BusinessTN

Last July, eight-pound upright vacuum cleaner maker Oreck Corp. announced plans to open its second-ever manufacturing plant and to locate it in Cookeville, Tenn. The company, identifiable by the face and voice of grandfatherly founder David Oreck in television commercials, later announced it would close its maiden manufacturing operation on the Gulf Coast of Mississippi and relocate all manufacturing operations to the Cumberland Plateau.

More recently, the company announced its intention to eventually employ around 700 in the state, a substantial increase over initial estimates. Jobs to fill include not just manufacturing positions but also call center positions in Cookeville and even some sales and marketing positions in Nashville. Downtown office space is already leased.

Given Oreck’s recent flurry of activity in Tennessee, is it just a matter of time before the New Orleans-based brand considers a full corporate headquarters relocation to Tennessee? Oreck board member Jim Amos, a Franklin, Tenn., resident, appeared to put all speculation to rest recently when he informed BTN magazine in no uncertain terms that the company had already settled on a decision to relocate to the Music City.

Vacuum Packed
During a recent interview about his own decision to buy and relocate New York dessert maker Tasti D-Lite to Nashville, Amos stated plainly, “Now Oreck is going to move their headquarters from New Orleans to Nashville, as well.”

Asked to clarify if he was referring solely to the company’s previously announced decisions to relocate parts of the company to Tennessee, Amos replied, “the whole company is going to move here.”

Asked when that would occur, Amos replied, “I can’t tell you that at the moment, and I hope I’m not speaking out of school here as a board member, but I can tell you that the headquarters will be moving to Nashville.”

Amos is the former chairman and CEO of San Diego-based Mailboxes Etc. and the man who designed the sale of that 5,000-unit retail postal business to shipping giant UPS in 2002. The former International Franchise Association chairman, Amos now owns Sona MedSpa, a chain based in Tennessee, as well as the aforementioned Tasti D-Lite. Amos once helmed the “I Can’t Believe It’s Yogurt” franchise. Other corporate boards he currently sits on in addition to Oreck Corp. include Meineke Car Care Centers.

Not So Fast
Asked to respond to Amos’ revelation, Oreck Corp. President and CEO Tom Oreck refuted his board member’s claims, though his repeated use of the qualifying statement “at this time” hardly conveyed any sense of categorical denial.

“We are not making that kind of announcement at this time,” Oreck said from his New Orleans offices. “We’re bringing a lot of functionality up there, but we’re not doing that. We are bringing a lot of administrative functions up there, some marketing function up into Nashville, a call center into Cookeville and so on. So we have a lot of operations going up there, but that’s not an announcement we are making at this time.

Asked if his board member Amos was wrongheaded in making the statement that the company was moving its headquarters to Tennessee, Oreck replied, “It’s certainly not wrongheaded. And it certainly would not be an illogical stream of thinking. I think that Jim was referring to the manufacturing plant relocation as well as some of these administrative moves and so forth. But I think either for him to have said or to be interpreted as meaning that the corporate headquarters is moving at this time would not be a correct statement."

He added "certainly it is a much bigger commitment than our original intent and the original announcements. But it certainly would not be correct to characterize that as a corporate headquarters move at this time. I would hope you would not make that characterization because it really would not be right. And Jim, if that was what he indicated, he was sort of overstepping as far as accuracy.”

Asked hypothetically if the company would ever consider moving its headquarters, for instance, if it meant remaining a U.S.-manufactured brand, a point of emphasis with company founder David Oreck, his father, the younger Oreck replied, “We obviously don’t really get into that kind of detail about what we may or may not do in the future other than to say that we are always kind of looking at our options and considering what those options may be.”

Green Grass and a Red Carpet
Statements Oreck made about Tennessee’s business climate also portend a greater presence for the company in Tennessee going forward.

“We could not be happier with the reception we’re getting,” he said. “With the welcome we’re getting. The people in Tennessee have been incredible in terms of opening up their arms to us and all of our people. The workforce in Cookeville is astonishing. It is the most remarkable work ethic I have ever encountered. It’s just a joy to be a part of that community and the Nashville community and Tennessee in general. We just couldn’t be more delighted with the way things are going and hope to keep growing our business and presence there and intend to be good corporate citizens in every way. We’re very excited about it.”

Such statements are in stark contrast with what Oreck had to say to New Orleans CityBusiness magazine late last year after the company selected Cookeville as the site of its new manufacturing plant. In that article, Oreck cited Louisiana’s uneven playing field for businesses as a primary reason for moving.

“It really is a matter of Louisiana looking less backward and more forward about what it takes to compete in today’s business world,” Oreck told the magazine. “Additional investment, new business investment or existing business investment requires an unwavering commitment to excellence of infrastructure.”

Winds of Change
Louisiana’s poor business climate, though, wasn’t the main impetus behind Oreck’s eventual decision to relocate all manufacturing operations to Tennessee. In 2005, after Hurricane Katrina ravaged the Gulf Coast, Oreck was the first manufacturer in the region to revive operations, and also the first corporate headquarters to re-open its doors in New Orleans. But the costs of Katrina did eventually catch up with Oreck, apparently making it impossible to maintain manufacturing operations on the Mississippi coast. According to press reports, an Oreck Corp. press release at the time of the shuttering of Mississippi manufacturing operations stated “this post-Katrina plant phase-out is determined by facts and factors beyond anyone’s control” and specifically pointed to “the increased cost of doing business and the harsh realities of living on the Gulf Coast.

CEO Oreck was recently quoted in a USA Today article stating that the company couldn’t get adequate or affordable coverage for manufacturing operations after the storm. Post-Katrina, Oreck stated, “Literally, our insurance costs more than doubled. There was a $1 million increase in our premium per year.” He added, “that’s bad, but that’s not the difficult part. The difficult part was the best we could do was get one-third of the pre-Katrina coverage.” And, according to the article, only half of the company’s workforce returned to the area, despite offers of increased pay.

In his interview with BTN, Oreck was quick to point out that the skyrocketing insurance costs he referenced in the newspaper article were relevant only to the company’s decision to move manufacturing operations and that no such cost pressures are in effect in New Orleans that would hasten relocation of the company’s administrative operations. Manufacturing, Oreck clarified, is “where the bulk of hard assets were,” compared to the corporate headquarters, which he says is “really only people, and the people, in an event of a disaster, we can relocate, as we did after Katrina.

Storm Surge
In a November 2005 article in BTN article titled “Katrina and its Waves,” a handful of experts in the fields of economic development, corporate recruitment and site selection in Tennessee agreed that skyrocketing insurance premiums would eventually dampen the allegiance of even the most devoted corporate citizens and business owners of the Gulf Coast and lead eventually to a bevy of relocations. Particularly for companies owned by out-of-state investors, or that are not privately held, the experts predicted that such company officials would have to do what’s in the best interests of their owners and shareholders. “If you’re a business that doesn’t need the port of New Orleans, it would be hard to explain to your owners and shareholders why you were going to continue to be there,” said one ECD official at the time, adding that the full extent of the corporate fallout in New Orleans probably wouldn’t be known for years to come.

Oreck is majority-owned by New York-based private investment company, American Securities Capital Partners, the merchant banking arm of American Securities whose predecessor entity was founded in 1947 by William Rosenwald to invest and manage his share of his family’s Sears, Roebuck & Co. fortune. Oreck family members are stockholders in the company.

Does it all add up to a future relocation to Middle Tennessee? It is hard to be sure as long as statements supplied by company officials remain at odds. For now, at least, Tennesseans will have to be content with the fact that the light-weight Oreck vacuum—an all-American made product—is now exclusively a product of the Volunteer State. It is the kind of incremental step that would serve the company well if officials ever do get on the same page and decide that while the severing of ties to the Gulf Coast would be a difficult and emotional decision, it would be in the company’s best interests to trade in the Crescent City for the Music City.