Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 22, 1991 TAG: 9103220287
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: MARTINSVILLE LENGTH: Medium
The company can't ignore the sluggish business environment and the "powerful competition," John Franck told the annual meeting of Tultex stockholders. Franck said the shortened work schedule will last another 45 days, at least.
Franck is the son of retired Tultex chairman William F. Franck. He assumed the company's top post three months ago.
He termed 1990 "an awfully good turnaround year." Earnings jumped more than four times from $5 million to $23.5 million while sales rose 6.3 percent from $334 million to $355.1 million last year.
Franck presented a new "vision," designed to bring "superior returns" to shareholders, employees, customers and the 14 communities where its plants are located. He said he and Charles Davies, the company's new president, project:
A minimum 15 percent annual return on equity, bringing earnings per share to $2 by 1996, up from 85 cents last year.
Above industry average pay for the company's 7,000 employees.
Focus on quicker response to needs of customers.
Charitable donations, protection of the environment and improvement of educational opportunities for employees and families in communities where Tultex operates.
After the meeting, the stockholders toured the company's $65 million distribution center, a huge complex with 12 acres of floor space and 3 miles of conveyors. The highly automated center, to open in April, is being activated a year behind schedule because of software problems. It will have 700 employees when it reaches full operation.
The company had to abandon $2 million worth of distribution software because it could not be modified to handle adequately the center's operations, according to the annual report. When the software had to be rewritten from scratch, Dick Hunnicutt, recently retired chairman, negotiated an agreement with a contractor that did not hurt company earnings, Davies said.
Last year, Davies said, the company reduced its manufacturing costs by raising productivity, cutting inventory and eliminating salaried positions by more than 10 percent or more than 100 jobs. Reducing management and "flattening" the company will save money this year, he said.
Recalling the employee vote against representation by the Amalgamated Clothing and Textile Workers Union in 1989 and 1990, Davies said the company can continue paying more than its competitors "only by working together more effectively. Having an annual union campaign does not fit into that equation."
Davies said sales were a major disappointment last year. The company ran its plants at only about 50 percent of capacity in the last quarter and still ended the year with inventories much higher "than we wanted or needed."
The slowdown in shipments is continuing in this quarter, forcing the shutdown of a dyeing, finishing and cutting plant at Spindale, N.C. and a sewing plant at Marion, N.C. this week, he said.
Davies predicted that first half sales will be very slow but the second half should be strong enough to bring the year's sales up to the 1990 level. He said the company has successfully competed with national brands, citing its ability to retain and increase its business with three major retailers: Sears, Roebuck and Co., Kmart and Wal-Mart.
by CNB