Burlington Industries, Inc.

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Burlington Industries, Inc.

3330 West Friendly Avenue
Greensboro, North Carolina 27420
U.S.A.
(919) 379-2000
Fax: (919) 379-4504

Private Company
Incorporated: 1937 as Burlington Hills
Employees: 24,000
Sales: $2.50 billion

Burlington Industries, Inc. is one of the world’s leading producers of textiles and related items. Its products include fabrics for home furnishings and apparel, carpeting and rugs, draperies and window shades, and upholstery fabrics. It operates 44 plants in the United States and Mexico.

J. Spencer Love founded the company after he returned from military service during World War I. He initially went to work in his uncle’s Gastonia, North Carolina, spinning mill, and, after gaining some experience between 1919 and 1923, Love decided to branch off on his own. He purchased a controlling interest in his uncle’s mill, then convinced the Chamber of Commerce of Burlington, North Carolina, to help him finance the construction of a new plant in that city. Love shut down the original Gastonia mill, moved the equipment to Burlington, and formed Burlington Mills on November 6, 1923. The newly formed company consisted of 200 employees and one building, in the middle of a cornfield, which began textile production even before the construction had been completed.

Initially, Love’s firm manufactured several cotton products, including flag cloth, bunting, cotton scrims, curtain and dress fabrics, and a type of diaper cloth called birdseye. Unfortunately for the company, many of these products were already becoming obsolete by the time manufacturing had started. Business faltered until, out of desperation, Love began producing bedspreads out of an experimental fabric called rayon. Consumers responded positively to this shiny new material, and, within a few years, Burlington became a leader in rayon textile manufacture. This success led to the opening of a second mill in 1926 and a New York sales office by 1929. In 1927 sales had reached $1 million.

During the Depression, Burlington continued to expand even as many competitors closed their doors. The company had a sizable advantage over comparable New England-based firms due to lower costs in the southern United States. Using its competitive strength during this period, Burlington acquired several mills that had closed as a result of the poor economic times and subsequently reopened them under the Burlington name.

In 1935 the company moved its headquarters from Burlington to Greensboro, North Carolina, in order to have railway access to its operations in New York. In 1937 Burlington consolidated its various operating units and was listed on the New York Stock Exchange. Company revenues were up to $25 million.

When World War II broke out, the company began producing items for the U.S. government. Its research laboratories also were employed on various government projects, including one that investigated the use of a new fiber, nylon, in making parachute cloth. This initial work provided the foundation upon which the company developed several other uses for nylon-based textiles when the war ended.

Growth continued rapidly into the 1950s. Plants often were built with one wooden wall that could be taken down, moved, and erected again to expand available floor space. Burlington also acquired several competitors during this time, including Pacific Mills and Klopman Mills. As its diversification strategy began taking the firm beyond its original spinning and weaving businesses, the company changed its name in 1955 to Burlington Industries.

In 1960 Burlington purchased James Lees & Sons, a Philadelphia-based carpet manufacturer. In 1962 Burlington became the first textile firm to exceed $1 billion in sales. To this point, the company’s growth had been directed primarily by its founder, J. Spencer Love, who died in 1962. He was succeeded as president by Charles F. Myers. When Myers took over, he changed the company’s strategy to more effectively manage increasing labor costs and foreign competition. Under Love, Burlington had provided fabric to other apparel and home furnishings manufacturers. Myers undertook a new approach that directly targeted consumers as the company’s customers. In 1972 Burlington introduced several products under its own name, including towels, blankets, men’s socks, women’s hosiery, sheets, and draperies.

This activity was accompanied by other changes, including acquisitions of non-textile businesses, development of a consumer advertising campaign, and a major corporate reorganization. One of the acquisitions made during this time, that of the Globe Furniture Company in 1966, furthered the company’s goals of getting closer to consumers and of finding new avenues of growth. This became particularly important three years later when a Federal Trade Commission (FTC) decree prohibited Burlington from purchasing any United States textile firms for ten years without prior FTC approval.

During his tenure, Myers, who moved up to chairman in 1968, engineered a controversial internal restructuring that altered traditional organizational functions, such as marketing and research, and redeployed them into vertically integrated businesses. The company’s New York-based executives— along with Ely R. Callaway, who became president in 1968— desired a more centralized operation, while Greensboro-based executives favored the decentralized, divisional structure. In 1973 those who preferred the divisional structure forced Callaway to resign. Callaway had been charged with running the day-to-day operations of the company while Myers tended to finances. He had been held largely responsible for the company’s belated entry into double-knit fabrics. The popularity of knitwear had seriously reduced the company’s sales volume in traditional woven fabrics before Burlington made a major move into knit fabrics in 1971.

Callaway was succeeded as president by Horace C. Jones, the former president of the company’s Lees Carpets division. Although faced with rising costs for raw materials that were in short supply, Burlington quickly retooled its worsted fabric production facilities to take advantage of the growing trend toward knit and stretch fabrics. This move resulted in a significant turnaround. Contributing to the company’s recovery were U.S. trade agreements with four Asian countries that had been signed in 1971 and served to reduce import volume. The devaluation of the dollar abroad also helped by giving U.S. goods a price advantage. During this time, the company increased its emphasis on the home furnishings line, which was now being marketed under the Burlington House name. In 1973 Burlington ventured into the lighting area with its acquisition of Westwood Industries.

Internally the struggle for power continued. Jones was appointed chairman and CEO in 1974 following Myers’s retirement, and four executive vice presidents competed to succeed Jones as president.

The company’s recovery was short-lived. By the beginning of 1974, Burlington faced deepening shortages of raw material, fuel, and labor, combined with an inflationary economy, which threatened consumer spending for apparel and home furnishings. Demand for double-knit fabrics weakened because the material tended to snag. Strong overseas sales, however, enabled the company to finally realize a positive return on its ten-year-old investment in its European operations.

Domestic sales rebounded in 1977, due largely to gains in the home furnishings and industrial products area. Burlington succeeded in making necessary adaptations in its apparel products to meet changing fashion styles. For example, the company shifted production away from heavyweight woven fabrics into more lightweight textured products, introduced a new washable polyester and wool blend called Burlana, and expanded the manufacture of denim apparel fabrics, which were growing in popularity.

In 1976 William A. Klopman was appointed chairman and CEO of Burlington Industries. He had joined the company when it had acquired his father’s firm in 1956, and had risen through the ranks, to president of the influential yarn and apparel-fabric divisions from 1963 to 1971, and then to president in 1974. Under Klopman’s leadership, Burlington entered the 1980s with a critical eye on its foreign operations. It gradually strengthened its financial position overseas by restructuring its French businesses and by selling its German worsted apparel fabric subsidiary.

The company’s continued emphasis on capital spending since 1977, however, met with mixed reviews. Analysts argued that Burlington’s object of becoming a low-cost producer supported by technologically superior plants and long manufacturing runs prevented the company from making necessary changes flexibly and quickly enough to keep pace with trends in fashion and consumer demand. Klopman also was criticized for having an impersonal and aggressive management style, for having made incorrect product line decisions, and for creating trade friction between the United States and the Peoples’ Republic of China, as he lobbied hard for limits on Chinese imports. Nevertheless, Burlington in 1981 became the first textile firm to surpass $3 billion in sales.

In 1984 Burlington, acknowledging the necessity of broadening its product mix and targeting specialized, high-margin market niches, introduced a lighter-weight crinkled denim fabric to be marketed under designer brand names. In 1986, however, Burlington decided to place greater emphasis upon its industrial textiles area, and sold the designer bed-linen lines, along with the rest of its bedding and bath textiles division, to J. P. Stevens & Company.

Frank S. Greenberg became chief executive officer and chairman in 1986 upon Klopman’s retirement. Greenberg had joined the company in 1959 when Burlington had purchased Charm Tred Mills, a firm owned by his father. Like his predecessors, Greenberg rose through divisional ranks into the executive suite, beginning as the president of the rug division and, most recently, serving as company president. As chairman, Greenberg found himself and the company fighting a takeover attempt by Dominion Textile Inc., Canada’s largest textile producer, and Asher Edelman, a corporate raider. Many analysts felt that Burlington’s prior reluctance to exit the apparel-fabrics business when lower-priced imports began flooding the market had reduced company profits and made Burlington vulnerable to such an attack from outside the firm. Dominion, looking for a way to rejuvenate its own sales in a stagnant Canadian market, viewed Burlington’s denim fabric unit as particularly attractive.

Burlington was able to thwart the Dominion-Edelman takeover through a leveraged buyout that took the company private. Through an employee stock ownership plan, Burlington’s employees became its primary owners. To reduce the significant amount of debt incurred, the company began selling key assets, such as its industrial products segment, terminated 1,200 employees, and sliced operating expenses to the bare bone. Within one year, Burlington had retired 45 % of its buyout debt through severe reductions in overhead spending, capitalizing on a favorable market for its divested assets, and strong apparel fabric sales.

Operating in the early 1990s as a much leaner organization than in the past, Burlington Industries faces continuing challenges in matching market demand with its manufacturing capabilities and expertise. Burlington’s newly streamlined operation and ability to get out from under a massive debt load have given the firm increased flexibility to assess future economic and industry changes and then to make effective decisions designed to manage the impact of these changes on the company’s strategies and goals.