WPS Readies for Test
Home Accents Today Staff -- Home Accents Today, June 6, 2005
New York — By virtually all accounts, the winner in the auction for WestPoint Stevens will come away with a sharply downsized company, hopefully free of debt and with a clear vision of its future. But proof of performance will be the ultimate test.
Most of the really tough decisions have been made over the past two years, as the company struggled through an often painful bankruptcy process, at the same time dealing with the sting of criticism from competitors and observers that CEO M.L. “Chip” Fontenot said were often based on incomplete or faulty perceptions.
“Our service levels throughout this whole bankruptcy process have never dropped below 98 percent and, in most cases, they've been well above 99 percent for key customers,” he insisted. “So you can't point to the operations of this company and say they've failed.”
Now, as a new owner appears on the horizon and the company anticipates its exit from bankruptcy, Fontenot indicated WestPoint is ready to move on to the proof.
“We are rationalizing so many of our facilities, there's been a lot of severance, a lot of change cost,” he said in an interview last Friday. “We are literally reinventing this company and, at the same time, moving the footprint offshore. All of these things are in the air — all of them are moving right now.”
The challenge, as everyone knows, is to consolidate domestic production to bring it down to the lowest cost possible, while further developing sourcing arrangements, joint ventures and, perhaps somewhere down the road, foreign manufacturing capacity.
“We clearly need to drive the business in a competitive manner, and there's still going to be some of the business that needs to have quick replenishment and turnaround,” Fontenot explained. “But clearly, we have to position the whole structure of the corporation so the majority of the business is ultimately going to be offshore. We have a pretty clear understanding of what the cost issues are offshore, and what the service issues are, and what our customers have to rely on.”
How much offshore remains an open question as the restructuring and learning curve continues, Fontenot indicated. He outlined a three-tier system that will provide for some higher-end products to be made and shipped from U.S. facilities, while other products will be made and shipped directly from overseas, or made offshore and warehoused in the United States.
“You've got a huge company here that in a very short period of time is trying to consolidate all its production, making sure that what we have left (in domestic manufacturing) is clearly the most efficient and cost effective, but at the same time allows you to do those three things,” he said.
“It's going to get a lot tougher, and that's what we're positioning for right now,” Fontenot said. “We are absolutely not naïve about that.” — Brent Felgner