A game-changer for Grayson

Reopening of plant allowed it to remain county’s biggest employer

Published March 1, 2015 by Mason Adams

Legend has it that Arthur Jones, inventor of workout equipment, exotic animal enthusiast and airplane fanatic, chose the Southwest Virginia town of Independence to manufacture his Nautilus product line because of a chance listing in a plane’s logbook.

Jones had bought a used aircraft and needed a pilot with the correct certification to fly it, says Jon Little. He looked through the logbook from the previous owner and found the name of a pilot.

“The guy certified for that model airplane had lived in Grayson County in [the town of] Independence,” Little says. “Arthur hunted him down and decided to open up a factory in Independence. He felt like the people were great, and it was a great place to open a business.”

That was 1975. Despite changing hands numerous times since then, the factory consistently served as the county’s largest employer. For several weeks, though, it looked like the plant had shut down for good.

Nonetheless, Core Health & Fitness, where Little works as vice president of operations, announced last year it would take over operations, investing $2 million to expand the plant and provide 250 jobs.

Core Health & Fitness includes remnants of the former Nautilus corporate structure that oversaw the Independence plant until 2009, two years after Jones’ death, when the company split up its brands.

Med-Fit Systems bought the Independence plant and the Nautilus commercial brand, while Schwinn Fitness and Stairmaster remained with Core Health & Fitness, which was located in Nautilus Inc.’s longtime home of Vancouver, Wash.

Med-Fit struggled to do more than break even, however, and it closed in April. When it issued its notices for layoffs and+ closure, Core Health & Fitness moved in to acquire the brands and the plant.

“Nautilus had been a leading employer in Grayson County for around 40 years, and so when they closed the doors, it was a real bitter blow, not only economically but to the morale in the county,” says Tom Elliott, executive director of Virginia’s aCorridor, a Southwest Virginia economic development alliance. “For these former Nautilus executives to make the decision to acquire the assets and reopen the facility was really a game-changer.”

Grayson County Administrator Jonathan Sweet worked with the Virginia’s aCorridor, the Virginia Economic Development Partnership, the Tobacco Indemnification and Community Revitalization Commission and others to help line up incentives to seal the deal with Core Health & Fitness while also taking care of loose ends from the Med-Fit closing.

That included assisting Med-Fit in continuing operations until the company could be positioned for sale by temporarily deferring principal and interest payments on its economic development loans.

Sweet also worked to line up the incentive package for Core Health & Fitness, which totals $2.7 million, including $1 million from the Tobacco

Commission, $350,000 from the Governor’s Opportunity Fund and $783,200 from an Enterprise Zone Job Creation Grant.

Sweet says the county also “got creative” in shifting Med-Fit’s old incentives to make way for Core Health & Fitness.

“Med-Fit had taken out a tooling loan for a quarter million dollars. We were able to allow Core to assume that note, and we were willing to forgive that assumed note based upon the same jobs and capital investment performance as outlined in the state incentives,” Sweet says. “That saved the county a quarter million dollars of new money and prevented us in essence from losing a quarter million dollars in that note because Med-Fit went defunct.”

Beyond his responsibilities as county administrator, Sweet has worked with the company in a different way, serving as a fitness model in Nautilus ads.

Core Health & Fitness says its decision to acquire the Grayson County plant came about not just from incentives but because of how the existing facility and its trained workforce fit into its plans.

“The plant’s already set up for commercial strength manufacturing,” Little says. “You’ve got second- and third-generation employees there who’ve been doing machining, welding or assembly in that factory for years and years and who know how to do it with exceptional quality. We looked at that and determined that part of our strategy, if we acquired the [Independence] plant, needed to be leveraging its flexibility in manufacturing equipment across all of our products.

“Our plan is to bring manufacturing strength products back from Asia to the U.S.,” says Little. “That will double the volume coming through that factory, and in manufacturing volume is the key to happiness.”

Restoration of the factory’s operations and the planned expansion for new product lines again restores the Independence plant to its status as Grayson County’s top private-sector employer.

“What was so exciting about the project is they looked at the quality of the product and quality of the workforce, as well as their desire to have a Made in the U.S.A. product for state tax and marketing reasons,” says Sweet. “We’re talking about bringing manufacturing jobs back from China to the U.S. and Southwest Virginia. That’s the game-changer.”