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Sara Lee’s New Central Command

A tour of the new centralized Sara Lee Village facility, and some strategies the innerwear giant’s executives have on tap.

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NEW YORK — Sara Lee Corp. has built a village in Manhattan to house its growing intimate apparel empire and a new campus is being planned for its North Carolina headquarters.

The $6.46 billion intimates division accounts for about a third of Sara Lee’s $17.6 billion in annual sales, making it one of the largest and most profitable lingerie businesses worldwide. Under the aegis of Charles L. Nesbit Jr., president and chief executive officer of Sara Lee Intimate Apparel, industry observers said Sara Lee plans to grow its intimates business between 2 and 3 percent over the next several years.

Integral to this expansion is the opening here in March of a 30,000-square-foot “Sara Lee Village” at 260 Madison Avenue, where a massive integration of all departments has been cohesively melded into one powerful workforce, said Nesbit.

All of the intimates units have merged into one central facility, which some insiders call “Central Command.” The new location houses a stable of well-known brands: Bali, Playtex, Hanes, Hanes Her Way, Just My Size, Barely There, Wonderbra and Champion, as well as Hanes hosiery.

Inside the massive state-of-the-art floor on the sixth level — a modernistic-looking space that resembles the deck of the starship Enterprise — is a working laboratory designed to stimulate creativity and innovation among a diverse workforce of 150. The corporate-wide roster, which includes the Personal Products and Food and Beverage businesses, exceeds 100,000.

The modern industrial environment, replete with ergonomic furniture of the Forties by Charles and Ray Eames that average around $2,900 a chair, was designed by Chicago architect George Larsen. Special effects include thread-pattern, wall-to-wall carpeting; fabric-textured, free-form murals; pliable, mesh sculptures that look like undulating waves, and silver-tone, floor-to-window perforated-metal coverings for a customized central air and heat system.

Work stations designed by Herman Miller feature trademark Aeron posture office chairs that sell for as much as $1,200 each, nonglare task lighting for computer areas, semisheer sliding mesh doors that act as an aesthetic cushion for privacy and soft lighting, and luminescent, adjustable lily-pad-shaped mesh buffers that hang above work stations to block out noise.

In an interview and tour of the new facilities, Nesbit was joined by Robert G. Mazzoli, senior vice president and creative director; Gloria Falla, vice president of design for Playtex; Jeannie Martini, vice president of design for Bali, and Peggy Carter, vice president of corporate affairs for Sara Lee Corp.

Nesbit, who also is a vice president of the corporation, said one amenity for clients are two private rooms with computers and phones that line the entrance of the reception area.

“It’s for our clients who might need to work or simply make private phone calls,” he said.

Nesbit walked through the sprawling maze occasionally pointing out what he called “the backyard,” where numerous tables and chairs in different shapes, heights and sizes were strewn about or adjacent to work stations. Some faced multiple offices, reinforcing the philosophy of “shared common space,” where employees can have spontaneous meetings or take a coffee break.

“We want our employees to have a great, productive work environment,” Nesbit said. “That’s why we have the best creative people.”

Outlined like a city within a city, the model environment is occupied by huge CAD design rooms, a cavernous area for fabrics and trims, an immense work space for more than 50 sewers, a mechanic’s room with a team to repair everything from bra molding machines to test-wear washing machines, a high tech kitchen and resting area with magazines, a mail room, a locker room, wheelchair-accessible bathrooms and an infirmary.

There even are private elevators that connect directly with Sara Lee’s 14th floor, a 21,000-square-foot space that continues as the showroom setting for market appointments for the Playtex, Bali, Hanes Her Way, Just My Size and Wonderbra and W by Wonderbra brands. The 14th level, which formerly housed the Bali sewing rooms, will soon be given a similar facelift, he said.

Sara Lee officials would not divulge the cost of the new project, but the work of architect George Larsen and designer Herman Miller, as well as the technical support and systems, are estimated to be more than $50 million.

Nesbit said Sara Lee’s other “big news” is “an immense groundbreaking project” being staged at the Sara Lee intimates headquarters in Winston-Salem, N.C. Over the next 18 months, Sara Lee will consolidate all segments of its prodigious intimate apparel operation, including the administrative organization, into one monolithic “Sara Lee campus similar to the Nike campus,” said Nesbit.

Sara Lee acquired the land 10 years ago to house the activewear and underwear operations. The intimates campus, a former farm with a lake, will be another business model. It will house a credit union, employee stores, health and fitness facilities, food services, dry cleaning and shoe repair shops. Plans are being considered for a day-care center, which could tie in with a nearby YMCA to offer recreational and after-school programs for employees’ children. Several years ago, Sara Lee made a financial donation, as well as the real estate, to the YMCA, where a former hosiery plant was located.

Carter noted that the consolidation of “everybody in one place” was among the directional ideas initiated by Cary D. McMillan, executive vice president and ceo of Sara Lee Branded Apparel.

But Nesbit pointed out that the tangible aspects of Sara Lee’s new direction are just the icing on the cake. A virtual world of integration through technology is placing Sara Lee in a nontraditional role of manufacturer, designer and fiber and textile specialist.

Sara Lee has shuttered numerous domestic manufacturing and textile facilities since the corporation announced in 1997 that it was initiating a “deverticalization” program to focus on marketing. However, at the time, chairman and ceo John H. Bryan told shareholders that not all manufacturing operations would be sold. The priority was selling components to manufacturers, he said.

Hence, the nucleus of Sara Lee’s new vertically integrated project is a new virtual order of collaboration, communication, creativity and innovation that melds research and development concepts through Sara Lee’s proprietary global InSite intranet. The pooled and digested data is fed to all areas, including R&D sites, factories, fibers and textiles facilities, design studios, sales, marketing and distribution.

For example, Nesbit said the idea is to instantaneously connect a worker at a manufacturing plant anywhere in the world who is having a production problem with a designer, a textile expert or a product development specialist, or all four parties, to resolve a problem immediately.

“When the system is fully implemented, our objective is working in real time and in collaboration with any Sara Lee employee around the world,” Nesbit said. “A plant can get on a phone with a design center in New York or Paris, and with a minicam film the operation. The visual will then appear on our OnSite screen.

“People either have lived in a textile world or a manufacturing world. We are now a vertically integrated company,” said Nesbit. “We have purchase agreements with major suppliers, but we can build our own fabrics and fibers and do the yarns ourselves or, if we want to, use suppliers. With seamless Santoni, we are designing the fiber and the fabrics at the same time.”

Nesbit would not reply directly when asked if this new strategy will impact the way apparel business will be conducted in the future. However, he said it “could bring jobs back home.”

He would not elaborate, but industry observers said the idea of creating more jobs for Americans, especially through a model of the Sara Lee campus in North Carolina, could set the stage for a grassroots movement led by one of America’s most powerful Fortune 500 companies.

Nesbit noted that the move to consolidate all tiers of internal and external lines of business reduces the risk of dealing with suppliers and contractors in volatile countries, minimizes valuable lead time to get product to market, enhances customer service and has proven to be an effective cost-saving measure. It also ensures quality and brand integrity, as well as securing patent protection of proprietary products and brands produced in-house.

“Color matching is now computer controlled,” he said. “We’re on the same color system Wal-Mart is on. If we agree on a color standard, it’s controlled with all of our factories and suppliers. The other thing that’s been good for us is the integration of Liberty Fabrics. We now are designing in fashion-forward mode.”

Additionally, Nesbit said Sara Lee is planning to open a R&D center in a refurbished hosiery plant in the Southeast in the next 18 months to develop breakthroughs for all branded apparel. The four key growth areas for intimates will be Santoni knitting, molding and glue melt technology, and ultrasonic technology that bonds molecules together.

“The R&D will be linked to major universities,” he said.

Sara Lee Intimate Apparel maintains a myriad number of R&D, product development and design facilities around the world. In addition to New York and Winston-Salem, locations include London and the Courtald’s center in Nottingham, U.K.; Ireland; Milan; Barcelona; Paris and Autan, France, as well as northern Africa and South Africa; Eastern Europe, and Central America, the Caribbean and Puerto Rico. Thirty percent of its sourcing and manufacturing is conducted in the Far East.

Meanwhile, Sara Lee Original Cheesecake may be one of the company’s most recognized products with the widely known tag line “Nobody Doesn’t Like Sara Lee,” but the corporation markets more than 100 brands worldwide. The top 10 brands include lingerie megabrands Hanes and Hanes Her Way, a $2 billion wholesale franchise which spans the underwear, legwear and casual sportswear markets; Playtex bras and shapers, a $600 million-dollar powerhouse that’s sold in all channels of distribution, and Dim intimates and hosiery, a primarily Euro star brand that generates estimated volume in excess of $500 million, according to industry estimates.

With a hefty portfolio of famous name brands, the intimates, casual sportswear and legwear fields are the key apparel segments of Sara Lee Intimate Apparel. However, intimates and underwear are the star categories accounting for 37 percent of total sales and 35 percent of operating income. With leading share positions in North America and Europe, intimate apparel — comprising primarily bras, shapewear and related daywear items — claims a 29 percent stake of overall market share, while underwear accounts for 25 percent.

In the third quarter ended March 29, the Intimates and Underwear division of Sara Lee Corp. saw its operating income advance 10.8 percent to $185 million from last year’s quarter.

Last year, $291 million of Sara Lee’s annual advertising budget of $425 million was spent on advertising and promoting its stable of intimates brands for women, men and children. A majority of the print ads for Sara Lee intimates are photographed by several top photographers: Richard Avedon, who photographed the Bali print campaign and Barely There print and TV campaign; prints ads for the Lovable brand by Patrick Demarchelier; Just My Size by Liz Von Hoene, and the new Body Creations by Hanes Her Way by Perry Hagopian.

Media spending for all branded apparel was up 29 percent over the past nine months.

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