Putting Down a Deposit on South-Central : Rebuilding L.A.: Group announces plans to pour $28 million into reviving a soft drink bottling plant that could employ 250.
In one of the largest proposals since last year’s riots to bring new industrial jobs and investment into the inner city, a group of private investors announced plans Thursday to spend $28 million to revive a defunct bottling plant in South-Central Los Angeles and employ up to 250 people from nearby public housing projects.
The group, operating as the Neighborhood Beverage Co. and backed by former football player Roger Staubach and a Cleveland-based engineering firm, said it would refurbish the defunct 7-Up bottling plant at 51st and Alameda streets, hiring workers from the adjacent Pueblo del Rio housing project.
The organizers are led by former Los Angeles Lakers basketball star Byron Scott, onetime Coca-Cola bottling executive Byron M. Jamerson and Jamerson’s three brothers. They said the plant will offer workers minimum wages of $9 an hour, as well as paid training, full health benefits, child care, employee stock ownership and profit sharing.
The company also plans to set aside 10% of its stock to be purchased by local residents, fulfilling a goal of community ownership.
In all, the company has won commitments for $7 million in cash from private investors, including a $1-million to $1.5-million amount that will be raised through a mutual fund run by the community group Concerned Citizens of South Central Los Angeles, said Calvin C. Jamerson, Byron’s brother and the new company’s executive vice president.
The company has also secured a commitment from an unidentified “major institutional investor” for a letter of credit for up to $16 million in long-term debt, as well as a tentative agreement from First Interstate Bank for a $1-million to $2-million line of credit for working capital and operations, Calvin Jamerson said. The property, valued at $4 million, will be exchanged for stock in the company.
Scott will take an active role in management of the new company, Calvin said. As a major sports figure who grew up in Inglewood, he will also play a more traditional role in promoting the company.
Scott joins a long roster of current and former athletes--including Magic Johnson and Julius Erving--who are owners or investors in soft drink bottling companies, said Jesse Meyers, publisher of the industry newsletter Beverage Digest in Old Greenwich, Conn. With their positive images in urban communities, sports figures are ideal front men.
The Los Angeles plant, to be opened in August, 1994, will bottle its own line of soft drinks under the B&B; label, as well as contract services to grocery stores and others who want to bottle their own private-label sodas.
City officials applauded the plan. “This is providing jobs close to home, training close to home . . . and the opportunity for dignity,” said City Councilwoman Rita Walters, in whose district the project falls.
But skeptics questioned whether the group will actually be able to find enough cash to move the project forward, particularly in recessionary Southern California.
“How this company does in winning financing remains to be seen,” said analyst Tom Pirko, president of Bevmark Inc., a management consulting firm based in Los Angeles.
Industry analysts, meanwhile, described the difficulty starting up a soft drink bottling company in the already competitive and crowded Southern California market.
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“The private-label arena has grown dramatically in the recent past, but the market they’re in--Los Angeles--is extremely competitive,” Beverage Digest’s Meyers said. “There are already such excellent bottlers there . . . I don’t think they’re taking on an easy task.”
But Byron Jamerson, the new company’s president, said support from the community will overcome any competitive disadvantages. He added that a number of beverages sold in Southern California--especially private-label soft drinks and iced teas--are being produced out of state, indicating a need for local production capacity.
Organizers say they have already won commitments to produce 8.5 million to 11 million cases of soft drinks a year for Original New York Seltzer, Food 4 Less, Grocery Warehouse and Albertson’s and Universal Beverages, as well as the U.S. military and the Stockton School District. Meyers said the plant would need to bottle at least 5 million cases a year to succeed.
Bottling company employees will begin training as early as this November, organizers said.
Tammie Clark, a 12-year resident of the projects, was eagerly taking notes Thursday at the news conference announcing the project. The main question, she said, was “Is it going to help us?”
If she were to get one of the jobs, “it would change a lot,” she said. “I got the responsibility for my (three) kids to help them, and myself also.” A good job would be a ticket off welfare and a chance to move, she added. “A better place for the kids and me. . . . This will help.”
Byron Jamerson started talking about the project last June after leaving his job as an account manager with Coca-Cola Enterprises, the nation’s largest bottler of Coca-Cola products.
In the winter, through RLA (formerly Rebuild L.A.), Jamerson hooked up with Staubach’s Dallas-based real estate company. The former Dallas Cowboy had offered his company’s services to help with the rebuilding effort.
Staubach in turn put the company together with Austin Co., an international architectural, engineering and construction firm based in Cleveland, and with First Interstate Bank.
Staubach Co. won agreement from the building’s current owners to exchange the property for stock in the new company. Staubach’s company has also provided real estate advice and consultation valued at $150,000, Calvin Jamerson said.
