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Hanesbrands will shed 440 local jobs
3-year-old company will have half its original number of local workers
Journal Photo by Bruce Chapman
A view of the corporate headquarters of Hanesbrands Inc., which has announced another round of job cuts.
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Published: April 28, 2009
A fourth major hometown job cut, affecting 440 employees, will leave Hanesbrands Inc. with barely half of the Forsyth County work force it began independent life with in 2006.
The company is eliminating 200 jobs at its headquarters at 1000 E. Hanes Mill Road. Most of those employees in finance, human resources, sales and marketing and supply-chain management will be let go by the end of the week, spokesman Matt Hall said.
Hanesbrands also is closing a distribution center in West Point Business Park near Stratford Road by March 31, 2010, because of reduced product volume. The shutdown will affect 240 employees, with 40 third-shift workers losing their jobs immediately.
Altogether, Hanesbrands is cutting 500 jobs, all but 30 in the United States. The company said that affected employees would receive severance and outplacement benefits.
Hanesbrands said that a decline in sales is the primary cause behind the latest job cuts. The company reported separately that sales in the first quarter decreased 13 percent overall to $857 million, with all product categories but innerwear sales being down at least 21 percent.
"In the face of reduced consumer spending, we must manage conservatively and tightly control costs, including making the difficult decision to lay off employees during this bleak economy," said Kevin Oliver, an executive vice president for human resources.
Hanesbrands spun out of Sara Lee Corp. with great fanfare as the city's third Fortune 500 company in September 2006. At that time, Hanesbrands had 4,900 employees in Forsyth -- nearly 10 percent of its overall work force -- and 8,600 in the state. Richard Noll, the company's chief executive and now chairman, told the Winston-Salem Journal then that "we will always be a major employer in Forsyth County and have a strong community presence here."
But when the latest restructuring is complete, the company will have 2,560 employees in Forsyth County and 3,950 in North Carolina, Hall said.
The largest local job cut was 610 employees at the Stratford Road plant it closed in July 2007. That 550,000-square-foot plant was shut down as part of an accelerated pursuit of lower-cost production in the Caribbean and Central America.
At headquarters, several employees declined to discuss the job cuts. "I would, but they would kill me for that," a female employee said. "The company prefers that we don't talk to the press."
"Let me speak for everyone here, we have no comment," said a security guard who also declined to give his name.
The job cuts put Hanesbrands almost at the goal of $250 million in restructuring charges within three years of its spinoff. The latest restructuring is expected to cost $15 million.
Noll told analysts during an earnings conference call -- made after the job cuts were announced -- that the downturn in sales prompted the company to take "swift and important action."
"The way we identified what to do, however, was we simply looked at the plans for the remaining consolidation that we had, both at headquarters as well as our distribution, and simply accelerate the actions," Noll said. "We had the plans in place. We merely accelerated them."
The job cuts aren't surprising given the weak global economy and pullback in consumer spending, said Michael Lord, an associate professor of management at Wake Forest University.
Comparing the Wall Street-to-Main Street aspects of the federal bailout, Lord said that the "continued frustration and disillusionment of so many workers and their families is more than understandable."
"These workers, their families and communities will need a great deal of support and assistance."
Gayle Anderson, the chief executive and president of the Greater Winston-Salem Chamber of Commerce, said that the local community must expect its global companies to continue to scale back to remain competitive.
"It's more difficult to predict what the future holds, given the global economic situation," Anderson said. "However, our experience has been that companies with corporate headquarters located in Winston-Salem continue to support the local community in very significant ways -- both financially and with leadership and volunteers."
Hanesbrands reported that it had a $19.3 million loss in the first quarter compared with net income of $36 million a year ago.
It had an earnings loss of 20 cents compared with diluted earnings of 38 cents a share. Excluding restructuring costs, it had earnings of 3 cents compared with 42 cents a year ago.
The average earnings forecast was a loss of 6 cents by analysts surveyed by Zacks Investment Research. Most analysts do not include restructuring charges in their forecasts.
"The second quarter looks as if both the sales and operating profit rate of decline could improve," Noll said. "Retailers are still experiencing soft sell-through but are beginning to loosen inventory constraints."
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
■ Journal reporter John Hinton contributed to this article.
Hanesbrands cuts
Here are regional jobs cuts announced by Hanesbrands Inc. over the past two years:
• april 27, 2009: 440 jobs (200 corporate, 240 distribution) in Winston-Salem.
• Nov. 18, 2008: 155 corporate and management jobs in Winston-Salem.
• Sept. 24, 2008: 720 jobs in manufacturing in Eden.
• jan. 16, 2008: 80 jobs in production in Advance; 40 jobs in production in Asheboro.
• june 27, 2007: 260 white-collar jobs in Winston-Salem.
• march 29, 2007: 610 production jobs at Stratford Road plant in Winston-Salem.
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