HUNTSVILLE, Ala. -- Firearms maker Remington came to Huntsville in a 2014 deal announced with major fanfare. The company envisioned a $110 million plant and nearly 2,000 workers by 2021. State and local governments made a nearly $70 million commitment to seal the deal.
But lately, there's been a downturn in gun sales and Reuters is reporting Remington is considering filing for bankruptcy to manage its debt.
Chip Cherry, CEO of the Huntsville/Madison County Chamber of Commerce, said the recruitment of Remington matched a need in the local economy.
"Growth in advanced manufacturing jobs and that's really what we were looking for to balance out the economy, so that people who were looking for an opportunity to move up, from entry-level wages to a better wage, semi-skilled to skilled," said Cherry.
In early 2016 the company had exceeded the first hiring target in its development agreement with Huntsville by employing more than 250 workers. Huntsville Mayor Tommy Battle said he was extremely pleased and the company was ahead of schedule. But based on the terms of the deal, hiring now has fallen behind.
"We've had meetings with Remington, their business is a cyclical business and they are in a down cycle right now, said Mayor Tommy Battle. "I think the whole gun industry is on a down cycle right now.
Local officials acknowledge the job count has slowed. It's well below the projected 1,018 jobs by the end of 2017. But they point out Remington is paying about $30 an hour on average, $10 more than the development agreement calls for.
"So that's 500 jobs more than we had in this market prior to them coming here," said Cherry.
Cherry added the investment in the plant turned a dormant facility productive. Officials argue they can get money back from the company if Remington ultimately fails to meet job and payroll targets.
" A $12 million incentive is still out there as a mortgage against the building that we provided for them. And, if anything happened, I mean that building would come back to the taxpayers," explained Battle.
Remington's agreement with Huntsville says a bankruptcy could trigger a default in the multi-million incentive agreement, but local economic development officials expressed confidence in Remington Friday.
"They've had to restructure some of their business units," explained Cherry. "They're actively in the process of doing that. We are in this for the long term and we have a very strong relationship with Remington."
Cherry says Remington has been upfront about their challenges.
"They have honored their commitment to us and what they've moved here as far as ramping up that facility," said Cherry. "And we see there's a great long-term, the long term looks very good for that relationship. They're just going to have a rough road for the next couple of years."
Huntsville's deal with Remington included creating up to 2,000 new jobs. If the company were to fail to meet the terms, Battle said the city has options.
"We have some proper clawbacks in place, so that if that does not happen that we end up getting back what we have invested in the project," said Battle.
Cherry and Battle said they've talked to Remington and like the company's new leadership.
"I have a lot of faith in Remington, the new CEO, the new executives. Had conversations with them. I think they'll find a way to come out of this. I do think it's a cyclical industry and they're at the bottom of a cycle right now.
Remington did not respond to a request for comment. Chamber of Commerce officials said the company's payroll has a $32 million annual impact. The Chamber also provided the following information on Remington's current impact.
- Total Annual Jobs Impact: 889 jobs (direct & indirect)
- Annual Taxes Generated: $3 million
- Cumulative Taxes Generated 2014-2018: $14.6 million