September 13, 2004
Filling Bass' shoes | With their ambitious plan to redevelop Wilton's G.H. Bass complex, four guys from Franklin County hope to put hundreds back to work
By Sean Donahue
It's been more than three months since any Bass shoes passed through the G.H. Bass & Co. office and distribution complex in Wilton, but a few poster-sized advertisements for weejuns and other styles still lean against the walls of the plant's reception area. Nameplates hang on the doors of empty offices, and even a few plants have been left behind among the debris, making the sprawling, 291,000-square-foot complex feel a bit like the Mary Celeste, the famous ghost ship found sailing itself in the Atlantic, abandoned by crew and passengers in the midst of a mysterious emergency.
Among the clutter of the building's past, though, is an unassuming sign of its future: a small whiteboard near the door with the name "Nichols Development LLC" written in black marker. In August, Nichols Development bought the Bass complex for an undisclosed sum from the town of Wilton, which took over the space after Bass' owner, Philips-Van Heusen, closed down its Maine operations and left the state in May.
Equally unassuming is Nichols Development's president, Gil Reed, a garrulous guy in a denim shirt who describes himself as a good old Maine boy and who worked as a salesman for Farmington-based trailer manufacturer Nichols Custom Welding until agreeing to head up the Nichols Development team. Reed and his partners ˆ Mark Berry and Bob Nichols, both of Nichols Custom Welding, and Rich Johnson, of Lakewood Capital Inc. in Skowhegan, who is also a part owner of Nichols Custom Welding ˆ admit that they have no real estate or development experience. But that hasn't stopped them from coming up with a plan for the building they've renamed the Nichols/ Bass Business and Technology Center.
In October, Nichols Custom Welding will move into one end of the building's empty manufacturing space. (ICT, a call center, occupies a two-story office building attached to the plant, and remains the building's only tenant.) In the meantime, Nichols Development hopes to find 10 to 12 small, out-of-state manufacturing companies to join it in the building. Their goal is to have tenants employing 200 people by next year, and as many as 700 by the end of the decade, to help revive a regional economy they've watched decline for years.
"No, we are not real estate developers. We just want to create jobs," says Reed. "Our theory is, if we can help put 700 people to work for somebody, we can sell more trailers. The guy down the road sells more beer, the guy up the road sells more cars and that gives them more money to buy trailers from me. So now we get the circle of life going again. It's not just Walt Disney, it's right here in Franklin County."
It's also an enormous task ˆ which makes it more surprising that it would fall to four small-business owners with no development experience. But to many observers, the members of the Nichols Development team are using that lack of experience to their advantage. Building on their backgrounds in metal manufacturing and heavy equipment sales, the partners plan to tap their network of suppliers, customers and colleagues in the manufacturing and transportation industries, using personal connections and word-of-mouth referrals to find a diverse group of smaller manufacturers to fill the space.
By marketing the facility within that network, Nichols Development is testing what Steve Cole, director of community development for Wiscasset-based Coastal Enterprises Inc., calls a new model to redevelop Maine's industrial space. "You usually have a municipality or commercial real estate firm marketing an industrial building, and the networks of those two entities are quite different than the business network even of this relatively small western Maine company," says Cole, who helped the team polish its development proposal. "It's not often that people with those kinds of networks get to experiment with them like this."
Whether Nichols Development succeeds or fails, Cole expects the group's experience to provide insights for other private developers or local economic development agencies trying to resurrect manufacturing space across the state. But Cole and other observers see additional symbolic potential in the project. By taking on the Bass redevelopment, Nichols Development could show that local business people, even without formal development experience, have the basic skills and know-how to take on these large projects ˆ meaning that rural towns don't necessarily have to look out of state or to large companies to help them turn their economies around.
An unlikely approach
Ironically, earlier this year Nichols Custom Welding nearly followed Philips-Van Heusen out of Maine. The 40-year-old company, which makes everything from basic utility trailers to a line of sport, rescue and dump trailers towed behind ATVs, has watched its revenues grow from $146,000 in 2000 to about $1 million this year. It needed more space than its Farmington location could provide, and a casual conversation with one of its New Hampshire suppliers quickly developed into that supplier suggesting that the company move across the border ˆ and offering a list of potential locations and available tax incentives.
It was an attractive deal that Nichols Custom Welding came close to accepting ˆ until the team of two native Mainers and two non-native but longtime Franklin County residents began feeling increasingly uneasy about abandoning the state. "That's what everybody else does," says Reed. "A lot of companies pull up and go, and I can understand it, but we just wanted to be different I guess."
Unwilling to leave Maine, the company began looking for new locations around Franklin County, including the Wilton Tannery site. But when Reed called Wilton Selectman Rodney Hall to ask about the building, Hall suggested that Nichols Custom Welding also take a look at the old Bass building, which was being marketed to potential developers by the Wilton Development Corporation through a request for qualifications process. (Philips Van-Heusen in February had offered to sell the giant complex to the town for $1, and the town, in turn, asked the Wilton Development Corporation ˆ in collaboration with the Androscoggin Valley Council of Governments, the Greater Franklin Development Corporation and the state Department of Economic and community Development ˆ to find a suitable developer to take over the space.)
At first, the Nichols team thought the space was too much to take on, but their recent flirtation with a New Hampshire address had the partners thinking about the the plight of the local economy. At the same time, Mark Berry was involved with another large redevelopment project ˆ last year his family bought Saddleback Ski Area in Rangeley ˆ that had him in contact with Coastal Enterprises Inc. During a meeting about Saddleback with CEI's Steve Cole, Berry brought up the idea of taking over the Bass building. Intrigued, Cole began helping the team develop its RFQ submission.
By the June deadline, the WDC had received three proposals, and from that group chose the Nichols Development team ˆ even though the RFQ had included criteria such as real estate marketing capabilities and a track record of comparable projects. "We all tended to assume it would be some kind of a real estate person" who redeveloped the site, says Gilbert Riley, president of the WDC. "It turns out Nichols Development is a brand new entity, and they haven't as a group done this before, which at first sounds like it's in conflict with everything we thought we wanted. But I think the single biggest factor that turned everyone into a supporter is the enthusiasm this group brought to the project."
That enthusiasm showed during the group's formal interview with the WDC, says Riley, when the Nichols Development partners laid out their goals for job creation and a plan for how to get there: Gil Reed brought to the meeting an inch-thick binder full of leads in the manufacturing industry, many of which he'd already contacted about the building.
The partners also made up for their lack of development experience with a mix of complementary business skills: Gil Reed is the salesman, with 33 years experience selling everything from heavy equipment for John Deere to custom trailers for Nichols Custom Welding. Mark Berry, who's worked in ski resort management, provides the organizational and managerial background. Rich Johnson, who runs his own heavy equipment financing business, handles Nichols Development's finances. And Bob Nichols provides the hands-on manufacturing experience and mechanical skills to deal with the building's infrastructure.
"All of them have been involved in small-scale businesses in the region for long time, and they have a lot of practical experience in figuring out how to keep a business afloat," says Cole. "That, I think, is immensely valuable as they look to begin working on a bigger scale."
Creating a cluster
With nearly 30 acres and 300,000 sq. ft. to work with, calling the scale "bigger" is an understatement. But Nichols Development's plan for the Bass complex is to work with one business at a time, subdividing the facility's vast, open manufacturing floors into smaller spaces according to each tenant's needs.
In addition to flexible space, Nichols Development plans to offer an all-inclusive and lower-than-average rent, thanks to its low upfront cost to purchase the building (the partners decline to say exactly how much they paid, except that it was far below the building's assessed $2.5 million value). Among other services, the lease rate will cover electricity, heat, water and sewer, parking, snow removal, trash removal, full-time security and broadband Internet access. The final lease price was still undecided as of early September, as Nichols Development was still negotiating an electricity rate with Central Maine Power, but Reed said it could be in the $6-$7-per-square-foot range.
The goal is to provide more than just space: Nichols Development envisions turning the Bass complex into a small manufacturing cluster, where businesses with similar products or processes (but not direct competitors) can team up to order raw materials in bulk, and share a central shipping and receiving area. Nichols Development also is trying to match potential tenants to the area's existing skilled workforce ˆ machinists, welders, stitchers ˆ now unemployed or working in the service industry.
Nichols Custom Welding will be the building's first tenant, taking about 15,000 sq. ft. The move will be a significant improvement over the company's existing location, where there's not even enough room to store raw steel inside, which necessitates extra preparation time to remove rust when that steel is brought inside to make trailers. "We want to grow as big as we can grow, and the Bass building can accommodate everything we want to do," says founder Bob Nichols.
But with the building's $500,000-a-year operating costs, Nichols Development needs to fill 80,000 sq. ft. in order to break even. Though Reed says the goal is to reach that point by August of next year, the company currently is applying for loans to cover three years of operating costs. And even though there's an out-of-state financing company ready to provide the funds, Nichols Development also is negotiating with Androscoggin Bank and UnitedKingfield, because it wants to work as much as possible with local partners. "Why send more money out of state?" says Mark Berry. "There's already a ton of that happening."
The biggest problem with the plan, of course, is that Nichols Development faces the same fundamental economic factors that drove Bass and other traditional manufacturers out of Maine ˆ or out of the country ˆ in the first place. And even though the Bass facility, which is relatively modern and fully operational, is unique in Franklin County, according to local real estate brokers, Nichols Development has to compete with thousands of other developers across the country who are trying to attract the same manufacturing tenants.
Though they acknowledge the challenge, the Nichols Development partners plan to be strategic about the types of companies they court. In particular, they're looking for smaller or mid-sized companies that sell or distribute a significant amount of product in the Northeast but don't have a manufacturing presence here. With rising transportation costs, says Berry, it could be more cost-effective for these firms to move a portion of their production to the region.
The low lease rate and cluster strategy also makes the Bass complex more attractive than a basic industrial park or older mill that needs significant rehabilitation, Berry adds. And the site's location within a Pine Tree Zone means manufacturing companies could be eligible for the state tax incentives that program provides.
Be like a rubber ball
The team also is betting on another strategy to help beat the odds, one that Berry and Johnson call "Gil's dog and pony show." Reed has been pitching the Bass complex relentlessly since the day Nichols Development closed on the building, when he mailed out about 50 information packets about the facility and its benefits to targeted potential tenants he'd identified though preliminary conversations with Nichols' business network.
In August, Nichols Development had two Canadian companies down to tour the space. This month, Reed is flying to Indiana to meet with a manufacturer there that's interested in the facility. While he's in the Midwest, Reed plans to visit 45 other companies ˆ some he's talked to already, some he hasn't ˆ to try to find more potential tenants. "If I can get Pierre Leroy from John Deere to see me," says Reed, referring to the president of John Deere's worldwide parts division, "I'm gonna be in there saying, 'Pierre, will you build some nuts and bolts up here?'"
Looking ahead, Reed plans to build that type of regional sales trip around every solid lead he visits. And that approach is exactly what the Nichols Development team is going to need, says Economic and Community Development Commissioner Jack Cashman, if it is to succeed in what he says will be a "very tough task" to fill the building. "[Reed] is going to have to be like a rubber ball ˆ when he gets thrown against a wall, he has to bounce back, because he's going to get a lot of no's."
Cashman has met with the team, and is including information about the Nichols/ Bass building in a presentation he'll make to foreign companies during an upcoming trade mission to Germany and Italy. And while he welcomes the partners' commitment to recruiting manufacturing companies, Cashman says he believes the best way to overcome the challenge of filling so much space is to give equal consideration to any tenant, whether it's a warehousing company or a call center.
Even CEI's Cole thinks that filling the space may require a blend of tenant types, rather than creating a pure manufacturing cluster. "Looking at the way the building is configured, it's easier to imagine that it will be most attractive to shipping and distribution businessess," says Cole. "Those may not be manufacturing jobs, but they may be easier jobs to claim."
But the Nichols Development team notes that warehousing or storage operations only require a handful of employees, which wouldn't meet their goal for putting as many local people back to work as possible. They plan to pursue manufacturing tenants until they've exhausted their connections in the industry or burned through their operating capital cushion.
By making that commitment to creating jobs, Nichols Development knows it has created big expectations among its neighbors in Franklin County. And while the partners admit those expectations ˆ along with statewide interest in whether a group of non-developers can successfully redevelop a large industrial site ˆ has put extra pressure on them, they say their focus is on creating a successful business and new economic opportunities in the region, not a high profile for themselves. "We're not doing it to make a statement," says Berry. "We want to make sure there's something here for us and our kids and our grandkids. Somebody has to do something, and we don't see anyone else doing it."
Among the clutter of the building's past, though, is an unassuming sign of its future: a small whiteboard near the door with the name "Nichols Development LLC" written in black marker. In August, Nichols Development bought the Bass complex for an undisclosed sum from the town of Wilton, which took over the space after Bass' owner, Philips-Van Heusen, closed down its Maine operations and left the state in May.
Equally unassuming is Nichols Development's president, Gil Reed, a garrulous guy in a denim shirt who describes himself as a good old Maine boy and who worked as a salesman for Farmington-based trailer manufacturer Nichols Custom Welding until agreeing to head up the Nichols Development team. Reed and his partners ˆ Mark Berry and Bob Nichols, both of Nichols Custom Welding, and Rich Johnson, of Lakewood Capital Inc. in Skowhegan, who is also a part owner of Nichols Custom Welding ˆ admit that they have no real estate or development experience. But that hasn't stopped them from coming up with a plan for the building they've renamed the Nichols/ Bass Business and Technology Center.
In October, Nichols Custom Welding will move into one end of the building's empty manufacturing space. (ICT, a call center, occupies a two-story office building attached to the plant, and remains the building's only tenant.) In the meantime, Nichols Development hopes to find 10 to 12 small, out-of-state manufacturing companies to join it in the building. Their goal is to have tenants employing 200 people by next year, and as many as 700 by the end of the decade, to help revive a regional economy they've watched decline for years.
"No, we are not real estate developers. We just want to create jobs," says Reed. "Our theory is, if we can help put 700 people to work for somebody, we can sell more trailers. The guy down the road sells more beer, the guy up the road sells more cars and that gives them more money to buy trailers from me. So now we get the circle of life going again. It's not just Walt Disney, it's right here in Franklin County."
It's also an enormous task ˆ which makes it more surprising that it would fall to four small-business owners with no development experience. But to many observers, the members of the Nichols Development team are using that lack of experience to their advantage. Building on their backgrounds in metal manufacturing and heavy equipment sales, the partners plan to tap their network of suppliers, customers and colleagues in the manufacturing and transportation industries, using personal connections and word-of-mouth referrals to find a diverse group of smaller manufacturers to fill the space.
By marketing the facility within that network, Nichols Development is testing what Steve Cole, director of community development for Wiscasset-based Coastal Enterprises Inc., calls a new model to redevelop Maine's industrial space. "You usually have a municipality or commercial real estate firm marketing an industrial building, and the networks of those two entities are quite different than the business network even of this relatively small western Maine company," says Cole, who helped the team polish its development proposal. "It's not often that people with those kinds of networks get to experiment with them like this."
Whether Nichols Development succeeds or fails, Cole expects the group's experience to provide insights for other private developers or local economic development agencies trying to resurrect manufacturing space across the state. But Cole and other observers see additional symbolic potential in the project. By taking on the Bass redevelopment, Nichols Development could show that local business people, even without formal development experience, have the basic skills and know-how to take on these large projects ˆ meaning that rural towns don't necessarily have to look out of state or to large companies to help them turn their economies around.
An unlikely approach
Ironically, earlier this year Nichols Custom Welding nearly followed Philips-Van Heusen out of Maine. The 40-year-old company, which makes everything from basic utility trailers to a line of sport, rescue and dump trailers towed behind ATVs, has watched its revenues grow from $146,000 in 2000 to about $1 million this year. It needed more space than its Farmington location could provide, and a casual conversation with one of its New Hampshire suppliers quickly developed into that supplier suggesting that the company move across the border ˆ and offering a list of potential locations and available tax incentives.
It was an attractive deal that Nichols Custom Welding came close to accepting ˆ until the team of two native Mainers and two non-native but longtime Franklin County residents began feeling increasingly uneasy about abandoning the state. "That's what everybody else does," says Reed. "A lot of companies pull up and go, and I can understand it, but we just wanted to be different I guess."
Unwilling to leave Maine, the company began looking for new locations around Franklin County, including the Wilton Tannery site. But when Reed called Wilton Selectman Rodney Hall to ask about the building, Hall suggested that Nichols Custom Welding also take a look at the old Bass building, which was being marketed to potential developers by the Wilton Development Corporation through a request for qualifications process. (Philips Van-Heusen in February had offered to sell the giant complex to the town for $1, and the town, in turn, asked the Wilton Development Corporation ˆ in collaboration with the Androscoggin Valley Council of Governments, the Greater Franklin Development Corporation and the state Department of Economic and community Development ˆ to find a suitable developer to take over the space.)
At first, the Nichols team thought the space was too much to take on, but their recent flirtation with a New Hampshire address had the partners thinking about the the plight of the local economy. At the same time, Mark Berry was involved with another large redevelopment project ˆ last year his family bought Saddleback Ski Area in Rangeley ˆ that had him in contact with Coastal Enterprises Inc. During a meeting about Saddleback with CEI's Steve Cole, Berry brought up the idea of taking over the Bass building. Intrigued, Cole began helping the team develop its RFQ submission.
By the June deadline, the WDC had received three proposals, and from that group chose the Nichols Development team ˆ even though the RFQ had included criteria such as real estate marketing capabilities and a track record of comparable projects. "We all tended to assume it would be some kind of a real estate person" who redeveloped the site, says Gilbert Riley, president of the WDC. "It turns out Nichols Development is a brand new entity, and they haven't as a group done this before, which at first sounds like it's in conflict with everything we thought we wanted. But I think the single biggest factor that turned everyone into a supporter is the enthusiasm this group brought to the project."
That enthusiasm showed during the group's formal interview with the WDC, says Riley, when the Nichols Development partners laid out their goals for job creation and a plan for how to get there: Gil Reed brought to the meeting an inch-thick binder full of leads in the manufacturing industry, many of which he'd already contacted about the building.
The partners also made up for their lack of development experience with a mix of complementary business skills: Gil Reed is the salesman, with 33 years experience selling everything from heavy equipment for John Deere to custom trailers for Nichols Custom Welding. Mark Berry, who's worked in ski resort management, provides the organizational and managerial background. Rich Johnson, who runs his own heavy equipment financing business, handles Nichols Development's finances. And Bob Nichols provides the hands-on manufacturing experience and mechanical skills to deal with the building's infrastructure.
"All of them have been involved in small-scale businesses in the region for long time, and they have a lot of practical experience in figuring out how to keep a business afloat," says Cole. "That, I think, is immensely valuable as they look to begin working on a bigger scale."
Creating a cluster
With nearly 30 acres and 300,000 sq. ft. to work with, calling the scale "bigger" is an understatement. But Nichols Development's plan for the Bass complex is to work with one business at a time, subdividing the facility's vast, open manufacturing floors into smaller spaces according to each tenant's needs.
In addition to flexible space, Nichols Development plans to offer an all-inclusive and lower-than-average rent, thanks to its low upfront cost to purchase the building (the partners decline to say exactly how much they paid, except that it was far below the building's assessed $2.5 million value). Among other services, the lease rate will cover electricity, heat, water and sewer, parking, snow removal, trash removal, full-time security and broadband Internet access. The final lease price was still undecided as of early September, as Nichols Development was still negotiating an electricity rate with Central Maine Power, but Reed said it could be in the $6-$7-per-square-foot range.
The goal is to provide more than just space: Nichols Development envisions turning the Bass complex into a small manufacturing cluster, where businesses with similar products or processes (but not direct competitors) can team up to order raw materials in bulk, and share a central shipping and receiving area. Nichols Development also is trying to match potential tenants to the area's existing skilled workforce ˆ machinists, welders, stitchers ˆ now unemployed or working in the service industry.
Nichols Custom Welding will be the building's first tenant, taking about 15,000 sq. ft. The move will be a significant improvement over the company's existing location, where there's not even enough room to store raw steel inside, which necessitates extra preparation time to remove rust when that steel is brought inside to make trailers. "We want to grow as big as we can grow, and the Bass building can accommodate everything we want to do," says founder Bob Nichols.
But with the building's $500,000-a-year operating costs, Nichols Development needs to fill 80,000 sq. ft. in order to break even. Though Reed says the goal is to reach that point by August of next year, the company currently is applying for loans to cover three years of operating costs. And even though there's an out-of-state financing company ready to provide the funds, Nichols Development also is negotiating with Androscoggin Bank and UnitedKingfield, because it wants to work as much as possible with local partners. "Why send more money out of state?" says Mark Berry. "There's already a ton of that happening."
The biggest problem with the plan, of course, is that Nichols Development faces the same fundamental economic factors that drove Bass and other traditional manufacturers out of Maine ˆ or out of the country ˆ in the first place. And even though the Bass facility, which is relatively modern and fully operational, is unique in Franklin County, according to local real estate brokers, Nichols Development has to compete with thousands of other developers across the country who are trying to attract the same manufacturing tenants.
Though they acknowledge the challenge, the Nichols Development partners plan to be strategic about the types of companies they court. In particular, they're looking for smaller or mid-sized companies that sell or distribute a significant amount of product in the Northeast but don't have a manufacturing presence here. With rising transportation costs, says Berry, it could be more cost-effective for these firms to move a portion of their production to the region.
The low lease rate and cluster strategy also makes the Bass complex more attractive than a basic industrial park or older mill that needs significant rehabilitation, Berry adds. And the site's location within a Pine Tree Zone means manufacturing companies could be eligible for the state tax incentives that program provides.
Be like a rubber ball
The team also is betting on another strategy to help beat the odds, one that Berry and Johnson call "Gil's dog and pony show." Reed has been pitching the Bass complex relentlessly since the day Nichols Development closed on the building, when he mailed out about 50 information packets about the facility and its benefits to targeted potential tenants he'd identified though preliminary conversations with Nichols' business network.
In August, Nichols Development had two Canadian companies down to tour the space. This month, Reed is flying to Indiana to meet with a manufacturer there that's interested in the facility. While he's in the Midwest, Reed plans to visit 45 other companies ˆ some he's talked to already, some he hasn't ˆ to try to find more potential tenants. "If I can get Pierre Leroy from John Deere to see me," says Reed, referring to the president of John Deere's worldwide parts division, "I'm gonna be in there saying, 'Pierre, will you build some nuts and bolts up here?'"
Looking ahead, Reed plans to build that type of regional sales trip around every solid lead he visits. And that approach is exactly what the Nichols Development team is going to need, says Economic and Community Development Commissioner Jack Cashman, if it is to succeed in what he says will be a "very tough task" to fill the building. "[Reed] is going to have to be like a rubber ball ˆ when he gets thrown against a wall, he has to bounce back, because he's going to get a lot of no's."
Cashman has met with the team, and is including information about the Nichols/ Bass building in a presentation he'll make to foreign companies during an upcoming trade mission to Germany and Italy. And while he welcomes the partners' commitment to recruiting manufacturing companies, Cashman says he believes the best way to overcome the challenge of filling so much space is to give equal consideration to any tenant, whether it's a warehousing company or a call center.
Even CEI's Cole thinks that filling the space may require a blend of tenant types, rather than creating a pure manufacturing cluster. "Looking at the way the building is configured, it's easier to imagine that it will be most attractive to shipping and distribution businessess," says Cole. "Those may not be manufacturing jobs, but they may be easier jobs to claim."
But the Nichols Development team notes that warehousing or storage operations only require a handful of employees, which wouldn't meet their goal for putting as many local people back to work as possible. They plan to pursue manufacturing tenants until they've exhausted their connections in the industry or burned through their operating capital cushion.
By making that commitment to creating jobs, Nichols Development knows it has created big expectations among its neighbors in Franklin County. And while the partners admit those expectations ˆ along with statewide interest in whether a group of non-developers can successfully redevelop a large industrial site ˆ has put extra pressure on them, they say their focus is on creating a successful business and new economic opportunities in the region, not a high profile for themselves. "We're not doing it to make a statement," says Berry. "We want to make sure there's something here for us and our kids and our grandkids. Somebody has to do something, and we don't see anyone else doing it."
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