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P'tex to shut Phenix City

Move will save $25M a year

Don Hogsett -- Home Textiles Today, March 4, 2002

Yielding to the mounting pressure generated by imported towels — and at the same time looking for ways to save cash as it prepares to exit bankruptcy — Pillowtex is shutting down its state-of-the-art towel plant in Phenix City, AL, only seven years after the major mill spent almost $100 million to create the showcase operation, what is likely to be the last towel mill ever to be built in the United States.

Manufacturing will be shifted to an existing terry plant in Kannapolis, NC, and about 980 hourly and management workers in Phenix City and a nearby Columbus, GA, plant will lose their jobs.

The Phenix City plant opened in 1995. And, while flexible enough to produce virtually any kind of terry product, it was largely dedicated to mass merchant production, a ferociously competitive business that has come under notable pressure in recent years from imports from India and Pakistan. That business came under even greater pressure last year when Pillowtex lost roughly $150 million in Kmart business, about a third of that in towels.

While Pillowtex may be shutting down the two terry facilities in a cost-savings move, it doesn't necessarily mean the major mill will be walking away from any sales or any market segment.

"No, no, absolutely not. We're not walking away from any piece of the business," Tony Williams, president and coo, told Home Textiles Today. "What it does mean is that we'll be finding new ways to service some segments of the business more efficiently and, we hope, more profitably. And that may mean, likely means, more sourcing."

Williams added, "The sad fact is you have some uneconomic capacity, and we had to address that. This allows us to better balance our capacity and to make better use of it."

Williams said the closing will save the company about $20 million to $25 million a year.

"It doesn't mean they're losing any sales, just unproductive capacity," said Jeff Stewart, a high-yield textiles analyst at Wachovia Securities, Charlotte, NC.

Stewart added, "This will allow them to run two plants profitably instead of three plants inefficiently. This takes a whole lot of cost out of their system and is good news for Pillowtex and good news for the entire industry."

Pillowtex will still have two large terry plants in operation: one in Fieldale, VA, and another in Kannapolis, NC.

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