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New compensation rules for disabled workers worry local organizations

coverIn his 38 years at the helm of Haywood Vocational Opportunities, George Marshall has seen his share of change in the regulations and trends surrounding the intersection of worlds in which HVO deals. 

HVO, a not-for-profit social enterprise that produces medical supplies, is Haywood County’s fifth largest employer and the nation’s largest producer of custom medical drapes.

From humble beginnings to goodwill enterprise: Manufacturing medical supplies provides jobs for disabled

Crafting cornhusk dolls is a far cry from mass-producing blue surgical drapes, but one local non-profit made that leap in a matter of about four years.

Today Haywood Vocational Opportunities LLC employs 365 people — more than a third of whom are mentally or physically disabled. Its mission is to bring disabled people and jobs together, whether the position is with HVO or another employer.

“We want to put people in a real working environment,” said George Marshall, who has served as HVO’s president for nearly 30 years.

The Haywood County nonprofit trains disabled clients to hold down jobs in the real world, from the importance of getting to work on time to job-specific skills such as how to buff floors.

Meanwhile, the business side of the company manufactures a variety of medical supplies, including IV bags and surgical instrument covers, for about 40 customers worldwide. A majority of its business focuses on making sanitized surgical drapes similar to the one’s dentists place on a patient’s chest during teeth cleanings.

HVO is more than a business with a philanthropic bent — it is a charitable organization first and foremost that funds its mission through its manufacturing line.

“Our business enterprise is here to support our mission,” said Jeff Ledford, the nonprofit’s business development manager.

When HVO was founded in 1972, it had just six clients who spent their days make crafts such as cornhusk dolls to sell.

But, Fred Spencer, who served as the non-profit’s director from 1973 to 1975, had bigger ideas. He began knocking on doors and cold-calling companies looking for outsourced work for his clients. The person who happened to take him up on the offer needed belt loops and ties for disposable surgical gowns.

“We knew state and federal dollars … could not provide and would not over the long-term,” Marshall said.

Almost 96 percent of HVO’s revenue comes from production sales.

During fiscal year 2010, HVO reported $30.1 million in revenue — up from about $27.2 million the previous year, according to its federal nonprofit tax form. By comparison, its expenses were only $28.9 million — a gain of more than $1.3 million.

The impressive increase in revenue is likely a result of additional sales and grants related to its expansion into the old Wellco plant in Hazelwood, according to Beth Chittum, HVO’s market research analyst.

In September 2010, HVO bought the closed-down boot factory and turned it into a satellite facility, located just half a mile from its main headquarters off Hazelwood Avenue. The expansion created 32 jobs.

As a non-profit, HVO is also eligible for government funding.

The company received $740,749 in government grants during fiscal year 2010, some of that again related and an additional $350,363 in funding from other sources. It received only $490,010 in government money during the prior fiscal year.

Since 1972, the nonprofit has expanded to serve about 250 clients with disabilities annually, and has continued to grow its medical supplies business.

The nonprofit has averaged 10 to 12 percent growth each year, Marshall said.

“That’s pretty strong,” he said.

Business continued to grow despite the recession, Marshall said, adding that HVO was fortunate to get into a niche medical market.

“We backed into this one,” he said. “I have not seen our business in this healthcare industry really affected.”

There is no ceiling for HVO’s potential growth even though it restricts Marshall’s ability to engage with the clients on a daily basis.

“Growth has taken me further and further away from that daily business of HVO,” he said. “I would love to be active literally in our work areas.”

Although Marshall himself cannot spend everyday with HVO’s clients, the nonprofit employs three job specialists who work one-on-one with clients and follow-up with those who have graduated from its training program. The specialists help clients find what type of work they are interested in doing and teaches them the necessary skills needed to function in the workplace.

Clients who are in training receive a stipend, which is less than the salary of a full-time employee who has completed the program. HVO declined to comment on how much its employees are paid.

During the past three years, HVO has hired 52 of the 128 clients that it has placed in jobs after graduating from the training program.

The nonprofit offers a blended workforce of everyday people and individuals with disabilities. The one similarity among all the workers are hairnets and light blue smocks, which are required to maintain a sanitary workplace. Walls are also lined with nametags and hooks for each employee to hang his or her smock at the end of the day.

Because it manufactures medical supplies, the Food and Drug Administration audits the nonprofit. To keep up with federal sanitation requirements, HVO takes a number of precautions, from simply washing hands to air lock doors for some rooms.

Employees pass through an automated door into a small holding chamber, where they wait for the door behind them to close before the next one opens. This restricts the airflow into the room and helps prevent contamination. Visitors must stay behind a bold yellow line on the concrete floor so they do not contaminate the workspace, and several rooms can only be entered if a person is wearing a hairnet and smock.


‘Good training program’

Although HVO does hire some of its clients, others have obtained jobs at Ingles, Burger King and Goodwill, among other businesses.

Ingles grocery store off Russ Avenue currently has three or four employees who completed training at HVO, said manager Jeff Henderson.

“They always had a good training program, and they would work with them on-site too,” Henderson said. “It has always been a hands on effort for them; so, we were proud to be a part of that.”

Companies who hire disabled employees receive a federal tax credit. The amount of the credit depends on the company’s tax bracket and how much the employer pays in wages.

HVO’s older clients who work part-time or can no longer work can join the Learning and Enrichment program, where they spend time making crafts, gardening, cooking and volunteering.

Many of the nonprofit’s employees and clients volunteer in some way — with Meals on Wheels, MANNA FoodBank and others.

“We need to contribute back to the community,” Marshall said.

After receiving funding from the United Way for 15 or more years, HVO is now one of the largest contributors to the local United Way, he said.

Clients particularly enjoy ringing bells for the Salvation Army at Walmart and K-mart because they are able to interact with area residents.

“I think (HVO is) tremendously helpful to the community,” said Larry Clark, who has served on the non-profit’s nine-member board of directors for three years. “It’s a story that really hasn’t been told.”


Thirty years and no end in sight

George Marshall is the one constant at Haywood Vocational Opportunities LLC, which has continued to grow during his almost 30 years as its president. And, he doesn’t plan on retiring anytime soon.

“I enjoy what I do,” said Marshall, who can easily be described as a man married to his job.

He is the face of HVO, representing it both around the state and nationally. Marshall, who earns $173,511 a year, focuses on the big picture, guiding the organization’s expansion and mission.

“I’ll say this about him because he won’t; George is very well-respected in the community,” said Beth Chittum, HVO’s market research analyst. She agreed that Marshall will never retire.

During his tenure, HVO has grown from a tiny medical supplies operation into a stable business whose products are shipped globally.

“George Marshall runs a great place down there,” said Waynesville Mayor Gavin Brown.

While teaching in Swain County in 1978, Marshall applied for an instructor position in the continuing education department at Haywood Community College. The job was within HVO, which, at the time, was part of the local college.

“This was when we were just really developing our work, our business enterprise operations,” Marshall said.

His background in industrial education and career development ended up lending itself well to the position, and within about six months, Marshall became the nonprofit’s first operations manager. From there, he was named president of the organization in June 1982.

Marshall has the longest tenure of any HVO leader by a wide margin, having working there for about 33 years. The prior directors stayed in their positions for fewer than eight years; the first retired after just six months on the job.

“(Marshall) provides great leadership,” said Larry Clark, who chairs HVO’s nine-member Board of Directors. “When he speaks of passion for what he does, I think it’s a true statement.”

A humble man, Marshall would rather be on the ground floor of HVO’s operations than in his office overseeing the company’s budget.

“I would love to be active literally in our work areas,” Marshall said. “That’s where I started; that’s my background; and that’s what I enjoy the most.”

But, as the nonprofit continues to grow, Marshall gets further away from the daily business of HVO. He said he is disappointed that he cannot enjoy as much face-to-face interact with clients as he did in the past.

HVO opening brings new jobs to Haywood County

With the snip of a ribbon last Friday, Haywood County gained a new manufacturing facility and the promise of 75 new jobs thanks to Haywood Vocational Opportunities, who christened their new Westwood facility.

The 117,000-square-foot space was once home to Wellco Enterprises, but when the plant was shuttered in 2009, HVO snapped it up, renovating 70 percent of the space for use in its medical product manufacturing operation.

The opening ceremony included state Sen. Joe Sam Queen (D-Waynesville), who is in a re-election bid, Rep. Ray Rapp (D-Mars Hill), Waynesville Mayor Gavin Brown, as well as other local officials, HVO employees and local residents who were taken on tours showcasing the new facility and various bells and whistles.

The new plant will expand the operations that started in the company’s Riverbend Street building, providing more space for production and more job opportunities for local adults with disadvantages and disabilities, which is HVO’s mission. HVO President George Marshall said that the Westwood center would allow them to branch out into automated assembly and other, more specialized ventures.

“This is going to allow us to diversify into higher tech jobs,” said Marshall, who is confident that the expansion and its accompanying growth will mean a boost in jobs at HVO.

“Over the next two years, we forecast and have pledged to create 75 new jobs within HVO,” Marshall said. And this was, indeed, part of the deal Marshall and his company made when Waynesville officials agreed to apply for a grant from the N.C. Rural Development Center on behalf of the company in 2009. At the time, Marshall agreed to meet the 40-job quota that came as a grant condition, but was, even then, promising 75.

For their part, town officials seemed delighted that the building was experiencing a rebirth rather than slipping into disrepair.

“Wellco left us, and had to probably, but luckily for us, George and HVO stepped in,” Brown told the assembled crowd. “The town of Waynesville is proud to work with HVO.”

State officials, too, lauded the company’s efforts, not only for its economic growth, but for a commitment to serving an often-overlooked segment of the county’s residents.

“What’s so important here is we’re serving those who need service most: our handicapped citizens,” said Queen. “It is something for everybody to be proud of.”

Many of the company’s employees were in attendance, and the ribbon that heralded the new plant’s official opening was cut by Bobby Wright, HVO’s longest-tenured worker.

The factory itself was buzzing busily, production steadily rolling on as guests toured around the gleaming new work floors and warehouses. Like HVO’s other plant, production here will run on three shifts, almost around the clock.

But, while the company’s growth and success are not negligible — Marshall said they’ve seen 10 percent growth during the last decade — this new arm would have been impossible without grants and loans given to the company by outside organizations.

The N.C. Rural Development Center grant chipped in $480,000, while the Golden LEAF Foundation ponied up another $300,000 in grant funding. The Cannon Foundation awarded the company some grant money as well.

HVO to purchase Wellco site

Although Wellco shoe plant in Waynesville is closing, the community will be spared the blight of another vacant industrial site.

Haywood Vocational Opportunities, which manufactures and assembles medical supplies, is buying the site to expand its own operations. HVO, which currently has 320 full-time employees, hopes to add 75 more within two years at the Wellco site.

“This certainly softens the blow,” said Mark Clasby, Haywood County’s Economic Development Director. “Obviously you hate to lose any jobs anytime, but fortunately in this situation, HVO has been a great success story for Haywood County.”

An expansion was already in the works for HVO. HVO was planning to buy a site in the Beaverdam Industrial Park near Canton, but will now utilize the Wellco site instead.

“It is very conducive to upfitting, upgrading and renovating to meet our needs,” said George Marshall, CEO of HVO.

The Wellco site is less than half a mile from HVO’s current operation. That proximity was the main factor in the decision, Marshall said.

HVO’s main product is medical drapes used during surgery. The company also assembles surgical kits — up to 800 a day — customized with the suite of instruments a particular doctor might need. The new space will be used to expand HVO’s production capacity and grow new product lines, Marshall said.

Clasby is grateful HVO stepped in to buy the Wellco site, even if it meant backing out of the deal in the industrial park. When it comes to courting new industry to set up shop, Clasby feels the 10-acre graded site in an industrial park on the side of Interstate 40 will eventually find a new taker. As for the old Wellco site, Clasby fears it would have been impossible to recruit a new tenant.

“Manufacturing companies are not interested in old buildings with lower ceilings,” Clasby said.

“The Wellco property probably would not have a lot of interest from manufacturing industry,” Marshall agreed.

In tough times, local company looks to expand

In yet another piece of positive economic news, Waynesville-based Haywood Vocational Opportunities announced a proposed expansion that would create at least 50 new jobs.

HVO, which makes disposable medical supplies, plans to pay $400,000 for 10 acres at the Beaverdam Industrial Park in the eastern end of Haywood County and spend more than $1 million to construct a 40,000-square-foot building on the site.

The county recently spent $700,000 to grade the industrial site, and therefore is selling it at a loss. That’s just the nature of the business, said county Economic Development Director Mark Clasby. Grading industrial sites to ready them for building is one way to lure companies.

“That’s part of the economic development incentive, to work with existing businesses to retain them, or in this case, expand. That’s even better — it’s an investment in jobs for the future,” Clasby said.

HVO’s proposal has been OK’d by the Economic Development Commission, and is now awaiting final approval by county commissioners.

The company currently employs 315 full-time workers at its factory in the Hazelwood community. It also runs an employment and training program, which enrolls 120 people. The company operates under a unique business model — about 25 percent of its employee base at any given time has a disabling physical or mental condition that is a barrier to employment.

HVO has maintained a rapid rate of growth at a time when many businesses are struggling with the economic recession. The company moved into its current headquarters in 2005 and is already looking to expand. It added 72 new jobs in the last 18 months, mostly hourly positions, according to HVO President George Marshall. HVO is forecasting continued growth over the next 24 to 36 months.

“We have emerging business that, right now, I can’t comment on,” said Marshall.

The company plans to add 50 new jobs over that time period that will range from machine operators to assemblers. That’s apart from the jobs directly linked to construction of the building.

HVO makes a niche product that isn’t easily outsourced, which has helped it to weather the economic downturn.

“Basically, we’re in a real specialty market as it relates to healthcare,” Marshall said. “We produce custom surgical products for the healthcare industry, which, generally speaking, has not been able to be taken offshore. As commodity products have moved, this was one element that really could not practically, nor economically, be moved.”

HVO has developed a huge market for its products.

“Our customers are throughout the U.S. and international,” Marshall said. About 30 percent of HVO’s business is outside the country, including clients in Sydney.

Marshall said that HVO will aim to complete its new facility at the industrial park by the end of 2009.

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