Hanesbrands Inc. took another major step yesterday in its transition from domestic apparel manufacturer to global marketer.
The company said it will stop making its own yarn and sell three of the four plants involved in yarn production to Parkdale Mills Inc. of Gastonia. Terms of the deal were not disclosed.
Hanesbrands is closing the fourth plant, cutting 150 jobs in Sanford. It also is closing small warehouses in Advance and Clemmons, affecting a combined 25 jobs.
The yarn is used primarily for T-shirts, underwear and sweatshirts.
The transfer of production is supposed to be completed in the fourth quarter, but production will stop immediately at the plant in Sanford.
"Producing our own yarn, when more than adequate large-scale supplies exist, serves no strategic purpose," Richard Noll, the chairman and chief executive of Hanesbrands, said in a statement. "Outsourcing yarn is a logical evolutionary step to drive value and improve the use of our assets."
The decision affects a combined 780 employees at plants in Galax, Va.; Mountain City, Tenn.; and Rabun Gap, Ga. Parkdale will supply "a substantial amount of Hanesbrands' Western Hemisphere yarn needs" from the three plants it will take over.
The sale of the plants represents another milestone for Hanesbrands, whose predecessor companies Hanes Corp. and Sara Lee Corp. kept thousands of Triad residents gainfully employed in plants that once dotted Northwest North Carolina.
Just two of Hanesbrands' five U.S. manufacturing plants will be in North Carolina -- the Weeks plant in Winston-Salem and a sock plant in Mount Airy.
Since Hanesbrands' spinoff from Sara Lee in September 2006, it has closed 11 of its 19 domestic plants.
Hanesbrands said it expects to gain $100 million in savings within six months of the completion of the sale through "working-capital improvement, reduced raw-material requirements, reduced inventory and sale proceeds."
Anderson Warlick, the president and chief executive of Parkdale, said he does not expect any job cuts at the three plants. He said that both companies felt that the production transfer was in their mutual best interest.
"We gain a larger production volume and expand a relationship with a good customer," Warlick said. He said that Hanesbrands already had contracted with Parkdale for some yarn products.
"This is our business, what we specialize in," Warlick said. "We have done similar deals with VF Corp., Fieldcrest Cannon, Burlington Industries, Cone Mills and other N.C. textile manufacturers."
The production transfer is a "win-win" for the companies and the communities of the three plants being affected, said Peter Tourtellot, the managing director of Anderson Bauman Tourtellot Vos & Co., a turnaround-management company in Greensboro.
"This is an excellent example of a company recognizing its core strengths and eliminating those areas where it cannot be cost effective to continue," Tourtellot said.
When Hanesbrands spun out of Sara Lee, it had 4,900 employees in Forsyth County -- nearly 10 percent of its overall work force -- and 8,600 in North Carolina. Once the production transfer is complete, the company will have just under 3,000 overall employees in Forsyth and 4,275 in the state, spokesman Matt Hall said.
Hall said that 50 headquarters jobs will be eliminated by the end of the year, and 200 distribution jobs in Winston-Salem will be eliminated in 2010 -- both part of previously announced restructuring actions.
rcraver@wsjournal.com 727-7376
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