News: CJ Exclusives

Union Blocked Springs-Pillowtex Deal

Springs Industries bid prompted union demands, fell through

RALEIGH—The 6,450 layoffs at Pillowtex, Inc., which included about 4,800 workers in North Carolina, may have been mitigated had the union representing its employees not intervened in a deal to sell parts of the company.

The largest manufacturer of home fashions in the United States, Springs Industries, offered as much as $300 million for parts of Pillowtex’s operations and assets in the early spring of this year. However, the Union of Needletrades, Industrial and Textile Employees may have hampered the deal because Springs’s plans didn’t include the retention of Pillowtex’s Kannapolis-area operations, which employed about 4,400 of its workers.

UNITE pressured Springs to allow other offers for Pillowtex after the two companies had signed an exclusive purchase agreement for rights to brand names and some manufacturing facilities. The deal was amended to allow other buyers that the union said potentially were “willing to operate Pillowtex as a viable company.”

“We are confident that one of these new companies will be able to make a successful bid for the company and preserve Pillowtex jobs,” said UNITE President Bruce Raynor. “We compliment Springs’ top corporate leadership for allowing jobs to come before their own financial interests.”

Springs relented because of UNITE’s threats to rally at its headquarters, but poor first-half sales may also have led to the company’s withdrawal.

“We think the prospect of a national battle with the 250,000 members of UNITE was something that Springs management does not want to contemplate,” Raynor told the Southern Textile News.

“If there is a single buyer out there who thinks that they can come in and run this company and take these labels and leave these workers in the street, they’re going to have one hell of a fight on their hands,” said Harris Raynor, Bruce’s brother and vice president of the southern region for UNITE.

One bidder UNITE brought in was Cerberus Partners of New York, which Harris Raynor insisted was interested in running Pillowtex. However Cerberus operates as a “vulture fund,” in which investors pick over the remains of a near-dead company in order to turn a profit. Its interest, like Springs’s, primarily would have been in the value of Pillowtex’s widely recognized Charisma, Cannon, and Royal Velvet labels. While Cerberus conducted its due diligence on Pillowtex, Springs withdrew its offer. According to industry experts, Cerberus never made a formal bid.

“The union is confident we did the right thing for the people there,” said Harris Raynor. “We had no assurance Springs would go through with [the purchase].”

Chesser is associate editor at Carolina Journal.