Gildan Activewear cutting 545 jobs in U.S. and Canada, shifts work offshore

Gildan has already started to sell its own brand of socks and underwear in some regional U.S. and Canadian markets, Sellyn said. But the company wants to take on Fruit of the Loom and Hanes with its own full product line next year, sold through a major retailer such as Wal-Mart (TSX:WMT).

"Clearly over the next few years, most of our future growth opportunities will be to build our brand as a full-product line supplier of activewear, underwear and socks in the retail channel," Sellyn said in an interview.

The job cuts will leave about 1,400 employees in North America - about 600 in Montreal and 800 in the United States - out of a global workforce of more than 13,000.

Gildan will close its T-shirt and golfshirt plant at the end of the year in Valleyfield, about 70 kilometres southwest of Montreal, affecting about 155 employees.

"There is a significant difference between the cost structure of Valleyfield and our new factory in the Dominican Republic where we are relocating production," he said.

He noted the Central American facilities can do knitting, cutting and dying all at one "state-of-the-art" plant.

Gildan is also downsizing its knitting plant in Montreal by dropping 50 employees, some through early retirement and attrition, Sellyn said.

The knitting and fabric-making for fleece jackets will still be done in Montreal and sweatshirts also will be made there, he said.

Sellyn couldn't rule out more closures in North America, saying, "We will continue to evaluate the global competitiveness of our remaining facilities as we go along."

The company also announced the closure and downsizing of sock manufacturing capacity at Mount Airy, N.C., and Hillsville, Va., over the next three to four months. Sock production at the North Carolina plant will go to Honduras with specialty runs remaining at that American plant.

The cuts aren't surprising, given the significant investments Gildan has made at its Central American plants, said Doug Cooper, an analyst with Paradigm Capital Inc. in Toronto.

"It just continues the trend to outsource to lower-cost environments," Cooper said. "We don't see that trend abating at all.

Gildan is also well-positioned to compete against Hanes and Fruit of the Loom in retail markets, he said.

"I don't think there's any question - they can for sure," Cooper said. "Gildan has certainly won market share against them in the wholesale environment because low-cost wins."

He said while building a brand name can be difficult in retail there's not as much "brand awareness" in socks and underwear, which will help Gildan.

In addition to the manufacturing changes, Gildan is closing its Canadian distribution centre in Montreal at the end of October, eliminating six jobs.

The company also said it will record a restructuring charge of about 28 cents a share in the fourth quarter for the closure of its Valleyfield operations and impairment in the value of its remaining Canadian textile and related manufacturing assets.

After the restructuring charge, Gildan expects diluted earnings per share for the fourth quarter of about 30 cents US and full-year EPS of $1.79.

On Wednesday, Gildan shares fell 28 cents to $55.12 on the Toronto Stock Exchange.

Read the full article here

Broken Link? If the link to the original article is broken or has been altered you can view the article by clicking here.