Hanesbrands Announces Supply Chain Restructuring, Cuts 2,185 Jobs in U.S. and Mexico

Sept. 13, 2006
Hanesbrands Inc. (Winston-Salem) announced that it hopes to strengthen the competitiveness and flexibility of its global supply chain operations by moving

Hanesbrands Inc. (Winston-Salem) announced that it hopes to strengthen the competitiveness and flexibility of its global supply chain operations by moving production from three plants in the United States and Mexico to lower-cost locations in the Caribbean basin and Central America. The company will close plants in Monclova, Mexico, Lumberton, N.C., and Marion, S.C., that primarily make fleece sweatshirts and pants, outerwear T-shirts, sport shirts and sheer hosiery. The closings will eliminate 2,185 jobs at these locations, mostly in Mexico.

Continuing the company's long-term supply chain globalization strategy, the action will reportedly result in multiple benefits, including lower-cost manufacturing, improving the alignment of sewing operations with the flow of textiles, leveraging the company's large scale in high-volume products and consolidating hosiery production capacity.

"These steps will strengthen our global supply chain by taking advantage of opportunities to improve the competitiveness, effectiveness and value of our operations," said Hanesbrands CEO Richard A. Noll. "A cost competitive and flexible global supply chain plays a crucial role in contributing to our strong cash flow, increased profitability and investment in our brands and innovation."

Hanesbrands expects to take restructuring and related charges for the three plant actions, including severance costs and accelerated depreciation of fixed assets, totaling approximately $27 million in the fiscal year, primarily in the fiscal first half that ends Dec. 30, 2006.

"We are making significant improvements to the Hanesbrands supply chain in order to maximize execution, service levels, value creation, consistency and speed to market," said Gerald Evans, Hanesbrands executive vice president and chief global supply chain officer. "We regret that employees at these locations will lose jobs, but we must design and continually update our network to take advantage of lower-cost, more-effective production opportunities in order to remain competitive and generate growth that allows our overall organization to thrive."

The Monclova, Mexico, plant, which has approximately 1,700 employees, sews fleece sweatshirts and pants and outerwear T-shirts. Production will be moved to other company facilities in the Caribbean basin and Central America. Production is expected to cease by the end of December 2006. Also, about 80 positions at the Rosita, Mexico, fabric cutting operation that supplies the Monclova plant will be eliminated as a result of the production transfer.

Production at the company's Lumberton, N.C., facility will be shifted to Central America and the company's Forest City, N.C., plant. Production activity at the Marion, S.C., plant, will be consolidated into the company's Clarksville, Ark., hosiery production plant.