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155 jobs being cut locally
Hanesbrands' cuts here are part of 210 in corporate, management
Journal photo by David Rolfe
“These are difficult but necessary actions that we must take to compete in today’s market environment.”
Richard Noll
the CEO of Hanesbrands Inc.
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Published: November 19, 2008
Winston-Salem has taken the brunt -- again -- of a large job cut from a major hometown employer.
Hanesbrands Inc. said yesterday that it is cutting 155 local white-collar jobs as part of eliminating 210 corporate and management jobs companywide.
The company said that about half of the cutbacks are coming from its supply-chain-management organization. Those jobs include purchasing, production planning, product development, quality control and sourcing.
The other half is coming from customer management, finance, human resources, information technology and marketing.
"Some of the employees were affected immediately, some will be by the end of the month, some by the end of the year, and some early next year," said Matt Hall, a spokesman for Hanesbrands.
The company also announced the closing of a yarn plant in China Grove by year's end, eliminating 185 jobs.
"Given the significant economic uncertainty, we must manage our business conservatively, and we must tightly control costs," Richard Noll, the company's chief executive, said in a statement. "With these actions, we are accelerating our ongoing functional consolidation and conducting additional streamlining."
Hanesbrands said before the spinoff that it would take up to $250 million in restructuring charges by September 2009 as part of de-emphasizing domestic production and expanding it in Central America, the Caribbean and Asia. With the $14 million in restructuring charges announced yesterday, the company will have reached 86 percent of its goal, with 10 months remaining.
"These are difficult but necessary actions that we must take to compete in today's market environment and emerge as a stronger company," Noll said.
Hanesbrands spun out of Sara Lee Corp. with great fanfare in September 2006 as the city's third Fortune 500 company. Noll told the Winston-Salem Journal at that time "we will always be a major employer in Forsyth County and have a strong community presence here."
In September 2006, Hanesbrands had 4,900 employees in Forsyth County -- nearly 10 percent of its overall worldwide work force -- and 8,600 in North Carolina.
However, once yesterday's job cuts are completed, Hanesbrands will have eliminated about 46 percent of its North Carolina work force, or 3,920 jobs since the spinoff. It also will have cut 35 percent of its work force in Forsyth County, or 1,692 jobs.
After the latest cuts, the company will have 4,672 employees remaining in North Carolina, including 3,255 in Forsyth, or 7 percent of its overall worldwide work force of 48,600.
By comparison, Hanesbrands had 350 employees in Asia at the time of the spinoff. It began 2008 with 2,000 employees in Asia and expects to finish the year with 6,000.
Analysts said that the job cuts at Hanesbrands are not surprising, especially because consumers are expected to spend less on gifts, including apparel, in the sour economic climate surrounding this year's holiday-shopping season.
"This move does not seem to signal any major distress," said Michael Lord, an associate professor of management at Wake Forest University.
"It seems more like an anticipation of continued challenging times ahead. Few companies will be able to escape the general on-going -- and likely prolonged -- downturn in the economy."
Lord said that the job cuts do not bode well for the local economy, especially given that it is already having to absorb 570 job cuts from R.J. Reynolds Tobacco Co. and Reynolds American Inc.
There is also increasing anxiety about how many of Wachovia Corp.'s 2,900 local jobs will be cut or transferred as Wells Fargo & Co. merges the bank over the next two years.
"Despite all the turmoil in the stock market recently, most people do not really directly own a lot of stock, so the trouble has seemed somewhat distant," Lord said. "Most people care mostly about their jobs. And when jobs are cut, all of the sudden the pain becomes very real. It hits families hard and fast, and has a large and quick systemic effect on the economy overall."
The strength of Hanesbrands' brands with consumers and retailers will be tested when the company raises its prices by an average gross-price increase of 4 percent for domestic product categories.
Hanesbrands is also facing increasing pressure on its share price, which was as high as $37.73 on May 15. It closed yesterday at $13.03, down 48 cents.
Besides the 155 local corporate and management jobs, the company said that another 35 are being eliminated at "various other U.S. locations" and 20 at international locations."
Since the spinoff, Hanesbrands has closed -- or is closing -- at least 30 plants worldwide.
That includes at least 11 in North Carolina.
Only three of its 10 U.S. manufacturing plants will be in the state, including the Weeks plant in Winston-Salem and a sock plant in Mount Airy.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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