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Tag: Blue Star

Finding new solutions

Movers and shakers in Southwest Virginia wanted to try a new approach to economic development.

The stakes were (and are) high.

Naturally, the decline of the coal industry had a devastating impact on Virginia’s coalfields. The Appalachian Regional Commission classifies four counties in Southwest Virginia — Buchanan, Dickenson, Lee and Wise — as economically distressed.

Every county in Southwest Virginia saw a drop in population over the past decade, according to the 2020 census, leading to the loss of a delegate seat.

Trying to turn the tide, leaders in the area created InvestSWVA, a public-private economic development and marketing initiative for Southwest Virginia.

The idea for the initiative was born, according to Will Payne, InvestSWVA’s director, out of a desire by several current and former state legislators representing the region, including the late state Sen. Ben Chafin, state Sen. Todd Pillion and Dels. Terry Kilgore and Israel O’Quinn, to see Southwest Virginia be more proactive and assertive in pursuing business leads.

One member of the group or another, according to Payne, heard a rumor that EarthLink CEO Glenn Goad, who grew up in Wise County, was considering bringing some customer service operations from overseas back to the United States.

Kilgore drove to Atlanta to visit Goad in November 2019, according to Payne. In January, a larger group consisting of Kilgore, O’Quinn, Pillion, Chafin, Payne and Duane Miller, executive director of the LENOWISCO Planning District Commission, traveled to Atlanta to talk again with the head of the high-speed internet and mobile phone service provider.

The personal approach worked.

In September, EarthLink announced plans to invest $5.4 million to build a customer support center on property that sits on a reclaimed mine site in Norton, creating 285 jobs.

Miller feels confident it was the efforts by lawmakers and leaders to make personal connections with business executives that caused Southwest Virginia to be successful with EarthLink.

“Everyone has just said, ‘OK, let’s roll our sleeves up, and let’s just get to it,’” Miller explains.

Big news in Wythe County

Experts say there are two must-haves for sealing economic development deals: the right infrastructure and the right location.

Virginia committed $8.5 million to upgrade infrastructure at Progress Park in Wythe County to secure a deal with Connecticut-based Blue Star NBR LLC to invest $714 million to build a manufacturing facility that will produce nitrile butadiene rubber and medical gloves, creating more than 2,000 jobs. (See related story.)

The state’s investment in the project includes $3 million to expand the Fort Chiswell Wastewater Plant, $1.5 million to extend public sewer infrastructure and $4 million to build a water tank serving Progress Park.

Another new tenant at Progress Park will also get to benefit from those upgrades. STS Group AG, a supplier of interior and exterior parts for commercial vehicles, announced in April it plans to invest $39 million to bring its first U.S. manufacturing operation to the Wythe County business park, creating 120 jobs.

Slot machines and sawmills

Southwest Virginia’s biggest economic development news in 2020 was, of course, Bristol voters’ overwhelming approval of a referendum allowing Hard Rock International Inc. to build a $400 million resort and casino.

In late 2021, Hard Rock International announced construction has begun on a temporary casino at the former Bristol Mall, set to open in the first half of 2022, creating an expected 600 jobs. The temporary, full-service casino will offer about 900 gaming slots and 20 tables for gaming, as well as a restaurant and lounge in a 30,000-square-foot space.

Smyth and Grayson counties celebrated a win in August 2021 when Woodgrain Inc., a manufacturer of wood molding and trim, announced plans to invest nearly $9 million to expand its Smyth County operations and put $8 million more into purchasing and expanding Independence Lumber sawmill in Grayson County.

“If this hadn’t have worked, it probably would have closed,” Mitch Smith, deputy county administrator for Grayson County, says of the sawmill, which is the county’s largest private employer.

This deal means the sawmill’s 80 workers will keep their jobs, and Woodgrain is set to add 20 jobs at the sawmill over the next three years, according to Smith. Additionally, the expansion is expected to create 80 jobs at the facility in Smyth County.

Energy opportunities

Del. Will Morefield, R-Tazewell, believes there’s a perception that Virginia’s coalfield communities are opposed to alternative energy. “In reality, we’re not,” he says. “We welcome it with open arms.”

Morefield is working closely with Kentucky-based Edelen Renewables, which is partnering with Kansas City-based solar developer Savion LLC to build a 700-acre solar farm on a former surface mine in Buchanan County. The $100 million solar farm is expected to generate about $100,000 annually in tax revenue and create about six permanent jobs and
250 construction jobs.

Although he’s a supporter of what he describes as “an-all-of-the-above approach” to energy, Morefield isn’t abandoning coal.

He was pleased when SunCoke Energy Inc., a producer of high-quality coke for blast furnace steel production, announced plans in May 2021 to invest $50 million to refurbish its manufacturing operation in Buchanan County and to perform upgrades allowing the facility to produce foundry coke, which is used for melting iron and other metals. Work on the project is expected to last several years, according to a company spokesperson.

“They’re one of the largest buyers of coal in Southwest Virginia,” Morefield says of SunCoke. “The multiplier effect that that company has on the local economy is significant.”

Growing established companies

“We’re seeing some really good growth among our existing manufacturing companies in the area,” says Jonathan Belcher, executive director of the Virginia Coalfield Economic Development Authority.

For one, Tempur Sealy International Inc. is expanding its Duffield facility in Scott County, investing $16.7 million and adding 25 jobs to meet growing demand for its foam mattress and pillow products.

In another win for Scott County, VFP Inc., which manufactures enclosures to protect critical infrastructure, announced plans in November 2021 to invest $7.2 million to expand its operation there, enabling the company to produce larger concrete shelters and meet future market demand.

Tazewell County also benefited from an expansion by a longtime area employer in 2021. Family-owned heavy metal fabricator Lawrence Brothers Inc. announced plans in April to invest $3.2 million to upgrade and modernize its machinery and equipment to increase capacity and double production. The expansion is expected to create 40 jobs.

Good fits for Russell County

Some economic development offices get obsessed with landing a whale, according to Ernie McFaddin, chairperson of Russell County’s industrial development authority. While he’ll certainly take a corporation bringing 2,000 jobs to the area, he’s also happy to land medium-size deals.

“I know for us that an employer with 50 to 150 jobs is really the sweet spot,” he says. The county got just that with Ceccato S.p.A. In September, the Italian vehicle-washing equipment manufacturer announced plans to invest $1.75 million to build its U.S. headquarters in Russell County, creating up to 50 jobs over the next three to five years.

Ceccato USA President and CEO Jimmy Sisk settled on the Russell Place building in Lebanon the first time he looked at it, according to McFaddin.

“I think the biggest thing he liked was that he really didn’t have to do anything to it,” McFaddin says. “Clearly they were looking for a place where they could get started quickly.”   

 

Southwest Virginia’s recent deals

Blue Star NBR LLC

Wythe County

2,464 jobs

EarthLink

Norton

285 jobs

Amazon.com Inc.

Bristol

200 jobs

STS Group AG

Wythe County

120 jobs

Maine Five Distributors LLC

Buchanan County

100 jobs

Woodgrain Inc.

Smyth County

80 jobs

Ceccato S.p.A.

Russell County

50 jobs

Lawrence Brothers Inc.

Tazewell County

40 jobs

Mohawk Industries Inc.

Carroll County

35 jobs

VFP Inc.

Scott County

30 jobs

Source: Virginia Economic Development Partnership

Glove affair

You can hear the pride in Bill Mosher’s voice when he talks about his dad, Ken Mosher, and his career in the medical glove business.

“He was in the glove industry for almost 50 years,” Bill Mosher says incredulously.

Ken Mosher’s storied career includes being part of a team that in 1990 invented the nitrile glove, an alternative to latex gloves used in industrial and food preparation environments. He worked in the industry when the majority of medical gloves were still produced in the United States and later watched the industry move offshore.

By 2000, the elder Mosher had founded Omni International Corp., which handled U.S. and Canadian marketing, sales and distribution of medical gloves manufactured in Asia. He retired in 2015, but it didn’t take.

A few years ago, as Bill tells it, his father began discussing plans to bring medical glove production back to the United States.

“He reached out to some folks that he knew from the industry,” Bill says. “He reached out to a few kind of new folks who had some more experience with starting businesses here in the U.S. And he kind of put this plan together with this team in order to create this new company.”

That company is Blue Star NBR LLC, which is investing $714 million to build an advanced nitrile butadiene rubber (NBR) manufacturing facility and a nitrile glove production operation on 255 acres in Wythe County’s Progress Park. The project is expected to create 2,500 jobs by 2028.

Construction on the NBR manufacturing facility began in January and it’s expected to be operational by August. The first of Blue Star NBR’s six planned glove manufacturing plants is scheduled to open by March 2023, with five more plants opening between 2023 and early 2028. When it’s operating at full capacity, Blue Star NBR plans to manufacture 20 billion nitrile gloves per year — about 18% of the nation’s current supply.

“The U.S. uses about 110 billion gloves per year and that’s growing at 9% a year,” says Blue Star NBR CEO Scott Maier.

The project was initially a joint venture with Delaware-based American Glove Innovations Inc. (AGI), but that deal fell through in January, Maier says. However, he adds, that will not impact the timeline or Blue Star’s investment or hiring plans.

Plans for Blue Star were in the works before the first cases of COVID-19 hit the United States, creating a severe shortage of personal protective equipment (PPE), including masks, gowns, gloves and other items.

Experts credit several factors for the shortage. A big one, of course, was that few PPE manufacturing facilities were located in the United States. Leaders in countries that did have PPE operations began stockpiling gloves and masks for domestic use.

Blue Star ended up locating in Southwest Virginia largely because Bill Mosher, now vice president of operations for Blue Star NBR, called up Maier, a college buddy. After some conversations, Maier came on board as CEO.

An Alexandria resident, Maier brings to the job 20 years of private equity, venture capital and manufacturing experience. In 2015, he founded Bird Dog Distributors, a medical and surgical supply company based in Clintwood, a town in Dickenson County.

Maier picked Clintwood after searching for areas designated as Historically Under-
utilized Business Zones, otherwise known as the U.S. Small Business Administration’s HUBZone program. It provides businesses located in these areas with some federal contracting incentives if they meet certain conditions, such as business size and number of workers living in the area.

He’s grown to be a champion of Southwest Virginia. “I like this area,” Maier says. “I like the workforce that’s here, and I just try to bring any business opportunity I can to this area.”

For David Manley, executive director of the Joint Industrial Development Authority of Wythe County, seeing the mammoth deal come to fruition after so much state and local work elicits feelings of pride.

“We’ve heard words like ‘game changer’ and ‘generational,’” Manley says. “And I don’t disagree with any of those characterizations. Economic developers want to improve the quality of life for communities in which they work. This is a [development] that will have positive benefits for decades to come.”

Josh Lewis, executive director of the Virginia Industrial Advancement Alliance, an agency that supports economic development efforts for several communities in Southwest Virginia, began working with Blue Star last spring.

Lewis knew Lot 24 at Progress Park could handle the massive operation that Blue Star NBR had planned. “I think everybody felt pretty comfortable that the site and the location opportunity that we were presenting to the company was a strong candidate,” he says. That didn’t mean the deal was in the bag, however.

“A lot of prospects come down and you feel optimistic, and then it doesn’t work out,” Lewis says. “But this one did.” 

$714M Wythe medical glove plant is solo venture now

Developers broke ground in January on the $714 million medical glove manufacturing complex planned for Wythe County’s Progress Park. Only now it may be a solo project, not a joint venture.

In October 2021, then-Virginia Gov. Ralph Northam announced that Alexandria-based Blue Star NBR LLC was building manufacturing facilities to make nitrile butadiene rubber (NBR) and billions of nitrile medical gloves in a joint venture with Delaware-based American Glove Innovations Inc. (AGI) that would create about 2,500 jobs by 2028. Northam billed the venture as “the largest job creation commitment Southwest Virginia has seen in a generation.”

But the joint venture may have fallen through, as Blue Star backed out of the partnership with AGI in January during the due diligence phase, according to Blue Star NBR CEO Scott Maier. “It’s just business,” Maier explained.

Blue Star is moving ahead with the project on its own, Maier said, and the decision to exit the joint venture will not impact the amount of the planned investment or the number of jobs previously announced. “They weren’t bringing any capital,” he said of AGI.

However, AGI spokesperson Deborah Brown, a partner with global law firm Quinn Emanuel Urquhart & Sullivan LLP, said the situation isn’t so cut and dry. “AGI is at least a 50% equity owner in [the project] and does not agree that it has departed or split from the venture,” Brown said in a statement. “AGI is committed to seeing the project through.”

Brown also took issue with Maier’s characterization, saying, “AGI brought substantial capital to the deal and has invested funds into the venture.”

Blue Star executives decided not to move forward with the partnership after learning of litigation involving Marc Jason, who was previously named co-CEO of the Blue Star-AGI joint venture.

Jason is CEO of London Luxury LLC, which filed a Jan. 5 lawsuit in New York State Supreme Court against Walmart Inc., charging that Walmart owes the company about $41 million for boxes of nitrile gloves produced in Malaysia and Thailand. The complaint goes on to state that London Luxury could lose more than $500 million on a deal to sell tens of millions of boxes of gloves to the retail behemoth.

“Walmart has created uncertainty regarding whether it intends to accept and pay for the vast majority of gloves it committed to buy,” the lawsuit claims.

In an emailed statement, a spokesperson for Walmart said the company has filed a counterclaim against London Luxury “for their repeated failure to meet product standards and delivery obligations.”

London Luxury did not immediately respond to requests for comment.

AGI touted the Walmart deal as part of the joint venture and the litigation spooked Blue Star. “They were bringing a purchase agreement from a large Fortune 500 company [to the table] and now that contract is in litigation,” Maier explained. “So, we kind of said, ‘You know what? When things settle down, maybe we can talk again.’”

However, Brown said that “AGI disagrees that an ongoing litigation serves as a legitimate basis for any change to the [Blue Star- AGI] venture.”

The fact that AGI may be out of the project doesn’t strike David Manley, executive director of the Wythe County Joint Industrial Development Authority, as particularly newsworthy.

“We’ve been working closely with … the Blue Star leadership since May,” Manley said. “We don’t anticipate any impact to the timeline or success of the project. The project is moving forward as expected.”

A spokesperson for the Virginia Economic Development Partnership said the state “is aware of Blue Star’s separation from AGI.”

“We do not anticipate any impact on the project timeline and outcome,” said Suzanne Clark, VEDP’s managing director of communications, marketing and communications.

Visitors traveling to Blue Star’s site at Progress Park this month will likely spot some heavy machinery. “We’re moving dirt,” Maier says. “It’s still on track to have that initial NBR plant open at the end of August.”

Blue Star’s nitrile butadiene rubber manufacturing facility will be followed by six planned nitrile glove manufacturing plants, the first of which is scheduled to open by March 2023, with five more glove factories opening between 2023 and early 2028. When it’s operating at full capacity, Blue Star NBR plans to manufacture 20 billion nitrile gloves per year — roughly 18% of the nation’s current supply.

On Feb. 4, the Virginia House of Delegates overwhelmingly approved legislation to fund up to $4.6 million for VEDP to provide recruitment and training of employees for Blue Star operations in Wythe County.