SPRINGDALE -- Redman & Associates is suing a Chinese manufacturer for $21.3 million.
The Rogers-based maker of battery-powered ride-on toys claims Sales Chief Ent tried to steal Walmart as a client and is preventing Redman from starting its own manufacturing business.
A report by Arkansas Business states 14 of the company's 24 workers were laid off suddenly Friday. A phone and an email message to Mel Redman, the company's chief executive officer, late Friday afternoon weren't returned by 7 p.m. Redman said during a June interview he planned to hire 30 people initially and have 90 employees by 2016.
Redman & Associates filed the lawsuit Friday in U.S. District Court's Western District of Arkansas in Fayetteville.
Redman announced in October the company was shifting manufacturing of its 6-volt toys from China to Rogers over the next three years. Production of the company's 12-volt toys was remaining in China.
Sales Chief started manufacturing the ride-on toys for Redman in March 2012, according to the lawsuit, and the companies agreed on "Net60" financing, meaning Redman wasn't required to pay Sales Chief for goods until 60 days after they were shipped from China ports and invoiced.
Redman states in the lawsuit the firms agreed to continue this process as he shifted some of the production to the U.S., but that changed abruptly May 24 when Sales Chief demanded immediate and full payment for all goods before any additional goods would be released to the company, including those already booked and shipped to the U.S.
Redman pays freight, storage and other logistical fees for the goods Sales Chief ships from China and the lawsuit states storage and logistical fees have already exceeded $1.4 million for toys stuck in storage.
"(Sales Chief's) purpose was to obstruct (Redman & Associates') cash flow to prevent the startup Made in USA manufacturing business from having enough funds to begin operations," the lawsuit claims.
The Rogers firm also claims Sales Chief used proprietary information and used the production stalemate to steal Walmart as a client.
Sales Chief arranged a meeting with Walmart, the suit states. The retailer notified Redman and invited him to a meeting Thursday, the suit states. The Chinese company also set up a meeting for Friday that didn't include Redman & Associates.
The lawsuit states the second meeting was Sales Chief's attempt to replace Redman as Walmart's supplier before the local manufacturing becomes operational.
NW News on 09/06/2014