North Carolina has traditionally been home to many of the nation’s
largest textile companies. One such company was Pillowtex,
once the nation’s number three ranking textile company, based
in Kannapolis, North Carolina. Pillowtex
was perhaps best known for its Cannon, Fieldcrest and Royal Velvet
brands. The company produced items such as sheet, towels, rugs,
and other goods for the home. A range of different issues, including
the effects of globalization, led to the July 2003 closing of the
company. More jobs in North Carolina were lost from the bankruptcy
of Pillowtex than any other single event.
operated a number of different plants in the United States and Canada.
Sixteen will close. All total, more than 7,000 people lost their
jobs without warning. The vast majority of these jobs, approximately
5,500, were located in North Carolina. On top of this, almost 5,000
of these jobs were clustered in a two county area (Martinez, 2003).
Unemployment statistics in these counties doubled after the Pillowtex.
In addition to laying off the most people in North Carolina history,
the Pillowtex closing led to one of the greatest job losses ever
in the American textiles.
What Went Wrong
was not just a fly by night company. In fact, it had been in operation
for over one hundred years. Of the many reasons for the company’s
closing, the relatively inexpensive cost of imported goods is typically
considered the primary reason. Additionally, simple business and
database activities can now be completed abroad by workers who receive
drastically lower wages. Pillowtex
simply could not compete. However, internal difficulties also contributed
to the collapse. The company had previously gone bankrupt in 2000,
their acquisition activities were not successful, and equipment
could not be replaced at a pace that could keep up with the rest
of the world.
Effect on Employees
Employees of Pillowtex
were tremendously affected by the layoffs. Without warning, they
no longer had health insurance. Furthermore, many employees were
not paid for work they had already completed. In order to offset
the effects to employees, a number of assistance measures have been
taken. Shortly after the closings, Gov. Mike Easley was working
to make sure that federal aid would be available for affected workers
as part of the Trade
Adjustment Assistance Act. This program allow affected individuals
to receive extended benefits on income and health insurance. Also,
a resource center was created at the site of the main plant in Kannapolis
to help former employees find new jobs. In fact, almost $20 million
in grant money has been set aside to help these individuals enter
the work force again and pay for health insurance. Part of this
sum has gone to the Rowan-Cabarrus Community College. Located in
the heart of the layoffs, RCCC has enrolled 1,500 of the 7,000 plus
former employees (Glassberg, 2004).
Effect on North Carolina
The closing of Pillowtex
affects more than just the employees. North Carolina’s economy
will suffer as well. First of all, the job losses will obviously
impact the state’s unemployment rate. It is possible that
the rate could rise one-tenth of a point from the Pillowtex
closings alone. Additionally, economic growth will be hampered and
an additional $400 million in benefits could have possibly been
reaped, according to N.C. State University economist Michael Walden.
On the other hand, other companies will beaffected by Pillowtex’s
closing. Some companies exist simply to distribute and manage the
manufactured goods. Even lawyers, financial advisors, and consultants
of the company will be affected by a significantly decreased amount
Cone Mills and Burlington Industries - The Merger
Financier Wilbur Ross is leading the merger of Burlington
Industries with Cone
Mills. He is creating the International Textile Group. The newly
formed ITG will have revenues of around $900 million. The completion
of the transaction took place in March 2004. Both companies had
been struggling. Burlington
had already declared bankruptcy in 2001. Cone
Mills has also declared bankruptcy. The primary operations of
both companies are located in Greensboro, NC, making the merger
geographically ideal. If the city provides economic incentives,
ITG will not move the headquarters to another location.
The Two Companies
Industries is approximately eighty years old. It is no newcomer
to the apparel industry. In fact, at one time, the company employed
more individuals than any other textile company. Today, Burlington
Industries is still one of the nation’s largest sources
of apparel and fabric, but employment stands around 5,000. Burlington
Industries once employed almost 80,000 workers. The company
has taken steps to keep with the seemingly "smaller"
and more globalized world. For example, the company has operations
in the United States, Mexico, India, and Hong Kong.
Cone Mills produces
products similar to those of Burlington
Industries and is over one hundred years old. It, too, has operations
in Mexico. Cone Mills
produces more denim goods than anyone else in the world.
One of Ross’s primary desire’s is to consolidate businesses
within the textile and apparel industries. Smaller companies simply
do not have the financial power to compete with overseas production
of the same goods. By consolidating, the company will have an increased
ability to produce goods at a reduced cost. Ross has repeatedly
stated his intention to minimize lay offs. Traditionally, the textile
and apparel industries have not been dominated by a handful of large
firms. Instead a number of medium-sized and smaller companies operate.
However, with the increase in offshoring, consolidation may be necessary
if the industry is going to survive, much less thrive, in the United
Industries and Cone
Mills have been indispensible parts of the textile and apparel
industries for many years. Consumers have come to recognize the
company names. Although, the two will now work from one headquarters,
they will still produce many of the same goods they did before.
They will even continue some of the production under the same manufacturing