MAGNOLIA — This city in Columbia County and one of its most storied employers just can’t quit each other.
Two years ago, the American Fuel Cell and Coated Fabrics Co. appeared to be done in Magnolia, ending a relationship that started not long after the close of World War II. About 250 people would lose their jobs. Am-fuel had found courtship in Wichita Falls, Texas, three hours northwest of Dallas.
Wichita Falls wooed the company with newer facilities closer to possible new clients in the aerospace industry and an incentives package worth $2 million if certain conditions were met.
That relationship never sparked: Amfuel closed the Wichita Falls operations at the end of 2017, and Amfuel and Magnolia caught each other on the rebound.
Len Annaloro, the company’s relatively new chief executive officer, promises “a new start” for Amfuel.
“Some people have been here for 52 years,” Annaloro said in a recent interview in his office at Magnolia. “I have eight or nine employees with more than 45 years, 15 employees with more than 30 years. You have people in Magnolia who’ve dedicated most of their lives to Amfuel. That’s amazing.”
Amfuel has 200 hourly employees, at an average pay of $15 an hour, and 43 salaried employees, Annaloro said. The company has an annual payroll of $9 million and projected sales this year of $18 million. Another 100 or so workers will be needed over the next year, he said.
The company makes fuel cells and bladders for military and private aircraft. Last fall, it was awarded a $10.2 million contract with U.S. Department of Defense to make fuel cells for the Air Force’s C-130s. The year before, it was awarded a $21.7 million contract to make fuel cells for F-16 fighter jets.
“We’re here to stay,” said Annaloro, a native of Rochester, N.Y., and a 44-year veteran of managing firms in plastics, rubber, lamination and automotive industries.
In September 2016, the previous owners and management of Amfuel announced the Magnolia plant would be closed because of the deal in Wichita Falls. About a week later, the same officials announced that a new contract with the plant’s union would keep a “substantial portion” of the workforce in place in Magnolia through much of 2017 and “possibly” beyond.
Then, weeks later, the company announced that the plant would still close, Annaloro said.
Although the Magnolia operations never ended, the number of employees dwindled to 72 at one point during the estrangement, Annaloro said.
“My first day here, I found a lot of mistrust, a lot of animosity,” said Annaloro, who became Amfuel’s CEO in late 2016, “I can’t say that the mistrust was misplaced. Workers had taken a pay cut [to save the plant] and then found out three weeks later that it was still going to close.”
At best, the move to Wichita Falls was ill-planned and underfinanced, Annaloro said.
“We had the equipment here, we had experienced workers here — people who weren’t going to uproot themselves and move to Wichita Falls, even if they had been invited to apply for jobs there,” Annaloro said.
Other plans, such as to subcontract certain components for manufacture elsewhere, weren’t practical, he said.
Not long after taking over in Wichita Falls, Annaloro said, it became clear that a return to Magnolia was necessary.
“It’s been a 360-degree turn,” Annaloro said. “We’re working with the city again, and with the union. I think I’ve managed to get some of the mistrust down.”
Amfuel filed for Chapter 11 bankruptcy protection a few months ago in Fort Worth, listing debts of more than $1 million but less than $10 million, and listing assets within the same range. About 80 businesses in and around Magnolia are among the creditors.
“Honestly, that should have been done a year earlier,” Annaloro said. “We were saddled with so much old debt. It gives us a fresh start.”
The company posted profits in February and March, “though minimal,” he said.
“When I got here, it was cash-on-delivery with suppliers,” Annaloro said, adding that one major customer went from 30-day terms on making payment to 15 days. “Everybody’s working with us,” he said.
Annaloro said he’s also trying to return to workers what they gave up more than a year ago.
“Pay got cut $1.28 an hour, an average of 9 percent per worker,” Annaloro said. “Benefits were cut, life insurance was eliminated. People were in an uproar over that, and you can’t blame them, especially when they’re told they’re still going to lose their jobs.”
Annaloro said he has begun replacing that $1.28 an hour. “I told our workers, we can’t do it all at once, but we’ll start chipping at it,” he said. The company also has reinstated the benefits and established an incentives program for extra pay every business quarter.
The latest contract with the union, United Steelworkers Local 607L, was approved by three votes a year ago. “I’m proud of that, to get a contract on the first try,” Annaloro said. “You take people’s money away, it hurts; it’s the worst thing you can do to them, but I think we’ve shown that it’s coming back to them.”
The company isn’t Magnolia’s largest employer but is one of its most historic.
The Magnolia operation got its start at the end of World War II, when Firestone Tire and Rubber Co. converted the former Magnolia Cotton Mill into a manufacturing plant for fuel cells and other coated products needed by the military and aerospace industry.
When Firestone appeared ready to close the plant in 1983, five local investors bought the plant and renamed it American Fuel Cell and Coated Fabrics Co., or Amfuel for short.
One of those investors, Mike Kinard, a retired lawyer and former state senator and member of the state Court of Appeals, said the group made some money during the 12 years they owned and managed the company as it made fuel cells for U.S. fighter jets, such as the F-18, and transport planes like the C-130 and KC-135.
His late law partner, Joe Woodward, suggested the purchase, just to keep the plant from closing, Kinard said.
“I’ll never forget Joe’s quote at the end of the Cold War,” Kinard said. “‘He said, ‘Now is not the time for a small law firm to be a defense contractor.”’
The group sold the company to Zodiac Aerospace of France.
Zodiac had the plant for 20 years and never made a profit, company officials said in 2015, just before selling it to Crosslake Investment Group of Florida.
Crosslake sold the company in 2016 to five Texas oilmen, who formed Amfuel Holdings LLC.
“Amfuel is in a particularly good position,” Kinard said. “Almost everything about this company is somewhat dependent on the national defense budget. I am hoping, partly because I have a paternal history with this company, that this is a real chance to turn it around.”
But Kinard said the company has some atonement ahead.
He said Annaloro has talked to him about the company’s bankruptcy filing. “The first response you get from someone [about bankruptcy] generally is a bad one, but where you really have a problem is when you don’t pay local vendors, the folks in the hometown,” he said, “but I think they are attending to that.”
Magnolia Mayor Parnell Vann, who in 2016 got choked up while talking to a reporter about the plant’s imminent closing then, said last week that he feels better about the company’s prospects. “I’m very optimistic for Amfuel’s return home to Magnolia, where it’s been under various names longer than I’ve been alive,” he said. “It’s been a staple of our community.”
ROOM TO GROW
By the end of the month, Annaloro said, workers will move to 10-hour shifts four days a week. “If overtime is needed, they can put it in on Friday and still get a regular weekend off,” he said, calling the move a benefit to workers as well as a move to efficiency.
He projected sales of $22 million next year, up from $18 million this year, and $28 million in sales in 2020, because of the prospect of more contracts with the Defense Department and other current customers such as Bell, Sikorsky, Boeing, Robinson Helicopter and Lockheed Martin.
In 1993, when floodwaters from the Mississippi River contaminated the drinking water in Des Moines, Iowa, the U.S. Corps of Engineers turned to Amfuel for help. The company sent 130 rubber-coated bags — each holding 3,000 gallons — to Iowa for residents’ drinking water.
Annaloro said he wants to increase that part of Amfuel’s business as well.
The company has room to grow, with 300,000 square feet of space on 77 acres just north of downtown and on the edge of Southern Arkansas University.
A challenge, though, is finding enough workers to fill Amfuel’s needs if business increases.
“We went through 200 applicants to get just 100 hires,” Annaloro said of the effort to rebuild employment in Magnolia after the dalliance in Wichita Falls. Finding workers who can pass a drug test is the biggest problem, he said.
In August, Annaloro said Amfuel will start an internship-like program for area high school seniors and juniors who don’t plan to attend college. The students will work about four hours a day, get paid about $10 an hour and receive credit toward graduation. He said he worked with principals and superintendents on the idea.
“If we get six or seven students interested in Am-fuel, then that’s six or seven students toward Amfuel’s future,” he said.
Print Headline: Magnolia, Amfuel tethered; CEO says ‘we’re here to stay’