NEW YORK — With a new president and new owners, knitting mill Glenoit Fabrics has found a new lease on life.
This story first appeared in the September 3, 2002 issue of WWD. Subscribe Today.
This spring, the Shanghai-based textile firm Haixin Co. acquired the apparel-fabrics business of Glenoit Corp., which has been operating under Chapter 11 protection since August 2000. But the first meeting between the mill and its new Chinese backers didn’t happen at a bankruptcy-court auction.
The common thread between the two companies is Larry Levine, a former Glenoit Corp. executive who Haixin brought back to the company as president and chief operating officer of the Glenoit Fabrics business. (Still in bankruptcy, Glenoit Corp. continues to operate as a maker of home furnishing fabrics.)
In the Nineties, when Levine last worked for Glenoit, the struggling company assigned him the job of seeing what it would take to open a knitting mill in China, where labor and operating costs are substantially lower.
“The handwriting was on the wall at the time,” that textile companies couldn’t be wholly reliant on domestic production, Levine said in a recent interview at Glenoit Fabrics (HG) Corp. offices.
Levine found a team of investors in Nanjing who were interested in joining forces with Glenoit and wrote up a business plan. But Glenoit management ultimately decided not to go ahead with the venture.
“When Glenoit backed out, the Chinese went ahead and built the mill,” Levine said. So, in 1999, after eight years with Glenoit, Levine decided to join Nicgain, the Haixin-affiliated company that built the knitting mill. When Haixin decided to buy Glenoit, it assigned him the job of turning the business around.
“It’s a tough job, coming back here,” Levine acknowledged. “The market is falling apart, and we have to create some business.”
One major thing has changed about Glenoit’s operations under its new ownership. The company continues to operate sliver-knitting mills — which produce pile fabric such as those often used in faux fur — in Tarboro, N.C., and Elmira, Canada, which together employ about 375 workers. But the bulk of its production will be done in China, where it has “a few thousand” mill staffers, Levine said.
The company is also offering full-package garment production through contracts with Dominican Republic sewing plants. This, coupled with the North Carolina plant, will allow the company to take advantage of the trade preferences extended to the Caribbean Basin.
“We can give our customers the ability to do things anywhere in the world,” said Levine. “If they want to do it in China, they can. If they need to do it in the CBI, they can.”
The company will make the same fabrics on both continents, to allow customers to place replenishment orders in its local plants.
“A lot of our customers like the idea of being able to work here and in China,” Levine asserted.
Levine said he believes the bulk of the company’s Chinese fabric sales will be sewn into garments in Asia. For garments that are cut and sewn in North America, he said he believes domestic fabric production will remain a valid alternative.
“The advantage of being able to do it here is you’re dealing with very heavy goods as a rule,” which are expensive to ship, he said. He added that there is little difference between what it costs to produce pile fabrics in the U.S. and what it costs to produce them in China and ship them to the U.S., when the cost of quota is factored in.
He noted that quota prices for Chinese pile garments are currently running as high as $9 a piece, up substantially from $3 a piece at the beginning of the year.
Levine said that having a New York office and a familiar American corporate name should help his parent company to build its business in the U.S.
“It’s a lot for an American customer to have to work 8,000 miles away,” he said.
Glenoit Fabrics primarily produces acrylic knit fabrics, though it also uses natural fibers, including wool, and is developing more laminated fabrics.
Glenoit Corp. filed for bankruptcy two years ago, staggering under the weight of $160 million in debt and a heavy net loss that followed the Asian financial crisis of 1997 and 1998. In 1999, the company recorded a $13.3 million net loss on $294.7 million in sales. The company’s apparel-fabrics business was only a portion of its total operations. Apparel-fabrics sales in 1999 were $74.6 million; the rest of the business was home furnishings.
In December, Thomas J. O’Gorman, Glenoit Corp.’s president and chief executive officer, died.
“A lot of people were reluctant to do business with Glenoit because of the bankruptcy,” Levine acknowledged. Last year, the apparel-fabrics operation’s sales came to about $45 million, he said. That’s down from a peak of $106.7 in 1998.
Levine’s goal for this year is to improve profitability and to build revenues to the $65 million to $75 million level within the next few years.
“This cannot be a $25 million to $50 million company. It won’t make money if it stays at that level,” he said. “I’m hoping that 2003 will be the start of the turnaround.”