West Point Manufacturing Company
West Point Manufacturing Company, West Point, Georgia
The cotton textile industry came to eastern Alabama, in the valley of the Chattahoochee River, in 1866, shortly after the end of the Civil War. Two separate groups of local planters and merchants took stock of the ruined businesses and plantations and found enough capital to start two mills. This action was representative of similar activities across the conquered South. The new South as it would be called would have to rely on progressive agriculture and the expansion of home-based industry. 1
Without significant industry the South had lost the war. Poverty and hunger were prevalent throughout the Valley. Unless a new direction was taken, the area would remain poor and undeveloped. The water and other resources needed to be used to greater advantage. One local newspaper declared “enough power could be obtained on the Chattahoochee within several miles of West Point to turn half the spindles in the world.” 1
Langdale Mill in 1920 from Mill News Vol XX!!, No. 16, Oct. 14, 1920, University of North Carolina Documenting the American South Photo Archives.
In August 1866, the cornerstones were laid at present-day Langdale for The Chattahoochee Manufacturing Company and, several miles down the river, at River View, for The Alabama-Georgia Manufacturing Company. Most of the capital was raised by selling cotton in Savannah and Augusta to buyers for English cotton mills eager to replenish their supplies after the war. James W. McClendon was the first president of the Chattahoochee mill. George Huguley led the Alabama-Georgia mill. The original Langdale mill machinery consisted of 50 looms and 3,000 spindles. The River View mill consisted of 48 looms and 3,000 spindles. The mills made osnaburgs, a coarse cloth intended for the local market. Business was good for several years until the Panic of 1873, when the mills closed for a time. 1
Originally River View, then Galeton and finally Riverdale (see below) Mill News Vol. XXII, No. 16, Oct. 14, 1920 University of North Carolina Documenting the American South Photo Archives
During the Panic, two Confederate veterans, Lafayette Lanier and his brother, Ward Crockett, became interested in the businesses. Lafayette was married to Huguley’s daughter and traded land for the mill stock of the McClendon mill. The machinery was old to begin with and nearly worn out by this time. Nevertheless, the Huguley family decided to invest in new English looms and also secured the help of William Lang, an experienced cotton mill man from Oldham, England. With the help of Lang’s father, Thomas, and the local Lanier Iron Works, machines were repaired and improved. 1
In 1880, the Lanier family owned approximately 70 percent of the stock in the Chattahoochee mill. The depression caused by the Panic of 1873 was over, and the optimistic Laniers reorganized the two mills as West Point Manufacturing Company. The company prospered. A long-standing connection with N. Boynton & Co. of Boston, sales agents for the Laniers, provided a national market for duck used for tents, covered wagons, and other uses. Millions of yards were used for housing railroad workers during the building of the five transcontinental lines between 1865 and 1893. The trade name Magnolia was adopted for the single filling duck. When the name was patented in 1904, it was only the second trade name for a cloth patented in the United States. 1
During a fire in 1886, the Langdale mill burned to the ground. Boynton re-capitalized the project and gained financial control and sole selling rights for production. The mill expanded and began making heavier duck, as well as the original duck. New trade names of Monarch and Oceanic were applied to the new heavy duck. The business grew and withstood depressions and later panics. Lafayette Lanier and Theodore Bennett pushed for another mill. A new mill, Lanett No. 1, began manufacturing in July 1894. Further expansion resulted in Lanett No. 2, which began operation in late 1900. The two Lanett mills employed 1,200 people to operate 53,400 spindles and 1,788 looms. Meanwhile, the River View mill was forced to close. The mill was reorganized under Lafayette Lanier and opened as Galeton Cotton Mills in 1892. After a struggle to determine ownership, the Laniers gained full control and reorganized the mill for a third time as Riverdale Cotton Mills. At first it was a subsidiary of West Point and became a division in 1921. In 1936, production was converted from duck to toweling. 1
Even before West Point was born, its future partner had begun a parallel path. In 1844, a Bostonian engineer took a defunct cotton mill in Biddeford, Maine, and, borrowing the name of a legendary Colonial soldier and merchant, obtained a charter for the Pepperell Manufacturing Company. The company was formally organized in 1850, with another mill along the same river site already under construction. The first bed sheet stamped with the Pepperell name was sold in 1851. 2
Pepperell had three mills humming by 1866; making shirting, sheets, and jeans for sale domestically and overseas. The company merged with the Laconia Company in 1899, just in time for the slump in New England’s textile industry. In 1925, Pepperell began construction on its first Southern mill – the Opelika Mill in Alabama. The Massachusetts Cotton Mills and the Lindale plant near Rome, Georgia were acquired in 1926. The same year, one of Pepperell’s best-known brand names was introduced, a line of sheets called Lady Pepperell. Another mill was built in Opelika and a sales force was organized. In 1930 Pepperell purchased Granite Mills, a producer of fine-combed cotton goods. By 1946, a new, wholly modern finishing plant had been built and a new sheet factory was added shortly after that. 2
The Lady Pepperell brand was introduced in 1926 – Textile Brand Names Dictionary
1931 – The Pepperell Griffon – Textile Brand Names Dictionary
In March of 1965, West Point Manufacturing Company and Pepperell Manufacturing Company merged to form West Point-Pepperell, Inc. Within two years, each of its name brands–Carlin, Martex, Lady Pepperell–had its own full line of products for the bed and bath, and other new products and brands were being introduced. In 1968, WPP launched a $16 million program to expand and modernize. Alamac Knitting Mills, Inc. and American Rug and Carpet Company were purchased by 1969. 2
In 1986, Cluett, Peabody & Co., Inc. was acquired by WPP as a wholly owned subsidiary. Cluett, like West Point and Pepperell, had its origins in the mid-19th century, in a small business in New York that made detachable collars for men’s shirts. In 1889, Cluett had acquired the Arrow brand name for its shirts. Between 1900 and 1931, Arrow shirts, promoted heavily through the “Arrow Collar Man” ad campaign, became a rage across the nation. By 1941, sales volume for Cluett products topped the $30 million mark and Cluett began to look to the South for expansion. In the late 1950s Cluett acquired Baltimore-based J. Schoeneman, Inc., a manufacturer of top-selling, high-quality men’s and women’s clothing. Throughout the following decades, it expanded through acquisitions of textile mills, apparel manufacturers, and distributors, such as the Halston line of men’s clothing. When West Point-Pepperell acquired Cluett in 1986, its previous year’s sales had been $2.1 billion. 2
In 1988, WPP made another cornerstone acquisition: J. P. Stevens & Company, a rival in several areas of WPPs business. The purchase included 15 manufacturing plants and such famous designer names as Ralph Lauren and Laura Ashley sheets and towels. This doubled WPP’s domestic share of those markets–climbing to about 30 percent of towels and 36 percent of sheets. The purchase also catapulted West Point-Pepperell to the number one spot in the $1.2 billion bed-linen market, and number two, behind Fieldcrest-Cannon, in the $1.2 billion towel market. As growth rate in home furnishings is more or less static, increasing market share is the surest way to increase earnings. Acquiring J. P. Stevens was a coup, but a costly one. The bill of $1.2 billion that nearly doubled WPP’s debt ratio. 2
In 1988, West Point acquired JP Stevens & Co. The new logo incorporated the Griffon.
While the company immediately put unwanted portions of J.P. Stevens on the block–such as automotive and carpeting businesses–the leverage incurred in the transaction made WPP more alluring for raiders. The company represented a number of strong brand names in the apparel field, such as Arrow shirts and Gold Toe hosiery, in addition to its leadership in sheets and towels. WPP’s labor force was mostly nonunion and a recent $300 million capital-spending program had brought its facilities up to state-of-the-art efficiency. The debt was just one more ingredient to attract a takeover. 2
And in fact, within eight months of the purchase, William Farley, then chair of Farley, Inc., a holding company whose crown jewel was Fruit of the Loom, Inc., came into the picture. A former investment banker, Farley was a noted takeover artist who had had great success throughout the 1970s with leveraged buyouts, hooking up with investment banker Drexel Burnham Lambert in 1984. He acquired Fruit of the Loom as part of his 1985 purchase of conglomerate Northwest Industries, Inc.–a billion-dollar acquisition he pulled off with the help of emerging junk-bond specialist, Drexel. Farley then groomed the underwear company into a billion-dollar business. 2
In 1989, Farley launched a five-month, hostile battle to take over WPP and won. The price tag was $3 billion– much more than initially expected–and the deal complicated. Through the ad hoc entity, West Point Acquisition Corporation, Farley purchased 95 percent of WPP’s stock at 20 times the company’s 1988 earnings, planning to sell $1.6 billion in junk bonds to repay debt and buy the remaining public shares. But he was unable to raise the money when both the junk bond market and Drexel Burnham, Farley’s investment banker, collapsed, and his West Point Acquisition Corporation found itself owing $800 million to banks and $700 million to bondholders. 2 Farley incurred $2.4 billion of acquisition debt in the purchase and had hoped to negotiate interim financing with a junk-bond offering handled by Drexel. He also planned to sell WPP assets, Cluett Peabody in particular, which he hoped would fetch up to $800 million. While Fruit of the Loom did a booming business, its cash was off limits to holding company Farley, Inc., because of debt-covenant restrictions. WPP was already a very lean company, so cost-cutting wouldn’t help. 2
Conditions for Farley were not favorable. WPP had fought the takeover vigorously. Employees burned Fruit of the Loom underwear in demonstrations. Company attorneys sought the aid of state legislators for anti-takeover legislation. The takeover had been so acrimonious, there was trouble brewing immediately afterward with rank- and-file workers, as well as executives. WPP lost many key players, including the fourth generation of the founding Laniers, and the former head of Stevens’ sheet division, who left with the highly profitable Laura Ashley license. Then Drexel lost its magician, Michael R. Milken, and the junk-bond market began to shudder. At the same time, many of WPP’s primary customers were also suffering: Marshall Field and Saks Fifth Avenue were reportedly up for sale; B. Altman was bankrupt and Bloomingdale’s was teetering on the brink of bankruptcy. Just at the point in the takeover where everything had to go right, nearly everything went wrong. 2
Tension was high in early 1990, as Farley continued to struggle to arrange financing to complete the acquisition of WPP. Though it had been announced that Biderman S.A., a French company, would buy Cluett, that deal was dragging and the price kept dropping. Farley had arranged a $1.03 billion bridge loan at inflated interest rates in order to pay interest on debts accrued. Then Drexel, which had been Farley’s compass in the deal, filed for Chapter 11 bankruptcy law protection against its creditors. Notes on the bridge loan were due in March of 1990. 2
At the eleventh hour, Farley secured an extension on his bridge loan. But he was short the $83 million needed to buy the last 5 percent of company shares. In March of 1990, Biderman finally signed on the Cluett sale, but the price was a shockingly low $350 million and without 100 percent ownership, Farley couldn’t use proceeds from the Cluett sale to help repay his loans, anyway. Then West Point Acquisition defaulted on a $796 million bank loan and missed bond-holder interest payments. The acquisition vehicle went into default in March of 1990; in August of 1991, Farley agreed to cede – through the vehicle – his hold on 95 percent of WPP. 2
At the same time, the recession was hurting sales of towels, sheets, and other cornerstone WPP products. After Farley ceded control of the company in a debt-for-equity swap, West Point Acquisition filed for a prepackaged Chapter 11 bankruptcy, meaning it had already won most of its creditors’ approval for debt-restructuring, a process much faster than most bankruptcy proceedings. Farley announced he would continue as chair and chief executive officer of WPP. He blamed the junk-bond market collapse, the Gulf War, the recession, and resultant credit crunch for the failure of his acquisition. 2
In the fall of 1992, West Point Acquisition had been restructured and renamed Valley Fashions Corporation. It had departed from Chapter 11 protection and was moving into the hands of private investors. Holcombe T. Green, Jr., headed up the company. A group of WPP shareholders sued Farley for his failure to complete the takeover, and sought to block the debt-for-equity swap. WPP reported a 5.9 percent drop in sales and a plunge in earnings in early 1993, in part due to reorganization charges and overall loss from discontinued operations. 2 A new president and chief executive officer was announced in February 1993. Joseph L. Jennings, Jr., claimed that all the company needed was a better sense of direction. In the New York Times, he said of WPP, “They are still the largest bed and bath company in the world. My job is mainly to bring more stability.” Jennings is related to the Lanier family, founders of West Point. 2
With the chaos of the failed takeover beyond it, WestPoint Pepperell, now controlled by Valley Fashions Corp., the group of investors that acquired Farley’s shares under the bankruptcy agreement, looked to regain stability. Holcombe T. Green, an Atlanta financier, was named CEO. Joe Jennings, a 20-year veteran in the textile industry, and a member of the Lanier family, was named president and given the responsibility of managing the company’s daily affairs. The strategy unveiled by the new management team included the consolidation of company brands and a $200 million investment in mill equipment and in computer equipment for customer links, internal operations, and design. 3
In December 1993, the company acquired the remaining five percent of WestPoint Pepperell through refinancing and merged with several of its subsidiaries to form WestPoint Stevens, Inc. Over the following two years the company engaged in an aggressive plan to increase its market share in the home fashions industry in an increasingly competitive retail market through the introduction of several new products. Examples included the creation of wrinkle-free cotton sheets and the introduction of new border treatments for towels developed with new, computerized looms. In February 1995 the company launched an unprecedented advertising campaign for its Martex line of bed and bath products. The award-winning campaign, entitled “The Bare Necessities,” helped to boost revenue for the third consecutive year. With innovations such as these, continuing measures to ensure low-cost production through technology, and a move toward employee-ownership through stock matching programs, WestPoint Stevens approached the late 1990s with the hope of improving its leadership position. 3
Late in 2000, in keeping with its Eight-Point Program of restructuring, WestPoint Stevens announced that it would close two manufacturing facilities: Rosemary Greige Plant, one of the company’s four plants in Roanoke Rapids, NC, devoted to towel production and its Liebhardt subsidiary’s plant in Union, SC. 4
WestPont was purchased by American Real Estate Holding Ltd. in June 2005 after filing Chapter 11 in New York bankruptcy court in June 2003. On May 29, 2007, WestPoint Home announced the closing of domestic bedding production facilities in Alabama, Georgia, and Florida, putting about 1,000 people out of work. In addition to the plant closings, about 40 positions were eliminated the corporate office and outside sales offices. After the closures the company will employ more than 4,000 people domestically. Further plant closings are expected in 2008. 5
Sources:
- Lanier, Joseph L., The First Seventy-five Years of West Point Manufacturing Company 1880-1955, The Newcomen Society in North America, New York, 1955.
- http://www.referenceforbusiness.com/history2/59/West-Point-Pepperell-Inc.html December 2007.
- http://www.referenceforbusiness.com/history2/85/WestPoint-Stevens-Inc.html December 2007.
- http://www.allbusiness.com/retail-trade/4205305-1.html December 2007.
- http://www.nationaltextile.org/nta/history/westpoint.htm December 2007.