Tuesday, January 29, 2002
Burlington must redefine for slim times
Textile company's peak era gone
By Paul Nowell
The Associated Press
GREENSBORO, N.C. As an aide to Burlington Industries founder Spencer Love, Weddie Huffman was there during the glory days of the world's biggest textile company.
Now 82 and long retired, Mr. Huffman is heartbroken that the once-grand company is battling for survival. And he has a quick answer when asked what his former boss would think about the company's recent filing for bankruptcy protection.
He's spinning in his grave, said Mr. Huffman, who worked for 27 years as a personnel executive for the legendary Mr. Love, who died in 1962.
Burlington's fall has sent the message that any textile company is vulnerable, and its attempt at recovery is being closely watched by an industry similarly reeling under debt and competition from cheaper Asian imports.
Burlington which makes denim, carpets and other textiles filed for Chapter 11 in November, just a day after Greensboro-based apparel maker VF Corp. announced it would get out of unprofitable businesses and trim 13,000 jobs.
Under the pressure of $1.1 billion in debt and a stock price that's dropped below $1, Burlington is planning to reinvent itself as a slimmer company.
It has announced it will slash 4,000 jobs from its work force of 14,000 and close or sell five fabric plants in the United States and Mexico. It also plans to put more of its resources into its profitable Lees Carpets business, expand globally through a Hong Kong subsidiary and accelerate manufacturing improvements in its North American operations.
At its height in the early 1980s, Burlington Industries employed more than 80,000 people in 149 plants, and its stock traded at more than $80 a share.
It began in 1923 as Burlington Mills when Mr. Love, a World War I veteran and Harvard graduate, persuaded investors in the city of Burlington to put up $250,000 to create a textile plant that would employ 200 people.
The company grew through the Great Depression, building more plants and hiring thousands of new workers. Mr. Love was one of the first textiles executives to experiment with the new synthetic fiber rayon, touted as a substitute for expensive silk.
By 1934, the company had become the largest producer of rayon fabrics in the United States. A year later, the company moved its headquarters to Greensboro.
Mr. Huffman attributes Burlington's rise to Mr. Love's business acumen and his entrepreneurial drive.
Spencer Love was creative and innovative, he said. And he was farsighted.
Experts point to a hostile takeover bid 14 years ago as the start of Burlington's current problems. In 1987, corporate raider Asher Edelman and Dominion Textiles tried to buy Burlington.
Convinced that such a deal would lead to the breakup of Burlington, company officials borrowed nearly $3 billion to buy its own stock and go private. The obligation became too much to handle, and much of it remains part of the company's debt.
The company took drastic steps to remain afloat, including going public again in 1992, closing doz ens of mills and laying off thousands of workers.
The company's problems worsened when several Asian currencies crashed in 1998, leading to a flood of Far East imports that became even cheaper when compared with the price of U.S. textiles. An $80 million profit in 1998 reversed in 1999 to a $31 million loss, leading to a decision to cut another 15 percent of its work force.
Current Burlington chairman George Henderson has put much of the blame on the U.S. government's trade policies, noting that four out of every five garments sold in this country today are imported.
We recognize the increasing global nature of our industry, but we strongly oppose unfair trade that impacts U.S. jobs, he said recently.
Plans for future
Filing for Chapter 11 protection means Burlington can keep creditors away while it works to reduce its massive debt. Burlington Industries executives have until mid-May to file a specific plan on how they intend to do it.
Rebuilding won't be easy.
On the same day it announced it was filing for bankruptcy protection, the company reported a $76 million loss for the fourth quarter and a yearly loss of $91 million.
As he watches from retirement, Mr. Huffman is just glad his career came during Burlington's heyday.
I wouldn't take a million dollars to take it all away, he said. I wouldn't pay a nickel to try to do it today.
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