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Archive for Wednesday, July 27, 2011

Town Talk: Bank forcing closure of Midwest Graphics; Rent-A-Center slated for former Blockbuster building; city finds replacement for eco devo spot

July 27, 2011

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News and notes from around town:

• A Lawrence-based company that used to help fans across the country celebrate national championships has fallen on hard times. West Lawrence’s MGI Companies has laid off the bulk of its 50 employees and is in the process of closing the company, which has its headquarters at 4811 Quail Crest Place. For years, the company was known as Midwest Graphics and operated a screen printing shop in Downtown Lawrence. The company grew to become a major printer of T-shirts and other promotional items for the NCAA and some of the larger universities in the country. Often the company was selected to do NCAA championship events and bowl games. But earlier this month, the company sent an email to its employees announcing that MGI’s banking partner had chosen to no longer fund the company.

“We are no longer in control of our operation, our funds or our business,” says the letter, which the Journal-World obtained a copy of. “We have been given the option to close the doors immediately or organize the closing, given a very difficult set of parameters to follow. It is in the best interest of all of our employees, our sales organization and our customers to organize the closing as best as we are able.”

The letter does not give the name of the bank. MGI company executives Lanny Riedel and Leon Dreiling confirmed the contents of the letter, but declined to comment further.

Whether there is a chance for the business to come back in another form is unclear. The letter does say that the business has been listed with a commercial broker for potential sale.

The company had several lines of operation. In addition to its collegiate business, the company operated Kid n’ Me Sportswear, MGI Promotions, and mypromostore.com.

This year marked the company’s 25th year in business.

• A major empty spot on 23rd Street looks like it soon will be filled. Plans have been filed at Lawrence City Hall for a Rent-A-Center to locate in the former Blockbuster video and movie rental store at 1516 W. 23rd Street. Rent-A-Center currently has a store at 711 W. 23rd Street in the Malls Shopping Center. Presumably, the company would be replacing that store with this new one, but a manager at the local store said he wasn’t authorized to comment on the move. I haven’t yet heard back from the company’s corporate spokesperson.

• The city has not waited long to fill its economic development coordinator position, and it is turning to an analyst in the private sector to do so. As we reported earlier this week, Corey Mohn is leaving the city position on Friday to become director of statewide programs for Network Kansas. Assistant City Manager Diane Stoddard recently confirmed to me that the city has hired a replacement in Britt Crum-Cano. Crum-Cano previously was the director of research for Kansas City-based Lane 4 Property Group. In that job she did market and site analysis for all of the company’s retail clients. In addition, she has done retail space planning for the city of Overland Park, and has played a role in the Campustown Revitalization project in Ames, Iowa, the Bluemont Corner in Manhattan, and The Trails project in Kansas City, Mo. For Lawrence, Crum-Cano will be responsible for analyzing various requests for public incentives both for retail and industrial projects. She also will assist the Lawrence Chamber of Commerce by providing information to businesses looking to locate or expand in Lawrence.

Comments

brickwall123 2 years, 9 months ago

I have a good friend that worked for this company that was in the original wave of employees that was let go. I've heard they are still trying to operate with very little staff. However the business they are still doing is shady as they are not paying sales reps commissions or royalties on licensed product. Now, this is all heard second hand and cannot be verified. I've also heard that employees have been denied their flexible spending account money and vacation time accrued. It is quite sad to see this happen to anyone.

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GravityStorm 2 years, 9 months ago

Obama's war on prosperity continues.... another evil, profit-seeking organization bites the dust. Good job Barack...your pledge to "fundamentally transform America" is working out nicely.

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Ron Holzwarth 2 years, 9 months ago

"Whether there is a chance for the business to come back in another form is unclear. The letter does say that the business has been listed with a commercial broker for potential sale."

I certainly hope that they can find a buyer! I'm not an accountant, but from reading this article, it sounds as though MGI Companies has many assets, not only tangible, but also intangible assets such as goodwill.

I tend to think that purchasing the company outright would be a very good investment for an individual or investment firm that can withstand the hard times we are going through on a national basis.

And I also believe that it would be a very good idea for the city to allow some tax breaks for any new owner of the company, if that would help keep the business in Lawrence.

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Ron Holzwarth 2 years, 9 months ago

"MGI’s banking partner had chosen to no longer fund the company."

“We are no longer in control of our operation, our funds or our business,” ,,, “We have been given the option to close the doors immediately or organize the closing, given a very difficult set of parameters to follow."

Wait a minute. Something sounds fishy to me.

There are many banks in the area, and any one of them would be able to finance the company, if it was a viable business. What exactly is the "very difficult set of parameters to follow," I wonder.

Is one of the parameters finding other financing? I'm quite sure that's what it is. If you can pay off the note when the bank calls the loan, you will get a handshake and a "thank you" as you walk out of the bank's lobby.

Years ago, I worked for a company here in Lawrence that was not really economically viable, although they made a great pretense that it was. The owners were quite open with me, and told me that if the bank called the loan, which could happen anytime, they would either have to find other financing quick, or close the doors. They were always looking for new investors, and there were no takers.

(No, I am not talking about you, I'm talking about a company that is no longer in business. You know who you are.)

So, I'm quite sure that what actually happened was that the bank called the loan, which can be done at any time. The loan contract will always make that very clear, so it should not be a total surprise. So, I think that MGI was not able to either pay it off or find another source of financing, because on the bottom line, the business was on shaky finances and the bank made the decision to limit their losses.

It's so much easier to blame the bank than to admit that your business was either mismanaged or is not economically viable.

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OonlyBonly 2 years, 9 months ago

No comments about how quickly the "economic development coordinator position" was filled? It's almost like it was a done deal when what-his-name's departure was announced.....

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average 2 years, 9 months ago

It's not like RAC is new to town or anything, just moving from their current spot in the 23rd/Louisiana strip mall.

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Bob_Loblaw 2 years, 9 months ago

It says a lot (of bad) about a city when the Rent-a-Centers, thrift stores, and general home garage sales take over where the new goods retail stores can't survive. I hear the flushing sound getting louder as Lawrence goes down the tubes.

The best selection now for quality durable new goods is KC or Topeka.

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