Core will add new product lines

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Nautilus plant’s new owner is rehiring workers and preparing to expand

By Shannon Watkins

INDEPENDENCE — After Gov. Terry McAuliffe announced Wednesday that Core Health & Fitness LLC will invest $2 million to expand the former Med-Fit operation in Independence and employ 250 workers, two of the company’s executives spoke to The Gazette in more detail about Core Health’s plans.

“We’ll be starting out with the same lines [and] with the same products that we made prior to the sale,” said Jon Little, vice president of operations.

The plant makes Nautilus fitness equipment.

Dustin Grosz, president of the company, echoed Little’s declaration.“It’s going to take us probably 18 months to move in 50 new, different pieces of strength equipment,” said Grosz, which explains the need for more workers.

Core officials said the company plans to make the Independence plant the major center of its strength fitness equipment manufacturing, adding Nautilus to Core’s product lineup that includes popular brands like Stairmaster, Star Trac and Schwinn.

“Our belief is we’re going to add a minimum of 250 people over the next six months,” said Grosz of employment at the Nautilus plant. Under Med-Fit’s ownership, the plant had employed at most about 100 workers.

While he did not address the pay range, Grosz said employees would have improved contracts. “We believe the benefits package is slightly better than they had previously. I believe the overall plan, the medical plan, is better — as well as the 401k,” said Grosz.

Med-Fit bought the plant in 2010. It began a series of layoffs in April, then announced that the facility was up for sale.

Grosz addressed the possibility of the Grayson operation changing hands again. “We have no plans to get rid of it. I think it’s a strategically good fit for us. I think we’re planning to grow the factory by bringing in new products,” he said. “We’ve already hired back [as of Tuesday] 79 people.”

As for the timetable to get from 79 to 250 workers, Grosz said that hasn’t been worked out yet. “We haven’t gotten to that level of details yet. We’re still looking at that.”

A Team Effort

The story of how Core was courted to take over the Nautilus plant is one of hard work and focus, according to Grayson County Administrator Jonathan Sweet.

“This all started back when Med-Fit announced their position of duress” in April, said Sweet. “We were assisting their turnaround team. We assisted them to get ready for sale. We wish they would have called us sooner. We offered up some recommendations for surviving and offered them help for the sale.”

Sweet said the county had supported a deferment of Med-Fit’s principal payments to the Virginia Small Business Financial Authority, and also deferment of principal and interest payments on a Grayson Industrial Development Authority loan, and went so far as to help expedite the company’s Virginia state tax refund.

“With respect to Core Health & Fitness, since we were a part of the turnaround team, they had requested my presence to do a presentation for their business team,” said Sweet of the county’s involvement. “The Grayson County Board of Supervisors and the Grayson County IDA were both involved in this project.”

In pursuit of the sale, Sweet says he managed to persuade Gov. McAuliffe to call Core and convince the company to buy the plant. He also worked with Community Marketing Development Specialist Joe Gillespie at the Virginia Economic Development Partnership and Virginia’s aCorridor Executive Director Tom Elliott to put the state’s part of an incentive package together.

The state and local incentive package was a little more than $2.7 million, Sweet said, including $1.05 million from the Virginia Tobacco Commission, $350,000 from the Governor’s Opportunity Fund, as well as help from the Virginia Jobs Investment Program and tax credits.

Additionally, said Sweet, “Core assumed Med-Fit’s IDA loan debt of $225,000 and [Grayson County] agreed to forget it if they met performance parameters of job creation and capital investment.”

The quick turnaround of the deal — basically three months — was unusual.

“It was truly a team effort and it took everyone working together with a common objective to make it happen,” Sweet said.