Burlington Industries, Inc. Business Information, Profile, and History

Company Perspectives:

We are an organization of people with many special talents and skills, united in our commitment to build a growing, competitive and highly profitable textile company with which our customers prefer to do business, in which our investors prefer to invest and for which we all prefer to work.

History of Burlington Industries, Inc.

Burlington Industries, Inc. is one of the world's leading producers of textiles and related items. Its products include fabrics for home furnishings and apparel, carpeting and rugs, draperies and window shades, and upholstery fabrics. The company operates over 40 plants throughout the United States and Mexico, and functions as a coalition of nine separate businesses joined under the Burlington name.

The Early Years

After returning from military service during World War I, J. Spencer Love went to work in his uncle's spinning mill in Gastonia, North Carolina. There he gained four years of experience before deciding to branch off on his own. He purchased a controlling interest in his uncle's mill, and then convinced the Chamber of Commerce in Burlington, North Carolina, to help him finance the construction of a new plant in that city. Eventually, Love shut down the original mill and moved the equipment to Burlington, forming Burlington Mills on November 6, 1923. The newly-formed company consisted of 200 employees and one building that was situated in the middle of a cornfield. Textile production was started even before the building's construction had been completed.

Initially, Burlington Mills manufactured several cotton products, including flag cloth, bunting, cotton scrims, curtain and dress fabrics, and a type of diaper cloth called birdseye. Unfortunately for the company, however, many of these products were already becoming obsolete by the time manufacturing had begun. Business faltered for a short time, until out of desperation Love began producing bedspreads out of an experimental fabric called rayon. Consumers responded positively to this shiny new material, and within a few years Burlington became a leader in the manufacture of rayon textile. This success led to the opening of a second mill in 1926, and the achievement of $1 million in sales the following year. A New York sales office was opened in 1929.

During the Depression, Burlington continued to expand even as many competitors closed their doors. The company had a sizable advantage over comparable New England-based firms, due mainly to the lower cost of labor in the southern United States. Using this competitive strength during that period of time, Burlington acquired several mills that had closed as a result of the poor economic times, and subsequently reopened them under the Burlington name.

Diversification Throughout the Mid-1900s

In 1935, the company moved its headquarters from Burlington to Greensboro, North Carolina, in order to have railway access to its operations in New York. In 1937, Burlington consolidated its various operating units and was listed on the New York Stock Exchange. Company revenues had risen to $25 million.

When World War II broke out, the company began producing items for the U.S. government. Its research laboratories also were employed on various government projects, including one that investigated the use of a new fiber, nylon, in making parachute cloth. This initial work provided the foundation upon which the company developed several other uses for nylon-based textiles when the war ended.

Following the war, growth continued rapidly into the 1950s. Plants were often built with one wooden wall that could be taken down, moved, and erected again to expand available floor space. Burlington also acquired several competitors during this time, including Pacific Mills and Klopman Mills. As its diversification strategy began taking the firm beyond its original spinning and weaving businesses, the company changed its name in 1955 to Burlington Industries.

In 1960, Burlington purchased James Lees & Sons, a Philadelphia-based carpet manufacturer. Two years later, Burlington became the first textile firm to exceed $1 billion in sales. To this point, the company's growth had been directed primarily by its founder, J. Spencer Love, who died in 1962. He was succeeded as president by Charles F. Myers. When Myers took over, he changed the company's strategy to more effectively manage increasing labor costs and foreign competition. Under Love, Burlington had provided fabric to other apparel and home furnishings manufacturers. Myers undertook a new approach that directly targeted consumers as the company's customers, and in 1972 Burlington introduced several products under its own name, including towels, blankets, men's socks, women's hosiery, sheets, and draperies.

This activity was accompanied by other changes, including acquisitions of non-textile businesses, development of a consumer advertising campaign, and a major corporate reorganization. One of the acquisitions made during this time, that of the Globe Furniture Company in 1966, furthered the company's goals of getting closer to consumers and of finding new avenues of growth. This became particularly important three years later when a Federal Trade Commission (FTC) decree prohibited Burlington from purchasing any United States textile firms for ten years without prior FTC approval.

Reorganization Into the 1970s

During his tenure, Myers, who became Chairman of Burlington in 1968, engineered a controversial internal restructuring that altered traditional organizational functions, such as marketing and research, and redeployed them into vertically integrated businesses. The company's New York-based executives--along with Ely R. Callaway, who succeeded Myers as Burlington's president in 1968--desired a more centralized operation, while Greensboro-based executives favored Myers' decentralized, divisional structure. In 1973, those who preferred the divisional structure forced Callaway to resign.

Callaway had been charged with running the day-to-day operations of the company, while Myers tended to finances. Callaway had been largely responsible for the company's belated entry into double-knit fabrics, after the popularity of knitwear had seriously begun to reduce the company's sales volume in traditional woven fabrics. Because of this, Callaway's departure was a loss to the company. Fortunately, he was succeeded as president by Horace C. Jones, the former president of the company's Lees Carpets division. Jones ensured that Callaway's work to enter the knitted fabric market was continued. Although faced with rising costs for raw materials that were in short supply, Burlington quickly retooled its worsted fabric production facilities to take advantage of the growing trend toward knit and stretch fabrics. This move resulted in Burlington's recovery.

Also contributing to the company's recovery were U.S. trade agreements in 1971 with four Asian countries that served to reduce import volume. The devaluation of the dollar abroad also helped by giving U.S. goods a price advantage. During this time, the company increased its emphasis on the home furnishings line, which had begun to be marketed under the Burlington House name. In 1973, Burlington ventured into the lighting area with its acquisition of Westwood Industries.

Internally, the struggle for power continued. Following Myers' retirement in 1974, Jones was appointed chairman and CEO, and four executive vice-presidents competed to succeed Jones as president. William A. Klopman, son of Klopman Mills' founder, was chosen for the job. Unfortunately, the recovery that was seen during Jones' presidency was short-lived. By the beginning of 1974, Burlington faced deepening shortages of raw material, fuel, and labor. These setbacks, combined with an inflationary economy, threatened consumer spending for apparel and home furnishings. Demand for double-knit fabrics weakened because the material tended to snag. Luckily, strong sales overseas enabled the company to finally realize a positive return on its ten-year-old investment in its European operations.

In 1976, William A. Klopman was appointed Burlington chairman and CEO. He had joined the company when it had acquired his father's firm in 1956, and had risen through the ranks, to president of the influential yarn and apparel-fabric divisions from 1963 to 1971, and then to president in 1974. Under his leadership, domestic sales finally rebounded in 1977, due largely to gains in the home furnishings and industrial products area. Burlington succeeded in making necessary adaptations in its apparel products to meet changing consumer tastes regarding fashion styles. For example, the company shifted production away from heavyweight woven fabrics into more lightweight textured products, introduced a new washable polyester and wool blend called Burlana, and expanded the manufacture of denim apparel fabrics, which were growing in popularity.

Corporate Restructuring in the 1980s

Burlington entered the 1980s with an eye on its critical foreign operations. It gradually strengthened its financial position overseas by restructuring its French businesses and by selling its German worsted apparel fabric subsidiary. The company's continued emphasis on capital spending, however, met with mixed reviews. Analysts argued that Burlington's object of becoming a low-cost producer supported by technologically superior plants and long manufacturing runs prevented the company from making necessary changes flexibly and quickly enough to keep pace with trends in fashion and consumer demand. Klopman also was criticized for having an impersonal and aggressive management style, for having made incorrect product line decisions, and for creating trade friction between the United States and the Peoples' Republic of China, as he lobbied hard for limits on Chinese imports. Nevertheless, in 1981 Burlington became the first textile firm to surpass $3 billion in sales.

In 1984, Burlington acknowledged the necessity of broadening its product mix and targeting specialized, high-margin niches. The company introduced a lighter-weight crinkled denim fabric to be marketed under designer brand names. Just two years later, however, Burlington decided to place greater emphasis upon its industrial textiles area, and sold the designer bed-linen lines along with the rest of its bedding and bath textiles division, to J.P. Stevens & Company.

Upon Klopman's retirement in 1986, Frank S. Greenberg became Chairman and CEO. Greenberg had joined the company in 1959 when Burlington had purchased Charm Tred Mills, a firm owned by his father. Like his predecessors, Greenberg rose through divisional ranks into the executive suite, beginning as the president of the rug division and later serving as company president. As chairman, Greenberg found himself and the company fighting a takeover attempt by Dominion Textile Inc., Canada's largest textile producer. Many analysts felt that Burlington's prior reluctance to exit the apparel-fabrics business when lower-priced imports began flooding the market had reduced company profits and made Burlington vulnerable to such an attack from outside the firm. Dominion, looking for a way to rejuvenate its own sales in a stagnant Canadian market, viewed Burlington's denim fabric unit as an attractive acquisition.

Burlington was able to thwart the Dominion-Edelman takeover through a leveraged buyout that took the company private. Through an employee stock ownership plan, Burlington's employees became its primary owners. To reduce the significant amount of debt incurred, the company began selling key assets, such as its industrial products segment, while also eliminating 1,200 employee positions and slicing operating expenses to the bare bone. Within one year, Burlington had retired 45 percent of its buyout debt through severe reductions in overhead spending, capitalizing on a favorable market for its divested assets, and strong apparel fabric sales.

The 1990s and Beyond

Operating in the early 1990s as a much leaner organization than in the past, Burlington Industries faced continuing challenges in matching market demand with its manufacturing capabilities and expertise. Burlington's newly streamlined operation and its proven ability to get out from under a massive debt load had given the firm increased flexibility, which enabled the company to explore new trends in textile products. By that point in time, Burlington had positioned itself as the world's largest jacquard weaving manufacturer for upholstery, draperies, mattress coverings, and bedroom linens. Furthermore, its Area Rugs division was the United States' leader, and was experimenting with new patterned color systems as a means of offering customers a broader variety.

One notable change in the early 1990s occurred when Burlington re-entered the public arena with an open stock offering in 1992. With this change, the positive alterations that had taken place when the company operated privately became very evident, as Burlington was immediately able to capitalize on new industry trends. Most importantly, the company was fully able to develop and market new and different products in order to capture consumer interest and set itself apart from the competition. Not only was new product development increased, but so also was Burlington's speed of service to both retailers and customers. It was clear that the company's restructuring efforts after the leveraged buyout in 1987 were finally paying off.

A surge in new housing in the United States during 1994 heightened demand for residential carpeting, even further helping Burlington regain its standing as one of the country's largest and most successful textile businesses. To meet the demand, many of Burlington's plants began running 24 hours a day, seven days a week. Meanwhile, the company continued to invest millions in new product development throughout 1994 and 1995, while virtually extinguishing the remaining debt load left over from the previous years.

At that time, Burlington was searching for attractive acquisition candidates that would diversify its product offerings, while also complementing the items it presently produced. In January 1995, Burlington made the decision to purchase Bacova Guild, Ltd., a company that was the market leader in printed accent rugs and mats. The Bacova Guild joined the Burlington House Area Rugs division, which was already the market leader in dyed bath and area rugs, and together the two operations helped Burlington control those segments of the floor covering market.

Near the end of the century, Burlington was operating over 45 different manufacturing plants throughout the United States and Mexico. As it already enjoyed a standing as the United States' largest apparel fabrics manufacturer, Burlington continued to increase its export volume to further expand its yearly sales. The company entered into a joint venture in 1995 with Mafatlal Industries, Ltd. of India to make and sell denim products in India and other parts of Asia. Burlington decided to sell its struggling knit fabrics division in 1996. Also aiding in Burlington's heightened potential for further growth was the passage of the North American Free Trade Agreement (NAFTA), which helped Mexico and the Caribbean become extremely important sources of apparel items. Burlington had operated out of Mexico for half a century, and an increase in demand and production there was a benefit.

With international markets continually opening up, and with other segments of the world possessing a strong desire for Western-products, Burlington's size and broad scope will be an advantage in its future ability to capture and handle these new markets. The company's emergence from trying times as a stronger and more efficient operation may be indication that Burlington is able to meet the demands of the coming years and promote continued future growth.

Principal Divisions: Burlington Menswear; Burlington Klopman Fabrics; Burlington Denim; Burlington Sportswear; Burlington Madison Yarn Company; Burlington House; Burlington House Area Rugs; Lees Carpets; Bacova Guild, Ltd.