In its ongoing battle with Russell Corporation in the Artwear/Careerwear category, Gildan Activewear Inc. has formed a 50-50 joint venture with Frontier Spinning Mills Inc. to acquire the assets of a yarn-spinning facility in Cedartown, GA for $12.5 million.
The move is part of a strategy for both companies to increase their vertical capabilities in a market that continues to see downward pricing pressure and shrinking margins. The company said that output from the facility, a strategically-located and low cost yarn source, is expected to be entirely made up of Gildans integrated fabric manufacturing operations, and could supply materials to the companys Honduran operation in Rio Nance as well as other future expansion plans.
Gildan also announced last week that a major investor, Solidarity Fund, will sell off its block of 2.5 million shares currently worth about $90 million. The action is reportedly a result of allegations that Gildan fired 38 workers in Honduras for trying to unionize a plant. The company said the workers were part of 200 employees laid off in November 2002 for reasons related to the business cycle.
The fund, which is sponsored by the Quebec Federation of Labor and manages some $4.6 billion in assets for its 550,000 members, also had its representative on Gildan's board of directors resign.
Gildan announced just two weeks ago that it had become a Participating Company of the Canadas Fair Labor Association.
