WILTON – In the next few weeks, Nichols Custom Welding of Wilton needs to secure a $2.5 million loan or the company risks losing a $3.1 million government contract that, if fulfilled, could wind up bringing another 50 jobs into the region.
Walking through a cavernous production room past rows of fuel trailers in all stages of completion Wednesday, Nichols President Gil Reed explained the company has enough money to get through another two or three weeks of operation, but will run out of capital long before the day in mid-August when the 216 trailers ordered by the federal government are slated to arrive in Iraq, where they will be used by the Multinational Security Transition Command.
“We don’t get paid until all the trailers have arrived” in Iraq and are deemed fit for service, Nichols Welding General Manager Kelly Gordon explained Wednesday.
When Nichols executives announced they had won the contract to their welders in late March amid shouts and cheers, Reed said, they had all been confident the company could fulfill the contract.
They were under the impression they would be making 50 trailers at a time – a number the company could easily afford to manufacture.
But last week, Reed said, he was told the army needs 216 trailers within the next 120 days.
The company will run out of money for payroll, materials, and shipping before being paid. But Reed is still confident Nichols will succeed.
“I think we are being tested,” he said. “And I think if we pass the test, we’re able to get it done on schedule, we’ll be set.”
To do that, Nichols needs more money – about $2.5 million, to be exact.
The company is currently spending about $155,000 per week, and will be spending up to $225,000 each week when they ramp up production later this month. Reed said he’s been turned down by bank after bank so far.
For bigger banks, the sum needed is too small to qualify for the kind of loan Nichols needs. For the smaller banks, it’s too large, Reed said.
Company executives are talking with private investors, but their hopes are pinned on the state, Reed says.
Nichols may be able to get a loan from the state’s Interim Financing Program, part of the Maine Department of Economic and Community Development.
To qualify, Reed says, Nichols needs to be backed by a bank and needs the town of Wilton to agree to be a “conduit” for the money.
Neither position is especially risky, he said, since as soon as the trailers arrive in Iraq and have been deemed acceptable by a government overseer, the company will be paid.
Wilton selectmen voted last Tuesday to schedule a special town meeting May 2, at which residents will be able to vote to accept the $2.5 million, six-month interim loan from the state.
The 216 trailers are the first of a potential $17 million contract, Reed said, and if the Army is happy with Nichols’ work, Nichols may be asked to manufacture more than 800 more.
So far, said Kelly Gordon, government overseers who have come to Wilton to check on the company’s progress have been impressed by the speed, and the quality, of the work being done.
“This isn’t something new for us,” Reed said, explaining Nichols has been making custom trailers for the past 20 years. The new skills the company is learning to fulfill the current contract are “petty stuff,” Gordon said. “The product itself we’ve been making for 20 years. It’s learning the exact placing of the labels, and things like that,” that Nichols needs to learn now.