Gildan cuts 400 jobs at two U.S. plants
Last Updated: Friday, December 12, 2008 | 4:59 PM ET Comments1Recommend3
CBC News

Gildan Activewear Inc. is chopping 400 jobs at two U.S. plants in a bid to cut costs and give more knitting work to its Honduras plant, the T-shirt maker announced earlier this week.

Montreal-based Gildan, which has gained fame as a specialty knitter, will move sock finishing work from its plant in Fort Payne, Ala., to its new facility in the Central American country, a move which will cost 220 jobs in the self-proclaimed "sock capital of the world."

In addition, Gildan plans to shut a plant in Virginia by February which will cut another 180 jobs.

The moves are necessary to reduce the company's overhead during a harsh economic time, the company said in a conference call releasing its fourth-quarter results.

"Socks manufactured in the U.S. generate lower gross margins than the company’s Activewear and socks products manufactured in our modern technologically advanced facilities offshore," said Laurence Sellyn, Gildan's chief financial officer.
Three month stock chart for Gildan Activewear Inc.Three month stock chart for Gildan Activewear Inc.

Gildan has been trying to maximize production at its Honduran operations, which have faced production hiccups in past quarters.

In the most recent period, Gildan saw its earnings drop by almost half to $21.4 million US from $41 million, comparing the final three months of 2008 with the same period of 2007.

Gildan also experienced a 20 per cent drop in shipments from its American plants to distributors in November, a sign that falling U.S. consumer spending is affecting the company's business.