Gilden Closing Five Manufacturing Plants

Tuesday 03rd of April 2007 12:25:05 AM

Gilden Closing Five Manufacturing Plants

Gilden Activewear, Inc. will be closing down five of its manufacturing plants in the next few months in order to open new plants in Central America and the Caribbean. The company, which manufactures mainly T-Shirts, is starting a trend that other apparel companies may begin to follow in the future. Closing the plants was a way for the company to save money in labour, equipment, and factory space. “It's an indication that things are going very well for the company offshore. The extent of the savings is very positive news in terms of 2008. The $45 million figure seems very substantial,” said analyst Jessy Hayem, from Desjardins Securities Inc. in Montreal, Canada.

Two of the manufacturing plants that will be closed are in Canada, two in Mexico, and one in the United States will be closed by the end of the year. In addition to T-Shirts, Gilden Activewear, Inc. recently purchased Kentucky Derby Hosiery, and will be selling socks as well that are manufactured in plants located in the United States and Honduras.

These logistical changes have also meant changes for the company’s earnings. It is estimated that the company will save US$45 million by making these production changes. This means that the estimated stock value will rise from seventy cents to seventy-five cents by the end of the 2008 fiscal year.

Many companies are competing in the T-Shirts market including other big companies like Hanesbrands, Inc. and Fruit of the loom Ltd. Beating out the competition by saving money in labour and the cost of materials will help Gilden Activewear take a larger percentage of sales. This also means that these companies may also begin moving their production lines to other countries as well. “Gilden has definitely led the pack in moving facilities, and they're quite ahead of their competitors,'” said Hayem.

(c)Zac Nelson, www.sxc.hu