TURMOIL IN TEXTILES
Byline: Scott Malone
While it had been clear from the beginning that 2001 was going to be a brutal year for the textile industry, that knowledge didn’t make it any easier for executives to digest the numbing news on Nov. 15 that Burlington Industries was bankrupt.
The giant Greensboro, N.C.-based mill, hammered by competition from low-cost imports, had reported net losses for the past three years. It also carried a heavy debt load. Observers said that, objectively, it was evident that something would eventually have to give. With the U.S. economy in recession, it was only logical that management would be pushed to a survival move.
On the other hand, if bankruptcy could hit Burlington, which until its filing had remained listed on the New York Stock Exchange and was the largest publicly traded U.S. textile company remaining, some executives wondered if insolvency might be on the way for other top textile companies, most of which have stumbled financially.
Burlington had taken major steps to restructure itself, slashing 4,500 jobs over five years as it exited low-margin product categories. The company had also tried new ventures, including garment production and investing in high-tech nano-technology fabrics. Yet George Henderson, the company’s chairman and chief executive officer, had concluded that without taking care of the $1.05 billion debt, the company would be unable to keep up with the changing industry.
“We know we’ve got to change our business model, and to be able to do that in the normal course of business with the amount of debt that we have, we just felt it was going to be difficult, if not impossible,” he said the day the company filed.
The firm’s competitors expressed sadness at the news, saying that troubles at such a major mill did not bode well for the industry as a whole.
“I think of Burlington as a paragon of a company,” said Arthur Wiener, chairman and ceo of Galey & Lord, who spent two decades working for the mill that is now his rival. “If I could support them, I would.”
Last week, Burlington took its first major restructuring step following the filing, merging its Casual Wear and Performance Wear divisions into one unit, Burlington North American Fabrics, which now comprises the company’s entire apparel-fabrics manufacturing business.
Those who worried that Burlington’s filing would set off a wave got some evidence to support their theory later that month, when fleece knitter Malden Mills Industries, unable to reach an accord with its lenders, also sought court protection.
That mill’s debt had built up after a 1995 fire that destroyed most of its manufacturing facilities. Chairman and ceo Aaron Feuerstein decided to rebuild his plants in Lawrence, Mass., where the company had been a major employer.
Malden’s filing came the same week CMI Industries — headed by president Joe Gorga, the second vice president of the American Textile Manufacturers Institute and in line to take the helm of that association in 2003 — filed Chapter 11.
While sources inside and outside those three companies said they expected to see them emerge from bankruptcy, earlier in the year other companies proved unable to so.
Dyersburg, Spartan Mills and JPS Industries — a descendant of one-time industry powerhouse J.P. Stevens & Co. — all liquidated.
Other companies wielded the layoff ax over the year, seeking to slash overhead in an effort to remain financially afloat. In April, DuPont said it would cut its fibers staff by 2,000 in an effort to reduce its dependence on “geographically challenged” domestic plants. Cone Mills, National Textiles, Mission Valley Fabrics and Fab Industries announced 1,100 layoffs in the spring and early summer.
By August, the cuts had become alarming enough that the ATMI stepped forward to declare that the textile industry was in “crisis,” in a 25-page report that closed with a list of the more than 200 American textile mills that had closed since 1997.
The economy continued to sour and the Sept. 11 terrorist attacks further shook the confidence of consumers, executives and bankers. By October, the industry headcount was down to 435,000, which meant that 63,000 jobs had been lost over the previous 12 months, according to the Labor Department.
For one longtime industry leader, the job losses were a warning that the U.S. stood to lose its manufacturing base — and jeopardize the entire economy — if the government didn’t step in to intervene.
Roger Milliken, chairman of Milliken & Co., said an overreliance on trade and an abandonment of manufacturing caused the downfall of the once-mighty Spanish Empire.
“We are consuming a billion dollars more in manufactured goods each day than we produce,” Milliken said. “These facts are a prescription for social, political and economic unrest.”
Kate’s New Do
Just as hairstylists were busy chopping off models’ long locks at the fall shows — Erin Wasson, Natasha Vojnovic and An Oost among them — to look like punk Kate, Moss was going still shorter. Kate’s new Edie Sedgwick pixie cut, courtesy of James Brown, her hairstylist and roommate, proved once again that fashion’s longstanding “It” Girl continues to stay one step ahead of the pack.
Before Camelot, high style was a rare sighting in Washington, D.C., especially among first ladies. But Jackie Kennedy changed all that; her low-key yet luxurious look made her one of the great fashion icons of the 20th century. “Jackie Kennedy: The White House Years” at the Metropolitan Museum’s Costume Institute celebrated her impeccable taste with an installation of clothes, photographs and video clips. Everyone from Madonna to Hillary Clinton attended the opening party in April, and the show proved to be the biggest blockbuster in the history of the Institute.