US: Hanesbrands to axe 8100 jobs in shift to Asia
Apparel maker Hanesbrands Inc is to close nine plants in five western hemisphere countries and axe 8,100 jobs as it consolidates production into fewer and bigger facilities in Asia.
The company, which is behind brands such as Champion, Wonderbra, Playtex and Bali, says its latest supply chain streamlining - which is part of a long-term plan to cut costs - is due to be completed by the end of summer 2009.
It also will complete the migration of the company's large knit-fabric textile production from the United States.
The measures will lead to restructuring and related charges of $76m, of which approximately two-thirds are likely to be incurred in the third quarter of 2008.
"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 A Noll said today (24 September).
"Globalising 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."
By the end of 2008, Hanesbrands is expected to substantially close seven plants - a sewing plant in El Salvador, affecting 2,600 employees; a sewing plant in Honduras, affecting 1,250 employees; a sewing plant in Costa Rica, affecting 1,250 employees; and two yarn plants, a knit-fabric textile plant and an inventory storage warehouse in the US, affecting 745 employees.
By the end of summer 2009, the company also expects to also close a sewing plant in Mexico, affecting 1,650 employees, and close its last large knit-fabric textile plant in the US, affecting 600 employees.
"In addition to improving cost competitiveness, these moves will lay the foundation for completing our Asia build out and improve the alignment of our sewing operations with our end-state flow of textiles," added Gerald Evans, Hanesbrands president, chief global supply chain officer.
"We regret that employees will be affected by this production streamlining, but our supply chain globalisation is necessary to strengthen our overall company and keep us competitive around the world."
Textile production from the latest closings will be absorbed into existing textile plants in Central America.
Hanesbrands has expanded the fabric production levels at its textile facilities in the Dominican Republic and El Salvador, and also plans further expansion in Central America.
Most of the sewing production from the shuttered Central American plants will be moved to the company's new Asian facilities.
Hanesbrands has opened or acquired four sewing plants in the past two years - two in Thailand and two in Vietnam - and expects to increase its workforce in Asia from 4,000 today to 6,000 by the end of 2008.
The company is also constructing a textile fabric plant in Nanjing, China, which is expected to begin the ramp up of production in 2009 to supply fabric to the company's expanding Asian sewing network.
Since its spin-off from Sara Lee three years ago, Hanesbrands estimates it has now taken $204m out of the planned $250m in restructuring charges.
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