When a new manufacturer arrives, the Mississippi Development Authority traditionally sends out an e-mail announcing the impending plans and thanking all who worked hard to make the good news happen.
MDA sent one out this week for the reopening of a theater seat manufacturer in Union County, in North Mississippi. The company’s story says a lot about how both corporate finance and consumer tastes are changing rapidly.
In 2012, VIP Cinema Seating opened a plant in New Albany. It started with 30 employees but grew into one with more than 500. It’s the kind of small-business-turns-into-big-business success story of which every community in Mississippi dreams.
Ultimately, the owners cashed in by selling the company to a private equity group. But the new owners filed for bankruptcy protection in February — before the coronavirus pandemic took hold.
Enter the prior owners, who along with two other investors bought most of the bankrupt company’s assets and now stand ready to reopen in New Albany with a 100-employee operation. The company’s slightly adjusted name is VIP Luxury Seating.
The first observation is about private equity ownership. Smart people run those companies, and often do quite well. But in this particular case, even with a strong economy, they were unable to avoid bankruptcy.
The second observation involves a bit of informed speculation.
Perhaps the company sank into bankruptcy because of the rapidly changing tastes of the viewing public. In just the last few years, more people have installed extra-large, high-definition television sets in their homes. These TVs present a reasonable alternative to the theater experience, and if there is less use of movie theaters, there obviously will be less demand for the comfortable reclining seats that are standard in the newer auditoriums.
Presumably the original VIP owners have ideas about how to pivot the business — thus the new name of the company. People always are looking for somewhere comfortable to sit, so there ought to be a market for luxury seats.
Good luck to the revived company. Jobs are depending on its ability to find new customers.