Textile giant finds niche at top of the line

With many textile firms going out of business during the recent slump, executives of WestPoint Pepperell take some satisfaction from their declaration of record profits last year and the prospect for even higher earnings this year.

Treasurer Marshall N. Morton says with some understatement that WPP came through what he calls ''this recent unpleasantness'' fairly well, with most labor reductions achieved through attrition and cutbacks in hours worked, rather than layoffs.

It also pleased stock market analysts. ''They're fine people - a good company ,'' says Jay Meltzer, textile expert with Goldman, Sachs.

The headquarters of this third-largest US textile firm are on the western edge of Georgia - so far west, indeed, that the switchboard is actually across the state line in Alabama.

The mills of WestPoint Pepperell spread along both sides of the Chattahoochee River, across Georgia, up into the Carolinas, and - as a result of corporate acquisition - as far away as Texas and Maine. But it is in this valley that the firm, or rather its corporate ancestors, sprouted in the years after Appomattox.

Today's WPP is the product of a 1965 merger of two venerable 19th-century companies with ties to the old Yankee traders of Boston. Their first mills, run by water wheels, were of brick made of the clay dug from the red earth.

The current chairman, J. L. Lanier Jr. (a ubiquitous Georgia name, belonging also to the poet Sidney Lanier, a distant relative) is a descendant of one of the company's founders. For an added historical touch, the original Pepperell Manufacturing Company was named for a colonial merchant, Sir William Pepperell.

But for all its tradition, WestPoint Pepperell is continually cited by economists, bankers, and analysts as a forward-looking firm that is doing as much as anybody to ensure that the United States has a textile industry in the 21st century.

''They're in everything - very diversified,'' says Kay Norwood, textile analyst with Interstate Securities of Charlotte, N.C.

WestPoint, noted for its upscale towels and bed linens, as well as carpeting, managed its record earnings last year despite the recession and a 9 percent decline in sales. Officers are looking for another record when this year's figures are released at the end of this month.

Key to this success, WPP treasurer Marshall N. Morton says, was falling fiber prices - cotton and synthetics - at a time when demand for their high-quality products remained strong and thus did not force a price cut. Continuing modernization of manufacturing operations has helped, too. For instance, WPP's box looms, used for plaids, can be fairly easily adapted from shirtings to heavier cloth as demand changes.

The carpet business, tied to the housing industry, did suffer considerably during the recession.

Now business is picking up across the board. ''And it's coming in in areas we consider to be good for us, as opposed to business we've had to go out and buy just to keep our mills going,'' Morton says.

Over the longer haul, WestPoint's strategy, typical of progressive firms across the industry, has had two prongs: paying more attention to what the customer wants and focusing on the upper end of the market.

''It used to be you just made what your mill could make best and sent it out the door,'' Morton says. ''If you couldn't get your price for it, you cut price - and consequently got no good return on your product.''

That attitude changed during the '70s, when pressure from imports was being felt. ''We'd have the salesman coming back and saying: 'Here's what the customer wants. Let's organize our mills in such a way that we can maximize the return on our investment.'

''Also, during this time, we recognized the importance of some well-established brand names that had been ours for years but probably hadn't been trumpeted enough: Martex, for instance, in sheets and towels; Lady Pepperell in sheets; and Cabin Crafts in carpeting.''

Efforts were made to make those labels, with the distinctive griffin logo, household names figuratively as well as literally. An image of service and quality was pushed.

''Imports were a problem in the late '60s, a growing threat that was very hard to accommodate. We found that by emphasizing differentiated products that had style content or a high degree of quality or a high degree of service we were able to offer something that the importer could not.''

In the bed-linens sector, this has led to explosions of color and pattern - and to ''designer'' sheets by some of the biggest names in women's and men's fashions.

In towels, the emphasis has been on the weight, size, and cotton content of the towels, as well as the sheer sensuous appeal of color and luxurious absorbency.

Turning such mundane necessities of life as bed linen and bath towels into a forum for high fashion and colorful self-expression has made customers tolerant of higher prices and taken some of the cyclicality out of the industry.

Mr. Morton recalls how well the company did during the 1975 recession: ''We found that, instead of taking a vacation, people were redecorating their houses. We benefited from that in a perverse way - very unexpectedly.''

Being able to afford the Cadillac of bath towels can be a comfort when you cannot afford the Cadillac of motorcars, it would seem.

In any case, says Mr. Morton, ''That added styling, added differentiation, gave us something the importer couldn't deliver, and we were able to begin insulating ourselves from competition.

''No insulation is ever complete, and so I wouldn't want you to think we're feeling fat and happy about imports, but we're determined that as long as foreign countries can produce a nondifferentiated item with very low labor costs - and in some cases get their local government to underwrite the whole project - there's literally no point in competing in those products. We have to find things that we make better.''

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