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July 17, 1998
KELSO, Wash. (AP) -- Tollycraft Yachts Corp., once the city's largest private employer, is moving to Mexico.
The move will reduce labor costs by 80 percent and enable the idled manufacturer to start building luxury boats again, said company President D.R. Cooley said Wednesday.
In reports filed this spring in compliance with the Securities Exchange Act, the company announced it has entered into a joint venture with the owner of the Astilleros Pergasa, a 5-acre boat repair facility in the town of Progreso in the Mexican state of Yucatan.
Cooley said yesterday the company is also negotiating for the adjacent 15-acre Marina Tortugas and another contiguous 15-acre parcel.
Earlier this year, the beleaguered boat builder notified the Securities and Exchange Commission it had placed 2 million shares of common stock in a Tijuana trust account for a $6 million promissory note "to assist in the relocation of its manufacturing and production facility from Kelso, Wash., to Mexico."
Cooley said the company plans to move its sales headquarters to Miami, a 52-minute flight from the Progreso area. The Mexican operation will begin tooling up in September, and the company will be building boats by the beginning of next year, Cooley said.
Tollycraft hasn't produced a boat since 1996.
Tollycraft, founded in 1936, filed for bankruptcy protection and shut down in late 1993, restarted the following spring, then closed in July 1996.
Late last year, the company's Kelso landlord, Don Lemmons, auctioned off about $100,000 worth of molds, tools and equipment essential to the business in lieu of more than $150,000 owed in back rent.
Tollycraft also owes the federal government $1.8 million in taxes and penalties.
Cooley said a debt restructuring plan would be announced shortly.
Woodworkers Union chief Joel Hembree, who at one time represented more than 180 Tollycraft employees, was upset at the news of Tollycraft's upcoming move.
"D.R. Cooley and Tollycraft are walking away from a tremendous amount of owed money," Hembree said. "The employees broke their backs for him ... Labor costs didn't hurt him a bit. The biggest problem they had was they didn't have the cash to buy parts."