By  on March 2, 2011

MONTREAL — A surge in cotton prices has forced the closure of Groupe RGR, a 38-year-old maker of denim sportswear for U.S. clients such as Gap Inc. and Tommy Hilfiger, and Lois jeans in Canada.

The company will close five plants in July, affecting about 400 full-time female workers who will lose their jobs.

“It’s the toughest decision I ever had to make in my life,” said Rolland Veilleux, co-founder and chief executive officer of RGR, based in St. Georges de Beauce, near Quebec City.

“At the top in 2000, we employed 1,800 and operated 11 specialized plants working for top North American clients,” he said. “But we’ve had to fight mounting low-cost Asian competition for several years. Business has been declining steadily and we no longer have the volume.”

Six plants had already been closed, along with a Vietnamese joint-venture operation designed to supply RGR and its clients. The five plants closing in July, all in the Beauce area, will be the last to go.

Veilleux, 70, said he will continue with several smaller businesses, but RGR will be down to about 10 employees in July. He said the three-month surge in cotton prices to about $2 a pound was the killer.

“We did all we could, but now we don’t have a choice,” Veilleux added. “We cannot compete with Asia.”

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