The owners of Norwalk Custom Order Furniture still may have a long road ahead before they can start churning out goods.
But they made progress Tuesday night when the Norwalk City Council approved a $225,000 revolving loan fund agreement benefiting the furniture company.
The seven-year loan has a 2 percent fixed-interest rate. An identical loan on the open market would carry an interest rate several times that, officials said.
The loan will be used to purchase a mix of equipment, which in total is expected to cost the company $450,000, said Ben Kenny, development coordinator for the WSOS Community Action Commission. WSOS advises the city of Norwalk in some financial matters.
"There's some machinery they need to get in their ownership to continue with the full production," Kenny said. "It includes some equipment, I believe, that is off site in Tennessee."
The new furniture makers have compiled a veritable laundry list of necessary equipment. Topping that list are wood routers -- essential to creating the patterned frames of the furniture products, said Denny Camp, an outside tax consultant who is representing the company.
Camp said the new company's business philosophy will have to be different from that of the company it replaces. He said the entire business model is going to change to improve efficiency, starting with plans to make the frames on site.
"The old corporation had another business that they owned produce the wood frames. ... If you ordered a couch, they would order those frames up, and they'd have to order a pallet of them," Camp said. "If 50 of them come on that pallet, then 49 of them sit on there until somebody else orders that same couch," he added. "We'll cut things as lean as we can and make operations as efficient as possible."
The overhaul will also impact the sales format.
"It's going to be a licensing-type structure, more or less," Camp said. "With a franchise, the only products they can put on their floor are Norwalk Furniture products, where this (new format) will allow them to put whatever they want. All we want them to do is sell furniture, and we'll say our furniture can stand up to anybody," he added.
A lot is riding on Norwalk Custom Order Furniture's success. Hundreds of jobs are hanging in the balance.
That partly explains why the city is taking a stake in its future with a low-interest loan. But the loan was also a prerequisite for the company to secure state assistance.
The Ohio Department of Development pledged a $2 million loan to the dozen investors to help purchase the Norwalk Furniture plant, Mayor Sue Lesch said. The department also arranged a $718,916 job creation tax credit on the promise that Norwalk Custom Order Furniture would generate 260 full-time jobs within three years.
Part of the requirement for receiving this tax relief is a local match.
As the new investors strive to get production going, former Norwalk Furniture employees are struggling to make ends meet.
Under the Trade Adjustment Act, Lesch said extended unemployment and training benefits are available to about 505 Norwalk Furniture employees. Mandatory meetings for interested employees are slated for Oct. 30-31 at the Norwalk High School Performing Arts Center.