Rusk, Nacogdoches vie for distributorship

Southwest Scooter Company announced that Greg James has been awarded a distributorship for Texas, Oklahoma, Arkansas and Louisiana.

The East Texas location for the distributorship remains undecided. The two cities vying for the business are Nacogdoches and Rusk - and a final decision will be made within 10 days.

Over the next three years, the new enterprise will employ 30 persons with an anticipated annual payroll of $1.34 million - and Mr. James said he sees growth potential to double the number of jobs and payroll. Annual salaries will range from a low of $25,000 to a high of $50,000 with two and four-year degree requirements.

Using a hub and spoke model, the James distributorship will be the wholesale supplier to local franchises in the four-state area. Additionally, the distributorship will be responsible for final assembly. The products, which are manufactured in China, will be shipped to Houston in containers and transferred to the East Texas distribution site.

Rusk appears to have the home court advantage because of Mr. James' car dealership, Greg James Country Motors, on U.S. Highway 69. With five acres of land and room to grow, adding a distributorship on the same footprint with the existing car dealership makes business sense, he said.

However, the Nacogdoches Economic De- velopment Corporation is "offering a different set of tools," said Mr. James. With an aggressive group of businessmen at the helm, a new executive director and a polished web page, NEDCO has a track record of closing deals. Also, Mr. James has lived in Nacogdoches for 23 years and served as NEDCO president during the organization's infancy.

Nacogdoches is likely considering low cost warehouse space served by a spur rail line to expedite shipments from the Houston Ship Channel. NEDCO has not formally heard Mr. James' presentation, although he has met individually and informally with a few members.

"I am not at liberty to discuss the details," said Bill King, new president of NEDCO.

The body meets monthly, and the next scheduled meeting is Sept. 11.

REDCO will meet Friday at 1 p.m. to consider an incentive package that Rusk can offer.

Mr. James says he is asking for a $135,000 grant over a three-year period that is tied to job creation and performance goals. Those funds will be used to defray start-up costs, including salaries.

"I feel very confident that we will exceed these goals by a comfortable margin," said Mr. James.

Mr. James wants the distributorship to be located in an area designated as an enterprise/free trade zone, which is a partnership with the state of Texas capable of extending local and state regulatory benefits in distressed economic areas and offering tax credits on inventory.

Nacogdoches already possesses this designation; Rusk is investigating the procedures to obtain the certification.

"The designation is tied to the national poverty level," said Bob Goldsberry, who is the Rusk Economic Development Corp. (REDCO) coordinator. He said he is working with a representative at the Texas Economic Development Bank to examine the city's options.

If the distributorship is located in an enterprise/free trade zone, ad valorem taxes on wholesale inventory will be waived. Normal sales taxes will be collected on assembled scooters at the point of retail sale.

Besides the distributorship, Mr. James will be an authorized wholesaler and retailer for scooter parts for the middle third of the United States. Southwest Scooter's other parts warehouses are on the East and West Coasts.

The potential for more jobs and growth through a distributorship and parts warehouse is enormous, Mr. James said. "We're sitting exactly half-way between the state's two biggest markets, Dallas and Houston," he said.

Boutique scooter shops

In addition to the distributorship, Mr. James has already committed to opening two "boutique scooter shops," designed to emulate the successful floor plan of Vespa scooters in metro areas.

The Rusk boutique scooter shop will officially open for business in early October at Greg James Country Motors. Mixed on the show room floor with General Motors cars will be scooters that get 70-100 miles per gallon, along with helmets, pads and other gear.

Mr. James leased a 1,500-squarefoot boutique site in Nacogdoches, located at 4017 North Street across from the Wal-Mart Supercenter. He obtained a building permit in May to renovate the site, and it will open in January 2009.

"We're doing this in phases," said Mr. James. "We're opening the first boutique store in Rusk, then the distributorship and warehouse location will be decided and opened, and then we will open the Nacogdoches boutique store," he said. After that, Mr. James said the next phase will be to get a web site operational for wholesale and retail parts.

As the price of gasoline hovers just under $4 per gallon, Mr. James thinks more people are "thinking green" and looking for alternative modes of transportation. For a small scooter under 50 CCs, drivers don't need a motorcycle license.

"These scooters get 70-100 miles per gallon," he said. And he sees an endless pool of potential customers from campus police at major universities to police meter maids and rural mail deliveries.

"Why buy a scooter," he asked rhetorically. "They are fun, affordable, get 100 miles (mpg) and they have a minimum carbon footprint. They're easy to drive, there's no clutch - it's an automatic transmission."

Scooters will cost approximately $1,800 and come with a two-year warranty. One of the features of the James business model will be to provide a free loaner scooter for warranty work.

"Greg James and his team have an outstanding record of customer service accomplishment in the automotive field and are anxious to set new standards of excellence in customer service for scooter dealers and their customers," said Tom Lynotty, president of CMSI Inc. Motorsports of Preston, Wash.

Sales tax benefits

Mr. James estimates that Rusk and Nacogdoches will each see a $10,000 annual boost on sales tax collected at the boutique retail stores - and that does not include retail sales from the parts warehouse.

"While most of the manufacturing is done in China, it is important to note that this is an American company that designed and engineered the scooters, and final assembly will be performed at the Greg James distributorship in Texas for several states," he said.

While Mr. James waits for the two economic development corporations to finalize their best offers, he has pre-ordered 100 scooters to initially stock the Rusk and Nacogdoches boutique stores.