WestPoint's New Deal

The surprise entry of Wilbur Ross into the WestPoint Stevens saga has both heightened anticipation about its future and simultaneously brought a sense of resolution to its post-bankruptcy prospects.

The fate of WestPoint Stevens has been the Sword of Damocles hanging over other bedding and bath manufacturers ever since the nation's No. 2 mill entered bankruptcy in June 2003.

Over the 22 months since, one of the questions most frequently lobbed at this correspondent has been: “What's going to happen to WestPoint?”

Retailers, stung by Pillowtex's revolving door bankruptcies and final collapse, have been leery of a Son of Pillowtex scenario. And competing manufacturers – most of them offshore — have worried they might have underbuilt capacities for a WestPoint-free world in which over $1 billion in bedding and bath business goes up for grabs.

The Ross Factor should ameliorate some of that fever and bring a measure of stability to the discussion about WestPoint's intermediary prospects for survival. Because we know how Ross operates, and we know what he believes.

Ross sees himself as someone in the turnaround business — one who buys companies in distressed industries to reclaim them — and has suggested that the bird which best represents his company would be a phoenix.

In contrast to the typical vulture capitalist who buys to dismantle, Ross fixes before he flips. At a time when most companies are fleeing commodities businesses as fast as their legs can carry them, Ross believes that rising standards of living around the world will propel demand for commodities.

On the subject of textiles, he is among those who believe there will always be a need for some level of domestic production — so long as it is low-cost and innovative.

Speaking on globalization during a panel discussion in New York recently, Ross also speculated that additional textiles safeguards will be imposed.

He holds no illusions about the threat coming from China — indeed, he's on the ground there. But Ross indicated during last month's panel that some of the fundamentals for explosive growth might yet be lacking. He noted that although many Asian mills doubled their capacities in anticipation of 2005, it's not clear all have the management expertise to handle businesses of that scale.

For the textiles industry, Ross predicted global consolidation among producers, a leveling out of prices and, ultimately, an industry dominated by “a small group of very large multi-national textiles mills.” That he presumably sees a place for WestPoint Stevens in that population can only serve as a boon to its fortunes.

Now all we have to do is wait to see if the bankruptcy court agrees.