NEW YORK — Peter Liu is trying to change the industry’s perception of bankrupt Burlington Industries Inc., along with its business model.
A casual glance at the business card of the executive who now heads the company’s apparel-fabrics operation, Burlington Worldwide Ltd., reveals one change — his desk is in Hong Kong. The flip side of the card emphasizes another subtle shift — the back of the card is printed in Chinese, a feature common in Asian sourcing circles, but far out of the ordinary for the Southern mill set.
Liu joined the company in August 2001, charged with stretching the Greensboro, N.C.-based textile operation’s arms into Asia, where a vast amount of apparel destined for U.S. stores is made. Burlington Worldwide is the company’s venture into outsourcing — buying and selling fabrics made at mills not owned by the company — in a bid to recapture a chunk of the apparel business the company has lost to foreign competition over the past two decades.
Under the direction of Liu, who serves as the division’s president, Burlington Worldwide has lined up 15 mill partners in Hong Kong, China, Taiwan and South Korea, and three months ago began shipping fabric to Asian apparel factories.
"We have the headquarters in Hong Kong because that is where all the action is," Liu said Thursday during a stop in New York. "Where you have the garments made is where you need to have the fabric made. Next door, if possible."
The company sees several clear advantages in producing fabrics in Asia, including the lower wages that allow for lower prices and proximity to the region’s apparel factories. But outsourcing also provides financial flexibility to the bankrupt company.
"We essentially are running the mill, but we don’t own the assets and we don’t own the employees," said Liu. "That gives us flexibility."
Most major U.S. apparel vendors have found contracting production to be a cost-effective way to compete. Apparel executives contend that getting out of the manufacturing business allows them to focus their time and money on designing eye-catching product, and market their brand names to consumers.But Liu doesn’t like to use the word "sourcing" to describe the new business model. He prefers to call it "virtual manufacturing." The difference, he contended, is that Burlington staffers — the division now has 13 employees based in Hong Kong, in addition to a sales and design staff of about 60 in the U.S. — will develop new products to be produced in Asian mills, in addition to handling the selling and shipping.
"We intend to turn these partner mills into a Burlington mill," he said.
"All the fabrics from Asia will have nanotechnology," said Ken Kunenberger — who last week was named president of North America for the Worldwide division and reports to Liu. Burlington owns a majority stake in Nano-Tex LLC, which develops and licenses nanotechnology enhancements that can make fabrics water resistant, wrinkle resistant or impart other properties.
The Worldwide division will sell only fabric. Burlington’s failed experiments in full-package garment production — the company in recent years shuttered Mexican factories where it tried its hand at making jeans and other apparel — have convinced Burlington executives to stick to their knitting and weaving, Kunenberger acknowledged. The division will also sell all the apparel fabrics made by Burlington-owned plants in the U.S., Mexico and India.
According to filings with the Securities and Exchange Commission, Burlington’s apparel fabric sales for the nine months ended June 29 were $376.9 million, 33.4 percent below where they’d been a year ago. Liu declined to provide revenue projections for the Asian business, citing the company’s ongoing Chapter 11 proceedings.
Burlington said last week that Joel Futterman, executive vice president of product development in Greensboro, and George Edmunds, vice president of operations in Hong Kong, now report to Liu. Liu reports to George Henderson, Burlington’s chairman and chief executive officer.
The Worldwide division is also in the process of setting up a Shanghai office.
"I thought about whether the headquarters should be in Hong Kong or Shanghai," said Liu, in a nod to the latter’s rising importance as a commercial destination. "Hong Kong will be a commercial hub for years to come. China is catching up, but Hong Kong is not going to go away. Most of our customers have buying offices in Hong Kong."Kunenberger said he believes the outsourcing model will allow Burlington to keep up with future migrations in apparel production. In the past, he said, "the customers moved on and we were a prisoner of our assets."
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty