Greensboro, NC, Mar. 18--Wilbur Ross made it official yesterday that he has merged Burlington Industries Inc. and Cone Mills Corp. to form what he believes will be a competitive global textile manufacturer.
The Winston-Salem Journal reported that Ross said during a news conference at Burlington's headquarters that he has folded the combined assets into the new International Textile Group, a company with $900 million in annual revenue and four product divisions.
"Cone and Burlington Industries are being consolidated into a new powerhouse," Ross said. "We now have the financial resources and management resources in place to grow the company and compete globally."
Ross' private-equity firm, WL Ross & Co., purchased both manufacturers out of bankruptcy. The firm acquired Burlington for $614 million in November and Cone for $90 million last Friday. It is the same blueprint that Ross used to buy three bankrupt U.S. steel manufacturers and form International Steel Group Inc., which he took public in December.
Affiliates of WL Ross will operate Burlington and Cone as limited liability operations. The manufacturers will retain their individual product dentities "because there is great strengths in those brand names," Ross said.
Ross said that there would not be a substantial impact on the manufacturers' work forces because of the merger.
Burlington has 5,000 employees, including 1,550 in the Triad, while Cone has 2,250 employees, including 1,181 in Greensboro and 1,725 overall in North Carolina.
Ross plans to keep International Textile Group's headquarters in Greensboro if "local authorities provide the required incentives." The Guilford County Board of Commissioners is expected to address at its April 1 meeting a $100,000 tax-incentives request for a new company headquarters and Cone's White Oak denim plant in Greensboro.
The new company has Ross as its chairman, while its president and chief executive is Joseph Gorga, who held those roles at Burlington. John Bakane, the former chief executive of Cone, will serve as the chief executive of the Cone Mills Denim division.
Cone Mills Denim will operate Burlington's Burlmex denim manufacturing plant in Mexico in an expansion of the world's largest denim producer. The Burlington House jacquards operations will be combined with Cone's jacquards operations and its Carlisle subsidiary into a Home Furnishings division.
Peter Kilduff, a textile-management professor at the University of North Carolina at Greensboro, said that a merger likely would mean job cuts at headquarters where there is overlap.
"But combining forces in some areas could create a stronger competitor, especially as it look to apply the Nano-Tex technology in other product lines," Kilduff said.
Ross said he plans to acquire international textile manufacturers as opportunities arise.
Ross stressed that International Textile Group must remain a leading innovator in textile technology to thrive in a global market that China could dominate once textile quotas are removed on Jan. 1. He will go to China next week to discuss his plans with government and textile leaders.
Ross also said he would continue to lobby the Bush administration to extend a 7.5 percent cap on Chinese textile imports to 26 product categories through at least 2005. The U.S. Commerce Department plans to implement that cap on knit fabrics, robes and bras.
"The cap would change the marketplace from a sudden onslaught of Chinese products on Jan. 1 to a gradual increase that would give the U.S. textile industry time to restructure," Ross said.
