Res 025-2018 2/20/2018Resolution approving the programs and expenditures of the Wichita
Falls Economic Development Corporation (WFEDC) and amending
the budget to include up to $175,000 for Nexstar Manufacturing, Inc.
WHEREAS, Texas Local Gov't. Code § 501.073(a) provides "The corporation's
authorizing unit will approve all programs and expenditures of a corporation and
annually review any financial statements of the corporation"; and,
WHEREAS, on February 6, 2018, the WFEDC approved the Project listed below
and as stated in its agenda.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF WICHITA FALLS, TEXAS, THAT:
1. The Wichita Falls Economic Development Corporation's approval and
funding of the following programs and expenditures as described below
and in said corporation's agenda, are approved:
Nexstar Manufacturing, Inc.
Cash for Jobs ($175,000). The WFEDC will pay Nexstar $4,000
for each new position, with an additional incentive of $3,000 for
new positions that result in hiring individuals from outside of
Wichita County who establish residency for a minimum of six
months. The WFEDC will only pay for new positions one time.
Each new position must be filled by one or more employees for a
total period of not less than six months before Nexstar may petition
the WFEDC for payment.
2. The current fiscal year budget of the WFEDC is amended to provide for the
aforementioned expenditures and changes thereto.
PASSED AND APPROVED this the 20th day of February, 2018.
ATTEST:
City CIc k
WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION
18 January,2018
ITEMISUBJECT: $350,000 Cash for Jobs Incentive for Nexstar Mfg. Project Summary
INITIATED BY: Kevin M. Pearson
ATTACHED': Nexstar Partial Business Plan
COMMENTARY: The Chamber has worked with Michael Thompson, a highly skilled
machinist, for the ;last 12 years. He andhisfather opened Machining Solution, located at 306 N.
Brook, in 2005 in a small, 5000 square foot building. Because of strong sales growth, the
company acquired the former Powerseal building at;1619 Martin Luther King Boulevard.
Michael Bernhardt purchased the company in 2009 and the company name was changed to
Arrow Manufactured Products, which now has 50 employees. Michael Thompson has left
Arrow and would now like to start -a new company called Nexstar Manufacturing. 'Michael's
strength and value has always been his manufacturing and machining skills, and he has partnered
with two other individuals who will provide the management for the new venture — Jody
Bloodworth and Akshay Lazaruz.
Jody Bloodsworth is buying and will own property at 307 Mississippi (the former Lone Star Toot.
facility) on I February. He will lease the facility to; Nexstar; atypical scenario for tax reasons.
Project start-up costs are:
Land and Building, $500000
Office Remodel $ 40,000'
Machinery and Equipment $ 50,000'
Overhead Cranes $175,000
Total Project Costs $765,000
In addition, a $245,000 Line: of Credit with Legend Bank will be in place by the end of the
month.
As you will see in the attached Business Plan, the company plans to create 94 new jobs by the
end of 2022. The company would like to be conservative on its estimate of new job creation and
is committed: to the creation of 25 new jobs by the end of 2018 and an additional 25 new jobs by
the end of 2019.
Economic Impact after the first and second year of`Nexstar's Operation is listed below and is
based on MSU Professor Dr. John Martinez's Economic Impact Model.
Page 1 of 3'..
Annuallm acts
Initiailm act
I Direct
I Indirect
I Induced
Total
Employment Impact
$
25
8
9
42
Annual Earnings Impact
,01ror000
$ 2,000,000
$ 600,000
'$ 600,000
$ 3,000,000
nd.I,) iR
Cmn1^,—,t
;Q RO/_
1Q no/
)1 Ro/
I inn nod
Annual Impacts
Loalttitent
Direct
Indirect
I Induced
Total
Employment Impact
07%
25
6
6
37
Annual Earnings Impact
r°la
2,000,000
$ 2,000,000
Annual Impacts
f,pjtf;af,,lmp*O,,tDirect
I Indirect
I Induced
Total
Employment Impact
>511
30
17
18
85
Annual Earnings Impact
; $ 34jOQ;,0il0
$ 4,000,000
$ 1,100,000
$ 1,100,000
$ 6,000,000
Annual Impacts
Local:i otrtent
Direct
Indirect
Induced
Total
Employment Impact
�7"/#:,
50
11
12
73
Annual Earnings Impact
`. "" : 67u " .
4,000,000
1,000,000
1,000,000
$ 6,000,000
The Chamber is recommending a Cash for Jobs incentive in an amount of $7,000 for the
projected 50 new jobs by the end of 2019 —a total of $350000. Payment for this incentive will
Page 2 of 3.
not occur until the new jobs have been in place for a period of not less than six months. If the
company meets its hiring goal by the end of 2019, it may again approach the 4a Board for
additional incentives for the anticipated 46 additional new jobs to be created by 2022.
There is always a higher degree of risk with a start-up venture such as this. A Cash for Jobs'
incentive is a pay for performanceincentive and carries less risk than a forgivable loan.
Page 3 of 3.
NexStar Mfg.
307 Mississippi Ave.
Wichita Falls, Texas
NexStar Manufecturing Business Plan
Table of Contents
Executive Summary
Board Members
Products
Market
Financials
Management
Team Vision
Market Segments
The Competition
Future Products
Inventory
Facility
Appendix
2
2
2
3
NexStar Manufacturing Business Plan
Executive Summary
NexStar is re -envisioning manufacturing, by delivering the highest customer service in the
industry. The company has chosen to operate out of Wichita Falls, while serving customers
across the state of Texas. Its core competency is focused on construction manufacturing and
refurbishing oil & gas equipment. It expects its topline revenue to reach $2.8 MM in 2018;and
$5.2`MM in 2019. To support this growth, NexStar plans to hire and develop local talent. It
expects to staff up to 76 personnel by 2020, under the guidance of its seasoned leadership.
Board Members
The NexStar Manufacturing leadership has a strong track record of success. With over 25 years
of industry experience, our seasoned team is positioned to grow the company and hire the best
local talents The leadership is comprised of Michael Thompson, Jody Bloodworth, and Akshay`
Lazarus, each with a wide variety of large and small business operations. Additionally, we have
handpicked a best -in -class; manufacturingteam that will focus on the delivery and execution.
`As we kick things off in 2018, we expect the operations of NexStar to contribute to the local
economy'- Michael' Thompson, Founder and CEO.
Michael Thompson'
Michael has owned or operated several manufacturing companies in and around the Wichita'
Falls area. As a successful entrepreneur, he has overseen every aspect through the life cycle of
a business, and he is confident in his ability to make NexStar one of Wichita Falls 2018
successes. His expertise, experience, and can -do attitude is our recipe for success.
Jody Bloodworth
Jody has been a local resident of Wichita Falls for over 30 years. He is a seasoned
businessman and has contributed to the local economy by establishing numerous; businesses.
He has substantial experience taking an idea from inception through execution. Additionally,
Jody has a unique ability to align the necessary resources and skills to make a business;
successful.
Akshay Lazarus
Akshay is an experienced professional with over 15'years 'in large corporations. He has played
numerous roles while working at Southwest Airlines, HP, AT&T, and Amazon. More recently, he
has worked as a Management Consultant at PwC and brings his expertise as he stewards the
financials of the company. Akshay is a hard-working individual and is dedicated to the success<
of NexStar.
Products
NexStar will begin operations by focusing its offerings in two main sectors: (1) construction
manufacturing and (2) oil & gas. Examples of the types of products the company will build are
1. Construction manufacturing
The products we will build and deliver will include, but are not limited to:
A. Skids
B. Weldments for heavy construction
C. Environmental -e.g.,, waste or water' management
D. Waste containers
E. Water containers'
Ne�StarManufaduring Businers Plan
2. OH& gas
The products we will build and deliver will include, but are not limited to:
A Gas production units' separator packages
B Vertical and horizontal treaters
C. Vertical / horizontal, high and low-pressure separators
D. Indirect line heaters/ oil line heaters
E. Gas production units
F. Gas dehydration units
G. Vertical and horizontal filter separators
customer. In 2010. we plan to focus our sales and delivery efforts in the following industries
A. Construction
B. Environmental/ Waste Management Products
C. Oil and Gas
D. Mining
Financials
NexStarwill commence operations in February 2010 and expectsto generate $2.8 MM in the
firstyear. The companyWII break even within the first 24 months and hassecured external
funding to supplement its operations, Mile it ramps up its sales and production.
Overthe next 5 years, we expect NexStairtto generate $25 MM in sales. Sales WII ramp up
during the first year, and stabilize in the third at$6.6 MM annually.
Graph 1: E stinnated Annual Sales
Annual Saies
0
NetarManufaduring Businers Plan
�o osee a detafed d&_1k(_0wn ff Me pfa9se d'efelt,die appmdr' A
Management
The ultimate success of the Production Equipment manufacturing business will be dependent
upon management's ability to develop an innovative product line and to cost-effectively deliver
the products to a large and receptive market. This team's founding executives comprise the
following high caliber professionals whose experience will create immense energy for the
company.
Michael ThonWson, VP of Operations and Sales — Michael has been in the manufacturing
industry for over 25 years and has held various positions working in the shop from machining,
programming, sales, and owner. Michael has also held many management roles in the shop
from team supervisor to shop foremen. He started from the bottom in manufacturing and
worked his way up to ownership. During that role, he had to project manage all the project that
he did, cradle to grave. Michael then extended his skills ability to the sales group and eventuall,
became the VP of Operations and Sales currently and has managed the manufacturing side at
an aerospace company. Michael is destined to achieve success and works painlessly to
achieve his goals.
Redacted due to confidentiality reasons, Office Manager — Our Off i ce manager
oversees busin ess and growth from an inside position Workin g as internal sales and
scheduling to identify all products that ship to our customers as well as communicating
directly with customer and suppliers to keep all entities informed.
Team Vision
Market Segments
are muiti-tDiiiion-cioiiar inciust
shorter lead time needs of d
China and India take 14-16-1
is great. Our strategy isto p(
inesses by providii
stomer
imes.
, at
Ne tarManafaduring euanersPlan
building superior products, offering outstanding customer support, and parlaying longterm
co ntracts'`
The Competition
Based on the current landscape NexStarhas4 major competitors. They are:
1. Sharp Iron
2 Chantex
3. Tryer'Pro cess
4. Quality
Future Products
• Gas Production Units -Gas production units have always been popular in the North East
but are starting to see variations of them needed in other areas now.
• Gas Dehydration Units -Gas dehydration units are aihot item and are more complicated
but have the best margins. Not everyone can build them so that Ishy not all
fabricators offerthem. The team has a vast experience Wth dehydration units.
• Vertical and Horizontal Filter Separators -These are an easy productto introduce to the
product line and go hand in hand with traditional separatorswith slight modifications.
Inventory
Inventory control will be a major area of management attention and will demand close
cooperation between marketing, sales manufacturing and; purchasing Starting off, all Itemswi
be Made to Order (MTO) - i.e., only manufacture what our customers order.
Staffing Requirements
To support this growth we expect to ramp up staffing in a systematic and cautious manner.
Based on the sales growth, demand, and market conditions, we expect the following growth in
staffing.
Tablet: Projected Resource Mix
y ►; �., F.
F
ger f Sales t 1 2 2 2 2
Production Manager 1 2 4 6S 8
ce Manager 2 4 6 8 10
Welders .15 3445 50 .55
Blast � Paint 3 4 5
Quala y 24 5Machinist _.:.1 .._. 4 _. 9 ._. 14 fl9..
Tyr 25 50 76 go 94
Facility'
The location of our manufacturing facility is307 Mississippi Ave. Wichita Falls, Texas,
Manufacturing location is crucial to the ability to win orders and have a steady flow of
available personnel. With Michaels previous experiences in manufacturing, a good local
area to setup the larger facility would be fin the North Texas area. There are a few shops
that I know is available to purchase that are set up to build the equipment we are chasing,
Wichita Falls is a great local location with plenty of workforce available to work in that area.
quarter prior to payment based on the follo ing schedule.
Jobs Created
Incentive
$6.50to $7.49 per hour
$500
0
$
$7.50 to $8.49 per hour
$1,000
0
$
$8 50<to $9 49'per hour
$3,000
1
$ 3,000
$9.50,to $10.49 per hour
$2,000
3
$ 6,000
$10 50>to $11.49 perhour
$2,500
5
$ 12,500
$11 50 to $12.49 perhour
$3,000
7
$ 21,000
$12.50-to $13.49 per hour
$3,500
12
$42,000
$13 50 to $14.49 perhour
$4,000
2
$ 8,000
$14 50 to $15 49 per hour
$5,000
22s
$ 110,000
$15 50:to $16.49 per hour
$5,500
79
$ '434,500
$16.50 to $$1I8.00 per hour
$6,000
127
$ 762,000
$18 01 to 24.99 per hour,
$6,500
64
$ 416;000
For.alaried postions $50,000 to $100 000 per year excluding overtime, benefits, or bonus
_.
Percent of annual payroll
5% Payroll
.
_$
4ACorporation Budget & Financial Stat�lf;; ""
_
"
."
1118/2018
Flttcir.
Retnatrttrtv.."
"
FY 16
FY 1 "'
FY 17
1=Y 18
FY 18
t
Actual
Budoot. :".
Actual
i#ddtt± " ..
Actual
Revenue...
"Budg
• . "
Sales Taxes
$
3 728 961
'3716,619
$ 3,735,556
"3,73 ,25
$ 581,869
Other Rents (ATCO Lease)
$
106,80Q
106„'8pt1 ,
$ 17 80p
$
Reimbursements (WDS, Prop Tax_ , M Air)
$
60 942
3 ,3 0
$ 7,843
$
Interest
$
50,621
... '.50,000
$ 113,244
". " . fflCpsO i
$ 40,338
Project Repayment (Travel Center)
$
81,327
Sale of Assets
$
Total Revenues
- '
' $ 4,028,651
$ 3.9 t5.B39 ,
$ 3.874A43
" '` 3.835.259;",
$ 622.207
Completed d Closed Projects
Lone Star Milk Producers (0112016)
$
.
" 1`16,006"
$
77,876
Alcoa Water Treatment Project
""" �,20&i'066
$
1,200 000
City/SAFB Front Gate Project
1,25t},C{}tj
$
11250,000
Cryovac Iowa Park Water Project
""' 300,{1fi1p
$ 276,574
Wayfinding Project (Promotional)
$
225,000
.. '
Annual Programs
Ad ValoremT_ Tax
$'
2,7"'
$
32600
.., "32,"'_$
72,284
." ". #0k000'
Professional Fees
. 3€ o
$
23 127
"$ O;0i30
$ 11,338
.$
$' f} i0
$ 9,499
CCI-Contract
$
426,01:
_$
416,091 ;
$: .. 0,307,;
532,907
$t31,71F
$ 131,328
Economic Development Marketing
" " " 124,$53
. $
124,853
$ 225,000
, '325,dltHA'
$ 81,250
SMAC
$'
14t},tf00
$
140000
315,00(1
$ 315,000
1,13,Sot%,
$ 68,600
Downtown WF Dewlpmt, Inc.
"
,. : ibd,006
$
100,000 •.
$"'" 4,001,000
$ 100,000
" ` " 100,006
$ 25,000
Business Plan Contest (Lalani)
""
30,0
$
30,000
$. " 3C3„6ifC}
$ 30,000
3Ci�t1Qi "
Business Park Maintenance
1f 2,'2i?
$
94,882
$.. " `' i(*594f
$ 89,695
112,944"
Water/Sewer Sanitation _
."
`. ; " . `"4.'$00
$
8,208
, ". 6,006
$ 13,705
" �� ' � �' 4, Ci�i-.
$ 2,120
Gas
$
6,692
Electricity
3,283
""` • " 1p0
$ 22 944
400
$ 6,226
City Administrative Expense
SiYaCfO
$
50,000
$ , " : 5b 006
$ 50.000
WF Regional Airport Facilities (2033)
$"
": 4,11,0Cdtb
. $
140 QOQ
1 }tI„i300'
$ 140,000
='"1 C1 iitlt3.
Choose Wichita Falls Program
•" 17 >tiOCt
$
85 732
(i€1,fl00 .
$ 199507 `
$ W191 ""
$ 24,814
ED Strategic Planning
"
" ". '" tt,60ti'
$
Labor Market Study
2dp47tit}:
$
" ; ,,0tftt
$
Best Practices Site Visits
Open Projects
Eagle Rail Car Services (1012020)
Safety Design USA (06/2018)
Eagle Rail Car -- Project 11
"
, " 425 Q0
$ 352,000
Pratt & Whitney Technology
"". 1,8E ,00t1
$ 693,187
AMFUEL Project
$
2,tl14,70.
$
594,254
GuidelT Project
46,pptY
$ 18,000 .
$ 29,500
Stanley Building Improvement Project
2,600,000
$
211 984
,3 3 5,000
$ 1,975,007
1C30;0t20'
$ 160 599
Bruce Facility Consulting Services
";fir
" , :121r04t
$
71 591
, ," "
$ 57,164
'
USA800
3 359;200 "
$ 775 200
Chantex Manufacturing
$.: "296,75t1.
$ 2967750
Vitro -Super Coater
. ' 3,000,00iY
$ 900 OOfl
ATCO Structures Operating Expenses
$ „ 144, 000,
$ 17,714
"$. =."' 10�,Ot10:
$ 6,767
Stanley ATCO Marketing Plan
381105'
$ 19,053
Market Street ED Plan
$ 1,750
$ 55,000
MPEC/Hotel Parking Lot
"
;''
$ " . &6T,a t10.
SAFB Gate Project (Phase II)
1,500,00Gt
Owens Corning
", t:615.t7Gi'
Eagle Rail Project III
506001)
Braun Intertec Enviornmental Study
Sharp Iron Recruitment
7i,{10i1.
Total Expenditures
$ 1 _638.245,'
$ 4879,481
" 9„6 .568.`
$ 6,344 721
5 '' S.568.347
$ 1.445.703
Revenues Less Expenses
$
(850,830)
S, " f5.762.72#1
$ (2.470,278)
$ r(1:731.O881
$ f823.496)
Beginning Cash Balance
" '
" $
18,799,117
$ 47,948,267
$ 17,948,287
15;476,Ofl
$ 15.478 009
Ending Cash Balance
$ 17 948 287
;$ 12185.563'
$ 15.478 009
$ 13'746 921'
$ 14.654.513
Reserved For Encumbrances
$
7,607,745
i7;565,62l =
$ 10,830,606
. ,1t7,1322,851
$ 14,943,495
Unreserved Fund Balance
$ 10,340,542 `
$' 4.615":942;
$ 4.647 403 "
5" 2. 24:1i70`
$ t288.982)