It was just after 2:30 a.m., January 6, 2005, when everything changed in Graniteville, South Carolina. Norfolk Southern 192, a three-engine freight train pulling 42 cars, traced Horse Creek into a valley near the Georgia border and straight into the old textile town. At the center of Graniteville, population 2,600, lay a complex of industrial buildings owned by a company called Avondale Mills, at the time one of the nation's largest suppliers of denim. A short spur veered off the track a few dozen yards from the first mill building, so trains could stop to load and unload cargo. A few hours earlier, another Norfolk Southern train, P22, had stopped there, to park on the spur for the night while the crew got some rest.
Train 192 was just passing through Graniteville, carrying its heavy cargo--particleboard, industrial clay, coils of steel, and various chemicals, including liquid chlorine in three consecutive 90-ton tankers--to the state capital of Columbia, some 60 miles northeast. Unlike many rail lines, the stretch that passed through Graniteville was what's known as dark territory, where the switches are not controlled by remote dispatchers but rather must be toggled manually. Chris Seeling, the train's engineer, had no way of knowing that the crew of the other train had failed to move the switch back to the main track after they had crossed over to the spur.
Seeling's train was cruising at 47 miles per hour as it lurched onto the side track toward the parked freighter. The engineer had no more than a second to react--probably just enough time to register what was happening and watch, helplessly, as disaster materialized out of the darkness. An instant later, he slammed into the freighter head-on.
Eighteen cars and three engines derailed and folded in on one another. Six-inch-thick steel-clad walls crumpled and tore. It had been an unseasonably warm week, and the heavy early-morning mist in the valley muffled the thunder of the collision.
Inside the mill buildings just a few dozen yards away, many workers didn't even hear the wreck. Outside, as the trains came to rest, one chlorine tanker with a 29-inch gash began to leak, fast. The poison vaporized as it escaped the tanker, and formed a greenish fog that enveloped the scene. Heavier than air, the gas didn't billow up so much as flow like a liquid, a low toxic cloud sliding along the ground, following the slope of the land toward the buildings and down into a wooded area along the creek. The breeze was slight that night, just two to four miles per hour, so the air around the mills stayed heavily concentrated with chlorine. Large ventilation fans in the buildings ushered the gas into the mill structures, where 183 people were working the night shift, and an acrid smell of bleach soon turned to blinding pain.
"I don't want to be alone; I can't breathe," cried one mill employee who called 911. "My lungs hurt so much. Oh, God! I don't know if I'm going to make it!"
They ran for their lives, out loading docks, emergency exits, or the front door. Outside, their situation only worsened. When it mixes with water, chlorine turns to hypochlorous and hydrochloric acid. That chemical reaction, already happening in the air, now started happening in people's throats and lungs, and in their eyes, as they tried to sprint to their cars. Some dropped to the ground, thinking they'd stay below the cloud, only to find their gasps even more painful. Some ran to the woods by the creek, where their bodies were later found. They scattered any way they could. A white powder drifted to the ground, and the smell of chlorine spread throughout the valley, where many woke to panicked calls, or neighbors and family members pounding on their doors.
At 2:39, Phil Napier, the town's volunteer fire chief, awoke in his home, just up the hill from the mill complex, to an emergency page about the crash. After ensuring his team would stand by until the chemical cloud could be identified, he drove his truck down the hill to investigate. As he turned onto Canal Street, he saw two men on the tracks, one standing and the other sprawled on the ground. The standing man rushed up to the truck and Napier rolled down his window.
"We've had a head-on collision with a train! We've got a chemical leak! I can't breathe," the man said--and collapsed.
Napier couldn't see through the fog, but he was mere yards from the derailed cars, and that man was the 28-year-old Seeling. In the brief moment his window was down, Napier started choking. He gulped for air and made a quick U-turn away from the scene, and in keeping with hazmat protocol, sped away to save himself. He found himself east of the accident scene, on high ground, with no idea how he'd gotten there. He called dispatch and reported what he'd seen.
By the time hazmat teams began their search and rescue operations, the trains sat silent and the cries for help had subsided. The gates at the rail crossing were still down and made the only noise on the scene, a persistent metronome sounding its alarm. Clang, clang, clang, clang, clang. It rang for two days.
The accident--at the time the worst rail-related chemical spill in U.S. history--claimed nine lives (including Seeling's) that night. Hundreds were hospitalized, and many still suffer from breathing difficulties.
But other blows were yet to come.
Steve Bush eases his silver Tesla Model S over the train tracks and rolls to a stop across the street from Hickman Mill, one of the hulking brick buildings that used to make up Graniteville's mill complex and the first piece of a town renaissance that, today, Bush is leading with his business partner, Pete Davis. He nods to the tracks just behind him. "That's where the accident happened," he says. "The spur has been decommissioned, but trains still run through town several times a day--they don't stop anymore."
Bush is the CEO of Recleim, a new appliance-recycling company that earlier this year opened its first facility inside the mill's 110,000-square-foot Hickman Weave Room. Headquartered in Atlanta, the company is an offshoot of a boutique investment group--Peachtree Investment Solutions--that was founded by Davis to take advantage of federal and state tax credits for risky real estate developments that normally don't qualify for more traditional bank financing.
Graniteville is just such a place, and not only because of the train wreck. The crash was more like an exclamation point on a series of calamities that began there in the 1980s, after nearly 150 years of prosperity.
Graniteville's first big mill opened in 1849. Back then, it was the only large-scale textile plant in the South, turning out 12,000 yards of fabric per day. The Graniteville Company, as it was called then, grew quickly, and the town became the blueprint for hundreds of mill villages that sprang up around the region. Even during the Civil War, the company flourished, because it found a way to sell to the North by shipping goods from Charleston to London and then back to Boston. The mill complex grew to include more than a dozen buildings in the Horse Creek Valley, and several more in surrounding towns.
The town's fortunes started to reverse in 1983, when the legendary corporate raider Victor Posner seized control of the Graniteville Company and sold off much of the surrounding land. Then, in 1996, Avondale Mills bought the Graniteville Company and retired the name. By then, offshoring of the textile industry was well under way, and Avondale struggled to compete against low-cost labor in Asia and Latin America.
Roger Boyd, a lifelong Graniteviller who worked in the mills for 29 years and whose father and grandfather also spent their careers with the company, quit his job several years after Avondale took over. Many other long-timers also quit or were replaced. "Things were just different," Boyd says. The Graniteville Company had made a point of giving local kids part-time jobs and supplying band uniforms for the high school and mowing the grass around the canal, where locals would go fishing; Avondale didn't. The mills and the town were once inseparable; now there was just a faceless factory. When those Norfolk Southern trains collided in 2005, many locals had already assumed that the company was doomed by international competition, along with most of the rest of the domestic textile industry. Since 1990, the number of jobs in apparel and textiles had fallen faster and further than in any other U.S. industry, dropping by more than 50 percent in 2005, and the slide was only steepening. "Sooner or later," Boyd says, "our jobs would have went away."
Just over a year after the accident, Avondale announced it would shut down immediately. A day after that, it accepted a $215 million insurance settlement. "We do not believe the settlement fully compensates us for the full value of the losses incurred as a result of the Norfolk Southern derailment," company chairman G. Stephen Felker said at the time, and promised to sue the carrier. That suit ended with another settlement, for an undisclosed sum. To the Graniteville townspeople, it looked like Avondale used the settlement money as a lucrative escape hatch. (Felker said the accident was simply too devastating.)
In any case, Graniteville once again became an archetypal Southern mill town, this time because of its empty industrial ruins and marooned work force. It fell to the townspeople to try to maintain what parts of their little hamlet they could.
Phil Napier, the volunteer fire chief, is a third-generation Graniteviller who worked in the mills as a teenager. Now 65, he runs a combination hardware store and flower shop across from the mills, holds a seat on the county council, and holds court every day in his shop with a parade of locals who come to hear the latest town gossip. He's as close as Graniteville has to a mayor. "I told people that our community wouldn't die," he says. "We were a strong, united community, and we would move forward." Napier started mowing the grass and pulling weeds along the canal, and maintaining the small memorial to the crash victims across the street from the tracks.
Still, by the time Bush and Davis stumbled onto the town, it was a shell of its former self--"poverty in its truest form," Davis calls it. It was just the kind of opportunity they were looking for.
Neither Bush nor Davis could have predicted they'd enter the recycling business, let alone become white knights for a struggling town. They're investors--not operators or social entrepreneurs. But they have uniquely well-suited finance skills and a soft spot for small Southern towns.
Bush, a 41-year-old Georgian from a no-stoplight, crossroads community an hour from anywhere, started as a pipeline engineer for Chevron--"I basically made sure what went in one end came out the other"--but found himself itching to do something entrepreneurial. He quit his job, went to business school at the University of Chicago, and began climbing the corporate ladder in Atlanta, eventually landing as COO of an HR company. After he had twin daughters, his wife met another mom of twins, and the two women realized their husbands would get along.
Davis, 46, who grew up in small-town Mississippi, had made a small fortune in the esoteric practice of tax-credit syndication--finding investments that qualify for tax credits (for low-income housing development, historic preservation, clean energy) and then selling those credits to large investors. Credit Suisse recruited him to create a division to focus on his specialty. In 2008, the bank decided to sell the business he'd built, and he accepted a buyout to stay in Atlanta. His wife met Bush's wife in 2008, and Peachtree Investment Solutions was born.
Peachtree initially focused on the kind of work Davis had done for Credit Suisse. But as Congress started to make noise about reforming tax laws, Bush and Davis began to look for ways to diversify. A client asked them to advise on an investment opportunity: Some entrepreneurs had a tentative deal with a German company called Adelmann Umwelt to license its industry-leading appliance-recycling technology, along with complementary technology from a Danish company called Lesni, and bring it to North America.
Davis joined those entrepreneurs on a trip to Germany to explore the deal and saw quickly that their business plan was full of holes. He also gleaned from the meetings with Adelmann that the Germans weren't particularly confident in the potential licensees. So, after a few days, he asked a simple question: "For how much will you sell me the idea?" He suspected that, presented with quick cash, the entrepreneurs would sell. He was right--and paid "pennies," he says, considering the potential.
Bush and Davis had been spending time around Graniteville because they'd been consulting for a wealthy real estate developer named Weldon Wyatt, who, they had learned, had bought up the abandoned mill property. Wyatt and a partner had sold most of the mill equipment, but after the economy crashed in 2008, the buildings just sat fallow.
As Davis flew home from Germany, everything came together: the innovative European technology, the empty factory buildings and underemployed labor pool in Graniteville, a location near several major population centers that turn out a lot of appliance waste, and--crucially-- a federal program known as New Markets Tax Credits that might get him the financing he'd need. Here was a chance not only to diversify Peachtree's interests, but also to build something he and Bush could believe in. "It just fit together," Davis says. He opened his computer and spent the flight writing everything out.
"You know how you see an old sidewalk, and it's cracked, and there's a flower growing out of it?" asks Kelly Dyches. "It's kind of like that," she says, of seeing the Hickman building running again. Dyches worked for years in the mills, operating heavy machinery, and was on duty the night of the accident in a building up the hill, outside the main complex. The day I visit Recleim, she's driving the truck that moves trailers to and from the loading dock--one of several former mill workers now employed there. (She's since left Recleim.)
Inside the building, hundreds of old refrigerators, stoves, washers, and dryers line up like an army of blocky robots to be noisily dismantled. Workers remove shelves, power cords, and windows, and use specialized drills and hydraulic cutters to suck out oil and extract compressors. A conveyor hauls the gutted machines up and deposits them one by one through a chute into a negative-pressure chamber, where they are sheared and then smashed to pieces. Then a granulator breaks them down further, into crumpled nickel-size coins of copper, steel, plastic, and aluminum. After separators sort the materials and deposit them in dedicated bins, the commodities are ready to be sold to refiners. In the most innovative process, environmentally harmful gases and CFCs are sucked into a Lesni air-purifying machine, which neutralizes those toxins so they don't dissipate into the atmosphere, as they do in typical scrapyards.
The operational mind behind all this belongs to general manager Douglas C. Huffer, previously president of Maytag Commercial Products, whom Bush and Davis coaxed out of semiretirement. A genial 59-year-old with an impressive push-broom mustache, Huffer recruited former colleagues to build what he calls a "demanufacturing" plant. The term is more than semantics--it colors everything from how Recleim presents itself to the community (no piles of junk appliances sitting in a yard) to how it's classified for insurance rates, to its obsessive focus on operational efficiency. "I used to take commodities and make appliances," Huffer explains. "Now we're taking appliances and making commodities."
Recleim trucks in appliances from within a 300-mile radius, an area that includes approximately 15 million people. Since trucking heavy appliances to the facility is the greatest expense, the company hopes to open as many as 10 strategically located plants around the country, which would mean access to almost every major metro area. Bush estimates that a single Recleim facility, once it's at capacity, could generate up to $25 million in revenue annually--so in theory, the business could bring in several hundred million dollars a year.
It's an ambitious plan, one that could make Bush and Davis heroes in more places than just western South Carolina. The company has already selected its second location, a town on the outskirts of Dallas that, Bush says, "is exactly the same as [Graniteville] from a poverty and unemployment perspective." That's important, because, as they did in Graniteville, they're using federal New Markets Tax Credits to finance the expansion.
"There's a concept in New Markets Tax Credits lending called the 'but for' test," Bush says. "Could you do this but for the tax credits? The answer for us is no, we couldn't." Recleim works in part because of Graniteville's location and great industrial bones, but also because traditional financing wasn't possible. "Take just the real estate--everything is so depressed that you can't get your appraisal high enough," Bush says.
For its Graniteville facility, Recleim raised $20 million of its $26.5 million in financing from two mission-based financial groups, Amcref Community Capital and SunTrust Community Capital, that specialize in New Markets Tax Credits financing. The catch for Recleim, or any other organization using NMTC financing, is that it must meet stringent community-impact standards established by the lenders according to federal guidelines. Amcref judges its investments on four criteria: employment, the environment, the community, and the local economy. Recleim is the highest-scoring business it has ever assessed.
The Graniteville plant employs 127 people--including 66 full-timers--on the day Bush shows me around. It plans to grow that number to 200 in the next year, and according to Amcref, the company has pledged to hire up to 70 percent of its work force from Graniteville. "These are the very type of jobs that were lost, so that's where people get excited," Bush says. On average, Recleim pays 2.6 times more than minimum wage and 1.6 times more than the county's per capita income, and offers full benefits. Those workers will keep about 1.6 million tons of greenhouse gases out of the atmosphere every year and divert 57 million pounds of appliance waste from landfills. Amcref calculates more than $437 million in local economic impact from Recleim in Graniteville over the next seven years.
While the company won't divulge its revenue, signs point to good progress. Recleim has struck supplier deals with BSH Home Appliances, the maker of Bosch and Thermador products in North America; Pepsi Bottling Ventures; and various cities and counties, retailers, and distributors. While I'm interviewing Doug Huffer, a group from one of the world's largest appliance makers arrive at his office after touring the plant. "Very impressive," says one of the visitors. "I'll get our purchasing guys in touch."
Pete Davis sits at a table strewn with master-plan maps of Graniteville, in the conference room of Peachtree's headquarters, in a small office complex in Atlanta's wealthy Buckhead district. It turns out that the very week I'm visiting, Bush and Davis are closing a deal to buy all the other mill buildings, along with most of the undeveloped land that runs up the valley from the center of town. To take advantage of Graniteville's heavy power supply from the mill days, the two hope to lure a tech company to build a large data center in one of the abandoned buildings, Davis says. As Recleim grows, other buildings might attract complementary businesses, such as a plastics company.
But the renderings also show an equestrian trail from the center of town up through the valley, a brew pub along the creek, an amphitheater, a textile museum, and retail space. I don't understand, I tell Davis. The potential for the rest of the mill buildings is obvious, but why bother with the land? Surely he could get a greater return, at less risk, than by styling himself and Bush as the stewards of a struggling South Carolina mill town. "We could be doing a lot of other things and getting a similar return," he says. He points at the master plan, its walking paths, green space, and restored historical buildings. "But when can you create that? Which I can, and I will--that's what gets you up in the morning."
Bush tells me that he and Davis are also buying the water rights to all that land. Recently passed legislation in South Carolina makes it harder to drill deep wells for groundwater if there's surface water available, but the nearby Savannah River has long been polluted with mercury and other heavy metals; the EPA calls it the seventh-most toxic river in America. That makes the 41 million gallons a day of clear spring water that pass through the Horse Creek Valley extremely valuable. The water is the real asset, it turns out; the land is a bonus.Bush and Davis are dealmakers, after all; not operators, not developers. They spot opportunities and put the pieces together to make them happen, often by taking advantage of complex financing strategies that they understand better than most. In the case of Recleim, that means that, after several years, they're likely to sell the company and hand it off to someone who wants to run it long term.
Which is probably best for Graniteville. But they've also found themselves falling for Graniteville in ways they never expected. "Go spend time there. Meet the people," Davis says. "Then come back and ask me why it's worth doing."
"We've had a problem with vultures. Buzzards," says Napier in his hardware store, as he sits on a red-leather swivel chair with his 8-year-old dachshund, Sweetpea, in his lap. There are a hundred of the birds on the power lines just across the street by the mills. "Pete came in one day, and he and I were talking about it, and he says, 'I'd like to come over one night with a .22 rifle and just shoot them.' That's when I knew he was a down-to-earth person.
"From Napier's perch each day, he can see out the front window of the shop, across the empty parking lot, past the mills, and over to the Graniteville water tower. For years, after Avondale came to town, the tower's paint slowly faded in the South Carolina sun. When Davis and Bush bought the Hickman building and announced the launch of Recleim, the first thing they did was have the water tower repainted, complete with the old bright-red Graniteville Company logo. "People were really impressed when they saw that," Napier says.
"I've sat here and saw a lot over the years," he tells me. For some time after the derailment, he'd watch cars on Canal Street pull into his parking lot and wait if a train was passing, rather than drive beside it. These days, he still gets a chill sometimes when he sees the train, but the cars just keep going. There's also a lot more traffic now, including 20 trucks a day carrying castoff appliances or hauling out their valuable remains.
"Graniteville is coming back to life," he says as he gazes out toward the water tower. Sweetpea growls a bit as she slips out of his lap, and he lifts her back into place and strokes her ear.
"It's coming back."