NEW YORK — Apparel maker Hanesbrands Inc. said Wednesday it will close nine plants across five countries and cut about 12 percent of its work force as it restructures its operations in order to cut costs. The moves will eliminate the jobs of about 8,100 workers in the United States and Central America, while the company plans to add 2,000 jobs in Asia. Hanes has about 50,000 employees in 25 countries. The maker of Hanes and Champion apparel said it is expanding production in Asia and consolidating into fewer and larger plants in lower-cost countries.
Hanesbrands to shut nine plants, cut 8,100 jobs By Andria Cheng, MarketWatch Last update: 12:54 p.m. EDT Sept. 24, 2008
NEW YORK (MarketWatch) -- Hanesbrands Inc. said Wednesday that it will shut nine plants in five countries in the Western hemisphere and move some of the production to Asia, in a move that will cut about 8,100 jobs. The move is the latest in a wave of apparel makers consolidating and moving their production offshore to lower costs. The plants, which include sewing and knit-fabric textile units and are located in countries such as El Salvador, Honduras, Costa Rica and Mexico., are scheduled to be closed by the end of summer 2009, the Winston-Salem, N.C.-based company said in a statement. The closings also will occur in the U.S. They will affect 1,345 employees and the closing of the company's last large knit-fabric textile plant in the U.S. Hanesbrands (HBI:23.40, +0.13, +0.6%) , spun off from Sara Lee Corp. in 2006, said it plans to incur a charge of $76 million, two-thirds of which it will record in the third quarter.
Seeking to lower costs in an increasingly competitive landscape and answering to the demands of retailers such as No. 1 discounter Wal-Mart Stores Inc. (WMT:59.92, +1.00, +1.7%) , U.S. apparel companies from denim maker Levi Strauss & Co. to VF Corp. (VFC:80.50, +3.05, +3.9%) , maker of Wrangler jeans, have moved their production in the past decade overseas to Asia and Latin America, analysts said. San Francisco-based Levi shut its last U.S. plants in 2004 as it moved production to China.
"We are making significant progress in expanding our supply chain production capability in Asia and consolidating into fewer, larger facilities located in lower-cost countries around the world," Hanesbrands Chief Executive Officer Richard Noll said. "Globalizing our supply chain, and eventually balancing production between Asia and the Western Hemisphere, is a critical plank in our strategic efforts to reduce costs, improve product flow and increase our competitiveness."
The textile production from the latest closings will be absorbed into textile plants in Central America. Most of the sewing production from the Central American plants will be moved to the company's new Asian facilities. Hanesbrands has opened or bought four sewing plants in the past two years -- two in Thailand and two in Vietnam, with a plan to expand its workforce in Asia to 6,000 by the end of 2008 from 4,000 today.
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