A Moreno Valley, Calif.-based RV company that partnered last year with a foreign car maker, expects to begin building the more diminutive vehicles by the second quarter.
Brad Williams, CEO of MVP RV, said Jan. 14 that he expects to finalize a funding agreement in the next 30 to 60 days that would allow him to retrofit his current RV factory into a plant to build electric vehicles, according to the Riverside Press-Enterprise.
Williams was in Detroit last week to meet with an investment group and also watch as CT&T, the company’s foreign partner, unveiled new electric vehicle models at the North American International Auto Show.
MVP RV and South Korean-based car maker CT&T partnered last year to form MVP-EV to build the foreign company’s brand of small electric vehicles in the United States. At the time, officials had said they hoped to have the first vehicles rolling off an assembly line by January, and employing 120 people initially.
Williams will continue to build RVs in a separate building on the MVP campus.
Williams acknowledged that announcements like his cause excitement, and perhaps impatience, among the community. But he said deals like the one he’s been seeking to pay for his factory’s makeover take time.
“Once the funding occurs, we can pick up more speed,” he said. CT&T has a partnership in place with another factory in South Carolina, Williams said. If MVP can get the final amount of funding it needs within the next two months, it could be the first U.S. factory making the cars, he said.
Williams said that a contingent of CT&T executives who visited the Moreno Valley factory recently noted that they would need more space to eventually build electric buses.
“I think the electric car is here to stay,” he said. “I’m glad we’re getting our foot in the door.”
Last week CT&T unveiled two fully electric concept cars at the Detroit auto show.
Riverside County, Calif., supervisors voted unanimously Tuesday (Nov. 24) to support an application for a foreign trade zone inclusion of a Moreno Valley site where electric cars are planned to be assembled.
CT&T Co. of Seoul, South Korea, signed a formal agreement in September to begin building electric-powered cars at a former recreational vehicle manufacturing site near March Air Reserve Base. Locating in a foreign trade zone gives companies reductions in import fees and streamlines the shipping of parts from South Korea, according to the North County Times, San Diego.
CT&T has contracted with Moreno Valley-based MVP EV to assemble, sell and service its line of cars. MVP EV is a sister company to RV builder MVP-RV.
The foreign trade zone is centered around the base. Because CT&T is outside the zone, its site would be designated a subzone, but eligible for benefits as if it were inside the actual zone. The next step in the trade zone request is up to the federal government, which also is considering applications from five other companies for inclusion in the zone.
For a company doing business overseas, “inclusion in an FTZ is absolutely essential for business attraction and retention,” said Tom Freeman, the county’s commissioner of foreign trade. Still to be resolved is the assignment of a customs officer to the zone; the federal government wants the county to pay the approximately $130,000 cost.
In public comment at the meeting, unofficial county watchdog Garry Grant said that the CT&T project is an example of outsourcing and ultimately will harm Riverside County’s economy.
Fifth District Supervisor Marion Ashley countered that the CT&T project is “in-sourcing” and just what the county economy needs.
Third District Supervisor Jeff Stone agreed, saying the car factory will send a positive ripple though the county economy.
“These new employees are going to need homes, they’re going to need to buy gasoline, they’re going to need to eat in restaurants,” he said.
MVP says it expects to begin assembling a basic two-seat car early next year. Initial hiring is expected to be about 120 workers, rising to perhaps 700 as the company adds new models.
Prices are expected to start at $10,000 for the basic CT&T car, which will run about 75 miles between charges. Other models could include a four-door passenger version, fleet vehicles, patrol cars for malls and campuses, and buses, although expansion to assemble those is at least a year and half out, said Brad Williams, president of MVP.
Economists say attracting manufacturing jobs represents a new chapter for the Riverside County economy, which relied heavily on housing construction before the recession.
CT&T’s basic e-car looks a bit like the Smart car, which is produced by Daimler AG of Germany. Cargo space behind the seats can accommodate several bags of groceries or similar cargo, and stowage space in the front could take a few more grocery bags.
It is envisioned as a family’s second vehicle, an errand runner, grocery hauler and chore wagon.
Top speed on the basic model will be 35 mph, but later models will be freeway-capable, the company said.
CT&T says it plans other assembly and distribution sites around the nation; it says it plans to form partnerships with American companies as it did with MVP.
Riverside County, Calif., supervisors are expected to approve a resolution today (Nov. 24) urging the federal government to admit a Moreno Valley vehicle manufacturer into the county’s Foreign Trade Zone, which would provide it with immediate import-tariff relief.
In September, MVP-RV sealed a deal with South Korean electric vehicle producer CT&T to make the company’s e-zone and c-zone EVs at MVP-RV’s then-shuttered recreational vehicle manufacturing plant along Interstate 215, according to The Desert Sun, Palm Springs, Calif..
According to MVP-RV President Brad Williams, the partnership could translate into the creation of around 120 jobs on the assembly line and in supporting positions.
MVP-RV has applied several times to the U.S. Department of Commerce for admittance to Foreign Trade Zone 244, which is operated by the March Joint Powers Authority and runs along the I-215 corridor between Moreno Valley and Perris.
The company’s applications have been denied each time, along with the applications of four other local firms, with federal officials citing a lack of customs inspectors to monitor new entrants to the trade zone.
Firms with trade zone status are spared paying import duties on products they bring into the country for use in manufacturing. The goods are treated as though they’re still outside the U.S., and taxes are assessed later, when the finished products go to market, according to federal officials.
Riverside County Foreign Trade Commissioner Tom Freeman said dozens of local businesses are part of the western county trade zone and by saving those businesses import fees, there’s more money for them to reinvest in operations and expand payrolls.
The county has been seeking to have a full-time customs inspector from the U.S. Customs and Border Protection Agency posted to the county’s western trade zone, offering free office space and use of a county vehicle as part of the bargain. But federal officials have rejected the requests.
Sherri Hoffman, assistant director of trade in the Customs and Border Protection Los Angeles field office, said that generally any time a trade zone governed by the Port of Los Angeles Customs and Border Protection office lies more than 60 miles beyond the outer boundary of the port trade zone, a user-fee agreement must be in place for customs officials to service the outlying trade zone.
According to Freeman, that means the county would have to pay $150,000 a year, which he complained was tilting the playing field in favor of businesses closer to the port.
“The Orange County and Los Angeles communities have an advantage over us,” he said recently. “They have a federal subsidy that we don’t enjoy here in Riverside County. Their businesses have the advantage of not having to pay fees” for customs inspectors.
Until last November, three customs inspectors staffed the western Riverside County trade zone. But when freight shipper DHL left March Field, so did the inspectors, whose positions were funded by the company.
Riverside County ranks 47th in exports among the nation’s 3,100 counties, with roughly 1,000 manufacturers in the county shipping to all corners of the globe, according to the county Economic Development Agency.
The export trade in Riverside County is valued at $2.5 billion annually, EDA figures show.
After months of searching for fresh capital to kick start production, Moreno Valley, Calif.-based MVP RV has located a private equity firm and is in the due diligence process leading up to inking a final agreement.
Partners Brad Williams, Roger Humeston and Pablo Carmona jointly told RVBUSINESS.COM today (Sept. 11) they are hopeful the pact can be signed soon and production of the company’s travel trailers and fifth-wheels resumed within a month thereafter.
The owners, formerly with Thor California Inc., have $3 million in confirmed dealer orders ready to fill once production resumes. MVP RV halted production in early June when it ran out of money.
The U.S.-based private equity firm’s capital would not only be used to finance new construction but also to pay suppliers and make good on outstanding warranty claims, they said.
Williams would not disclose the name of the equity firm, the amount of its proposed investment or any other terms.
Their statement came on the heels of a related announcement on Thursday in which they said they formed a separate company – MVP-EV – to build electric vehicles for CT&T United, the American subsidiary of CT&T Korea Ltd. Those vehicles, from motorcycles and golf carts to small cars and buses, will be built in one of the buildings on the MVP compound in Moreno Valley.
CT&T is making its first push into the American market and eventually plans to employ as many as 2,600 people in the country, operating several factories along with research and management teams to market several models of battery-operated vehicles.
MVP-EV holds the West Coast franchise to build the vehicles, thereby having the potential of employing hundreds of workers in Southern California.
CT&T is not the source of the private equity capital in question, Williams said. “They’re (CT&T) not interested in RVs at all,” he said.
The RV and electric vehicle companies are separate but could well use some of the same suppliers, a prospect that became more likely as RV suppliers have come forward since Thursday’s announcement and offered their services, Humeston noted.
MVP RV has less than 100 suppliers, but the electric vehicle business will have some 400 separate suppliers, based on CT&T estimates.
Williams, MVP RV president and CEO, said he went public with the RV company’s progress in finding private equity in part to allay concerns by some suppliers that, amid Thursday’s announcement, the RV firm may have closed.
On the contrary, MVP RV has a variety of vehicles in various stages of production on all its lines and continues to garner dealer interest in its products, Williams said.
Chief among them are the Coast, an aerodynamic, lightweight trailer, and the Envy, a fully-loaded a toy hauler. Both products were designed to fill the void left when Weekend Warrior exited the business, Williams said.
In July 2008, MVP RV Acquisition Corp., an affiliation of top executives at Thor California Inc., agreed to purchase Thor California Inc., a subsidiary of Thor Industries Inc.
As MVP RV, the company continued to manufacture the Wave, Summit and Jazz travel trailers and fifth-wheels along with Tahoe and Vortex toy hauler lines, previously produced by Thor California.
They’ve also developed new products such as the Beacon, a microlight trailer, and the Sonoma, an inexpensive, entry-level travel trailer.
The company was actively selling through nearly 100 dealerships in 11 Western states and three Canadian provinces. Williams estimated at the start of the summer that 65% of MVP RV’s products built in the first year have already sold
The company survived the credit crunch that began a year ago and was aggressive in developing new products, such as the Coast and Envy, but when orders began arriving in the spring, the company was out of cash and had to stop production. But it did not fold, Williams stressed.
“We right-sized and cut and slashed expenses every way you could imagine,” Williams said earlier this summer. “We’ve positioned ourselves so that when we do come up running, our break-even is very low. We’re lean and mean and in position to take advantage.
“We were struggling with profitability through most of last year until this spring. We started to show a profit, which indicated all the changes we had made took hold. Then we got into this cash flow tug of war situation.
“The beauty here is, no bank holding us hostage. We have no long-term debt. Our intent is to get a cash injection and get squared away with our suppliers.
“The time is right for this; we think the worst is behind us. This is the best time to invest in an RV company,” Williams said.