Hanesbrands will close textile plant in Puerto Rico

Hanesbrands Inc. announced November 15 that it will close its Ponce, Puerto Rico, textile manufacturing plant and move production to existing lower-cost production capacity in the Caribbean basin.

Production at the Ponce plant, which makes fabric for T-shirts and underwear briefs, will cease by the end of January 2007. The closing will result in a reduction of approximately 500 jobs.

The plant closure and production transfer, a continuation of the company’s long-term supply chain globalization strategy, will result in reduced costs and improved utilization of the company’s new and higher-volume textile production capacity that is coming on line in the Caribbean basin.

“Moving production from Ponce to the Caribbean basin is necessary to improve Hanesbrands’ efficiency and competitiveness,” said Gerald Evans, Hanesbrands executive vice president and chief global supply chain officer. “As part of our multiyear supply chain improvement strategy, Hanesbrands is ramping up high-volume, lower-cost production in new textile manufacturing facilities in Central America and the Caribbean basin.

“We regret the loss of jobs for our employees in Ponce. We have a good work force in Ponce, but this move is an economic necessity for our organization overall in today’s competitive global market and does not reflect the quality and dedication of the Ponce workforce.”

Hanesbrands expects to take a charge for restructuring and related costs for the plant closure, including severance costs and accelerated depreciation of fixed assets, totaling approximately $18 million. Approximately half of the charge will be noncash.

Hanesbrands’ supply chain strategy is to move operations to lower-cost geography in the Western Hemisphere and over the long term to balance operations between the West and Asia.

In September, the company announced that it would close three manufacturing plants – two in the United States and one in Mexico – and move production to Central America and the Caribbean basin. The company announced in October that it would consolidate three distribution centers in the United States.

Also in October, Hanesbrands announced that it reached a definitive agreement to buy a sewing plant in Thailand, which would be the company’s first owned production facility in Asia.