O’Connor Outlines New Springs Global Structure

Don Hogsett, February 7, 2006

Fort Mill, S.C. — With the ink freshly dry on a deal that knits Springs Industries and Coteminas together as an international powerhouse, Springs Global, the company has hammered out an operating structure that leaves sales, marketing and most executive functions in the United States, but in a redrawn configuration, and gives control over all manufacturing to Brazil.

“We wanted to create an organization that functions globally from two separate perspectives: from a marketing and account perspective, and a manufacturing and supply chain perspective,” said Tom O’Connor, Springs Global executive vp. “And we wanted to do that with one united global operation, not a North and South kind of thing.”

Under the new organizational structure, said O’Connor, all sales and marketing, along with many executive functions, including global sourcing and supply chain, will continue to operate out of Springs’ current facilities in Fort Mill, S.C. At the same time, he added, sales and marketing will undergo something of an overhaul.

For the past several years, Springs had been split up into 10 autonomous business units, each with its own head and separate sales and marketing units; each business unit was tied to a specific product category or account. The new structure, said O’Connor, “more accurately reflects the rapidly changing global nature of the business,” and is modeled on a key account strategy.

O’Connor will head up all account teams in North and South America and have responsibility for growing market share in existing markets, building market share in Europe and developing new markets for Springs Global. All sales teams will report to O’Connor, as well as all merchandising, marketing, design and product development functions for bed, bath and fabric window treatments.

Tom Gaffney will head bedding merchandising, while Dick Grissinger will lead bath merchandising. The creative products, baby, basic bedding, Owen blankets, Canadian, wholesale and direct businesses will retain their current leadership and structure, and will report through O’Connor.

While sales and marketing operations remain in the United States, global manufacturing comes under the control of Coteminas out of its San Paolo, Brazil, headquarters, and will be led by Pedro Bastos, former vp of operations for Coteminas.

About 25 plants in the U.S., Brazil, Argentina and Mexico now produced bedding and bath products for Springs Global.

All sourcing and purchasing operations will be located in Fort Mill under Chris Baker, former executive vp of Springs’ bath business. He has responsibility for raw material, energy, finished goods and component sourcing, global supplier management, global strategic alliances and Springs Asia.

And a new corporate post has been created to merge the operations of Coteminas and Springs in order to take out costs and step up efficiencies. Mario Sette, formerly director of export for Coteminas, will head up that operation.

Roberto Cristofanilli, controller and head of information technology for Coteminas, will head a new Shared Services organization responsible for integrating finance and technology functions.

Springs veteran Torrance Sheeley “remains an integral part of the business and will continue to head the Wal-Mart account for us, reporting to me,” said O’Connor.

O’Connor, in turn, reports to Springs Global’s co-ceos, Crandall Bowles and Josue Gomes da Silva.

“What this does is provide us with an integrated global structure consistent with our global strategy. It’s the right structure for the organization. It takes advantage of the low-cost manufacturing operations in Latin America  and the sales and marketing expertise we have up here.”

And it also makes a lot more work for O’Connor. “It sure does,” he laughs. “I’ve added all the merchandising functions in addition to the new global perspective and responsibility.”

O’Connor emphasized that Springs Global will continue to maintain a vast presence in the United States. “As a legal technicality, the headquarters of Springs Global will be in Sao Paolo, Brazil,” said O’Connor, a point which has created some confusion. “But the headquarters thing is just a technicality. Functionally, all the sales and marketing, all the of the business units, just about everything that used to be Springs remains here.”

With all manufacturing now controlled out of Brazil, will more American manufacturing plants be closed?

“As we look at it today, that is certainly a possibility,” said O’Connor. “But you have to remember, whatever changes may take place, they would have happened with or without the merger. They would have happened because the business dictates it.”

O’Connor ticked off manufacturing operations one at a time. “Comforters, the top of the bed, that makes sense to keep here.”  But sheets and greige goods, he said, are another matter entirely. “It doesn’t make much sense to produce those things here. And basic bedding will stay, the blankets and things like that. They are made quite cost effectively in the United States”

Bath rugs, said O’Connor, “are likely to stay. That makes sense for us.”

And the towels now produced at its Griffin, Ga. plants? O’Connor was circumspect, saying, “We will continue to sew and finish towels in North America,” but saying nothing about towel weaving.

The new Springs Global will be equally controlled by Coteminas and Springs and its American partner, Heartland. Coteminas will hold four seats on the new company’s board of directors, while the Springs/Heartland coalition will hold four.

Ultimately the owners hope to take Springs Global public, but that move, said O’Connor, is at least two years away. “There are just so many variables, and you have to see what the markets are doing.”

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