China firm buys Oreck; Nashville headquarters to close

China firm buys Oreck; Nashville headquarters to close

July 17th, 2013 by The Tennessean in Business Around the Region

Sale of the assets of Nashville-based Oreck Corp. to the China-based manufacturer of Hoover vacuum cleaners received final approval Tuesday in U.S. Bankruptcy Court in Nashville.

The Royal Appliance Manufacturing Co., the Ohio-based subsidiary of TTI Floor Care of Hong Kong, is scheduled to close on the purchase on July 24.

Royal is paying $17.25 million in cash and assuming various debts and other liabilities of the bankrupt Oreck, which filed for Chapter 11 reorganization in early May. Oreck, which moved its vacuum-cleaner and home-care products business to Nashville from New Orleans after Hurricane Katrina, had been looking for a buyer for several months before filing the bankruptcy petition.

Besides getting the Oreck brand to add to its stable of products - which include Hoover and Dirt Devil vacuums - Royal has said it plans to keep the Oreck factory in Cookeville, retaining all of its 200-plus workers.

But Oreck's Nashville headquarters will close, and Royal will sell or close the 100 Oreck-owned factory outlet stores. At least 15 of the 60 headquarters employees will be offered jobs with Royal, according to the purchase agreement, and Royal will continue to honor warranties on Oreck products.

The approximately 250 independently owned Oreck factory outlet stores, including the Chattanooga store on Shallowford Road, will remain open and continue to offer Oreck sales and service.

Jack Bates, whose brother Bill Bates owns Orek of Chattanooga and its parent company, Vacuums Unlimited, operates Orek stores in Chattanooga, Johnson City, Tenn., and Birmingham, Ala.

"We will continue normal operations and continue to offer Orek and other vacuums," he said.

Bates said he expects service business to pick up since Sears recently got out of servicing vacuum cleaners.

Royal outbid the founding Oreck family by about $1 million in an auction for the company on Monday. The family was attempting to regain control of the company that was started 50 years ago by David Oreck, who sold it in the late 1990s.

TTI Floor Care North America is the U.S. arm of the Hong Kong conglomerate TTI, which also owns power-tool and outdoor-power-products brands Ryobi and Homelite, among others. The company's annual sales total $4 billion, with about one-fourth of that in vacuum cleaners and other floor-care products. TTI bought the Hoover brand in 2007.

The Cookeville plant is of value to TTI/Royal and actually could be expanded, with more employees hired, Simon Lawson, chief executive officer of TTI Floor Care North America, said during Monday's auction.

Most of TTI/Royal's products, including the Hoover and Dirt Devil vacuum cleaners, are now made in China, although there are Hoover plants in El Paso, Texas, and Juarez, Mexico, as well.

David Oreck founded the vacum company that bears his name in 1963, initially selling his vacuum cleaners by mail order, and later became well known for his TV infomercials touting the features of his machines.