WPS closes some plants, reshuffles

WESTPOINT, GA. — Still hemorrhaging red ink at an accelerating pace as it works its way through bankruptcy, and looking to cut costs and streamline production, WestPoint Stevens said it's shuttering four plants, consolidating towel production and laying off 975 workers.

The move comes shortly after the company reported to a U.S. Bankruptcy Court a sharply widened November loss of $4.9 million, and a steep 24 percent drop-off in sales from October levels.

As part of a sweeping overhaul of manufacturing operations, WestPoint said it's closing two antiquated, multi-level towel plants, the Fairfax greige facility in Valley, Ala., and the Dixie plant in LaGrange, Ga. The company is also shifting production to the Lanier-Carter plant, which will be converted from bedding to towel production.

Also being closed are two bedding facilities, the multi-level Dunson plant in LaGrange, Ga., and the Coushatta, La., basic bedding plant. Production at the Dunson plant will be folded into other bedding facilities. Coushatta production is no longer needed, the company said, "because of increased manufacturing efficiencies achieved at other basic bedding plants that are better geographically located for the company's distribution system."

Expenses associated with the shutdown were included in an additional restructuring charge approved by the company during the third quarter.

Layoffs at the affected plants will begin in mid-March, and terry production will begin at the converted Lanier plant during the summer.

"Overall, these moves will strengthen the company with greater production efficiency and better-aligned capacity and allow us to compete more effectively in a global economy," said "Chip" Fontenot, WPS president and CEO.

Losing money at an accelerating pace, WestPoint recorded a $4.9 million loss during November, almost treble the size of a smaller $1.6 million loss. November sales slumped by 24 percent to $140.3 million from $184.8 million during October. Monthly reports of sales and profits should be read with some caution, since both are subject to wide swings incluenced by new programs shipped and the pace of retail reorders.

The November sales decline put margins and operating profits under heavy pressure, with some relief provided by continued aggressive cost-cutting. Average gross margin fell by 270 basis points, or 2.7 percentage points, to 13.5 percent from 16.2 percent during October.