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Collins & Aikman To Quit Automotive Fabrics Business

Troy, Mich.-based automotive systems and cockpit modules supplier Collins & Aikman Corp. announced it will exit the automotive fabrics business, pending approval by the US Bankruptcy Court. The action will impact approximately 1,200 employees in three fabric manufacturing plants in Roxboro, N.C., one in Farmville, N.C., and a laminating plant in El Paso, Texas. It will be implemented over a transitional period depending on when the business can be transferred to other suppliers.

The company is seeking a buyer for the El Paso operation, but it has abandoned efforts to sell the rest of the fabrics business, according to David A. Youngman, vice president, communications. He said the business has been unprofitable, and a turnaround is not projected.

“Despite an aggressive cost-cutting program, the business is projected to continue to be unprofitable,” Youngman said, noting the company has invested heavily in technologies to produce fabric styles, such as velour, that no longer are popular with consumers. In addition, he said, “ Sales have dropped from more than $300 million in 2004 to a projected $150 million in 2006, and we have an extensive amount of excess capacity.”

Other factors in the business’s misfortunes include escalating raw material prices and the transfer of manufacturing offshore, according to Gerald Jones, executive vice president, Fabrics.

The company’s automotive carpets business remains profitable, and is not included in the decision, Youngman said.

“Our other automotive operations still offer value-added products. For example, there are three automotive carpet plants in North Carolina and others elsewhere. That is one of our core competencies, along with injection-molded panels and other products,” he said.

Collins & Aikman filed voluntary petitions to reorganize under Chapter 11 bankruptcy protection in May 2005. The company plans to complete the shutdown of its Fabrics business before the end of September 2006, when it expects to emerge from bankruptcy. Youngman said the company could emerge as a stand-alone company, or it could be sold. Among those parties who have expressed interest in the company, he said, is New York City-based financier and chairman of the Greensboro, N.C.-based International Textile Group, Wilbur L. Ross Jr., whose recently formed International Automotive Components Group has acquired Collins & Aikman’s European businesses.

May/June 2006