Guilford Mills Inc.
Address:
4925 W. Market St.
Greensboro, North Carolina 27407
U.S.A.
Telephone: (919) 316-4000
Fax: (919) 316-4357
Statistics:
Public Company
Incorporated: 1946
Employees: 4,364
Sales: $614 million
Stock Exchanges: New York Philadelphia Midwest
SICs: 2258 Lace & Warp Knit Fabric Mills
Company History:
Guilford Mills Inc. is the leading producer in the United States of warp, or flat, knit fabric. The company knits, dyes, and finishes nylon, acetate, and polyester yarn and sells finished fabrics to the apparel, automotive, and home furnishings industries. Guilford fabrics are used in lingerie, sportswear, loungewear, swimwear, children's sleepwear, bedsheets, mattress ticking, bedspreads, upholstery, and draperies. In the automotive industry, Guilford fabrics are used for automobile roof interiors and seat covers. Guilford is the only U.S. automotive textile company with manufacturing facilities abroad--the company has production plants in the United Kingdom and shares ownership of Mexico's largest warp knitting company.
Guilford Mills was founded in 1946 in Greensboro, North Carolina. James Hornaday set up shop in a garage with half a dozen employees and six warp-knit machines to produce synthetic fabrics for ladies' lingerie. The company's first permanent knitting plant was built four years later in Greensboro, and in 1961, Guilford started its first dyeing and finishing plant, which Hornaday hoped would enable Guilford to charge more for its material. Charles (Chuck) Hayes, who later became Guilford's chairman and CEO, was hired that same year to oversee the new operation. At that point, Guilford had 60 machines and was a medium-sized operation.
Guilford quickly introduced innovative dyeing and finishing techniques that included laminating, napping, embossing, and coating. From its beginnings in lingerie, Guilford branched out and supplied warp knit fabric to manufacturers of sleepwear, dresses, swimsuits, and other apparel. The company also supplied fabric for window treatments, automotive interiors, shoes, and luggage.
Twenty-one years after its founding, Guilford had a second dyeing and finishing plant up and running. By 1968, Hayes, 33, was president of the company, which had turned increasingly to the production of warp knit fabrics. Warp knit is a specialized fabric made by a machine knit process. The nylon, acetate, and polyester yarns run in a lengthwise direction in the fabric, forming interlocking loops. With progressive production strategies, the company quickly grew to $3 million in sales.
Hayes is credited with building the company from a small knitter of synthetics into the world's largest and most efficient producer of warp knit fabric. Under Hayes's direction, the company won business away from larger competitors and made shrewd acquisitions and partnerships. And Guilford produced low-priced synthetic knockoffs of more expensive, natural-fiber fabrics.
The company went public in 1971. Hayes became the chairman and CEO one year later, and the company listed its stock on the American Stock Exchange. In the early 1970s, Guilford acquired Astrotex, Ltd., of New York and launched the Guilford-National joint venture in Kenansville, North Carolina. When velour, a velvety cotton fabric priced at a steep $8 a yard, became popular in the 1970s, Hayes and his team of fellow executives decided to develop a cheaper, synthetic substitute. Although the company had to invent a new way to dye the velour-like material, Guilford perfected a synthetic velour in 1978 that generated six to eight years of profitability. During the late 1970s, Guilford acquired the Chadalon Nylon Extruding Plant in Georgia and started a major bonding and laminating division at the Greensboro, North Carolina site.
In 1981 Guilford organized a joint venture in the United Kingdom with Carrington-Viyella plc. The new company was called Guilford-Kapwood Ltd., and Bryan Lodder, a Briton, was appointed to oversee it. Two years later, Guilford bought out the British company, which was renamed Guilford Europe. Lodder was in charge of European operations.
Guilford's executives refer to 1984 as the company's "golden year." Stock was listed on the New York Stock Exchange. During the previous five years, Guilford's sales had increased 70 percent. In 1984 the company earned $24.3 million on sales of $456.9 million--a 5 percent margin that was the envy of the industry. Giants like Burlington and J. P. Stevens had margins of 2 and 1.1 percent, respectively.
"Commodity, the volume, our low cost, our low overhead--everything was just in place, and we were it," Guilford CEO Hayes was quoted as saying in the May 1992 issue of Business--North Carolina. "It all came together because at that time we had the most advanced line of warp-knit products in the world and had replaced a lot of woven fabrics at lower selling prices, but at better margins to us. It all clicked at the same time."
Guilford took advantage of the "click" and used profits to embark on an aggressive acquisitions campaign. The market in synthetics was beginning to fade by the mid-1980s, and to survive, Guilford realized it needed to increase market share. The company acquired two competitors in 1985--TRT Corp., of Augusta, Georgia (a fabric printing operation), and Lumberton Dyeing & Finishing Co. of North Carolina. The following year, 1986, Guilford bought up Gold Mills Inc. of Pennsylvania and FEF Industries of North Carolina. The company bought into Grupo Ambar, S.A. de CV, a warp knitter in Mexico City in 1987. These acquisitions doubled sales between 1984 and 1988 and gave Guilford a 60 percent share in warp knitting, its primary business.
In addition to acquisitions in the warp knit business, Hayes pushed Guilford to learn new technologies. The company branched into the circular-knit business. Circular knits are twice the size of the standard 60-inch fabric width and are produced on special knitting machines. Wide-width circular knit fabric is popular with apparel makers because more garments can be cut from less fabric.
Guilford began producing circular knit fabric in 1989, using prototype equipment. Because the fabric was double the standard width, Guilford needed new machinery to dye it. The company converted its Augusta, Georgia, printing plant into a state-of-the-art, circular-knit finishing facility. The conversion eventually cost Guilford more than $30 million in equipment and resulted in millions of dollars of losses.
By the mid-1980s, Guilford was one of Greensboro's major employers. In 1987 the company had sales of $539.1 million, and in 1988, Guilford was Number 461 on the Fortune 500 list. In 1988 the company combined Guilford/U.K. and Guilford/U.S. manufacturing facilities to form the International Marketing Division. The company also set up a partnership with Suminoe Textile Co of Japan, a leading supplier of textiles to the automotive industry. The two companies planned to share marketing resources and technical knowledge and supply American and Japanese car manufacturers with fabric for head and door liners. Guilford had pioneered the automobile headliner market in 1986 and was eager to expand into car upholstery and other auto interior fabrics.
In 1988 industrial fabrics, including automotive, made up 24 percent of Guilford's business. Apparel fabrics constituted 62 percent of the company's sales, and home furnishings were 14 percent. The company's headliner fabrics could be found in more than half of all American cars, and its seat cover business was booming. Also in 1988, Guilford acquired Krislex Knits, Inc., which had been one of Guilford's major suppliers of circular knit fabric.
By the end of the 1980s, the Guilford had more than 4,500 employees at 14 plants. But the company was having trouble making the transition from warp knits to the realm of circular knits, which required a fashion and consumer-oriented approach and in which raw materials were costlier and quality control crucial. In making warp knits, running 100,000 yards of seconds was of little consequence--it was prohibitively expensive with circular knits.
According to CEO Hayes, speaking in the May 1992 Business--North Carolina article, Guilford was ill-prepared for the transition. "The mentality was warp knit," he said. "There was a tremendous difference in culture that did not mesh together."
On top of the circular knit problems, Guilford suffered growing pains in the latter half of the decade and had difficulty integrating the six companies it had acquired since 1984. Growth slowed in 1989, the same year that a Miami Beach financier began building a stake in Guilford. Industry analysts wondered if the financier Victor Posner, owner of the Graniteville Co. corduroy plant, planned a takeover.
Guilford's CEO, Chuck Hayes, appointed Bryan Lodder as president of the company. Hayes retained the titles of chairman and CEO, but assured Lodder that he would have total autonomy. Lodder was president until 1991, when Hayes assumed that position.
By the end of the decade, a number of factors had converged to cut into Guilford's profits. A slump in clothing sales and a growing flood of cheap imports, along with a decrease in automotive production, slowed growth considerably. By 1990, Guilford stock had fallen to $21 from its high of $39.50 in 1987. That year, the company lost $22.6 million when it closed the Augusta, Georgia, circular-knit dyeing and finishing plant. The operation was moved to facilities in Lumberton and Greensboro. Sales for 1990 were $544.1 million.
Guilford marked 1990 with innovation, becoming the first U.S. mill to introduce microdenier specialty fabrics, which have a high-filament count that gives a silk-like feel to stretchy fabrics. The company also began a market launch into sports and fashionwear made with cotton Lycra spandex. In 1991, Guilford launched the Feminine Mystique Foundations Lines and the Infiknits wide-width circular knits line of natural fibers and Lycra blends. The production of fine denier specialty yarns allowed Guilford to create unique, exclusive fabrics. That year, Guilford's sales were $528.8 million and income was $15.9 million, and the company had slipped to the last slot on the Fortune 500 list. Guilford was not alone in its struggles--the Wall Street Journal of April 2, 1992, reported that profits for the Fortune 500 companies were "an unparalleled disaster" in 1991. Profits for the group fell 41 percent that year.
Guilford continued its program of restructuring and redirecting itself in 1992. CEO Hayes took on the additional roles of president and chief operating officer. The company planned to invest $100 million in new machinery and equipment and set a goal to become a global contender in the automotive market, building on its sales to Toyota, Nissan, and Honda in addition to General Motors and Ford Motor Co.
1992 also saw Guilford's continued development of its wide-width circular knits business. The company showed strong growth for Infiknits, its naturally finished, 100 percent cotton and cotton/Lycra spandex fabric line. Against the backdrop of a slow rebound in the textile industry, Guilford's share of the women's domestic swimwear market continued to rise, driven by innovations in fabrication. Guilford formed a partnership with Hunter-Douglas, a major player in the home fashions industry, to produce the Silhouette line of vertical blinds and pleated shades.
Guilford's automotive business unit also showed recovery, with worldwide growth in automotive and van interiors and residential upholstery. The unit emerged as a technological and design innovator, selling its bodycloth and headliner fabrics to automakers in the United States, Europe, and Japan.
Always driven to research and innovation, Guilford began developing a technical center in Greensboro to combine its engineering, technology, research, and product divisions under one roof. The company focused in 1992 on the further development of microdenier fabrics. Improvements in process technology and modifications of equipment were also high priorities. At the International Fabric Association International's 81st convention/industrial fabric and equipment show, Guilford introduced Tacfast, a new hook-and-loop fastener system for applying carpet tiles.
For the 1992 fiscal year, Guilford had $614.9 million in sales--an increase of 16.3 percent over 1991--and an income of $24.9 million. The company expected to continue technological upgrading of equipment and planned strategic expansion in its fibers and automotive units. Capital expenditures of $80 million were planned for fiscal 1993.
Principal Subsidiaries: Guilford FSC, Inc.; Guilford Mills (U.K.) Ltd.; Guilford Europe Ltd.; Gold Mills Inc.; Guilford Airmont, Inc.; Guilford Mills (Michigan), Inc.
Further Reading:
Avery, Sarah, "Salesman Orients Textile Firm to Japan," Greensboro News & Record, February 13, 1989, 99:44, p. C-4.
Bailey, David,"Look Back in Anger: For Guilford Mills to Face the Future, Chuck Hayes Had to Come to Grips with Where He'd Been," Business--North Carolina: May 1992, 12:5, p. 28.
"Fiber Selection: Wet Processing Implications," Textile Industries, August, 1970, pp. 144-169.
"For Guilford Mills, Added Value Multiplies Profits," Textile World, December 1983.
"Fortune 500 Group Had 41 Percent Plunge in '91 Profits," Wall Street Journal, April 2, 1992, sec. C, p. 21.
Geremski, Terence E., "Guilford Mills Reports Record Second Quarter Earnings," PR Newswire, January 18, 1993.
Guilford Mills Annual Report, Greensboro, N.C.: Guilford Mills Inc., 1992.
Heerwagen, Peter, "North Valley Home to Fortune 500," North Valley Business Journal, June 1992, 3:8, p. 1.
Hopper, Kathyrn, "Guilford Mills Eyes Deal with Financier," Greensboro News & Record, May 22, 1990, 100:142, p. A-6.
----, "First Quarter Loss Pressures Guilford Mills," Greensboro News & Record, February 19, 1990, 100:50, p. C-1.
Kunz, Mary, "What Makes a Survivor?" Forbes, January 26, 1987.
Luber, Diane, "Guilford Mills: Digesting New Ventures," Greensboro News & Record, January 23, 1989, 99:23, p. C-8.
----, "Guilford Mills to Sell One Plant in Lumberton, Expand Another," Greensboro News & Record, September 29, 1988, 98:273, p. C-5.
Mildenberg, David, "Posner Raises Guilford Mills Stake: Company to Phase out Georgia Plant," Greensboro News & Record, January 27, 1990, 100:27, p. A-7.
O'Hanlon, James, "Knitting Up a Storm," Forbes, January 21, 1980, p. 81.
Patterson, Ramona, "Guilford's Krislex Purchase Creates Room to Grow," Business Journal--Charlotte, January 11, 1988, 2:40, p. 11
Robinson, Russ, "Textiles, Tobacco, Furniture Continue to Reign in Triad," Business--North Carolina, May 1986, 6:5, p. 31.
Seidel, Leon, "Everything's Coming Up Tricot," Textile Industries, January, 1970, pp. 94-95, 154.
Smith, William C., "Industrial Textiles Mood: Upbeat Despite Economy," Textile World, December 1992, 142:12, pp. 70-72.
Snow, Katherine, "Textiles' Recovery Needs Consumers to Catch Up," Business Journal--Charlotte, December 30, 1991, 6:37, p. 12.
Source: International Directory of Company Histories, Vol. 8. St. James Press, 1994.
