KCEDA seeking to fill void left by Emilia exit
The Kemper County Economic Development Authority (KCEDA) is looking to bring new industry into the county following the July exit of one of the county’s top private employers, Emilia, LLC.
KCEDA Consultant Ike Kiefer explained the Israeli-based pharmaceutical company left Kemper due to increased cost of production which translated into roughly $10 million in losses.
“They explained to us that the reason they went out of business was that they had made a lot of money last year with the pandemic, and they were making hand sanitizer. As fast as they could make it, they were selling it,” he explained. “But then this last calendar year, their cost of production just skyrocketed because a lot of their raw materials— the chemicals and the plastics, the bottles, the caps, and such — come from China or are imported from other locations. The logistics, delays, and such basically turned them into a huge loss this year.”
Kiefer said the KCEDA’s first approach was to see if an operation like Emilia could be replicated. Research discovered that other businesses across the country similar to Emilia were going out of business due to the same factors, but that did not mean the possibility was no longer attainable.
“Because it was kind of a unique operation, the best answer would have been if we could find another company to come in and essentially take it over,” said Kiefer. “We were looking at the market, and the initial indication was that there were other businesses like Emilia that were also smaller operations going out of business because of the same reason. That story was kind of across the industry. There were smaller operations like Emilia going out of business. But the initial indication market research that we did was that because these ones were going out of business, that demand was still high and larger companies were going to swoop in and essentially buy them up because now it's a kind of a buyer's market time to do that because the contracts still have to be met by somebody.”
According to Kiefer, Emilia began reaching out to like companies across the country and internationally, and six different companies have already toured the facility.
“We got the word they were shutting down at the end of July. They had people here in August and September, but none of those turned into an offer.Then, in September/October timeframe, the actual market for cosmetics apparently kind of collapsed. The explanation to us was that there had been a lot of stockpiling during the COVID years. People were kind of hedging, just like toilet paper. So, there actually wasn't this unmet demand. There was actually a lot of product on the shelf at the consumer level at the stores. They had been stockpiling, so it wasn't an urgency to get these orders filled that were out there.”
Kiefer said several inquiries, including a serious, privately-owned prospect who sent a team to tour the property, have been promising but ultimately have been stalled due to the state of the market.
“Between the time they came and took a look at it and the time their board was going to vote on it, that new market analysis basically said they should hold off,” said Kiefer. “They said they might come back after the new year. But that kind of became the story. We had a couple of kind of nibbles on it, but nobody would commit.”
He said KCEDA had a decision to make at that point — to continue marketing the facility as a pure OTC-pharmaceutical operation or not. To continue marketing along this path, all the equipment needed to be retained and preserved. While the county owns the facility, Emilia owns all the equipment. A decision had to be made on if the county wanted to purchase the equipment or allow it to be liquidated by Emilia.
That path, due to several considerations, was not the direction the county wanted to go.
In the meantime, KCEDA stepped in and started a process to begin an advertising campaign in an international economic development publication for industries looking to relocate, Site Selection Magazine.
“Emilia would make efforts to turn that over if they had a buyer (before the lease ends in January),” said Kiefer, “but in the meantime, they're satisfying their lease and there's a lot of equipment to liquidate.”
In what Kiefer called somewhat of a silver lining, he said the county had been planning renovations for the main production facility, which had been nearly impossible to do while Emilia was in operation.
“The shutdown allowed us to get the contractor in there and have full access to the whole building to really crank out this electrical renovation project. The building will actually be in better shape than it was, and it's on the market now. But it will officially be empty at the end of January, when that lease expires,” he explained. “So, that's basically going to be kind of marketed more as a generic facility. It could be turned back into a pharma operation.”
He said the plan is to continue seeking the right fit while continuing to market the facility.
“As of right now, we just we don't have any real serious interest in that building. So, we're just continuing to market it and listen to what's going on the counties around us here,” said Kiefer. “We have hopes that we can do something that would be local, a U.S. based, family- owned company would be great — something along those lines. That would be an ideal fit for what we are trying to do.”