follow us

Dan River slims down to stay alive

Gary Evans, Don Hogsett -- Home Textiles Today, August 23, 2004

Looking to cut costs as it works its way through bankruptcy and restructuring, Dan River Inc. has launched a further overhaul of its U.S. operations and will close a finishing and sheet sewing facility in Danville, Va., and a warehouse in Portsmouth, Va., operated by its Import Specialists division.

The textiles producer said the closings will take place during the fourth quarter of this year and result in the loss of about 275 jobs.

The company said most of the finishing production at the Danville facility will be shifted to the Harris and Brookneal plants. Most of the sheet sewing will be transferred to the Brookneal and Glenn plants. Warehousing for the Import Specialists business, acquired by Dan River in March 2000, will be absorbed into distribution facilities in Danville, Va.

"This was a difficult decision made only after careful consideration," said Joseph Lanier Jr., chairman and CEO, in a letter to workers.

This latest in a series of plant closing and layoffs over the past two years was triggered by a slide in sales in the company's core home fashions business as Dan River's key product — bed in a bag — came under intense pressure from both U.S. competitors and low-cost imports.

Home fashions sales skidded 22.4 percent for all of 2003, a daunting shortfall of almost $100 million, to $342.1 million from $441.2 million the prior year. Home fashions sales fell even further during the first quarter of this year, sliding 28.7 percent, to $79.9 million from $112.2 million.

"These closures were made necessary by the low rate of home fashions order activity. Consumer demand for bedding products has continued to be weak. Retailers have reacted by reducing inventories, increasing promotional activity and increasing importation of low-cost products. This has necessitated we reduce our manufacturing capacity to improve operating efficiency and reduce cost," said Lanier.

In earlier moves to cut costs and bring production in line with demand, in December 2001, Dan River scaled back weaving capacity in its apparel fabrics business and reconfigured production in its home fashions business, shifting some production and shutting its Newnan, Ga., cut-and-sew facility. Last year, Dan River shuttered two home fashions manufacturing plants, a sheet weaving plant in Greenville, S.C., and a comforter sewing plant in Fort Valley, Ga., both employing about 630 workers.

Taking a scythe to white-collar jobs as well, last August the company eliminated about 80 salaried positions, and in June of this year eliminated another 100 jobs. Also in June, the company eliminated a shift at its Danville, Va., comforter plant and another at its Danville sheet sewing operation, affecting about 212 workers. So far, the ongoing overhaul of the company's operations has resulted in the loss of 1,793 jobs, not including routine attrition.

Lanier told Dan River workers in his letter, "The next several months are important to the company. On July 28 we filed our Plan of Reorganization with the bankruptcy court." The plan outlined a debt-for-equity swap in whichDan River's current common stock will be cancelled, and most unsecured creditors will receive newly minted stock to settle their claims once the company emerges from bankruptcy.

"Over the weeks ahead we will be seeking exit financing with the goal of emerging from bankruptcy by the end of the year," said Lanier. "In the meantime, we must continue to control costs while continuing to improve sales and provide outstanding service and quality."

Lanier said the cost-cutting moves "are as unpleasant as any I've been associated with in my 48 years in the textiles business. I am committed, however, to do what is necessary to insure that the company will successfully emerge from bankruptcy as a viable enterprise."

Featured Video

  • Politics & Percale at the New York Home Fashions Market

    Camera Icon More Videos

Other Home Furnishings Sites

Casual Living
Gifts and Decorative Accessories
Home Accents Today
Kids Today
Furniture Today