It’s too early to tell how or if Remington’s recent furloughs will affect its agreement with the city of Huntsville, according to city officials.
June 3 marked the first day of about a two-month furlough for about 200 workers at the Remington plant in Huntsville. Workers are expected to return in mid-August.
Following the company’s emergence from Chapter 11 bankruptcy last year, which saw $775 million in debt converted to equity and the company receive $193 million in a new lending package funded by seven banks, the city of Huntsville renegotiated the original incentive package that was put in place when Remington decided to move here.
Last November, the city council approved a new deal that gave Remington an extra three years to meet its objective of employing 1,868 employees or the company forfeits its $12.5 million incentive package provided by the city of Huntsville, the Madison County Commission and the Industrial Development Board.
“Part of the revised agreement gives the company flexibility to respond to market shifts, as long as they fulfill long-term obligations,” Kelly Schrimsher, director of communications for the city of Huntsville, said. “There are benchmarks where the company’s performance is analyzed. These include performance numbers for wages and employees. The next reporting period will be Dec. 31, 2019. Compliance reports, however, will not be delivered until spring of 2020.
“Until the city and state see that report, it would be premature to speculate on Remington’s performance.”
According to reports, Remington has already lost $3 million from a withheld cash incentive payment from the state and repaid more than $500,000 for failing to meet various job and payroll targets, which was part of an overall $70 million incentive package.
Remington did not respond to requests for information by deadline.
Huntsville officials still believe Remington is committed to meeting its goals and to the city.
“This is a 200-year old company in the process of restructuring and reshaping its future to meet a changing marketplace,” Schrimsher said. “The CEO’s office is now in Huntsville. We believe the company is committed to having a strong presence here, and our agreement gives them time to work through their reorganization.
“Conversations to date have reflected this continued commitment.”
Schrimsher also said the city is well protected under the agreement it has with Remington.
“The city still has 100 percent control of the Remington campus,” she said. “To date, Remington has not earned any percentage of the facility. Should Remington ultimately be found in default of its contract, the company would owe the city $12.5 million, which was the city’s investment in the project or surrender the campus. The campus market value far exceeds the $12.5 million mortgage.
“Huntsville’s investment was relatively small considering the hundreds of millions of dollars Remington has invested in the plant and payroll to date. If Remington walked away tomorrow, Huntsville would be made whole.”
Schrimsher cited the positive impact Remington had after locating in the city from a jobs standpoint, regardless of what happens in the future.
“To put this in further perspective, the Huntsville marketplace is in an entirely different position when Remington entered in 2014,” she said. “At that time, Huntsville was heavily dependent upon federal employment dollars, and Mayor Tommy Battle and the Chamber (of Commerce) were working hard to diversify and expand our employment base beyond federal contracting. Advanced manufacturing was a target market, but it’s also highly competitive, and every state in the country is fighting for good-paying jobs for skilled workers.
“Landing the Remington plant put Huntsville on the map for advanced manufacturing. After the Remington announcement, the city caught the eye of Polaris, then GE Aviation, Aerojet Rocketdyne, Blue Origin, and now Mazda-Toyota. Remington was a catalytic project for Huntsville. At present, there are thousands of jobs available for highly skilled workers in Huntsville.”