Dixie Could Move Fabrica To Alabama, or Sell It

Chattanooga, TN, Feb. 26, 2009--Dixie Group said it could move Dixie's Fabrica International division east from California sometime after June, with the majority of the business headed for Dixie's Atmore, Ala. plant.

It would be the second major consolidation into Atmore in six months aimed at reducing expenses.

"Our plan is to continue cutting costs to fit the size of our business and manage for better cash flow," CEO Dan Frierson said on a conference call.

It's also possible Dixie could sell the Fabrica division, which it bought in 2002. Fabrica makes high-end residential carpet and custom rugs. A sale of the division, or the company's California real estate, could allow Dixie to further reduce its $93.8 million in debt.

Frierson said it would cost $3 million to $5 million to move Fabrica, and less than a year to recoup those expenses through lower costs. The move would cut another 13 percent of the company's employees.

The company spent $2.3 million in the fourth quarter to move its tufting operation from Eton, Ga., to Atmore. Dixie said Wednesday that move was "substantially complete."

The company cut 17 percent of its employees last year in its cost-cutting drive, eliminated its match to employee 401(k)s and cut pay between 1 percent and 15 percent for salaried employees.

Dixie said it would focus on reducing inventories this year, so it would have less cash tied up in its business.