The $375 million sale of a group of a Johnson City-based manufacturer’s plants will bring another corporate headquarters to the city, according to economic development officials.
Northeast Tennessee Regional Economic Partnership CEO Mitch Miller said in an email Monday Tsubaki Nakashima Co. will bring its North American headquarters to Johnson City after the deal to purchase NN Inc.’s precision bearing components group closes, expected in the third quarter of this year.
NN Inc. announced the sale Monday in a corporate press release. It includes bearing plants in Erwin and Mountain City.
Miller said Tsubaki Nakashima, a Japan-based company, will occupy and operate the Northeast Tennessee facilities once the sale is completed.
In investor relations information, neither of the companies spelled out the new owner’s plans for the individual plants in the precision bearing components (PBC) group, but NN Inc. CEO Richard Holder said in a statement “Tsubaki Nakashima is the right strategic fit for PBC, its employees and its customers.”
“By joining with Tsubaki Nakashima, a well-respected bearing components manufacturer with an established track record of global growth, PBC will continue to thrive,” he continued.
Tsubaki Nakashima’s investor information says the acquisition will put the company a step closer to achieving short- and long-term sales goals and increase its global footprint. By buying NN Inc.’s offerings, the company will break into roller bearings manufacturing.
“We are excited to welcome (Tsubaki) Nakashima Co to Northeast Tennessee and look forward to working with them to grow their North American presence here in our Region,” Miller said in an email.
The Japanese company currently has 12 manufacturing facilities in seven countries, including two in the United States: Sault Ste. Marie, Michigan, and Cumming, Georgia.
In the sale, Tsubaki Nakashima gains seven NN Inc. facilities, mostly in Europe, but including the Erwin and Mountain City plants.
In 2015, mayors in the town of Unicoi and Washington County reported NN was considering moving its Erwin ball bearing plant from its spot near Unicoi County High School to land on Dry Creek Road, nearer to Interstate 26. The new plant would have been a model facility for the manufacturing business, according to Unicoi Mayor Johnny Lynch in a 2016 Board of Mayor and Aldermen meeting.
At that time, Unicoi County’s economic development board held an option on the Dry Creek property and were building an incentive package for the company to help facilitate the new plant. The board applied for a $500,000 grant from the state to buy the property, but learned in March the grant application was denied.
NN Inc. was also at the center of what economic development leaders called “discrepancies” earlier this year, when a Johnson City Press reporter discovered the company failed to meet the job creation figures written in a payment in lieu of taxes, or PILOT, agreement for its headquarters expansion project.
The agreement exempts the company from paying property taxes for five years, then allows it to pay at a discounted rate for the next five, but required the company to have 200 employees by 2017 or face financial penalties.
When the Press discovered the company only had 64 employees at the end of 2016, Johnson City economic development officials said company representatives misconstrued the due date, thinking the contractual penalties went into effect in 2019.
The city Industrial Development Board and City Commission eventually approved an extension of the agreement, allowing the company to enjoy the tax abatement program for another three years, but not without some scolding from city leaders.
NN Inc. said the proceeds of the sale will allow the company to move into higher-growth, more profitable markets, namely medical and aerospace industries.
Company representatives did not respond to a journalist’s inquiries Monday about the potential impact of the sale on the Tennessee facilities, but a purchase agreement between the companies filed with the Securities Exchange Commission includes a section about current employees.
According to the agreement, Tsubaki Nakashima will “review and evaluate each Acquired Company Employee for continued employment opportunities with the Acquired Companies and/or Purchaser following the Closing whether in connection with the Acquired Business or otherwise.”
Employees of the acquired companies who continue to be employed by Tsubaki Nakashima after the sale will be paid wages at or greater than his or her salary under NN Inc. for at least 12 months.
The combined plants included in the sale employed approximately 1,260 people at the end of 2016.