In Gadsden, AL, the Hollingsworth Companies first met the leadership team of Fehrer Automotive in May of 2009. Fehrer was at that time the key global seat foam supplier to Mercedes and were pursuing Volkswagen Group in Chattanooga. Fehrer was successful in landing the VW business and by December we negotiated a 10-year lease with Fehrer for half of a 238,000 SF building we own in Gadsden. In order to help them establish their new North American location, we offered them a flat rent for 2 years with a significant rebate as rent was paid. The collaboration paid off for both companies. In September of 2012, Fehrer committed to take the balance of the building for a 10-year term with a phased-in rent for the added space over the first two years as they installed and certified an additional production line. This enabled Fehrer to continue to grow their volume and take on a new customer, Tesla. We also approved in February of 2015 a sub-lease to a key supplier of Fehrer to co-locate in their space. Fehrer’s business continued to grow and we helped them finance needed upfits in June of 2018 with an early renewal and extension of the lease term to 15 years. This too was successful and allowed Fehrer to land additional business.
So, by December of 2019, we reached agreement on an expansion of the 238,000 SF building to 491,000 SF and a new long-term lease. This also encouraged Fehrer to relocate some production from Germany to Gadsden. Fehrer is now one of the largest employers in Etowah County, and they will be adding more jobs with the expansion. The Hollingsworth Companies’ collaborative approach to tailoring the lease to fit the economics of Fehrer’s business cycle was even more important than our ability to make modifications to the building to support their manufacturing systems. By understanding their business model, we were able to reduce their cashflow needs at a time when they needed to invest in equipment that would result in increased revenues, because the lead time to revenue generating volume production is two years. This is a long time to be pregnant. However, the pain and discomfort are definitely worth it. We are ten years in on a relationship that will last at least 25 years. We are pleased we played a small part in enabling Fehrer’s growth by 400%. What can we help your company do?