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Tag: Blue Star NBR

Wytheville rubber glove facility is on hold

After a federal financing package fell through, construction of Blue Star NBR’s medical glove plant in Wytheville has stalled.

Now, Blue Star needs $230 million to start operations, says CEO Scott Maier. “It seems silly for all of this to fall to the wayside,” he says. “We don’t want to just sit and twiddle our thumbs and wait.”

First announced in October 2021, the project broke ground in January 2022 but has since faced funding-related delays. Blue Star anticipated securing a federal loan package from the U.S. International Development Finance Corp. (DFC), an agency that President Donald Trump authorized in 2020 to use funds for two years to support domestic companies producing resources needed during the COVID-19 pandemic.

Blue Star had expected DFC financing to fund NBR and glove production facilities, Maier says, adding that agency officials told him to apply for Department of Defense funding and that DFC would cover any financial shortfall. But then, DFC’s processing of Blue Star’s loan request was delayed, and the agency asked for a revised budget. Finally, DFC’s loan-making authority expired before it finalized the loan, leaving Blue Star in a tight spot.

A U.S. Government Accountability Office study published in November 2021 reported that DFC had received 178 such loan requests, but none were given.

Maier says Blue Star considered seeking private financing, but investors have balked, given the uncertainty of the project’s completion. And the U.S. Export-Import Bank considered the project too risky to underwrite.

Maier says his next, best hope would be getting the remaining funding from the federal government’s 2024 budget, which had not passed as of early December 2023.

These possibilities, Maier says, would involve Congress or the Biden administration directing Health and Human Services to reallocate money toward the project or designating money for the project in a continuing resolution.

A Virginia Economic Development Partnership economic impact analysis estimates Blue Star’s facility would bring 2,500 jobs to Wytheville, says Garrett Murch, founder of GCM Strategies.

In May 2023, Blue Star completed construction of a 30,000-square-foot, 85-foot-tall main factory to produce raw nitrile butadiene rubber. The delayed second phase, which would take nine months, would involve commissioning that facility and starting large-scale NBR production.

Phase 2 also includes building the first glove manufacturing facility, which could begin producing gloves within two months of completion. Within 18 months, the facility could reach full production, making 2 billion to 4 billion gloves annually.

The five-year plan is to have six glove manufacturing facilities.

In November 2023, Maier met with both U.S. senators from Virginia, a discussion that U.S. Rep. Morgan Griffith (R-9th) joined via webcast.
The offices of Sens. Tim Kaine and Mark Warner and Rep. Morgan Griffith said in a statement to Virginia Business: “Upon learning of the issues with the development of the Blue Star plant in Wythe County, Sens. Kaine and Warner and Congressman Griffith teamed up in a bipartisan push to urge the Biden administration and the company to come to an agreement to get the plant on track for completion. They are disappointed that an agreement was not reached. They will continue to look for ways to work across the aisle to support domestic manufacturing and job growth in Southwest Virginia.”

“We’re still hoping the government will finish what it started,” Maier says, but if not, Blue Star will examine alternatives like retooling its facility to produce commercial-grade rubber for gaskets.

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.