It comes as no surprise that Winston-Salem felt pride when Chicago-based Sara Lee Corp. spun off Hanesbrands Inc. in September 2006 and set up its headquarters there. For one, it returned the company to its roots. What became Hanes Corp. was founded in Winston-Salem in 1901. Sara Lee predecessor Consolidated Foods Corp. bought Hanes in an unfriendly takeover in 1979. But Sara Lee decided in 2005 to separate its apparel division — which also includes such labels as Playtex, Champion, L’eggs and Wonderbra — from its food, beverage and household products.
The process took 18 months but couldn’t come soon enough for local leaders. Gayle Anderson, CEO of the Winston-Salem Chamber of Commerce, was thrilled the city had become home to a $4.5 billion company. “Any time you have the headquarters of a company in your community, the decision about how much to participate from a financial standpoint, as well as from a standpoint of people being involved in leadership positions, is made locally, so it’s to your advantage,” she said at the time. Also enthusiastic was the Winston-Salem Journal. Despite citing competition from Asia and elsewhere, it predicted: “Hanesbrands should at least be able to retain its 4,900 job slots in Forsyth County.”
It hasn’t worked out that way. Six months after its debut, the company started cutting local jobs. By the end of this year, when its 850,000-square-foot Winston-Salem hosiery mill closes, Forsyth County employment will be down to 2,500. It will have only one Tar Heel factory left — a sock plant in Mount Airy. Sales dropped 10%, at least in part because of the recession, to $2.9 billion in the first nine months of 2009.
But Twin City leaders still say they feel good about the company. “It’s exactly what we’ve experienced with other manufacturers,” Anderson says. “We’ve been through this enough that we don’t feel it reflects badly on us at all. It’s the way of the world.” Some production has been outsourced to Asia and other low-wage countries, she says, just as it moved in the U.S. from the Northeast to the South in the late 19th and early 20th centuries.
The presence of Hanesbrands headquarters is still a big benefit, says Bob Leak, president of Winston-Salem Business Inc., which recruits companies. “We can show corporate America that this is a viable and good place. It validates, internally as much as anything, that a community has the capability to handle a project of that scope.”
Blaming declining cigarette sales, Reynolds American Inc. offered severance packages to 1,800 production workers in its hometown, Winston-Salem, and nearby Tobaccoville. Within a week, about 400 accepted. The departures started in January and will run through early next year. About 75% will be completed by September. The company took a $47 million charge in the fourth quarter to pay for the down-sizing but says it will save $17 million in 2010 and $30 million next year. It has no plans for involuntary layoffs. Reynolds had more than 15,500 full-time workers in the region in 1983. After the buyouts are completed, that number will shrink to about 2,630.