Faster than anyone expected, the former Worthington Compressor factory in Buffalo is coming back to life.
The Dresser-Rand Co. closed its Worthington Compressor Operation here in July 1987, throwing 600 people out of work. Covington Capital Inc. bought the 32-acre property in February 1988. Today, nine companies have committed to purchasing 80 percent of the factory at a starting employment of about 187 jobs. Future employment is expected to hit 250 jobs or more.
"We moved in there and it was like a ghost town," said Charles R. Mertz, president of Enviro-Care Inc., one of the first tenants. "Now it's like a little city. Everyone gets to know each other. We talk to each other."
The resuscitation of the plant is a dramatic saga of industrial resources being put back to work. It suggests there is hope for many of the empty factories in the region where giant manufacturers no longer could survive. It hints that smaller, thriving manufacturers are driving a strong market in Buffalo for industrial real estate, and they're bullish on investing in expansions.
Covington Capital of Larchmont, N.Y., specializes in rehabilitating factories, but no project has ever moved as swiftly as Worthington, said Michael Owen, property manager for Covington.
"I'd like to find another plant to do this in Buffalo," Owen said.
Covington manages about 20 million square feet of factory space similar to Worthington nationwide. "Our niche is taking corporate America's discards and putting them back to work," Owen said. Two current projects are finding tenants for the International Harvester plant in Fort Wayne, Ind., and the B.F. Goodrich factory in Akron, Ohio.
Covington cut a deal with Dresser-Rand's parents, Dresser Industries Inc. and Ingersoll Rand Co., that in retrospect seems like a sure money-maker.
Covington paid $1.3 million for the 856,000-square-foot plant complex in February 1988, according to records in the Erie County Clerk's office.
The property's assessed value is $2 million, said Joseph Tanzella, the city's commissioner of assessments.
And Covington is selling the plant for at least $4.3 million, based on the $5-per-square-foot rate promised to the first tenants. But Owen said the square-foot charge has risen as much as 40 percent since Covington began parceling out the factory.
"We paid a good buck, and we'll make a good buck," Owen said.
The payoff comes only after Covington took over the risk of a factory that already failed once. Worthington doesn't look like a gold mine. The old buildings with their giant ceiling cranes have a haunting rust-belt beauty, but devoid of machinery, they are also bleak.
"You watch them die," Owen said. "It's neat to bring them back."
The three investors behind Covington, who don't manage the property directly while living in California and Florida, are Barry Lang, Gerald Wendel and Stuart Lichter.
The Worthington factory is located at Roberts Avenue and Clinton Street, with easy access to the Niagara Thruway.
Tenants buying buildings
Covington is pioneering a new technique to create what it calls the Worthington Business Center. Rather than leasing the space, or selling it to one large tenant, Covington is attempting to create a "property owners association," a near relative of the condominium concept.
The manufacturers moving into Worthington are buying the land and buildings outright. They will become members of an owners association and will pay an annual fee for certain shared services. Altogether there are about 44 buildings in the Worthington complex, most of them connected and blended so that several "buildings" may effectively make up one structure or one workspace.
Covington's application to establish the association is still awaiting final approval by the state attorney general's office. But tenants like Curtis Screw Co. Inc., Enviro-Care, Machinery Repair Corp. and others are confident it will work, and they already have moved in on a temporary lease basis.
Covington has never created an owner's association before, but city officials in other places where Covington has redeveloped property through leasing seem satisfied.
"They've done an excellent job here," said Mark Becker, a development official in Fort Wayne, Ind. The International Harvester plant is 80 percent leased after about five years under Covington, he said.
The Worthington factory's comeback reflects a combination of Covington's apparent expertise, the strength of the Buffalo market, and the quality of the Worthington buildings themselves once you wipe away the grime, officials say.
The factory is in quite good condition, said Gordon Wilson, a 37-year veteran of Worthington who became an expert in the facility during three decades directing plant engineering and manufacturing engineering. Now Wilson is a consultant to Covington.
"We didn't really intend to close, so it wasn't a case of letting the plant run down," Wilson said. Worthington's shutdown came after Dresser-Rand decided to consolidate the compressor business at plants in Sidney and Painted Post, N.Y.
"It was a good deal," said Mertz of Enviro-Care. "It was a good value."
Enviro-Care has added eight jobs since moving to Worthington from Wyoming Street, for a total of 30 jobs. The company will purchase 15,000 square feet once the ownership plan is approved. Enviro-Care's specialty is restoring homes and businesses damaged by fire.
"I fell into something really nice," said Steve Krasinski, president of Buffalo Maid Cabinets Inc. "After looking at a lot of places like this, to me this was a bargain."
Buffalo Maid, a custom cabinet-maker, needed a shop laid out for carpentry. It bought the building where Worthington made wood patterns for its steel castings.
Like all the tenants, Buffalo Maid inherited only an empty building; the equipment was shipped out by Dresser-Rand. Local utility companies installed gas and electric lines for free, but the tenants must install their own heating units. Buffalo Maid paid $70,000 on top of the purchase price to prepare its space.
With 16 jobs and more projected, Buffalo Maid occupies 28,000 square feet. It used to be located on Broadway.
Not all the companies are shifting from elsewhere in the region. A.C. Hamilton of Mississauga, Ont., a supplier of plastic processing equipment, has been approved by the Erie County Industrial Development Agency for $609,000 in bond financing to expand into Worthington and employ 20 people in its new operation here.
In addition, Owen said the first nine committed tenants include a company from Cleveland and another from Stamford, Conn.
Curtis Screw, the largest tenant so far, last week cut the ribbon on its new facility employing 55 people in 30,000 square feet that was Worthington's old valve department. The jobs are new, devoted to a new line of business, while Curtis Screw continues to operate its main factory on Niagara Street.
Altogether, Curtis Screw paid about $1 million for 150,000 square feet of space, 200 parking spaces and other considerations, said President John T. Hoskins. It will add more jobs and refurbish more space as the business grows, he said.
Curtis Screw was attracted by the heavy floor capacity, the overhead cranes, and the fact that the buildings still were in good condition, Hoskins noted.
Machinery Repair Corp. is taking over 156,000 square feet where Worthington's forge was located, after working previously in 22,000 square feet on South Park Avenue. The big overhead cranes will help MRC move the large machinery that it repairs and fabricates, said Ted Rowswell, operations manager.
"That's one of the big pluses -- the crane capacity in the buildings," Rowswell said.
MRC will employ 20 to 25 people in the Worthington facility by the end of the summer, after completing rehab work that will include a clean white coat of paint on the walls of the old forge, he said.
Hope for Hewitt-Robins plant
MRC will use the space for its big lathes and boring mills that can handle some parts as long as 41 feet and others as broad as a 16-foot diameter. The company expects employment to triple over the next two years as it expands the business of machining components for manufacturers and repairing heavy equipment like stone crushers for customers like the Nordberg Co. of Milwaukee, Rowswell said.
The Worthington experience bodes well for other abandoned factories in the region, said Dean J. Sallak, treasurer of the Erie County Industrial Development Agency. But, Sallak cautioned, not every property has the assets of Worthington that can be applied to a variety of manufacturers.
The Dresser Industries foundry in Depew was taken over in 1986 only when the ECIDA leased it to a developer for $1 because developers apparently wouldn't pay more. A single sub-tenant took over most of the useable space.
Steel factories are notoriously hard to put to any other use. Republic Steel's former South Buffalo facilities and much of Bethlehem Steel's Lackawanna operations are in the process of being demolished.
On the other hand, a factory like the old Hewitt-Robins rubber plant on Kensington Avenue might meet a better fate. No one was able to save the Hewitt-Robins factory after it closed and threw 700 employees out of work in 1974.
"Right now, Covington is saying to us, 'Gee, can you find us another plant?'" Sallak said. "It's a heck of a situation when there is a shortage of shut-down industrial plants."