end of June. The plant, on Illinois Avenue, has 800,000 square feet. Initially, the firm would have 51 employees, each of whom has invested at least $16,000 each in the project. Employment would reach 140 by the end of the first year and 250 in the second year, Mr. Obey said. His business plan given to the state in the spring suggested up to 400 workers within three years. State officials said the deal could materialize. "There has been no decision one way or the other," said Ms. Schlissberg. "Projects this big don't happen overnight. We want to make sure we're doing our due diligence." Contact Gary Pakulski at:
pakulski@theblade.com
or 419-724-6082.
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