FiberPro, a manufacturer of custom log and lumber equipment, announced Friday it will expand in Hot Springs with an investment of more than $3.1 million and will create 69 jobs over three years.
But the company, its founder and chief executive officer, and two other men are defendants in a 2020 civil lawsuit alleging they stole trade secrets from a former employer in the same sort of business.
Gov. Asa Hutchinson, state Commerce Secretary Mike Preston and U.S. Rep. Bruce Westerman, R-Ark., joined local officials for FiberPro's announcement in Hot Springs.
"FiberPro's commitment to individualized solutions for each of our clients has led to outstanding growth for the company," Josh Krauss, FiberPro chief executive officer and founder, said in a news release distributed by the Arkansas Economic Development Commission.
Timber Automation LLC, which was founded in Hot Springs about 30 years ago, alleges that Krauss, Henry Meyers and Jeremy Hutson were employees of Timber Automation and stole company data before FiberPro got its start in 2019.
"I can't speak for the others, but Josh Krauss and FiberPro stole nothing," Krauss said by telephone Friday afternoon from his company's office. "It's a shame that these lawsuits are filed, with the big companies trying to take the little guy out." Krauss described Meyers and Hutson as 1099 independent contractors for FiberPro.
FiberPro's website cites experience gained at Timber Automation and subsidiaries.
Answers filed separately in court by Krauss, Meyers and Hutson deny wrongdoing. The lawsuit specifically cites Meyers as the one who took company data, in his last two weeks on the job in about late May.
Krauss said he didn't know whether the governor's office, the Economic Development Commission or any of the other officials were aware of the lawsuit. "It never crossed my mind," Krauss said, whether to alert officials of the lawsuit before Friday's announcement.
In a statement later Friday, the development commission said: "[W]e were aware of the lawsuit between FiberPro and Timber Automation ... [C]ommercial disputes are not uncommon. We were excited to celebrate the creation of 70 new high-paying jobs for the Hot Springs community at this morning's event."
Timber Automation was founded in Hot Springs more than 25 years ago as Hi-Tech Engineering, according to the company's website.
Timber Automation said in its lawsuit that Krauss was a vice president for sales, Hutson a project engineer and Meyers a designer during their varying lengths of employment with the company between 2008 and 2020.
Filed originally in Garland County Circuit Court last summer, the lawsuit has moved to federal court in Hot Springs, where Senior U.S. District Judge Robert T. Dawson has set a Sept. 20 trial date. Timber Automation seeks unspecified compensatory and punitive damages.
The lawsuit alleges that FiberPro used, or continues to use, proprietary information to steal, or attempt to steal, customers from Timber Automation.
In August 2018, Timber Automation announced an investment of more than $3.5 million in its 145,000-square-foot facility in Hot Springs -- an expansion comparable to that announced Friday by FiberPro. More than 50 jobs would be created, the company said at the time.
It had more than 250 employees at the time at its facilities in Hot Springs, Baxley, Ga., and Quebec City, Canada, the company said then.
Krauss on Friday said FiberPro's new manufacturing plant, in a building on U.S. 70 east of downtown, has about 140,000 square feet. "We have a lot of applicants, and a lot of job interviews in the next two or three weeks," Krauss said.
The Economic Development Commission said FiberPro qualified for the state's Tax Back and Create Rebate incentive programs. It also said it didn't provide Timber Automation incentives for its 2018 expansion and that the company isn't under any current incentive agreements.
The lawsuit in federal court is 6:20-cv-06076-RTD.