National Textiles Business is Booming

Bobbin, Oct, 1999 by Jules Abend

Greatly exceeding its first-year projection of $700 million in revenue, Sara Lee spin-off National Textiles LLC is modernizing and expanding its customer base, while patiently waiting for and supporting CBI parity legislation.

We have been extremely successful in the first 18 months of our existence. And our relationship with Sara Lee is great. They are very happy with what we've done for them."

So says Jerry Rowland, CEO of National Textiles LLC, which was established in December 1997 in a $600 million deal inked by veteran industry entrepreneur Marty Granoff, chairman of National, with Sara Lee Corp.

The transaction, one facet of Sara Lee's deverticalization strategy, which was analyzed in the March 1998 issue of Bobbin, brought nine Sara Lee yarn and textile plants under the National Textiles umbrella. The deal involved yarn plants in Rabun Gap, GA, Mountain City, TN, and Sanford, NC; textile operations in Greenwood, SC, and Forest City, Morganton and Eden, NC; and a combined yarn and textile complex in Galax, VA.

At the time of the purchase, Sara Lee, the $20 billion, American-sounding as mom's apple pie global consumer goods company (which has interests in household and body care products as well as apparel), was de-verticalizing in order to concentrate less on the back-end manufacturing aspects of its knit/sewn products business and focus more on marketing.

Ever on the alert, Granoff -- who also owns Val D'Or Inc. and is vice chairman of Koret Inc., the latter of which was acquired by Kellwood Co. last year -- saw an opportunity and made the move to serve Sara Lee by acquiring most of its U.S. textile production facilities.

The principals of the newly organized company expected to realize $700 million in revenue during the first operating year, and Rowland reports that the "plan was met and greatly exceeded." He says that National "ran every day and every week" from the beginning, and outside business bas reached about 10 percent of total output and is growing.

The CEO amplifies: "We're selling to T-shirt makers, wholesale screenprint distributors who are doing their own sewing, and some companies like The Gap and Hilfiger, which have sawing companies convert the piece goods."

In fact, business has been so good that Winston-Salem, NC-based National, reportedly among the top 10 U.S. textile companies, has increased its work force to about 4,800 and is now outsourcing approximately 15 percent of its total production to other firms. The company is moving quickly to modernize, Rowland says. In response to a demanding summer season, and its latest projections, he estimates that National -- which is said to manufacture 20 percent of all U.S. knit fabrics -- will have full operating capacity in the next 12 months.

Although Rowland wouldn't specify capital expenditure investments, he asserts, "It has been a bundle. It has been aggressive." During the past 14 months, for example, National boosted open production and spinning capacity about 15 percent. It retrofitted the spin boxes on its Schlaforst spinning frames with new Suessen spin boxes that yield up to 30 percent more productivity per machine. Moreover, the company is upgrading the dye equipment in its Eden plant; installing new machines at and expanding the Greenwood operation; and installing high-speed knitting equipment and adding bleaching capacity at Galax.

National also purchased six new Bierrebi LTE/210-4S automatic cutting systems for the plant in Forest City and five for the Galax facilities. These outerwear and underwear cutters operate at rates up to 300 dozen per hour, even into large size ranges. This higher output per machine results in an overall reduction in the number of machines required, which translates into direct labor savings.

Commenting on the purchase, which includes an option to add more machines in the future, vendor Joe Buckner, Bierrebi International CEO, enthuses: "The modernization that they have going and their view toward the future is very impressive to us."

Along those lines, Rowland, who previously served as president of Sara Lee Yarn Co., emphasizes that the spin-off from Sara Lee has given National the ability to concentrate totally on manufacturing, cost improvement, quality and service.

"Just to have a central focus without any other distractions has enabled us to reduce costs dramatically, [and] it has made us a better supplier to Sara Lee," Rowland stresses. "We have been able to create a culture in which all of the members of the organization are striving to be the lowest-cost producer of high quality, tubular goods in the U.S."

The CBI Connection

National -- which ships 98 percent of its cut parts to Central America and Mexico for assembly -- would be better positioned to realize its full potential in this regard if a Caribbean Basin Initiative (CBI) trade enhancement bill passed. There currently are three versions pending on Capitol Hill, two in the House and one in the Senate. And it's possible, say Congress-watchers, that some "yarn-forward" formulation could be part of a compromise. This would provide preferential duty treatment for apparel products assembled in CBI countries from fabric that has been processed within the United States or CBI region from the point of the yarn onward.