Russell Corporation

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Russell Corporation

P.O. Box 272
Alexander City, Alabama 35010
U.S.A.
(205) 329-4000
Fax: (205) 329-5045

Public Company
Incorporated: 1902 as the Russell Manufacturing Company of Alexander City
Sales: $899 million
Employees: 16,000
Stock Exchanges: New York
SICs: 2329 Men’s & Boys’ Clothing, Nec; 2321 Men’s &Boys’ Shirts; 2231 Broadwoven Fabric Mills, Wool; 2253 Knit Outerwear Mills

From humble origins in a small Alabama town in 1902, Russell Corporation has evolved into the country’s premier designer, manufacturer, and marketer of athletic and leisure wear clothing for men and women. In 1992 Russell Corporation was awarded a five-year contract to serve as the exclusive producer and marketer of athletic uniforms for most Major League baseball teams. The company is America’s largest producer of athletic uniforms and has the number one market share in the fleece screen printing business.

Founder Benjamin Russell was only 25 when he bought six knitting machines from R. A. Almond in 1902. Russell, a struggling lawyer in Birmingham, Alabama, was anxious to return home to Alexander City and open his own business. With borrowed money, he incorporated the Russell Manufacturing Company in 1902, remaining its president until he died in 1941. Russell’s knitting machines, 12 sewing machines, and 12 employees were crammed into a 50 by 100 foot wooden building. Because of the lack of electricity, Russell Manufacturing Company relied on steam for power. At the end of the first year of production, the company turned out 150 items of clothing per day. Though first year profits were disappointing, the entrepreneurial young owner envisioned his plant expanding into all aspects of the garment making business.

Russell’s dream was slowly realized and profits grew steadily in the following years. Six years after opening his plant, Russell acquired spinning frames, allowing the company to produce its own yarn. Several years later, it could bleach its own cloth.

Electricity came to the plant in 1912, and two years later a second yarn plant went into operation.

Demand for cloth and yarn shot up dramatically during World War I, during which time the company expanded and prospered. When the war ended, the ensuing recession left the company unaffected because the demand for yarn continued. In response, the company added workers and plants. Also at this time, the Russell Mill School was established for educating the children of employees and for adult programs. The company’s fourth yarn plant began operation in 1921, and in early 1927 a weaving operation was installed. By the end of the year Russell Manufacturing Company could dye its own cotton and yarn, coming close to realizing Benjamin Russell’s ambition of making his company a completely vertical or “fiber to fabric” operation.

Until 1932, however, fabric still had to be sent to other U.S. plants for finishing. Despite the company’s profit losses during the Great Depression, Benjamin Russell decided to expand his business. The worst year of the Depression, 1932, turned into a milestone year for the 30-year-old company; it acquired full finishing operations, thereby becoming one of the few fully vertical fabric factories in the world. That same year Benjamin Russell’s son Benjamin C. Russell established an athletics division called the Southern Manufacturing Company. Its first products were football jerseys sold to a sporting goods distributor in New York. In 1938 the company’s first screen printing developed for the printing of names, numbers, and designs on athletic uniforms. In 1960 the Southern Manufacturing Company was renamed the Russell Athletic Division. No one in 1932 would have guessed that this unobtrusive sideline would alter the company’s identity from that of a domestic fabric manufacturer to a global leader in the sportswear industry.

Civilian textile manufacturing declined during the World War II because of enormous government clothing contracts that strained the company. By war’s end, machinery was badly in need of repair because replacement materials had been difficult to obtain during the war years. In addition the company’s founder, Benjamin Russell, had died at the outset of World War II. His son Benjamin C. Russell took over the helm during the difficult but prosperous war years, but died prematurely of pneumonia in 1945. Another Russell son, Thomas Dameron Russell, succeeded to the helm. By the time he stepped down as president 23 years later, the company had become a leading manufacturer of athletic and leisure wear and exited the fashion clothing manufacturing business.

In the 1950s sporting and leisure wear had not yet caught on with the general public. With two domestic recessions, the company was hard hit by falling sales and growing competition, and expansion was temporarily impeded. Changes in the clothing industry, however, helped Russell rebound. By the early 1960s, T-shirts had become acceptable garb for both sexes. In the late 1960s the unisex trend in clothing strengthened while comfortable, leisure clothing became popular in the early 1970s. These trends served to Russell’s advantage. In 1966 a new sewing plant was established in Montgomery, Alabama (the first Russell plant to be built outside of Alexander City). Four years later, the Athletic Division had expanded so much that a separate plant became necessary. The company went public in 1963. The firm, whose name had altered in 1962 to Russell Mills, Inc., would be a public stock-holding company in which the Russell and insiders family would continue to own approximately 32 percent of the stock.

In 1968 Eugene C. Gwaltney became president of Russell Mills (which in 1973 would alter its name to the current Russell Corporation). That year company sales stood at $51 million. During Gwaltney’s term in office, plant expansion continued. The company’s screen printing facilities were enlarged and it acquired a yarn manufacturing plant in northeast Georgia in 1977. In the mid 1970s Russell opened a new distribution center in Alexander City. All operations at this ultramodern facility, such as storage retrieval, shipping, and goods reception, were fully automated and consolidated. At the same time, new buildings went up to house operations including data processing, personnel, and security. By 1981, with the consolidation of knitting into one plant, Russell could boast the most modern knitting facilities in the world. Expansion into Florida and south Alabama took place after 1982, the year Eugene Gwaltney was elected chairman of the board and was succeeded as president by Dwight L. Carlisle.

In 1989 Russell Corporations’s test and evaluation mill was constructed at a cost of $6 million. This was an innovative facility in which new machinery was evaluated before purchase, avoiding the interruptions in operations implicit in tests during the production process. By 1990 the company owned and operated 13 sewing plants outside of Alexander City and employed 15,000 workers. Since 1976 sales revenues had increased by 13 percent annually. With the acquisition of two subsidiaries, Quality Mills in North Carolina and Cloathbond Ltd. in Scotland, in 1988 and 1989 respectively, the company had become a global contender in the sportswear industry.

According to market analysts, a key to the company’s success is its aggressive technological modernization. In a five year period ending in 1992, the company invested more than a half billion dollars in capital expenditures which translated into approximately 15 percent of annual sales—far higher than the industry’s average of eight percent. In addition, the company spends at least three percent of sales revenues on print and television advertising. In both 1980 and 1990 Textile World cited Russell Corporation as the “Model Mill” of the year. Another reason for the company’s success is research and development. In 1992 an innovative new material that prevents pilling, NuBlend, was introduced in Russell’s Jerzees line of sportswear and won accolades from the leisure wear industry. Partly because NuBlend is the preferred fabric for screen printers, Russell holds the top market share in the fleece screen printing business at 30 percent.

Under President and Chief Executive Officer John C. Adams, approximately 80 percent of Russell Corporation’s sales are derived from its principal divisions, Athletic, Knit Apparel, Fabrics, and its major U.S. subsidiary, Cross Creek Apparel, Inc. (formerly Quality Mills). The company is the biggest manufacturer of athletic uniforms in the nation. Russell’s contract to manufacture uniforms for Major League Baseball teams also stipulates that the company holds the exclusive right to manufacture and market replicas of major league uniforms, T-shirts, and shorts. This has put the company in an advantageous position in relation to its main rival, Champion, Inc., the supplier of uniforms to the NBA teams. The Knit Apparel Division produces the Jerzees brand of active wear, such as T-shirts, fleece, knit shorts and tank tops, which are sold to specialized retailers and large merchandisers such as Wal-Mart.

North Carolina’s Cross Creek Apparel, Inc. produces the Cross Creek Pro Collection, such as casual knit shirts and rugbys, that are sold mainly in golf pro shops, and Cross Creek Country Cottons, purchased by screen printers and embroiderers for resale. The remainder of Russell’s sales revenues are derived from the Fabrics Division, which manufactures and markets lightweight cotton material for sale to clothing manufacturers, and from its European subsidiary, Russell Corp. UK Ltd. in Scotland. This subsidiary is also a vertical establishment that manufactures and markets a full line of Russell clothing, from the cotton fiber to the finished product, for the European market.

By the early 1990s, the company was approaching $1 billion in sales. While technological modernization and continuous research have redounded to the firm’s success, that achievement would be less if the company had not turned to overseas markets. With the acquisition of Cloathbond, Inc. in 1989 (now Russell Corp UK Ltd.), Russell Corporation has a foothold in the expanding European market. In 1992 alone, Russell’s international sales increased 40 percent over 1991, a figure expected to rise in the coming years. Also in 1992, the company established a small wholly owned subsidiary in Mexico which markets Russell active wear for the growing Mexican and South American markets.

Industry observers believe that the one of the keys to Russell Corporation’s growth is the expanding international market. As one of the oldest companies producing athletic wear, Russell is poised to fill such international demand for American type sportswear.