Hanesbrands To Close Nine Plants Globally

Winston-Salem, North Carolina-based Hanesbrands Inc. announced continued progress in executing its consolidation and globalization cost-reduction strategy, which includes increasing production in Asia.

The latest supply-chain streamlining, expected to be completed by the end of summer 2009, will consolidate production through nine plant closures in five countries in the Western Hemisphere, affecting approximately 8,100 employees. It also will complete the migration of the company’s large knit-fabric textile production from the United States.

“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 CEO Richard A. Noll said. “Globalizing 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 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 U.S., affecting 745 employees.

By the end of summer 2009, the company expects to also close a sewing plant in Mexico, affecting 1,650 employees, and close its last large knit-fabric textile plant in the U.S., affecting 600 employees.

Hanesbrands expects to incur restructuring and related charges for these nine plant actions, including severance and contract termination costs, accelerated depreciation of fixed assets and inventory write-offs, totaling approximately $76 million, of which approximately two-thirds are expected to be incurred in the third quarter of 2008. With these charges, Hanesbrands will have taken approximately $204 million out of the $250 million in restructuring charges the company has said it expects to incur in the three years following the spinoff.