By  on July 17, 2007

HO CHI MINH CITY, Vietnam — The largest towel maker in Vietnam is in talks with WestPoint Home about creating a joint venture with the New York-based company, which has been winding down its U.S. manufacturing operations, an official with Phong Phu Corp. said.

"They have spoken to the Vietnamese government and are coming out to talk to us in August," said Pham Minh Huong, director of export-import with Phong Phu Corp. "They told us they have to close operations in the United States because of labor costs and are trying to have a smooth transition."

A spokeswoman for WestPoint said the company was "not currently in negotiations" with Phong Phu Corp.

WestPoint, which was purchased by American Real Estate Holding Ltd. in June 2005 after filing Chapter 11 in New York bankruptcy court in June 2003, has been steadily shedding its U.S. manufacturing operations. Since 2003, it has eliminated some 5,460 jobs in seven states, according to the National Textile Association.

The most recent cutbacks were announced in May when the company said it planned to trim 1,000 jobs and close plants in Alabama, Florida and Georgia. WestPoint makes home furnishings under proprietary brands such as Martex, Grand Patrician, Utica and Chatham, as well as licensed lines for Martha Stewart, Lauren Ralph Lauren, Charisma, Betsey Johnson and Harley Davidson.

Huong said her state-owned firm makes about five tons of towels a month. WestPoint Stevens has not specified how much capacity it was looking for in Vietnam, she said. Company officials said they have joint venture agreements in Pakistan and India, but wanted to also do work in Vietnam, she said.

The U.S. is the biggest market for Vietnamese textile exports. With its recent admission to the World Trade Organization, Vietnam is trying to boost its textile industry by improving technology and building infrastructure to accommodate textile plants. Major investments in the industry are coming from South Korea and Taiwan.

In June, Phong Phu Corp. signed business deals with U.S. partners, including the International Textile Group and the affiliated private equity firm W.L. Ross & Co. that would involve ventures in real estate, privatization of Phong Phu Corp. and up to $100 million for a possible expansion of Phong Phu's Da Nang textile and garment manufacturing plants. The agreements were signed during a U.S. visit by Nguyen Minh Triet, Vietnam's president.

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