Bolton's Biggest Business - Future Electronics Property Lures Telecom Tech To Town
At a ceremony with town officials, Paragon had a temporary banner set up over the Future Electronics sign.
EDD COTE
Paragon Communications CEO Mike Prefontaine spoke at a recent gathering hosted by Paragon at its new Bolton campus.
When Future Electronics relocated the bulk of its 800-person Bolton workforce to the southern United States eight years ago, its massive campus set back from Main Street was left largely vacant.
With fewer jobs and a declining industrial and commercial tax base, the small town of 5,000 people wondered what the future would hold for the 300,000-square-foot building, which has a cafeteria, gym, cavernous warehouse and offices.
Enter Paragon Communications: Based in Ashland for years with facilities in Southborough and Holliston, the voice and data networking systems vendor and refurbisher wanted to consolidate its operations into one property, and it wanted to own it rather than continue leasing.
The company already did business with Future, which tipped them off to the idea of buying the property.
"It was just the perfect situation," said David Yered, Paragon's president of asset management. "The building is set up just the way we want it."
The company paid $8 million for the campus, and once the rest of its 200-plus employees make the move up Interstate 495, it will officially become the largest employer in town, officials confirmed.
Paragon said it plans to sublease some of its space to Future, which still has 62 workers in the building, as well as to new tenants.
Yered said there has already been interest from several parties. The building will have around 400 workers in it when it's fully subleased, he said
Extending The Tech Life Cycle
Paragon buys and refurbishes voice and data systems from manufacturers and companies that use them. It provides a parts supply chain for those older systems that allows companies to integrate old systems with newer products.
"We [support] the supply chain and life cycle of a product whose useable life, quite frankly, extends beyond its sellable life," said Scott Davis, Paragon's chief operating officer.
Equipment manufacturers can't keep inventory for old systems in stock forever.
"It'd be like a Lexus dealer keeping 10 years of new cars on the lot," Davis said. "You just can't do it."
But Paragon can. It maintains a stock of phones, circuit boards and myriad other parts that tech integrators will inevitably end up needing at some point. The company gets its supply from the original manufacturers or from companies who hire them to clean out entire offices.
Paragon resells the refurbished products to distributors that sell to end users.
Davis said Paragon has voice and data equipment arrangements with every North American technology manufacturer.
He would not disclose revenues, but said the company has seen "significant growth."
Paragon also has a division called NTSDirect, which sells new equipment, and another called R3, which refurbishes and sells smartphones and tablets.
The R3 employers were among the first to move to the Bolton facility. In a room on the top floor, boxes and boxes of smartphones were stacked on shelves like library books.
Like its other business lines, R3 doesn't do business with end users. Instead, it refurbishes phones for major cell phone service providers. Providers that offer to replace phones that break under warranty are almost always providing refurbished models like those on Paragon's shelves.
Choosing Domestic Labor
Paragon competes with a number of companies that outsource their labor to cheaper countries, Davis said.
But Paragon has avoided that because it feels the quality of worker it can find in MetroWest is higher than it would get elsewhere.
"We provide a more reliable product and a faster turnaround time by using U.S. labor," he said. "There's a consistent quality of workforce in MetroWest and we just don't feel comfortable doing business anywhere else."
Of course, paying higher wages can be a disadvantage, he admitted.
"No question, we've lost some business to outsourcing companies," he said.
A Boon For Bolton
Chris Nelson, who earlier this year left his post as chairman of the town's economic development committee, said Paragon's relocation is a big deal for the town.
"I think it's a tremendous thing for the town of Bolton," Nelson said. "That building has been underutilized for some time."
One reason Nelson left the economic committee is because he was frustrated over residents' opposition to development on commercially-zoned land in town. He's sees the Paragon move as the town getting lucky because Paragon and Future had a preexisting relationship, rather than actively attracting a company.
"We simply choose not to compete for any type of commercial revenue," he said. "If it happens to come, great, we'll take it."
Nelson said he was involved in early talks between the town and Paragon. The prospect was exciting, he said, because Bolton has had trouble attracting large employers.
"I think the biggest challenge is trying to draw companies into a small town that has limited options in terms of what you would normally see for infrastructure and what you would normally see for retail options," he said.
No Tax Deal For Paragon
One of the biggest ways a town can entice a business to set up shop is by offering it a tax incentive financing deal (TIF), which offers reduces property taxes in exchange for new jobs and property investments.
Paragon wanted a (TIF), but did not get one for several reasons. A combination of tight timing and a lack of negotiating leverage appear to have doomed Paragon's chances of getting a deal.
Unlike recent TIF deals in MetroWest, in which the applicant company has not acquired the property or started a major renovation until it won TIF approval, Paragon purchased its property while it was still negotiating
Davis, Paragon's COO, said it would be nice to have some support from the community that will benefit from increased property value and an influx of jobs.
But he acknowledged that the company may have made a negotiation no-no in not waiting out the TIF negotiations before buying the property.
"We continue to make significant investments, but I wouldn't consider us savvy real estate investors," he said. "From a negotiation standpoint, it would have been advisable to contend the deal and wrap up those issues."
Donald Lowe, Bolton town administrator, said the company may have had to make a more sizeable investment in the property to qualify for a TIF.
Paragon plans to replace the roof, resurface the parking lot and make other "green" renovations, but a TIF would have required the property value to rise by several hundred thousand dollars, Lowe said.
Regardless, he said the town would have been "more than willing to sit down with them and have a good faith discussion."
Lowe said he is pleased to see Paragon setting up shop in Bolton, but he acknowledged that the TIF may have been a tough sell with Town Meeting voters, since the sale had already gone through, leaving Paragon with less negotiating leverage.
He also said that there wasn't much time to get a TIF on the warrant for the fall Town Meeting.
And Nelson said his impression from the talks with Paragon was that it had expiring leases and had to act quickly.
"I don't think they had the luxury of being able to sit back and say we'll do this deal now or in another 12 months from now," Nelson said.
But TIF or no TIF, Paragon is growing, and now it's exactly where it wants to be. n
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