North Carolina - Delta Apparel is consolidating its fabric production for its basic, blank tee shirt business, a strategy which will involve shifting some US-based manufacturing operations to its facility in Honduras.
The consolidation transfers the production of some fabric for basic tees currently manufactured at the company's Maiden, North Carolina plant to Honduras, increasing production at the Ceiba Textiles facility by approximately eight per cent to roughly 900,000 pounds of fabric per week.
Delta said that the change shifted fabric production for blank tees to its most cost-effective facilities and is expected to shorten the production cycle by approximately ten days.
In addition, Delta is further reducing US fabric production in order to better align inventory levels with sales expectations. Total fabric production at the Maiden facility will decrease by approximately 35 per cent.
Bob Humphreys, Chairman and Chief Executive Officer, said: ?These decisions are always difficult, especially when they affect associates who have been dedicated and loyal to our company for many years. However, Delta Apparel can no longer justify the additional cost associated with its current level of domestic fabric production for the highly competitive blank tee shirt business. We believe this economic decision is in the best long-term interest of Delta Apparel and our shareholders.?
The movement of production to the Ceiba Textiles facility will begin immediately and is scheduled to be completed by the end of June 2014. The company expects to realize annual savings of approximately US$1.1 million once the consolidation is complete. The anticipated aggregate costs associated with this transition are approximately $0.2 million, which is expected to be expensed in the Company?s fiscal year 2014 third quarter.