Mel Redman, a former Wal-Mart executive and Redman CEO, told a room full of economic leaders that his firm had been looking at on-shoring its small manufacturing center as the economics are now favoring “Made in the USA.”
“This would not have happened if Wal-Mart had not made its $50 billion commitment to source American-made products over the next 10 years. That gave me the guts to step out and do it,” Redman said during Monday’s press conference.
Wal-Mart officials announced on Jan. 15, 2013, a pledge to purchase in the next 10 years an additional $50 billion in U.S.-made goods. Company officials have said they hope to boost U.S. manufacturing – often referred to as “onshoring” – by purchasing more sporting goods, apparel basics, storage products, paper products, textiles, furniture and higher-end appliances.
Beebe was one of eight state governors to attend the “U.S. Manufacturing Summit” in Orlando, Fla., that was held Aug. 22-23. The event connected economic development officials from 36 states with about 600 Wal-Mart suppliers and retail vendors.
Redman said he attended the recent supplier/manufacturing conference held in Orlando by Wal-Mart.
“We met with the state economic team about shared our plans and they took off like a freight train after that,” Redman said.
This is the first score for Arkansas since Wal-Mart’s manufacturing conference which brought together suppliers and state economic teams to discuss bringing manufacturing jobs back to the U.S.
Redman said he operates a sales office in Bentonville that employs 16 people. But moving the manufacturing here will create 17 jobs the first year, ramping up to 74 by the time the entire operation comes online in Rogers.
A study by the University of Arkansas estimates the $18.55 per hour average wage created from this business will pump $3 million back into the local economy once it’s fully operational. The UA study found that every new manufacturing job created will support four other jobs that provide services to the toy maker.
“We buy a lot of cardboard boxes and print lots of labels. Local companies here will get that business,” Redman said.
He said when the Rogers plant is fully operational and shipping from Northwest Arkansas instead of Long Beach, Calif., his firm will save 2.2 million inland miles and slash $7 million in ocean freight expenses, by far its largest annual expense. It will also cut seven days out of the supply chain, making for a more efficient overall operation.
Gov. Beebe said there is not a better story than seeing a local entrepreneur who could have retired long ago but instead invests in creating new jobs.
“This is just the tip of the iceberg. We are going to see other companies follow this lead because people do want to buy American-made products if the price and quality are comparable,” Beebe said.
Beebe also credited Wal-Mart for stepping out to help facilitate suppliers and economic teams to make success stories like this happen.
“I have said for a long time that a country can’t be great unless it makes things, we are seeing these jobs come back because consumers want to buy manufactured goods made in America,” Beebe said.
“Wal-Mart’s commitment to restoring U.S. manufacturing jobs and Redman & Associates’ decision to bring these jobs to the U.S. allow more Americans to do just that. With rising business costs overseas, Arkansas has the ideal location and workforce for companies looking to manufacture and distribute products throughout the U.S. and the world,” he said.
Rogers Mayor Greg Hines said the new facility will be located at 1300 N. Dixieland Road in an existing 275,000 square-foot building.
“Mel Redman told me after touring the building that he could not have built one more suitable for his manufacturing needs,” Hines said.
Redman will produce 6-volt battery powered ride on toys and believes they can source all of the raw products in the U.S. The battery itself is the most challenging. Redman will relocate its plastic molding business to Rogers, which makes the main body of these ride-on toys.
The toys made locally will feature characters from Disney and Marvel franchises including Disney Princess, Classics, Disney•Pixar and Spider-Man. Production should begin in early 2014. Redman is licensed by Marvel Characters B.V., and Redman produces Disney character ride-on toys for Wal-Mart under Wal-Mart’s license with Disney.
Simon said the response he and other Walmart officials are hearing from their supplier community about this initiative has been overwhelmingly positive.
“It is making economic sense. We continue to hear about smaller suppliers adding a few U.S. jobs here and there, but this is the first of we hope are several announcements for manufacturing onshoring,” Simon said.
He said this region like many others could become clusters for certain like types of manufacturing. For instance Redman requires plastic molding, which could open the door for others in that business. Or, when a textile company that makes socks comes back onshore, other garment companies could also cluster there because of shared sourcing power.
Grant Tennille, executive director for the Arkansas Economic Development Commission, said the state did give Redman a few incentives to move their manufacturing operation from Shanghai to the Natural State. Those incentives included $2 million that goes toward building and equipment costs for Redman, and the Arkansas Advantage 1% state tax credit on wages paid for five years. In addition, Redman will also get a sales tax rebate on manufacturing equipment purchases relating to its startup.
Tennille said the tax credits occur retroactively. Redman said the incentive package helped to seal the deal.
Tennille said there are plenty of other companies like Redman that have the relationship with Wal-Mart but have been outsourcing their manufacturing arm. Those are some of the companies the state is targeting for onshore efforts.
Raymond Burns CEO of Rogers Lowell Chamber of Commerce, said Monday’s announcement is symbolic of what is happening across the country as manufacturers across many segments are finding economic incentives to make their products in the U.S.
“We hope to see more of it here, that’s for sure,” Burns said.
Redman & Associates is a family-owned business founded in 1995. The company started as a consulting firm, and now has a diversified portfolio that includes production through all stages of product design, production, logistics, store planning, and into the hands of the consumer. The company produces Monster TRAX ride-on toy vehicles, Zumu three-in-one bike trailer/jogg
strollers and a variety of six-volt ride on toys licensed through Disney.