Springs Global US, Inc.

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Springs Global US, Inc.

205 North White Street
Fort Mill, South Carolina 29716
U.S.A.
Telephone: (803) 547-1500
Toll Free: (888) 926-7888
Fax: (803) 547-1636
Web site: http://www.springs.com

Wholly Owned Subsidiary of Springs Global Participações S.A.
Incorporated: 1887 as Fort Mill Manufacturing Company
Employees: 15,000
Sales: $2.7 billion (2005)
NAIC: 314110 Carpet and Rug Mills; 314129 Other Household Textile Product Mills; 313210 Broadwoven Fabric Mills; 314121 Curtain and Drapery Mills; 337920 Blind and Shade Manufacturing

Springs Global US, Inc., formerly known as Springs Industries, is one of the world's largest producers of home furnishings and specialty fabrics. Springs produces goods under its own venerable Springmaid, Wamsutta, Artex, Regal, and Dundee brands, as well as for private department store labels and licensed concepts from the fashion and entertainment worlds.

The company began importing some of its products as a response to cheap imported textiles. After the end of tariff protections, in 2006 the former Springs Industries merged most of its operations with its Brazilian supplier Coteminas S.A. to form the new holding company Springs Global Participações S.A. Since then, the U.S. business has closed numerous domestic manufacturing facilities to focus on sales and marketing for North America.

COMPANY ORIGINS

The company started in April 1887, when a group of 14 men and two women organized Fort Mill Manufacturing Company to produce cotton cloth. At that time, the Northeast and Midwest were booming, and cotton manufacturing was seen as a way to industrialize and revive the depressed South. Samuel Elliott White, a local planter and Civil War veteran, was elected the company's first president. Among the investors was Leroy Springs, a merchant who would become White's son-in-law and a key force in the company's development. The company produced its first yard of cotton cloth in February 1888. Its first annual report, in May 1888, stated that the plant had 200 looms and was producing 8,000 yards of cloth daily.

In 1892 many of the same investors started a second plant in Fort Mill. In 1895 Leroy Springs and others established another company, Lancaster Cotton Mills, of Lancaster, South Carolina. Toward the end of the century, with the Lancaster mills flourishing, Springs acquired control of the Fort Mill plants, which were experiencing difficulties, and other troubled cotton mills in Chester, South Carolina. The Lancaster operation expanded in 1901 and again in 1913 and 1914, when it was said to be the largest cotton mill in the world under one roof. In 1914 Leroy Springs led the establishment of Kershaw Cotton Mills in Kershaw, South Carolina.

Leroy's son, Elliott White Springs, joined the company in 1919 after distinguished service as an aviator in World War I. According to the younger Springs's biographer, Burke Davis, Leroy Springs ordered Elliott to learn the business without pay. It took Elliott Springs a while to settle into the business; several times he quit and came back. In these early years, Elliott Springs was more interested in both writing—his best-known work is War Birds: Diary of an Unknown Aviator —and social life than in textile manufacturing.

Leroy Springs seemed to lose interest in the business himself during the 1920s. He ran up debt and let the equipment run down; he also speculated in the stock market. In 1928 a disgruntled cotton buyer shot Leroy Springs in the head on a street in Charlotte, North Carolina. Springs recovered physically, but became emotionally withdrawn. Shortly before Leroy Springs's death in 1931, Elliott Springs took over management of the company.

At this time, the family's textile operations consisted of six plants with 5,000 employees. Elliott Springs—until then considered a playboy and a dilettante—led a dramatic revitalization of the business, which was suffering from the Great Depression as well as from Leroy Springs's neglect. He negotiated with creditors to save the mills from foreclosure, went without salary for a period, and bought used but useful machinery at bargain prices to upgrade operations. In the fall of 1933, he bought a former J.P. Stevens plant in Chester, South Carolina. Also in 1933, Springs consolidated the various mill properties into a single company, Springs Cotton Mills.

In 1934 the United Textile Workers of America attempted to organize workers at the Springs mills. Elliott Springs allowed the union to address the workers at a company-owned baseball field in Chester. After the organizers had spoken, Springs mounted the platform and told the workers that if they went on strike, he would close the plants and take his family to Europe. The workers later voted unanimously against union representation.

During the 1930s the Springs facilities had been expanded and modernized, despite the Depression. With the arrival of World War II, Elliott Springs turned over the company's entire production capacity to the military. Early in 1942 the company began manufacturing fabrics for a variety of military uses, including uniforms, tents, gas masks, and gun covers. All the Springs plants won awards from the U.S. Army and Navy for superior production.

The mills ran overtime, sometimes seven days a week, to keep up with wartime production. Elliott Springs feared this schedule would wear out the mills' machinery, so he instructed one of his plant managers to buy and store every replacement part available, an effort that paid off when the mills resumed normal operations in 1945. At the close of the war, Springs began construction of a bleaching plant and moved the company into the production of finished fabrics and consumer products, such as sheets and pillowcases. Also in 1945, the company established Springs Mills, Inc., in New York as the sales organization for its products.

The company's launch of the Springmaid brand of sheets and apparel fabrics in the late 1940s included a popular advertising campaign designed by Elliott Springs himself. Early ads included drawings of sexy, half-dressed young women and double-entendre copy. The best-remembered ad featured an American Indian brave lying exhausted in a hammock made of a sheet, with an Indian woman apparently rising from the same hammock. The caption read "A buck well spent on a Springmaid sheet." Some called the ads tasteless, but the campaign did focus attention on the Springmaid brand.

SPRINGS AT MID-CENTURY

Elliott Springs remained president of the company until his death in 1959. During his tenure, the assets of Springs Cotton Mills had grown to $138.5 million from $13 million. Sales had increased more than 19-fold, to $163 million, and the workforce had nearly tripled, to 13,000. The company was the seventh largest in the U.S. textile industry, but was the most profitable. H. William Close, Elliott Springs's son-in-law, succeeded him as president. Close expanded and modernized many Springs facilities and built a new headquarters for the sales organization in New York in 1962. In 1965 the company inaugurated carpet production with a plant in York, South Carolina.

COMPANY PERSPECTIVES

We know it's never just about a new comforter. Or curtains. Or even the right rug. It's about creating what you adore. Giving free play to your desires. Making one place in the world absolutely perfect. At Springs Global, we're dedicated to giving you inspiration, fresh possibilities and one gorgeous design after another. Ours are the brands you've known for years. The names you can trust for uncompromising quality. The products you can be proud to own.

In 1966 the sales group merged with the manufacturing company, with the resulting entity named Springs Mills, Inc. The same year, the merged company went public, selling 675,000 shares at $17 each. Late that year, Springs Mills shares were listed on the New York Stock Exchange.

In 1967 Springs considered a merger with another textile firm, Collins & Aikman Corporation, but abandoned the plan because of what the companies termed "operational difficulties." In 1968 Springs formed a new division to make and market knit fabrics; indeed, the 1960s and 1970s were a time of much diversification in Springs product lines. The company made a major conversion to production of cotton-synthetic blended fabrics, which had begun to outstrip cotton in popularity—in 1969, two major facilities were converted to blend production.

Springs hired its first nonfamily president, Peter G. Scotese, in 1969, with Close moving into the newly created post of chairman, which he held until he died in 1983. Scotese had been a vice-president of Federated Department Stores and, before that, a vice-president of another textile company, Indian Head, Inc. During Scotese's tenure, Springs expanded via numerous acquisitions, including, early in 1970, the finished-goods division of Indian Head.

Late in 1970 the Justice Department sued Springs and four other textile makers, charging that the manufacturers conspired with wholesalers and retailers to stabilize the prices of their prime lines of sheets and pillowcases, in violation of antitrust laws. Springs agreed to a consent decree in which the company agreed not to engage in such practices, without admitting that it ever had. Fifteen years later, the Justice Department agreed to terminate the decree, citing a 1977 Supreme Court ruling that price-fixing is illegal only when intended to curb competition and legal in other circumstances.

FOREIGN VENTURES AND DIVERSIFICATION

In 1972 Springs became a partner in a joint venture to start a textile plant in Indonesia, P.T. Daralon Manufacturing Company. Early in 1973 it entered the frozen foods business, acquiring Seabrook Foods Inc. of Great Neck, New York, for about $34.5 million. In 1974 Springs sold its three terry-cloth production plants to J.P. Stevens Inc. and discontinued operation of its carpet division at York, which had been unprofitable since its inception in 1965. Springs sold the facility to Cannon Mills Company in 1975. The Indonesian plant went into operation in 1975, but failed to generate enough revenue to maintain working capital; the unit's creditors had to defer interest and other payments. The following year, Springs sold its interest in the venture. Springs continued updating and modernizing its plants closer to home in the late 1970s, but also got out of another unprofitable business by closing the knit division in 1978. In 1979 Springs acquired Lawtex Industries, a maker of textile home furnishing products, for $15.4 million plus the assumption of $13.5 million in liabilities, and Graber Industries, Inc., a manufacturer of blinds, shades, and other window decorating products, for $38.5 million.

Walter Y. Elisha succeeded Peter Scotese as president of Springs in 1981; like Scotese, Elisha came from the retail sector. After Close's death in 1983, Elisha became chairman of the company. In 1981 and 1982, Springs closed several Seabrook units and sold others. Also in 1982, the company adopted a new name: Springs Industries, Inc.

Springs made a major acquisition in 1985: M. Lowenstein Corporation, a New York textile maker that, like Springs, had been in business since the 19th century. The acquisition brought Springs the Wamsutta brand of household goods and an entry into the premium-priced bedding market and the industrial fabrics business through Lowenstein's Clark-Schwebel unit. The cost of the acquisition was about $265 million.

KEY DATES

1887:: Fort Mill Manufacturing Company is incorporated.
1966:: Company goes public on the New York Stock Exchange.
1985:: M. Lowenstein Corporation is acquired, bringing the Wamsutta brand into the Springs fold.
2001:: Company is taken private and partners with Coteminas, a Brazilian textile maker.
2005:: U.S. lifts quotas on imported textiles, instantly depressing prices.
2006:: Springs joins with Coteminas to form Springs Global.
2007:: Springs Global has initial public offering in Brazil.

During the late 1980s Springs intensified its diversification away from the apparel-fabrics business, where foreign competition was strong, and instead refocused on industrial fabrics and home furnishings, purchasing the fiberglass-weaving and finishing operations of United Merchants & Manufacturers Inc. for about $60 million in 1988, and Carey-McFall Corporation, a maker of window shades and blinds, for about $35 million in 1989. Springs's finished nonindustrial fabrics business declined to 26 percent from 52 percent of total sales from 1980 to 1990; of these sales about half were to U.S. apparel manufacturers.

ACQUISITIONS, MARKET GROWTH, PLANT CLOSURES

By 1990, company officials said they would continue to serve domestic apparel markets that provided adequate returns, but predicted that growth would come from the industrial fabrics and home furnishings businesses. In 1990 provisions for restructuring of operations—such as converting or closing finished fabrics plants—resulted in Springs reporting its first loss, 39¢ per share, in its 25 years as a public company. Springs officials noted, however, that earnings before restructuring charges were $2.07 per share, reflecting strength in certain areas of the business.

In 1991 Springs acquired the C.S. Brooks' Nashville plant, followed in 1992 by the acquisition of Finlayson Enterprises Ltd. along with two Canadian firms: C.S. Brooks Canada, Inc., and Griffiths-Kerr, which resulted in a new subsidiary called Springs Canada. As company officials had projected, by 1993 Springs derived 65 percent of its revenues from home furnishings sales, due in part to its acquisitions the previous year and to the growing North American market. A strong supporter of the North American Free Trade Agreement (NAFTA), Springs forecast substantial long-term growth opportunities from the markets in Mexico and Canada. To promote the passage of NAFTA, the company ran a grassroots campaign throughout 1993 in which 50,000 personal letters were written and innumerable phone calls were made to Congress. The formation of Springs Canada proved beneficial, expanding the company's North American market and making Springs one of the leading suppliers of sheets and pillowcases in Canada.

Through the mid-1990s Springs continued with its long-term marketing strategy of acquisitions and consolidations. In 1993 Clark-Schwebel contributed its European operations plus $8 million for an equity position in C.S.-Interglass A.G.; in 1994 the Clark-Schwebel Distribution was sold. In 1995 Springs acquired Dundee Mills (towels), Dawson Home Fashions (shower curtains), and Nanik (window coverings), combining Dundee & Dawson into a Bath Fashions Group division, while adding Nanik to its window fashions business. Moreover, Springs introduced a new line of Wamsutta towels to coordinate with products, such as rugs, ceramics and shower curtains, provided by the Bath Fashions Group. The Intek office panel business was sold by Springs in 1995, which was a record year for the company's net sales: over $2.26 billion.

The year 1996 was marked both by the expansion of plants and the layoff of employees. As the high quality of technology for spinning and weaving steadily improved, the number of employees, the amount of space, and even the quantity of equipment needed for these tasks decreased. In order to reduce Springs' long-term debt and also to provide capital for acquisitions, the fiberglass division—Clark-Schwebel, Inc.—was sold for $193 million. Several older manufacturing plants were closed as well in 1996, their productivity taken over by the high-tech plants and by outsourcing.

Despite the closings and layoffs necessary in consolidating operations, Springs remained committed to its employees and to the communities in which they lived. Espousing seven values (quality, service, creativity, education, personal and family well-being, respect for history, and planning for the future), the company supported several plant and community improvement projects. Springs employees, known as associates at the company, were also encouraged to organize company and community activities that would further the seven core values. The company was named by Fortune magazine one of the "100 Best Companies to Work for in America" and one of the "Most Admired Companies in the United States."

In January 1997, Crandall Close Bowles was elected president and chief operating officer of Springs by the board of directors. Walter Y. Elisha continued as chairman and CEO for another year. The great-great-granddaughter of the company's founder, Captain Samuel Elliott White, Crandall Bowles had worked in Springs' finance department from 1973 to 1978, then joined her family's investment firm for 14 years, serving as president during her last nine years there. In 1992 Bowles returned to Springs, first as vice-president of textile manufacturing, then as president of the Bath Group.

Although net sales did not manage to significantly top those of the previous year, the close of 1996 and early 1997 showed Springs to be well positioned in its industry, well-focused and intent on its market, with a strong capacity for continued growth. Nevertheless, plant closures continued into the late 1990s, with five facilities being shut down in 1998, including a bleachery in Rock Hill that dated to the Great Depression.

PRIVATE AGAIN

The company's share price soared to $60 in June 1998 before falling to less than half that by next spring. Bowles hired several new executives to make the company more responsive to a fast-changing market. For 1999, sales were stagnant at about $2.2 billion, though net income rose to $69 million from $37 million the previous year.

The new management took the company private on September 5, 2001. Investment group Heartland Industrial Partners acquired a 45 percent holding in Springs in the $1.2 billion leveraged buyout. Their strategy for the future was to take over weakened rivals to build a $5 billion business, officials told the Charlotte Observer.

Several acquisitions followed in the next couple of years. These included a rug yarn plant acquired from Maybank Textiles Corp. (2001), Beaulieu Group's accent rug operations (2002), drapery and bedding lines from Burlington Industries (2002), and one of the last blanket manufacturers in the United States, North Carolina's Charles D. Owen Manufacturing Co. Inc. (2003).

Springs also invested in new equipment in an attempt to keep the mills competitive. A couple of Chester County, South Carolina, plants were consolidated in 2000 and 2001, trimming a few hundred workers from the payroll in the process. The company upgraded factories in Georgia as well.

GLOBAL SOURCING

In the early 2000s, amid intensifying competition in an increasingly challenging U.S. economy, Springs moved some of its production out of the country, establishing a drapery manufacturing facility in Mexico, in order to realize cost savings on labor. It also began importing quilts from China.

An important relationship started in 2001. At first Brazil's Coteminas was a supplier, offering a low-cost source of cotton textiles, thanks to its low raw materials prices and wage rates less than one-tenth those in the United States. Within a few years, Coteminas would join Springs in a major new business grouping.

In a telling sign of the times, the company closed the last of its manufacturing facilities in its hometown of Fort Mill, South Carolina in 2003. Meanwhile, one of Springs' oldest and largest rivals folded. Pillowtex Corporation collapsed under the debt burden of its buyout of Fieldcrest Cannon (an acquisition Springs had pursued until the price became too high for its liking). WestPoint Stevens declared bankruptcy in 2003 but remained in business.

BRAZILIAN MERGER

The financial picture for U.S. textile companies worsened sharply as import limits were lifted in 2005 and the market was flooded with inexpensive alternatives to American-made products.

In that climate, in October 2005 Springs management announced a proposed merger with Brazil-based Coteminas, which would create Springs Global Participações S.A., a holding company based in Brazil promising to be the largest home furnishings manufacturer in the world. The merger was completed early in 2006, and under the new organization, the South Carolina company was renamed Springs Global US Inc. (The window treatments business had earlier been spun off into Springs Window Fashions LP.) Dramatic cuts in the domestic workforce ensued, as more production was moved to South America.

Once a leading employer in South Carolina, with a workforce of 15,000, Springs Global employed fewer than 900 people in the Carolinas by the end of 2007, most of them in office jobs. Company representatives maintained that a modest U.S. manufacturing presence was still necessary to fulfill special demands, but for the most part, the U.S. operations would focus on marketing and administration.

Plant closures and acquisitions continued after the merger. Several recently acquired or renovated facilities in South Carolina and Georgia were shut down in 2006, their equipment shipped off to Coteminas factories in Brazil and Argentina. Springs Global was also planning to spend $160 million on overseas plants in Asia and elsewhere, according to the Charlotte Observer.

Crandall Close Bowles served as co-CEO of Springs Global after the merger but was retiring the post in September 2007. Her family then owned a 5 percent stake in the combined company, which was mostly owned by Brazilian investors.

Trudy Ring

Updated, K. CannCasciato;

Frederick C. Ingram