A bus maker’s costly breakdown

Lillie Mae Duncan drives her bus to the maintenance lot outside Charlotte Douglas International Airport Wednesday, December 18, 2013. The Charlotte airport's 10 buses made by bankrupt bus manufacturer DesignLine have suffered a fire, brake problems, ongoing maintenance issues and a scarcity of parts over the last seven years.
Lillie Mae Duncan drives her bus to the maintenance lot outside Charlotte Douglas International Airport Wednesday, December 18, 2013. The Charlotte airport's 10 buses made by bankrupt bus manufacturer DesignLine have suffered a fire, brake problems, ongoing maintenance issues and a scarcity of parts over the last seven years.

This story first ran Nov. 3, 2013.

After an acclaimed military career capped by directing the air campaign in the Persian Gulf War, Air Force Gen. Buster Glosson returned to the Carolinas to start a civilian life in the business world.

An N.C. State graduate who used “Wolfpack” as a code word during the war, Glosson moved to Charlotte and started companies that offered consulting services, made investments and provided health care to a country in the Middle East. Then, he spied what appeared to be a can’t-miss opportunity: a New Zealand-based hybrid bus maker that promised “cleaner and greener” vehicles for mass transit.

With his son, Brad, and other partners, Glosson acquired DesignLine and moved it to Charlotte in 2006. Some of Charlotte’s best-known businesspeople plowed money into the company, and even Charlotte’s former Mayor Anthony Foxx, now the U.S. transportation secretary, signed on as an employee. But seven years later, the can’t-miss investment has unraveled.

DesignLine filed for bankruptcy in August, and laid off most of its employees. A California-based investment firm has agreed to buy the company’s assets and plans to reopen, but investors aren’t expected to recoup any of their money.

Glosson and his son were able to bring the company to Charlotte and land much-needed investors. But in the end, they weren’t able to deliver on the promise of a company that gave the city manufacturing jobs and green-energy cachet.

A review of court documents and securities filings, along with interviews with investors and former employees, indicate the company began struggling financially only a few years after it arrived in Charlotte. Some investors question whether Glosson and his son, a Davidson College and Wake Forest law school graduate, had the experience to run a manufacturing company.

In March 2012, DesignLine’s board named a new CEO - former New York transit official Joseph Smith - and some investors have praised his efforts to turn the company around. Buster Glosson said his son resigned, and that he resigned himself as chairman two months later.

Ed Weisiger Sr., former president of Carolina Tractor, said he first heard about DesignLine through Buster Glosson, who was a friend. He visited the company while on a trip to New Zealand and invested in DesignLine when he returned. He later served on the board.

Like some of the other local investors, he was a member of Quail Hollow Club, the exclusive country club in South Charlotte. Sometimes investors even delivered checks in the locker room, one source said.

“To build a company you need to build it out slowly,” Weisiger said. “My thinking is they had grandiose ideas and not enough capital to carry it out.”

Buster Glosson, 71, told the Observer the company was initially under-capitalized, but when his son left in March 2012 it had secured $50 million in long-term funding and had a $100 million order back-log. The bankruptcy occured a year and a half after his son left the company, he noted, adding DesignLine spent $20 million in the two months after his son left.

“I’m sorry that the investment didn’t work out,” said Glosson, whose son, Brad, declined to comment. “Goodness knows that. I wish success to the new buyer for Charlotte’s sake.”


Buster Cleveland Glosson - named Buster on his birth certificate for his “robust” size - grew up in Summerfield in Guilford County, working on a tobacco farm when he was in high school.

In a recent interview, he said he pursued an electrical engineering degree at N.C. State with the idea of one day buying his uncle’s electrical contracting firm, but instead gained an interest in aviation and earned a regular ROTC commission. He entered the Air Force in 1965 as a second lieutenant.

After piloting 112 missions in Vietnam, he would climb the Air Force ranks. In July 1990, he went to the Persian Gulf and ran the eventual the air war under Gen. Norman Schwarzkopf. There, he organized the blitzkrieg that smashed Iraq leader Saddam Hussein’s forces before ground troops finished the liberation of Kuwait.

Glosson, who worked as a television commentator during future Middle East conflicts, would later complain the war ended a day too soon. His aircraft had been poised to attack Iraq’s Republican Guard, but President George H.W. Bush had called off the fight.

The general earned a reputation for “being a blunt officer whose hard-charging ways have produced results but have also made many enemies among his fellow generals,” according to a 1993 New York Times story. And a conflict with fellow generals would lead to the end of his career.

After a complaint that Glosson had improperly tried to influence a promotions board by disparaging a general in line for advancement, he received a letter of admonishment and retired early in 1994.

“I had always wanted to retire and go into the business world,” Glosson told the Observer in the recent interview. “If I had chosen the other option and stayed in active duty, I would have been in the penalty box for three years.”

At a Senate committee on his retirement, Sen. Jesse Helms, the North Carolina Republican, called Glosson’s career “spectacular,” adding his life since N.C. State had been a “series of successfully completed missions and assignments.”

Glosson said he moved to Charlotte after three local luminaries - former Gov. Jim Martin, former First Union chief Cliff Cameron and Stuart Dickson, who co-founded the company that bought Harris Teeter in 1969 - met with him in Washington and encouraged him to move to the city.

He started a company called Eagle Ltd. - named for the “Eagle 1” call sign he used as a fighter wing commander - and began offering consulting services and making investments.

In one venture, he joined two other partners in a commercial real estate firm, but ended up not being very involved, said David Rohrbaugh, a former partner. The general loaned money to help get the company started and agreed to donate 10 percent of profits to charity, but he didn’t deliver the business leads he had expected, Rohrbaugh said.

“He was a very strong leader type,” Rohrbaugh said. “Typical military. He was decisive.”

Glosson said he focused on consulting early in his business career, but didn’t really enjoy it.

“You just make recommendations,” he said. “In the military, I was an operator. You make things happen. You have control.”

In 1997, Glosson launched an ambitious venture called Emirates Palomar Medical Technology Services to develop a high-tech health care system in the Persian Gulf country of the United Arab Emirates, where he had a friendship with the UAE president. Carolinas HealthCare System and other hospital chains were part of the project, which included sending physicians to the Persian Gulf country.

But in 2001, the UAE canceled a 14-year contract, leading to a shutdown of the company. Glosson said at the time that the country’s military officials ended the contract after allegations that the company had overspent, an assertion that he said was false.

Glosson says now that the UAE president settled all debts and made decisions that “considered the well-being of all involved.” The company had to close because of security concerns caused by 9/11, he said.

“Tensions were such that leaders in the UAE thought that it was to everyone’s benefit to end it,” he said.

Going green

Despite that setback, five years later Glosson jumped on another international investment opportunity: DesignLine.

Founded in 1985 in New Zealand, DesignLine initially made diesel buses, but it soon began exploring hybrid technologies that used less fuel and were cleaner for the environment. Its first hybrid bus was a test for transportation for the Sydney Olympics in 2000.

In addition to the Glossons, the board of directors initially included some big names in Charlotte: Gov. Martin; Hugh McColl III, son of the retired Bank of America CEO; Skipper Beck, the late Charlotte car dealer; and Wesley Jones, founder of a Charlotte investment firm, according to a 2009 securities filing.

In a 2007 Observer interview, Brad Glosson, who would become DesignLine’s CEO, said he and his father wanted to get involved in the “green movement” and researched businesses that could win government contracts. They soon turned their attention to buses and to DesignLine.

“This bus was designed the way a true hybrid should be,” Brad Glosson said in the interview, “but their market in New Zealand and Australia isn’t large enough for them to take advantage of their technological superiority.”

While other bus manufacturers made hybrid buses, they still ran their diesel engines close to 90 percent of the time, Brad Glosson told the Observer in 2009. DesignLine buses, however, ran solely on battery power, using a diesel engine to charge the battery and getting juice when the bus used its brakes. One catch was the $550,000 price tag - $200,000 more than a $350,000 diesel bus. But, he said, over time customers would save money on fuel and parts.

It wasn’t unusual for Brad Glosson, now in his early 40s, to work with his father. He had served from 1998 to 2001 as general counsel and chief operating officer of Emirates Palomar and from 2002 to 2006 as president of Eagle Ltd., according to the 2009 filing. In these positions, he completed more than $150 million in multi-family residential developments, helped in the management of companies ranging from circuit board manufacturers to restaurant chains and negotiated international contracts, according to another biography.

But Weisiger, the investor, said, in his opinion, Brad Glosson didn’t have the necessary experience to run the company.

“I didn’t think too much of a lawyer running the company,” he said. “That’s my opinion.”

For 2007 and 2008 combined, Brad Glosson received total compensation of more than $500,000, while Buster Glosson made $191,000 in director and consulting fees in 2008, according to the securities filing.

Revenue surged under the company’s the new management, with sales growing about sixfold to more than $30 million in 2009, according to court documents.

In fall 2009, the company sought to go public through a merger with another company in order to raise $50 million in capital, but the deal failed to close, according to court filings. Around the same time, Wachovia bank sued DesignLine for defaulting on a $7 million loan, according to court documents. The bank later dismissed the case.

But profits remained elusive, with the company losing $26 million in 2010 and $24 million in 2011, according to court filings.

Lawsuits suggest Buster Glosson and DesignLine were under financial strain.

In 2009, Cameron Harris and his wife, Dee-Dee - both prominent in Charlotte business and real estate circles - loaned $1.5 million to Glosson’s Eagle Ltd., but they were never repaid, according to a lawsuit filed in Mecklenburg County superior court in August.

According to the complaint, Glosson sent an email to Dee-Dee Harris in July 2011, saying DesignLine was in the process of closing a deal.

Eagle “will benefit from planned closing,” Glosson said, according to the complaint. “I will update you soonest, once deal closes concerning unpaid Interest and Principal.”

Foxx’s role

In 2011, DesignLine reached two major milestones, landing a contract to sell 76 buses fueled by compressed natural gas to the New Jersey Transit agency and closing on $33 million in funding from institutional investors.

But the company needed to make “substantial investments” to build and test a prototype bus, ramp up its facilities and hire and train workers, according to court documents. By May 2012, DesignLine had spent the $33 million in capital raised in November 2011, according to the documents.

By that time, Brad Glosson had left the company. In March 2012, DesignLine’s board named Smith, the former New York transit official, as interim CEO, according to a news release. He would later become the permanent CEO.

Upon his arrival, DesignLine was building buses in Charlotte, but the factory wasn’t set up for the mass production scale needed for the New Jersey contract, Smith told the Observer in a recent interview. The company needed additional paint booths, lifts and other equipment, he said.

“You just can’t build a bus from nothing,” Smith said. “You need all kinds of cranes, air lines, electrical. Very little existed. We put a huge investment into that building.”

Smith also had to spend time assuaging customers who had issues with DesignLine in the past, he said. The company had faced lawsuits and contract cancellations over late deliveries and, in some instances, questions about whether the buses provided sufficient power.

One of the company’s Charlotte investors, retired oral surgeon Robert Seymour, met with Smith and helped him contact state and local officials to see whether there was any help they could provide. Gov. Pat McCrory and state Transportation Secretary Tony Tata visited the factory, but couldn’t provide any financial assistance, he said.

Charlotte’s mayor, Anthony Foxx, had joined the company in 2009, and some at the company thought he might help DesignLine win business from the city, said a former employee who did not want his name used. That extra business, however, never materialized.

When he took the job, Foxx, a lawyer who had previously done work with DesignLine, said that he had been careful about any conflicts between his public office and private job. Foxx worked on contracts and bids, but wasn’t involved in the financial side of the company, Smith said.

“He would tell me what cities were big into green technology,” he said. “He would give me advice here and there. He basically handled contracts and things of that nature.”

Foxx, who made $88,000 a year as deputy general counsel, left the company when he became U.S. transportation secretary in July. A spokeswoman for Foxx declined to comment.

Cash crunch

In July, DesignLine entered into a letter of intent with a prospective investor, but the investor pulled out unexpectedly on July 27, according to court documents. Sources said the company was a Carl Icahn-chaired company called Federal Mogul, a conglomerate with products that include Champion spark plugs. Federal Mogul declined to comment.

At the end of July, DesignLine furloughed workers for 10 days, as executives scrambled for more capital. With no workers around, Smith said he and his assistant continued to unload deliveries, and both broke their arms in an accident with a load of windows.

When no new investors surfaced, DesignLine filed for bankruptcy on Aug. 15 and laid off most of its workers. At its peak, the company employed more than 300, said Smith, who has left the company.

In bankruptcy court, a group led by a California investor named Tony Luo agreed to buy the company’s assets for $1.6 million. Before reopening, Luo said he will need to negotiate contracts with bus operators in New Jersey, Denver and Montreal, which previously had contracts with the busmaker.

Terri Gardner, an attorney representing DesignLine, said investors are unlikely to recover any money. An investor list filed in the case includes a number of well-known names in Charlotte, including Martin, Harris and motorsports team leader Rick Hendrick. All together, the company’s investors will likely lose more than $30 million, Gardner said.

Buster Glosson has taken a hit, too. In a bankruptcy court filing, Glosson’s Eagle Ltd. said DesignLine owed the general’s company $7.4 million. And in a separate case, a New York judge has ruled that Eagle and Glosson owe a lender in the state more than $3 million for debts related to DesignLine, according to court documents. Glosson is appealing.

Nowadays, Buster Glosson said he is still active on a few boards, including a philanthropy’s, but declined to give details. He and his wife, Vicki, live in a house valued at $900,000, near Quail Hollow Club, where some members say relations are strained with the general over DesignLine.

Brad Glosson, who declined to comment, is involved with a homebuilder called Cypress Communities and an investment company called Prometheus Partners, according to the companies’ websites.

Buster Glosson said he is sorry that others lost money, but notes he has also suffered.

“My concern is not about myself,” he said, “but it has been a significant impact.”

Researcher Maria David contributed.

Rick Rothacker: 704-358-5170, @rickrothacker