Russell Corp. is to build a new $50 million plant in Honduras to support an operational realignment that increases focus on both its athletic and activewear businesses.

The new business structure will combine manufacturing, distribution and some administrative functions with sales and marketing to create a separate Athletic Group and an Activewear Group. The Athletic Group will move away from internal manufacturing.

"This alignment creates two groups of businesses that need two different approaches for their operations," said Jack Ward, chairman and CEO. "The new structure allows us to differentiate the operations between products that are more branded and athletic focused and those that are more cost sensitive."

All of the branded athletic products will be part of the Athletic Group which, as it grows, will increasingly move toward a more sourcing-based model for manufacturing, says Russell. In some cases it will source from the from the Activewear Group.

The Activewear Group will focus on the JERZEES brand for the mass retail market and the JERZEES, Bike, Cross Creek and Three Rivers brands for the artwear channel. Production will primarily be through internal manufacturing operations and strategic partnerships.

The realignment will be supported with a new, fully- integrated textile facility in Choloma, Honduras for the Activewear Group. The plant will produce both jersey and fleece fabrics to support the company's four sewing operations and 4,000 employees already in Honduras.

"Our new Merendon Plant in Choloma will play an important role in our efforts to continue to lower costs in this highly competitive portion of our business," said Ward. "Our strategy is to continue to offer products that are an excellent value for the consumer, whether manufactured internally or sourced from other suppliers. We believe the low cost model for the Activewear business is based on internal manufacturing and strategic partnerships."

Construction of the $50 million facility is scheduled to be completed by late 2004 and production will begin by early 2005. The vertical textile operation will employ up to 700 people. Once fully operational in 2006, the projected annual pre-tax savings for phase one of this project should be approximately $15 to $20 million.

Inteletex - 30/10/2003