Mills cut costs by shutting plants
December 4, 2000,
NEW YORK -With three weak quarters in the rearview mirror and a potentially slow holiday shopping season in their headlights, several of the major mills have decided to take a radical step to cut costs: shutting some of their plant operations for extended lengths of time.
It is a tacit acknowledgment from the mills that the first three quarters of 2000 were a struggle for the home textiles industry and that the outlook for the remainder of the year is in doubt.
Of the four mills, Danville, VA-based Dan River has clocked the least amount of shutdown time so far. According to Joe Lanier, chairman, Dan River opted to shut down its gray mills sheeting operations for Thanksgiving week. But the possibility still exists more shutdown time will be taken later this month if the situation warrants it.
"We are normally shut down for annual maintenance," Lanier said about the time taken so far. "Our future plans, the Christmas plans, we haven't finalized yet. We will be taking year-end inventories to determine that.
"Nothing is set in concrete. If we need to take more time, then we'll take more time. We will finalize that as we get a little closer," he added.
WestPoint Stevens, based here, shut its towel plants for 16 days and its sheet plants for 10 days, said Lorraine Miller, senior vp for investor relations.
"It's my understanding that some time was taken around Thanksgiving and some time will be taken around Christmas to minimize startup and shutdown time at our various facilities," Miller said, declining to specifically name which plants had already been or would be shut down. "We will be focusing on reducing work-in-progress inventory."
Springs Industries was the mill that possibly logged the most significant shutdown time. The Fort Mill, SC-based manufacturer has already shut down its nine gray mills sheeting plants for a week each in October and November with an additional week planned later this month for a total of 21 days, said Betty Turner, vp for public affairs. The fourth quarter shutdowns were in addition to two weeks of closings in the previous quarter.
"On the margin level we intend to make further, more aggressive efforts to reduce our inventories, including additional weeks of closing of our gray bedding manufacturing facility, which we plan [for] three weeks in the fourth quarter to get that inventory to acceptable levels," said Crandall Bowles, ceo, during an October conference call to discuss third quarter earnings.
Although plant closings have not been announced yet, Dallas-based Pillowtex is seriously contemplating the move.
"I'm trying to do the right things for the Pillowtex business, regardless of the external world," said Allen Oakley, executive vp of manufacturing. "We have got to lower our inventories, and this is one of the ways to do it. It's something we need to do for the business."
Oakley said both sheeting and towels, specifically the weaving processes, would be affected if the shutdowns did take place. Up to a four-week closure was likely for sheeting, while a two- or three-week closure was possible for towels.
During the fourth quarter last year, none of the manufacturers shut down any of their plants except for standard vacation/holiday time and annual maintenance.
Lanier said Dan River had had no cancellations of orders from retailers, but "there have been some holdups." Pillowtex's Oakley said there was definitely a lower volume of orders.
"With the slowdown in retail sales and retailers reducing the size of their inventories, then that reduces our sales and our inventories will increase," WestPoint Stevens' Miller explained, adding that the company has also experienced a slowdown in retailers' orders. "Given my understanding, [home textiles manufacturers] are all of a mind-set that we need to reduce our inventories, and some of that will unfortunately come from reducing standing production."