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Basch Report
Jax Daily Record Monday, Oct. 16, 201706:50 AM EST

Trailer Bridge a relief lifeline in Puerto Rico

Jacksonville-based company keeping goods flowing in aftermath of Maria.
by: Mark Basch Contributing Writer

Jacksonville-based company supporting Puerto Rico in aftermath of Maria.

Five years ago, Jacksonville-based Trailer Bridge Inc. successfully emerged from a Chapter 11 bankruptcy reorganization after a relatively quick process, lasting just four months.

The company said it needed a quick resolution to its bankruptcy filing so there would be no interruption in its business.

It’s a good thing the Trailer Bridge reorganization was successful because the company, which operates freight service between Jacksonville and San Juan, Puerto Rico, has been an important relief lifeline in the aftermath of Hurricane Maria.

“The Trailer Bridge team has been fully operational since Day One and we have been sending teams from Jacksonville to San Juan to provide support and to help relieve the bottleneck created in San Juan,” CEO Mitch Luciano said in a letter to customers last week.

The company said in a news release that it increased its weekly liner capacity by 300 containers, bringing an additional 13.5 million pounds of relief goods to the devastated island.

Of course, Trailer Bridge is not the only Jacksonville-based company that regularly provides shipping services to Puerto Rico. 

Crowley Maritime Corp. said it immediately began shipping supplies to the island after the storm and worked with the Federal Emergency Management Agency to coordinate relief efforts.

Privately owned Crowley, with 300 employees in Puerto Rico, said it has been providing service to the island since 1954.

Trailer Bridge was a publicly traded company before it filed for Chapter 11 reorganization in late 2011 in U.S. Bankruptcy Court in Jacksonville.

As part of its reorganization completed in March 2012, creditors received stock in exchange for debt. However, the new stock was not publicly traded.

Seacor Holdings Inc., a publicly traded logistics and transportation company headquartered in Fort Lauderdale, ended up with 47 percent of Trailer Bridge’s stock after the reorganization.

After a recapitalization of Trailer Bridge in December 2016, Seacor says it has a 55 percent “noncontrolling interest” in Trailer Bridge.

$250 million Maria hit for Medtronic

One major international company with a large Jacksonville operation is facing losses from plant shutdowns after Maria.

Medtronic PLC said it has manufacturing operations in four Puerto Rico locations. The medical device company said its facilities “fared well, but each sustained some damage.”

The company said it has made progress in repairing the facilities and resumed limited production Oct. 2. The plants continue to operate on a limited basis with power from backup generators, it said.

Medtronic said the reduced production at those facilities will reduce earnings by up to $250 million in the second quarter of fiscal 2018. The company reported adjusted earnings of $1.54 billion in the first quarter ended July 28.

“The availability and sales of certain products that are newly launched, were on backorder status, or had lower inventory levels prior to the hurricane are expected to be affected” by the storm disruptions, it said.

Medtronic’s stock fell $2.88 to $76.93 last Monday after the announcement.

In the announcement, Medtronic said it has more than 5,000 direct and contract employees in Puerto Rico and had been able to verify the well-being of more than 90 percent of those. The company said it is providing needed supplies to those employees and their families.

Medtronic, which is headquartered in Dublin, Ireland, manufactures surgical instruments for ear, nose and throat doctors at its Jacksonville facility.

Drone Aviation’s Winch Aerostat Small Platform, or WASP, could be used to monitor the international borders.

Drone Aviation balloon tested

Drone Aviation Holding Corp. received some positive publicity last week when The Associated Press reported the U.S. Border Patrol just completed a 30-day trial of one of the company’s helium-filled balloons.

The Border Patrol is considering using the camera-equipped balloons to monitor illegal crossings.

The AP said the agency has a fleet of six large balloons that cost taxpayers $33 million a year. Drone Aviation’s balloons cost $800,000 each, plus about $350,000 a year to operate, it said.

The Border Patrol has not yet made a decision, but if it does buy the balloons would be a huge boost for the Jacksonville-based company. Drone Aviation recorded revenue of just $381,529 in the first six months of this year.

Coach changing name to Tapestry

As Coach Inc. expands with the acquisition of other brands, the luxury handbag and accessories company is changing its name.

Coach will become Tapestry Inc. on Oct. 31. When the name changes, its ticker symbol will change from “COH” to “TPR.”

The name change comes after Coach acquired Stuart Weitzman in 2015 and Kate Spade & Co. this year.

In a news release, CEO Victor Luis said the acquisitions were part of a plan to expand beyond the Coach brand and now that it has accomplished that, the company searched for a new name to reflect the shared values of the brands.

“In Tapestry, we found a name that speaks to creativity, craftsmanship, authenticity and inclusivity on a shared platform and values. As such, we believe that Tapestry can grow with our portfolio and with our current brands as they extend into new categories and markets,” he said.

New York-based Coach has an 850,000-square-foot warehouse at Jacksonville International Tradeport that handles all of its North American distribution.

GEE Group Inc. doubles revenue

GEE Group Inc. said the recent hurricanes impacted several of its offices, but the staffing firm still doubled its revenue in its fiscal fourth quarter after an acquisition.

GEE last week said it expects to report revenue of $45.5 million to $46.5 million for the quarter ended Sept. 30, up from $21.8 million in the fourth quarter of fiscal 2016.

Gross profit in the quarter is projected at $16.8 million to $17.2 million, up from $6 million the previous year.

The company’s revenue grew after acquiring another staffing firm, SNI Companies, in April.

In a news release, CEO Derek Dewan said GEE is benefiting from lower expenses as it achieves economies of scale after the acquisition.

“The assimilation of SNI Companies into GEE Group is proceeding nicely, due to exemplary leadership from both the SNI management group who joined GEE, as well as the company’s existing senior leadership team and managers from all of our divisions and operating brands,” he said. 

“The macroeconomic environment and changing workforce in the ‘gig economy’ continues to fuel strong demand for our services.”

GEE is headquartered near Chicago, but Dewan works out of an office in Jacksonville.

Dewan said GEE’s financial performance was strong in the quarter despite an impact from hurricanes Harvey and Irma on offices in Houston, Florida and Atlanta.

BAE cuts don’t affect Jacksonville

BAE Systems last week announced a reorganization initiative that will impact nearly 2,000 jobs, but the Britain-based company said it will not affect its U.S. operations.

The defense contractor is cutting up to 1,400 jobs in its military air and information division, 375 in its maritime services business and 150 in its applied intelligence business.

BAE operates shipbuilding and repair facilities in Jacksonville at Mayport Naval Station and on Heckscher Drive with more than 500 full-time employees, but those facilities will not be impacted. BAE has operated those shipyards since acquiring them from Atlantic Marine Holding Co. in 2010.

According to its website, BAE employs about 29,500 people in the U.S. and 83,100 worldwide.

The organizational moves come after a new CEO, Charles Woodburn, succeeded the retired Ian King in July. Woodburn had been chief operating officer before the promotion.

Cuts at baked goods company Flowers

Another company with a Jacksonville facility that recently cut jobs is Flowers Foods Inc.

The baked goods company said in a Securities and Exchange Commission filing that 321 employees left under a voluntary separation program, reducing total employment by 3 percent.

Flowers’ media relations department did not respond to an email inquiry about employees in Jacksonville.

Thomasville, Georgia-based Flowers operates a bread bakery in Jacksonville and also owns an idle Northside bakery it acquired when it bought the Hostess bread business in a U.S. Bankruptcy Court auction in 2013.

Flowers said the job cuts are part of a plan to streamline operations and revamp the company.

The company said in a news release it will be making “incremental investments” next year to “align its brands with today’s consumer preferences and will leverage scale and cash flows of established brands to support growth of high-potential brands.”

Flowers, which had sales of $3.9 billion last year, said its top brands include Nature’s Own, Wonder, Tastykake, and Dave’s Killer Bread.

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