Another textile mill closes.

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January 23, 2008 West Warwick R.I.
Company bids $250,000 to operate lace works as is

WEST WARWICK -- Palmisciano-Ponte Investment Group LLC was the high bidder, at $250,000, today to continue operating as the Riverpoint Lace Works, the textile dyeing and finishing company that has operated here for more than 80 years, and to preserve jobs for its 50 employees.

This morning, receiver Theodore Orson, of the law firm of Orson and Brusini, gathered before about 30 people on the second floor of the mill, at 825 Main St., to discuss the sale terms.

The company accepted different bid amounts depending on what the buyer wanted to do with the business. In addition to the $250,000 bid, two other bids came in to buy the assets as scrap.

Finally, auctioneer Sal Corio, of SJ Corio Corporation in Warwick, led interested buyers through Lippitt Mill to bid on individual machines and the entire contents of rooms.

Orson was to calculate which offer would generate the most money for the ailing textile firm. The winning bidder had until 5 p.m. to provide a check to the company for the full amount.

The goal has been to have the business sold as a continuing business, allowing the company's workers to remain employed.

Riverpoint Lace boasts that its plant, erected in 1809 as the Lippitt Manufacturing company, is the "oldest continuously operating textile mill in the United States." Its current owners acquired it in 1925.

Over the decades, as the privately owned company saw many of its competitors move their operations overseas, it became increasingly difficult for the mill to continue operating.

The auction was initially scheduled for last week, but Orson postponed it to give two prospective buyers time to consider purchasing the business and keep it going.

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Partners aim to keep mill running

01:00 AM EST on Saturday, January 26, 2008


Through it all, the Lippitt Mill in West Warwick kept humming, employing more than 50 people to dye and cut fabric. But that business, too, was recently endangered, after the owners of Riverpoint Lace Works filed for receivership, a form of bankruptcy, in November.

For now, however, it appears the dyeing machines will continue to operate. In an unexpected development, an investment group has purchased Riverpoint and announced plans to maintain its staff.
“This is an extraordinary situation,” lawyer Theodore Orson, the court-appointed receiver, said yesterday at a news conference at his East Side office. “It’s a wonderful thing.”

Given the state of manufacturing in New England, it was not clear that any company would invest in a foundering textile business. After all, the Hayes family could not make it work despite operating the mill since 1925.

In 1980, manufacturing jobs made up 38 percent of all private-sector employment in Rhode Island. By 2006, that contribution had dropped to just 13 percent.

To help pay Riverpoint’s creditors — including utility companies and at least one client that had loaned it money — Orson considered selling the equipment as scrap. (The land and 198-year-old mill building belong to a separate company, J&G Realty Corp., owned by John Hayes Jr.)

Instead, Peter Palmisciano Jr. and John Ponte formed the Palmisciano-Ponte Investment Group LLC and borrowed $300,000 to buy Riverpoint, paying three times the price offered for the machinery. Last night, Palmisciano toured the mill, shaking the hands of his new employees and handing out paychecks.

“We saw an opportunity,” Palmisciano said in an interview. “We feel we can walk in and help business turn around.”

Though the investment group starts out with little debt, its challenge is large. Riverpoint’s annual revenue has been plummeting, down to $3.5 million, a 43-percent drop from three years ago, according to Ralph A. Palumbo, an accountant who has helped run the company since November.

“It’s very scary right now,” Hayes told The Providence Journal in an interview before the recent auction.

The mill also needs costly upgrades, Palmisciano said. He and his partner expect to spend $300,000 right away, buying oil, repairing the boiler and upgrading machinery.

Palmisciano said he owns a business in Smithfield that manufactures parts for medical devices and aerospace firms. But neither he nor Ponte have worked in textiles, he said.

The purchase, Palmisciano concedes, is a “risk.” During negotiations, he said, Hayes told him he had tried hard to save his family business. “This man said, ‘I did everything that I could,’ ” Palmisciano recalled. “My stomach was turning.”

But Palmisciano said he and Ponte are up to the challenge. Some of Riverpoint’s business was lost to China and will be difficult to recover, he said. But other customers left because of quality and service problems caused by Riverpoint’s financial struggles, he said.

“There’s really some low-hanging fruit out there,” Palumbo said.

To win new clients, the investment group plans to add new product lines and to concentrate on a service that China-based manufacturers cannot provide: speed. Riverpoint’s remaining clients, Palumbo said, sometimes demand a 48-hour turnaround.

“It’s a niche business,” Palmisciano said, “but it has potential.”

The threat from Asian exporters is not new to Palmisciano. He said he once manufactured parts for pens, before that business evaporated after the Chinese market opened.

Though he plans to hire Hayes as a quality control manager and Hayes’ father as a consultant, Palmisciano said he would not hesitate to alter Riverpoint’s business model. “I’m well-versed in manufacturing,” Palmisciano said yesterday. “We need to look at things differently.”

Edward A. Giroux, the West Warwick Town Council president, has celebrated the mill conversions throughout the town that have breathed life into long-vacant buildings. But yesterday, he said he hopes the new owners of Riverpoint can make the business work.

“It’s nice to see that any thriving business remains in West Warwick,” Giroux said. “We need a strong business base to relieve the burden of taxes from our residents.”