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Former Pharmaceutical Rep Creates Jobs in Military Apparel Manufacturing Industry
In 2006, pharmaceutical giant Schering-Plough closed its manufacturing facility in Manatí, Puerto Rico leaving hundreds of people unemployed, among them, Armando Semprit.
The plant closing was partly due to the 10-year phase-out of Section 936 of the Internal Revenue Code, which provided a tax credit against U.S. taxes imposed on income earned by a U.S. corporation on the island. Pharmaceutical companies originally came to Puerto Rico over 40 years ago to take advantage of Section 936, turning Puerto Rico into a worldwide pharmaceutical center that currently produces 16 of the top 20-selling drugs in the U.S.
Nevertheless, Schering was one of dozens of manufacturing plants that ceased operations in Puerto Rico over the last decade, and Semprit only one of thousands of individuals who lost their jobs. His six years of experience as a medical representative and his Master’s degree in Global Management overqualified him against countless of line employees looking for jobs amidst the worst recession this economy has ever seen.
But Semprit was well prepared to take a hit. At the age of 28 he enjoyed a good salary, and had put away quite a bit for a rainy day. In order to keep himself busy while another opportunity arose, Semprit applied for insurance and securities licenses and spent the next two years hitting the pavement looking for clients.
“Because of my savings, I only worked the field part-time,” Semprit says. “But within two years, most of those savings had depleted, and I started to feel unemployed.”
What helped Semprit put an end to his “unemployed” feeling was reading the newspaper. As he explains it, one of his strategies when seeking new clients was to read announcements companies were making about new products that were sure to reap great revenues.
“I would visit them and advise them on where to invest their earnings,” Semprit says.
It was while thumbing through the newspaper one day in March 2008 that Semprit came across and ad for a company that was selling machinery and equipment for people interested in federal contracting. This caught Semprit’s attention and he paid the company a visit simply to offer his services as an investment broker, and to see first-hand the company’s operations and the type of equipment it was selling. The company was Rebmar, Inc. dedicated to the manufacturing of military uniforms and accessories in Morovis, in the heart of Puerto Rico’s central mountainous region. All of its industrial sewing machines and equipment were for sale. Rebmar’s owner --based on the mainland-- was near retirement and looking to close operations on the island, since his children had no interest in running the company.
Reading the newspaper again the next morning, Semprit saw an article about a Business Matchmaking event the U.S. Small Business Administration’s Puerto Rico office was conducting later that week with the Puerto Rico Association of Engineers and Land Surveyors.
“I went to the event to meet people and network, and also to learn about the federal contracting process,” Semprit says. “I listened as presenters spoke about the great potential of the HUBZone program, of growth opportunities in Puerto Rico, and the federal government’s investment in contracting.”
Within a couple of weeks of attending the SBA’s Matchmaking event, Semprit had visited the Puerto Rico State Department to read up on Rebmar’s corporate certificates and financial statements, and later visited the company again, this time making an offer to purchase the machinery as an individual.
“I knew nothing about manufacturing,” Semprit admits. “But I had to either invest the money I had left in a profitable business or find myself another job quickly.”
It took about a week of negotiations, but Rebmar’s owner finally agreed on a selling price that was reasonable to Semprit. The young man was becoming an entrepreneur. He incorporated his new business as Noliar Inc., engaging in the manufacturing of apparel, bags, pouches, vests, and tent and gas mask accessories for military troops. He also obtained Rebmar’s list of clients, who let him know they needed someone to fulfill the contracts pending.
On April 4, 2008, Semprit began operations with five employees at Rebmar’s facilities, which were housed in a building of approximately 40,000 square feet owned by the Puerto Rico Industrial Development Company (PRIDCO). Soon after, Noliar completed the contracts that Rebmar had left pending, and also landed two subcontracts from a prime contractor that was manufacturing commercial products for the federal government.
Within a few months, however, PRIDCO informed Semprit that it needed the facilities for another company, and Semprit relocated his business to another PRIDCO-owned building in Morovis – this time 21,600 square feet big.
But a cash flow problem led Semprit to visit his bank to apply for a loan. It was then he learned of the U.S. Small Business Administration’s 7(a) Loan Guaranty program, which provides long-term financing to acquire equipment and machinery, inventory, fixtures and accessories, renovations, purchase land, build new buildings, purchase existing businesses, and for the repayment of debts. The SBA can guarantee up to 85 percent on loans up to $150,000 and up to 75 percent on loans higher than $150,000 up to $5 million.
Semprit attended an SBA orientation session and was referred to the Puerto Rico Small Business and Technology Development Center for training, counseling and technical assistance.
“Like a good student, I took the SBTDC course on how to start a small business and went to all my classes,” Semprit says. “Because of my college major, I had basic knowledge of how to prepare a business plan, but the SBTDC helped me polish it. I also learned how to do my bookkeeping, and although I hire an accountant to review the company’s books, I still do all the numbers myself.”
At that time Semprit ultimately didn’t get a loan, but he recently obtained an SBA-guaranteed line of credit from Banco Santander Puerto Rico that is helping him establish commercial credit experience. Noliar Inc. has invested in more sophisticated equipment to be more efficient, and has fulfilled contracts for the Defense Logistics Agency Troop Support, among others. In addition, the company is also working as a subcontractor for Propper International, in addition to having six other clients, and foresees closing the year 2012 with $1.5 million in revenues.
Noliar –who’s named after Semprit’s mother “Noli”—recently obtained certification under the SBA’s 8(a) Business Development program, which provides eligible socially and economically disadvantaged firms with growth opportunities through federal contracts.
Almost four years after that fateful day in March 2008, Semprit employs 28 people, a fact that brings optimism to a town like Morovis with an unemployment rate of 21 percent. Looking back at the road he’s taken and the challenges he’s faced as an entrepreneur, Semprit sees the glass as half-full.
“I’m still here,” Semprit declares. “I’m creating job opportunities for people who probably wouldn’t have had another option. I look forward to what’s to come.”