Province reviewing loan to shoe firm

Rob Antle
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The Department of Business is reviewing the terms of an $8-million interest-free loan it made two years ago to help with a Harbour Grace shoe manufacturer's expansion plans.

Since then, Terra Nova Shoes has instead axed nearly half of its staff.

The latest round of layoffs was announced last week. Terra Nova said 59 workers are getting the boot because of a lack of demand for its products.

A bevy of politicians were on hand in September 2008 to announce a massive expansion to Terra Nova Shoes in Harbour Grace. - Telegram file photo

The Department of Business is reviewing the terms of an $8-million interest-free loan it made two years ago to help with a Harbour Grace shoe manufacturer's expansion plans.

Since then, Terra Nova Shoes has instead axed nearly half of its staff.

The latest round of layoffs was announced last week. Terra Nova said 59 workers are getting the boot because of a lack of demand for its products.

A year and a half ago, the Harbour Grace factory employed nearly 180 people. At the time, officials indicated the planned expansion would create another 50 jobs.

But there are now more than 100 people working at Terra Nova.

"In light of the workforce reduction at the Harbour Grace plant, the department has been communicating with the company and requested a revised business plan from them, which was received," Mark King, a spokesman for the Department of Business, said in an e-mailed statement.

"Based on this, the department is working together with the company to review the terms of the loan agreement and what changes may be needed."

The $8-million interest-free loan is repayable over a maximum of 10 years. Repayment is scheduled to begin in year three.

According to the department, the loan is secured by a charge on the property, building and equipment at Harbour Grace and backed up by a guarantee by both Kodiak and parent company Williamson-Dickie.

A Dallas-based public relations firm listed as the contact for Kodiak did not return a Telegram message before deadline.

The 2008 expansion plan was hyped as a big win-win for the shoe firm and the government. High-ranking company officials from as far away as Texas attended the announcement. So did Premier Danny Williams and a troika of cabinet ministers.

"This is a plant that's going to be in business for another 30 years," Kodiak president Kevin Huckle said at the time.

Huckle indicated the company could have decided on the expansion without any government investment, but said it would not likely have been so extensive.

"Could we have readied ourselves for the international growth we're projecting? No," he said in September 2008.

The $8 million forked out to Terra Nova Shoes accounts for more than half of the money handed out from a highly-touted - but little-used - business attraction fund.

That fund, administered by the Department of Business, provides assistance for large-scale outside operations looking to set up shop in the province.

Since being established in 2007, roughly $75 million has been budgeted in the fund to assist qualifying companies. That's according to government financial documents.

But as of March, only $14 million in loans had been approved.

That total includes the $8 million for Terra Nova Shoes.

Business Minister Ross Wiseman recently blamed the worldwide economic collapse for the limited uptake on the fund, noting that promotional efforts take time.

Another $25 million has been set aside for the business attraction fund this year.

Other pots of cash set aside by the department to generate economic activity in the province have had similarly little take-up.

A "special initiatives" fund has doled out just $4 million of a budgeted $19.5 million over the past three years.

The department has budgeted an additional $7.75 million for special initiatives this year.

rantle@thetelegram.com

Organizations: Department of Business, Terra Nova Shoes

Geographic location: Terra Nova, Texas

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Recent comments

  • Dave
    July 02, 2010 - 13:34

    Cool shades, man.

  • Harvey
    July 02, 2010 - 13:26

    Troika,eh Mr. Antle...what brilliancy!!!

  • John
    July 02, 2010 - 13:24

    Before anybody panics, let's not forget that there was a massive recession last year, causing a great loss of jobs which possibly caused an overstock of product.

    Now that things are comming around, hopefully things at the plant will return to normal in the near future.

    At least, the government has a security on the eqpt, land and buildings so if the worst case happens and the company goes under, the local people can go back to producing the excellent work boots that they have been doing for years.

  • Wayne
    July 02, 2010 - 13:23

    Why is it that, with the amount of money put into Terra Nova Shoes, the majority of boots and shoes issued to government employees (mostly uniformed services) are awarded from a tender by out of province companies?

  • David
    July 02, 2010 - 13:20

    A bit late to review the loan now. In fact, about 2 years and $8 million too late.

    Why does some Oversight only come after way too much Overlooking?

  • Max
    July 02, 2010 - 13:19

    Could it be that this Company ascribes to the well known propensity of Business to take the Government money and run.

  • don
    July 02, 2010 - 13:15

    Isn't this boot & shoe company an offshoot of the original boot & shoe company that was set up in Harbor Grace in the 1950's under Joey Smallwoods great modern industrialization plan that turned out to be a huge flop? Money down the drain in the 1950's and money down the drain 50 years later! Joey started a rubber tire factory when we had no rubber tree farms or oil fields to supply raw material to make the tires so the factory closed. Now we have lots of oil but no rubber tire factory! Joey started a chocolate bar factory when we had no cocoa plants or huge dairy farms to supply the milk for making the bars so the factory closed. Now we have lots of milk and no chocolate bar factory! Joey started a wool knitting mill when we didn't have many sheep ranches to supply the wool so the factory closed. Now we have lots of sheep but no wool knitting mill! Talk about doing things backwards and putting the cart ahead of the horse! What is the matter with our political leaders anyway? Does stupidity run in their blood?

  • Taxpayer
    July 02, 2010 - 13:12

    David that looks like socialist talk to me.

  • Byron
    July 02, 2010 - 13:12

    $8,000,000 to create 50 new jobs.Lay off 59 plus 31 fall of 2009 plus the 6 to 8 or so in between and another 12 who were given notice in the last couple days.That adds up to over 100 people out of work.........where's the plus side.........must be company math.

  • Maddie
    July 02, 2010 - 13:10

    I know peoplle who were let go from this factory and any of them will tell you that most of the reason for these people being let go is because this company is now contracting manufacturing for it's product to places such as Asia, and Mexico. Boots that were normally being manufactured here by Newfoundlanders are now being made in other countries at a fraction of the cost..$$$$$ is the reason people lost their jobs and that's what needs to be investigated!!!!

  • Dave
    July 01, 2010 - 20:24

    Cool shades, man.

  • Harvey
    July 01, 2010 - 20:13

    Troika,eh Mr. Antle...what brilliancy!!!

  • John
    July 01, 2010 - 20:10

    Before anybody panics, let's not forget that there was a massive recession last year, causing a great loss of jobs which possibly caused an overstock of product.

    Now that things are comming around, hopefully things at the plant will return to normal in the near future.

    At least, the government has a security on the eqpt, land and buildings so if the worst case happens and the company goes under, the local people can go back to producing the excellent work boots that they have been doing for years.

  • Wayne
    July 01, 2010 - 20:08

    Why is it that, with the amount of money put into Terra Nova Shoes, the majority of boots and shoes issued to government employees (mostly uniformed services) are awarded from a tender by out of province companies?

  • David
    July 01, 2010 - 20:04

    A bit late to review the loan now. In fact, about 2 years and $8 million too late.

    Why does some Oversight only come after way too much Overlooking?

  • Max
    July 01, 2010 - 20:01

    Could it be that this Company ascribes to the well known propensity of Business to take the Government money and run.

  • don
    July 01, 2010 - 19:55

    Isn't this boot & shoe company an offshoot of the original boot & shoe company that was set up in Harbor Grace in the 1950's under Joey Smallwoods great modern industrialization plan that turned out to be a huge flop? Money down the drain in the 1950's and money down the drain 50 years later! Joey started a rubber tire factory when we had no rubber tree farms or oil fields to supply raw material to make the tires so the factory closed. Now we have lots of oil but no rubber tire factory! Joey started a chocolate bar factory when we had no cocoa plants or huge dairy farms to supply the milk for making the bars so the factory closed. Now we have lots of milk and no chocolate bar factory! Joey started a wool knitting mill when we didn't have many sheep ranches to supply the wool so the factory closed. Now we have lots of sheep but no wool knitting mill! Talk about doing things backwards and putting the cart ahead of the horse! What is the matter with our political leaders anyway? Does stupidity run in their blood?

  • Taxpayer
    July 01, 2010 - 19:50

    David that looks like socialist talk to me.

  • Byron
    July 01, 2010 - 19:49

    $8,000,000 to create 50 new jobs.Lay off 59 plus 31 fall of 2009 plus the 6 to 8 or so in between and another 12 who were given notice in the last couple days.That adds up to over 100 people out of work.........where's the plus side.........must be company math.

  • Maddie
    July 01, 2010 - 19:46

    I know peoplle who were let go from this factory and any of them will tell you that most of the reason for these people being let go is because this company is now contracting manufacturing for it's product to places such as Asia, and Mexico. Boots that were normally being manufactured here by Newfoundlanders are now being made in other countries at a fraction of the cost..$$$$$ is the reason people lost their jobs and that's what needs to be investigated!!!!