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2 Greensboro textile companies merge

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Triad’s textile giants merged

3-18-04

By Donald W. Patterson, Staff Writer

Posted 7:20 a.m.

GREENSBORO — Wilbur Ross’ efforts to consolidate the textile industry have officially begun.

On Wednesday, the New York financier announced that he has merged Burlington Industries and Cone Mills, two of the Greensboro’s most well-known companies, into a private company called International Textile Group.

Ross bought the two companies out of bankruptcy, paying $614 million for Burlington in November and $90 million for Cone last week.

He called the combined companies, which he hopes to headquarter in Greensboro, “a newly erected powerhouse.”

ITG will have approximately

$900 million in revenues and $75 million in debt, compared to former liabilities of $200 million at Cone and $900 million at Burlington, Ross said.

“You will now have the financial resources to grow the company,” Ross said in an afternoon news conference at Burlington headquarters on West Friendly Avenue. “ ... ITG is already a major player in the U.S. and Mexico and intends to internationalize further.”

Ross would not say what his next acquisition might be, but indicated the possibilities are wide open.

“Everybody wants to know who’s next,” he said. “We always announce who’s next when we know. (But) we aren’t wedded to just buying things out of bankruptcy.”

It’s clear from the new company’s name that he intends to look abroad at some point.

Ross is following the same pattern in consolidating the textile industry that he has followed with steel.

Ross has created the No. 2 U.S. steel maker by acquiring bankrupt companies, including Bethlehem Steel Corp., and combining them into International Steel Group. Ross serves as ISG’s chairman. That’s the same title he’ll hold with International Textile Group.

In laying out his plan for his new company, Ross said:

• ITG will be run by executives from Cone and Burlington.

ITG’s president and chief executive officer will be Joseph Gorga, who was the president and CEO at Burlington.

“I look forward to blending these two companies and strengthening the well-known Cone and Burlington brands into the marketplace,’’ Gorga said in a statement. “There is a great opportunity to grow what each has started ....”

Gary Smith, formerly the chief financial officer at Cone, will be ITG’s CFO. John Bakane will remain CEO at what is now called Cone Denim. Smith and Bakane will report to Gorga.

• ITG will consist of four companies: Cone Denim, Burlington House, Burlington Apparel Fabrics and Nano-Tex, a California-based specialty chemical company.

Cone Denim will assume responsibility for Burlmex, a Mexican denim operation Burlington Industries started in 1999.

Burlington House will be a home-furnishings business that consists of Cone and Burlington jacquard operations and Cone’s Carlisle, S.C., finishing plant.

Burlington Apparel Fabrics will be combined into ITG and will continue to be run by Ken Kunberger.

• All four companies will operate from a single headquarters in Greensboro provided the city and county provide the incentives Ross has requested. Guilford County commissioners have scheduled a hearing April 1 to consider the $100,000 request.

• Even though the companies of Cone and Burlington no longer exist, their brand names do. Promoting these brands will be a key part of Ross’ strategy, he said.

“The consumer knows apparel brands but is ignorant of fabric brands,” Ross said. “I believe if you can make a banana into Chiquita, you can make Cone and Burlington fabrics have the consumer recognition they deserve.”

• Future layoffs in the combined operation will be “relatively minor.” He would not be more specific.

Cone already has reduced its head count from 3,000 to less than 2,300 and Burlington has cut its work force from 7,000 to 5,000, Ross said.

• Cone’s White Oak plant in Greensboro will continue to operate.

“We are pleased to provide stability and opportunities to over 1,000 manufacturing employees at ... White Oak,’’ Bakane said. “We look forward to working with the city in creating an environment in which White Oak manufacturing can continue to prosper.”

That came as good news for Cone employees.

“It’s a new start, a tremendous opportunity to make our mark on the marketplace,” said Stan Hollis, a plant manager who has worked for Cone since 1972. “It’s amazing that someone has enough faith in us to do this. ”

Other observers also welcomed Ross’ announcement.

“I think this is going to turn out really good,” said Peter Tourtellot, managing director of ALTMA Group, a national turnaround company with offices in Greensboro. “I think it is a blessing for both companies.”

Tourtellot said there’s only one way for the textile companies to survive.

“On one hand, (they must) reduce costs so that they are more competitive,” he said. “On the other hand, they have to have niche markets where they can compete on a worldwide basis. Denim is one of those products. It is difficult to make and not everyone can get into it. Cone and Burlington have expertise in that fabric and should be able to compete very well.”

Ross said the key is consolidation. One of the reasons that the steel industry has been able to revive itself is it has consolidated to the point that four companies, including his ISG, hold a majority of domestic revenues, Ross said. But the top five U.S. textile companies represent less than 15 percent of the industry.

“One of the problems with the textile industry is that it is highly fragmented,” Ross said.

Bloomberg Business News contributed to this story.

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