WestPoint Stevens Inc.
WestPoint Stevens Inc.
Incorporated: 1880 as West Point Manufacturing Company
Sales: $1.65 billion (1995)
Stock Exchanges: NASDAQ
SICs: 2211 Broadwoven Fabric Mills Cotton
WestPoint Stevens Inc. is America’s largest manufacturer and marketer of bed and bath textile products. It is also, through its Alamac subsidiary, a leading producer of knitted sportswear fabric. The company, whose southern roots date back to the early 19th century, operates 33 manufacturing facilities located in Alabama, Georgia, North Carolina, South Carolina, Maine, Florida, and Virginia. The textile giant markets bed, bath, and related accessory products under the well-known brand names of Martex, Unitica, Lady Pepperell, Stevens, and Vellux. Its licensed designer names include Ralph Lauren and Julie Ingleman.
WestPoint Stevens owes its present structure to three textile leaders founded in the 19th century: the West Point Manufacturing Company, the Pepperell Manufacturing Company, and J.P. Stevens & Company. The oldest strand of the lineage dates back to 1813 when Nathaniel Stevens began producing woolen broadcloth in a converted grist mill located in Andover, Massachusetts. The company, under the direction of three generations of the Stevens family, grew to become the nation’s second-largest publicly traded textile producer by the time it was acquired by WestPoint Pepperell in 1988. Pepperell, which merged with Westpoint in 1965, owes its inception to Sir William Pepperell, who began exporting cloth to the Orient from his Biddeford, Maine, mill in 1851. While the rich individual histories of each of the three companies are important in WestPoint Stevens’s current identity and all are represented in the corporate logo, the company—at least through most of the 20th century—has been most easily identified by its West Point heritage and the Lanier family, who incorporated the West Point Manufacturing Company in 1880 and maintained leadership through the late 1980s.
The textile mills that would become the West Point Manufacturing Company originated in West Point, the antebellum cotton center of east central Alabama and west central Georgia, shortly after Appomattox and the end of the Civil War. In 1866, two separate groups of local planters and merchants, their plantations and businesses ruined, pooled enough resources to build two cotton mills in the valley of the Chattahoochee River. The mills had the advantage of being located in the midst of cotton fields and would not have to pay the high freight rates for the long haul to the East. They also benefitted from a large supply of water power and labor. However, the fledgling operation suffered from a shortage of capital and experienced management. During the Panic of 1873, both mills were forced to shut down.
It was during the Panic that two young Confederate veterans, Lafayette Lanier and his older brother, Ward Crockett, sons of a successful antebellum copper miner, began purchasing stock in the idle mill. The Laniers, along with a new president, John D. Johnson, revitalized the enterprise by investing in new equipment and securing the services of William Lang, an experienced cotton mill manager from England, to help direct the rebuilding and reorganization effort. Realizing that the company had been losing money by manufacturing osnaburgs, a type of coarse cloth used in local markets, Lanier converted the mills to flat duck, a canvas-type fabric used for tents and covered wagons that was in heavy demand along the frontier.
Under Lang’s efficient management and the Laniers’ strong business sense, the company prospered, supplying millions of yards of duck needed to provide shelter for railroad workers during the building of the five transcontinental lines between 1865 and 1893. By 1880, the Laniers owned 70 percent of the stock in the Chattahoochee mill and reorganized the business as the West Point Manufacturing Company. The new company was incorporated in both Alabama and Georgia, with eight stockholders and a capital of $107,000.
Disaster struck eight years later. The mill burned to the ground, completely destroying the Laniers’ manufacturing business. The company was saved, however, by its selling agency in Boston, N. Boynton & Co., a sail manufacturer that depended on West Point to outfit its clipper ships, who provided the financial support for the rebuilding. The Eastern money enabled the company to diversify its line of duck fabric into heavier fabrics and take full advantage of the increasing demand for textiles brought on by the development of the West during the 1880s and 1890s. Before the close of the century, the company made its first expansion, building a new mill on a large tract of partially cultivated land lying along the Alabama bank of the Chattahoochee next to West Point. In honor of the two men who conceived the idea, Lanier and Theodore Bennett, an N. Boynton salesman, the new mill and surrounding village were named Lanett.
Early 20th-century Expansion
As a testament to its financial stability, West Point, which had added a bleachery and dye works facility and a railway, initiated a second major plan of expansion during the Panic of 1907. Under the direction of Lafayette Lanier’s son, George, the company constructed a new mill and village in the Valley region named Shawmut. Modelling the design of Washington, D.C., Lanier hired a landscape architect to build the town after the pattern of a wheel with streets radiating from the hub. Like his father, who had established a school, library, and nursery school for the Valley, the progressively minded Lanier exercised a strong commitment to the social development of the community. Under his tenure, the company abolished child labor, funded the construction of modern schools, and supplemented state teacher salaries, while also erecting public libraries, gymnasiums, churches and community centers.
By the close of the Great Depression and the more prosperous 1940s, West Point had completed a third phase of expansion. It purchased mills in the Southeastern states and bought its selling agency. Through the implementation of multiple shifts, the company was able to keep its mills operating around the clock, enabling the same number of spindles to produce a much larger volume of goods. This strategy made it more profitable for West Point to purchase existing mills rather than build new ones. Other significant developments during this phase of rapid growth included the acquisition of a tufting company and the institution of a research division.
By 1954, West Point Manufacturing Company had grown to include 12,000 employees, with annual sales of more than $125 million. Meanwhile, Pepperell Manufacturing and Stevens, both of which had—along with West Point—won Army-Navy “E Awards” for their support of the war effort, were growing steadily. Pepperell, having just constructed a new plant in Abbeville, Alabama, was fast becoming a leader in the sheet and pillow case industry. J.P. Stevens, having consolidated its nine mill companies and sales operation, had expanded to include 29 manufacturing plants and was becoming a leader in the production of sheets, bedroom accessories, towels, and carpet.
The 1960s and 1970s: Growth through Merger and Acquisition
In March 1965, West Point joined forces with Pepperell Manufacturing, creating the fourth-largest publicly held textile company in the United States at the time. Joe Lanier continued as chairman and CEO, leading the new entity into an era of continued growth and product development. Two years after the merger, WestPoint Pepperell introduced the revolutionary Vellux blanket, which offered the highest warmth-to-weight ration of any brand and was able to withstand laundering and retain its colorful appearance. That same year the company opened up the newly constructed Lanier Mill and Carter Mill in one new modern facility located in the Valley.
In 1968, the company extended the geographical borders of its operations further, purchasing Alamac Knitting Mills, Inc., with locations in Massachusetts, North Carolina, and New York City, while strengthening its base in the South, through the construction of a new chemical plant in Opelika, Alabama.
With the new decade, came the end of Lanier’s tenure as chief executive and the ascension of son, Joe Jr., to the position held by his family for nearly a century. During the early 1970s, the company broke ground on its first WestPoint Pepperell store in the Valley, while making plans to build a new Alamac facility in Elizabethtown, North Carolina. Channelling much of its energies into the profitable knitted sportswear division, the company further expanded its Alamac facilities through the remainder of the decade. In 1978, WestPoint Pepperell doubled the Elizabethtown operation through new construction, while further expanding the Alamac division through the purchase of two North Carolina plants.
We are focused on being the premier consumer products company in the home fashions industry with the strongest brands and licenses. We intend to increase our market share by offering a broad product line through all major channels of distribution. We are committed to supporting our products through innovation, styling, and consumer advertising.
New Challenges of the 1980s
WestPoint Pepperell’s expansionary efforts during the 1970s paved the way for record growth in the early years of the next decade. Despite recessionary conditions, marked most notably by 17.5 percent interest rates that put a crunch on the home-buying industry, WestPoint Pepperell’s business remained upbeat. In 1980, the company generated sales of $1.25 billion and earnings of $42.5 million—a 55 percent jump from the previous year, and while the vast majority of textile companies struggled through the recession of the early 1980s, the doyenne of the industry continued to grow, adding a new bed products facility in 1983.
New challenges, however, threatened to flatten the growth of the company that had grown to 41 manufacturing plants in eight states by 1985. Now the third-largest publicly held textile company in the United States, WestPoint Pepperell, along with the rest of the industry, faced increasingly strong competition from foreign clothmakers: cheap-labor manufacturers in Asia and South America now supplied more than 25 percent of the U.S. market. What is more, the company—with some of its mills more than a century old—was caught in the midst of a revolution in information technology and needed to invest heavily to survive.
The company installed its first computers well ahead of most of the competition, building its own units for machine monitoring as early as 1978. The initial applications developed by the company’s team of electrical engineers were used to collect and calculate the complicated data needed to measure the performance of plant machinery and workers. Because profitability in the textile industry is primarily a function of plant efficiency, such monitoring was fundamental to the company’s continued success. With the advent of computer technology, the company was able to improve product quality and reduce waste, largely by paying its workers based on their output. During the mid-1980s, the company also began reducing its clerical expenses through investments in personal computers for sales and marketing purposes, saving millions of dollars in reduced inventories.
The Turbulent Late 1980s
As the decade drew to a close, WestPoint Pepperell attempted to offset the growing force of foreign competition through expansion. Looking specifically to strengthen its presence in branded textiles, the company began negotiating the acquisition of one of its chief competitors, J.P. Stevens, then the second-largest publicly traded textile producer in the United States. In May 1988, after obtaining antitrust clearance from the Federal Trade Commission, WestPoint Pepperell took over the top spot in the $1.2 billion bed-linen business by acquiring the bed and bath operations of Stevens. The $1.2 billion deal, which included the acquisition of facilities in New York City, North Carolina, South Carolina, and Virginia, also elevated the company to a number two position in the towel market, behind Fieldcrest Cannon.
Just a year after the acquisition was finalized, WestPoint Pepperell itself became the target of a takeover, as it faced a challenge at least as threatening as the fire that demolished its mills a hundred years earlier: a hostile takeover attempt by corporate raider William Farley, the high-profile “Fruit of the Loom” underwear king. After several battles with WestPoint Pepperell chairman Joseph L. Lanier, Jr. and the Georgia legislature, Farley, with junk-bond financing from Drexel Burnham Lambert’s Michael Milken, managed to purchase 95 percent of WestPoint Pepperell’s stock at $58 a share, or an estimated $1.7 billion—20 times earnings and 2.2 times book value. The company’s sluggish performance, however, prevented Farley from raising the money to buy the remaining shares. With WestPoint Pepperell’s bank covenants protected, West Point Acquisition Co., the vehicle for the takeover, which had borrowed heavily to finance the purchase of the stock, defaulted on its own debt. Arguing that Farley’s acquisition company was obligated to purchase all of the shares, a group of WestPoint shareholders, including Lanier, filed suit, exacerbating Farley’s problems.
Although Farley promised that he would add jobs and expand the business, he was forced to lay off several hundred employees and sell off some of the company’s assets in a desperate attempt to raise the funds needed to purchase the remaining shares, but he was unable to do so. In 1991, the West Point Acquisition Co. finally gave up and sought Chapter 11 bankruptcy court protection from the angry shareholders who had tried to force Farley into involuntary bankruptcy. In September of that same year, the bankruptcy court approved a reorganization plan that eliminated all but five percent of Farley’s company holdings. A year later, and hundreds of millions of dollars poorer, Farley resigned.
A Return to Stability: The 1990s and Beyond
With the chaos of the failed takeover beyond it, WestPoint Pepperell, now controlled by Valley Fashions Corp., the group of investors that acquired Farley’s shares under the bankruptcy agreement, looked to regain stability. Holcombe T. Green, an Atlanta financier, was named CEO. Joe Jennings, a 20-year veteran in the textile industry, and a member of the Lanier family, was named president and given the responsibility of managing the company’s daily affairs. The strategy unveiled by the new management team included the consolidation of company brands and a $200 million investment in mill equipment and in computer equipment for customer links, internal operations, and design.
In December 1993, the company acquired the remaining five percent of WestPoint Pepperell through refinancing and merged with several of its subsidiaries to form WestPoint Stevens, Inc. Over the following two years the company engaged in an aggressive plan to increase its market share in the home fashions industry in an increasingly competitive retail market through the introduction of several new products. Examples included the creation of wrinkle-free cotton sheets and the introduction of new border treatments for towels developed with new, computerized looms. In February 1995 the company launched an unprecedented advertising campaign for its Martex line of bed and bath products. The award-winning campaign, entitled “The Bare Necessities,” helped to boost revenue for the third consecutive year. With innovations such as these, continuing measures to ensure low-cost production through technology, and a move toward employee-ownership through stock matching programs, WestPoint Stevens approached the late 1990s with the hope of improving its leadership position.
WestPoint-Pepperell Enterprises, Inc.; J.P. Stevens & Co., Inc.; WestPoint Stevens (Canada) Ltd.; Productos Textiles Mision Viega S.A.; Chattahoochee Valley Railway Co.; WestPoint Stevens Stores Inc.; Alamac Knit Fabrics, Inc.; WPS Receivables Corp.
Home Fashions; Alamac.
Barrett, Joyce, “Takeover of WestPoint Seen Damaging to Textile Industry,” Daily News Record, February 28, 1989, p. 15.
Egan, Jack, “Farley Gets a Workout: A Big Buy Out Could Cost the Fruit of the Loom King His T-Shirt,” U.S. News & World Report, March 12, 1990, pp. 57–58.
McNamara, Michael, “WPP’s Jennings: Off and Running,” WWD, February 9, 1993, p. 14.
Ruby, Daniel, and Call, Barbara, “Micros at the Mill,” PC Week, December 24, 1985, pp. 25–29.
Schwartz, Donna Boyle, “Sharp Point: WestPoint Pepperell Hones Its Strengths,” HFD—The Weekly Home Furnishings Newspaper, June 21, 1993, pp. 24–26.
Taub, Stephen, “WestPoint-Pepperell: Life after Farley,” Financial World, March 17, 1992, p. 14.
WestPoint Stevens: Heritage from Three, West Point, Ga.: WestPoint Stevens, 1995.