Hanesbrands Restructuring Will Close Plants, Cut Jobs

Hanesbrands Inc. (HBI) said Wednesday it will close three plants in America and Mexico, cut about 2,185 jobs and move production to lower-cost domestic, Caribbean basin and Central American manufacturing facilities.

Hanesbrands, maker of apparel under the brand names Hanes, Champion, Wonderbra and Playtex, said it plans to take restructuring and related charges for the moves, including severance costs and accelerated depreciation of fixed assets, of about $27 million in the fiscal year, primarily in the fiscal first half ending December 30. About $17 million of the charges will be non-cash.

Shares, which were spun off from Sara Lee Corp. (SLE) earlier this month, were up 2.9% at $22.56 in morning trading.

The company will close plants in Monclova, Mexico; Lumberton, North Carolina; and Marion, South Carolina, which primarily make fleece sweatshirts and pants, outerwear t-shirts, sport shirts and sheer hosiery.

The actions are part of the company's long-term supply chain globalization strategy, and will help it save money on manufacturing, improve the alignment of sewing operations, leverage the company's large scale in high-volume products, and consolidate hosiery production capacity, the company said.

"These steps will strengthen our global supply chain by taking advantage of opportunities to improve the competitiveness, effectiveness and value of our operations," the chief executive of Hanesbrands, Richard Noll, said in a statement. "A cost competitive and flexible global supply chain plays a crucial role in contributing to our strong cash flow, increased profitability and investment in our brands and innovation."

The Monclova, Mexico, plant, which has about 1,700 employees, sews fleece sweatshirts and pants and outerwear t-shirts. Production will be moved to other company facilities in the Caribbean basin and Central America. Production, which will be phased out, is expected to cease by the end of December. Also, about 80 jobs at the Rosita, Mexico, fabric cutting operation that supplies the Monclova plant will be cut as a result of the production transfer.

Production at the company's Lumberton, N.C., textile facility, which produces fabric for sport shirts and outerwear t-shirts, will stop by the end of November, the company said. The plant has about 260 employees, and production will be shifted to Central America and the company's Forest City, North Carolina, plant.

The Marion, South Carolina, plant, which has about 145 workers, will end production of sheer hosiery by the end of February. Production will be folded into the Clarksville, Arkansas, hosiery production plant.