Groupe DMC (Dollfus Mieg & Cie) History

Company Perspectives:

The DMC Group is market leader in fashion apparel fabrics and leisure crafts. It also occupies a strong market position in household textiles and trimmings for the clothing industry.

Company History:

A household name among the world's needlepointers, France's Groupe DMC (Dollfus Mieg & Cie) is also the world's leading designer and producer of printed fabrics for the apparel and other industries, as well as a leading designer and manufacturer of household and protective textiles and trimmings for the clothing industry. Since the mid-1990s DMC has also expanded upon its needlepoint and other hand crafts expertise to open a chain of retail hand crafts specialty stores.

An extensive reorganization of DMC and its subsidiary companies in the late 1990s has grouped the company's operations under four major divisions: Apparel Fabrics; Crafts; Trimmings; and Household Textiles. The company's Apparel division, which groups subsidiaries such as KBC (Germany), Velcorex of France (U.S.A.), DMC Tissus (France) and others, markets to the casualwear, sportswear, and other categories under brand names including SAIC, KBC, Herose, Inoseta, DMC Prints, Maya, CDW, and Texunion. Apparel, at some 49 percent, contributes the largest share of DMC's revenues.

Reducing its reliance on its apparel sales--and on the European market, which accounts for 70 percent of the company's sales and, until recently, the major portion of its manufacturing--has become a company priority in the 1990s. As such, the company is using its longstanding dominance of the world needlepointing market as a platform on which to penetrate deeper into the growing crafts market. While DMC subsidiaries, including founding house Dollfus Mieg & Cie in France, DMC Creative World in the United Kingdom, and DMC Inc. in the United States, produce needlepoint thread and accessories, DMC has branched out into retailing with its chain of Loisirs et Creation stores. This retail concept, specializing in hand crafts, is a first for France and Europe. Introduced with two stores in 1995, the Loisirs et Creation concept has expanded to ten stores in 1998, with plans to build a chain of more than 30 stores in France and Europe by the year 2000. In addition to the retail stores, DMC has also launched a network of Hobbyland in-store boutiques. With the worldwide crafts market estimated to be worth some US$20 billion, DMC expects its crafts division to contribute a growing part of its annual sales. In 1997, this division represented 17 percent of the company's total sales.

DMC is also a leading producer of industrial sewing threads, linings and interlinings, and other trimmings products for the worldwide garment industry. These activities represent 14 percent of the company's sales. DMC's Household Textiles division not only encompasses the company's upholstery and bed linens subsidiaries, but also serves as the company's springboard into the wider household fashions market. Household Textiles added nine percent of the company's 1997 sales of FFr 5.9 billion.

18th-Century Origins

DMC was founded in 1746 by Jean-Henri Dollfus, Jean-Jacques Schmalzer, and Samuel Koechlin in order to produce so-called Indian print fabrics in Mulhouse, in what was then the Alsace region of Switzerland (Mulhouse was annexed by France in 1798). The firm, originally known as Koechlin, Schmalzer & Co., linked Dollfus's artistic talents with Koechlin's financial backing and Schmalzer's wholesale experience. The company's development took off especially under the leadership of Dollfus's son, Daniel, who, upon his marriage to Anne-Marie Mieg in 1800, added his wife's name to his own. The company adopted the Dollfus-Mieg name in recognition of Daniel Dollfus-Mieg's contribution to its growth.

By the beginning of the 19th century, Dollfus-Mieg et Compagnie had already begun to achieve national recognition for the quality of its fabrics, winning a prestigious silver medal at the 1806 French Industrial Exhibition. The following year, Dollfus Mieg joined the nascent Industrial Revolution, becoming the first textiles company to operate a machine capable of printing in 12 colors. At this time, also, Dollfus Mieg began expanding beyond Mulhouse, although that city would remain its principal manufacturing site through the late 1990s. After opening a sales office in Paris, the company spread throughout France and then began establishing offices throughout Europe as well. Throughout the 19th century, Dollfus Mieg & Cie established more than 100 sales offices, not only in Europe, but throughout the world.

Dollfus Mieg continued to build its production capacity, introducing power weaving machinery and reaching production levels of more than two million yards of fabric annually by the 1830s. The company's sales expanded beyond Europe during this period, bringing Dollfus Mieg products to the United States for the first time. The company continued to improve on its manufacturing techniques, improving the quality of its fabrics, a process crowned, in 1864, by the gold medal award at the French Industrial Exhibition. At the same time, the company had also developed a reputation for its social policies, opening schools and daycare centers, and even building a community of homes for its workers. Many of these housing "settlements" were still in use by DMC employees into the 20 century. In 1842, the company founded the Société Industrielle de Mulhouse as part of its research and development activities.

After nearly a century concentrated on printed textiles, Dollfus Mieg began eyeing expansion into other markets. In 1841 the company began production of sewing thread. Dollfus Mieg's threads gained in importance especially after the company bought the patent rights to a process called mercerization.

Developed by the English calico printer John Mercer, the process involved dipping cotton yarn into a caustic alkali solution. The mercerized threads were stronger, more lustrous, and also more easily dyed. Where cotton threads before had found difficulty competing against silk yarns, the mercerized threads presented rivaled silk yarns in appearance, while remaining much less expensive.

Dollfus Mieg's thread and yarn production took off, and before the end of the century the company had established itself as one of the world's premier producers of sewing threads and decorative yarns. Aiding the company's reputation--and sales--was the 1886 publication of the Encyclopedia des Ouvrages des Dames, written by Austria's Theresa von Dillmont and published by Dollfus Mieg. The Encyclopedia, later retitled the Encyclopedia of Needlework, contained some 800 pages, and was eventually translated into 17 languages, with sales of more than two million copies. The Encyclopedia, after a number of revisions and updates, remained a bestseller among needle crafts practitioners into the late 1990s.

Industry Dominance in the 20th Century

Thread production had overtaken printed fabrics as the company's chief revenue generator by the end of the 19th century, a process aided by the introduction of embroidery floss in 1898. By the early years of the 20th century Dollfus Mieg had achieved worldwide dominance of the thread market and had become a leader in printed fabrics as well. While much of its production remained centered in its Mulhouse base, the company's products were available in more than 100 countries worldwide--and particularly its sewing threads enjoyed near-monopoly positions in many of the company's markets.

These positions were interrupted by the outbreak of World War I, and further disrupted by the World War II years, as the company found itself cut off from much of its export markets. Nevertheless, in the 20th century Dollfus Mieg began a policy of expansion that greatly increased its industrial base. While part of the company's growth came internally, including increasing its implantation in the United States with the formation of the DMC Corporation in New York City in 1934, Dollfus Mieg began a series of acquisitions that not only greatly increased its existing printed fabrics and sewing threads portfolio, but extended the company into a range of complementary fabrics and textiles production.

Shares of Dollfus Mieg were first offered to the public on the Paris stock exchange in 1922. The company's expansion took it into such fabrics categories as protective and fireproof textiles, home decor textiles, denim and corduroy fabrics, as well as fabrics specially developed for the sportswear market. The company also invested heavily in research and development of new thread-making methods in the 1950s and 1960s, helping the company rebuild its position lost during World War II. In 1961, the company changed its name to DMC, upon the merger of Dollfus Mieg & Cie with the operations of Ets. Thiriez & Cartier Bresson, a relationship that did not, however, survive into the 1980s.

By the start of the 1970s, the DMC group represented an extensive array of diverse subsidiaries. In keeping, the company was formally transformed into a holding company. The following decade, however, proved nearly disastrous for the company. By the start of the 1980s, DMC was losing money and facing bankruptcy. The arrival of Julien Charlier in 1982 as the company's chief turned DMC's fortunes around. Instituting a drastic reorganization--including cutting the company's workforce by more than 35 percent, resuming direct control of its thread production activities, and restructuring its subsidiaries around their various textile specialties--Charlier succeeded in bringing the company back to profitability by 1983.

Beyond stabilizing DMC's profits, however, Charlier took the company on an aggressive expansion program during the second half of the decade. Expansion took the form of acquisition, particularly as the company sought to enter new market areas. In 1986, the company acquired Hervillier (resold in 1990), as well as a part of SAIC Velcorex (later increased to 100 percent). Two years later, DMC stepped up the pace, acquiring 50 percent of Bozkurt, the textile subsidiary of the Turkish Koç conglomerate; the company also purchased a textile printing facility in Orangeburg, South Carolina, and a second facility in Lyon, France. While establishing a new company in Egypt, Thread Makers Cy, DMC acquired three fabric makers, Polilinha in Portugal; Donisthorpe in the United Kingdom; and Boule de Neige in Switzerland.

The following year DMC continued its expansion, with the acquisition of the Netherlands' Watermelon, and a 50 percent share (in partnership with the Dutch Ten Cate) of Irish denim makers Atlantic Mills. That same year the company established new operations in the United States, under the names Promotex and Fashion Fabrics of America, and formed a joint venture, Maya Fashion Print, that brought the company into Hungary. The company also began development of a retail distribution network, Descamps, with operations focused on the United States.

Sliding in the 1990s

By 1990, DMC's revenues had topped FFr 10.35 billion with net profits of nearly FFr 300 million. By the end of the decade, however, the company saw its sales drop by nearly half--and at one point its net losses approached FFr 600 million. A number of factors had come together to bring the company to a new crisis by mid-decade. The company's ambitious expansion program had taken it into too many directions, and especially beyond its core products of printed textiles and sewing threads. The company's sales were also hit by DMC's long reliance on the European marketplace--while the majority of the company's sales came from exports, fully 70 percent of the company's revenues were generated within the European community. Yet, through most of the 1990s, Europe weathered an extended economic crisis, particularly severe in France and in the reunified Germany. The company's printed fabrics catalog was also considered as having fallen out of fashion. DMC, plagued by management in-fighting and competition among subsidiaries, watched as its fabric sales eroded. Equally critical to the company's difficulties was its overemphasis on European locations for its manufacturing park at a time when the market had clearly shifted to the lower-cost production centers in Asia and other developing regions.

By 1994, the company's sales had slipped back to FFr 7.9 billion, with a net loss of FFr 148 million. The company's reorganization appeared to redress its position: after selling off a number of subsidiaries, exiting several markets, including zipper production, and regrouping its other operations, in 1995 the company, despite a continued slump in sales to FFr 7.1 billion, eked out a profit of just FFr 3 million. The company's difficulties led to the exit of CEO David Suddens, brought in by Julien Charlier just nine months earlier. Charlier, who continued to oversee the company from a position as president of the board of directors, appointed Jacques Boubal to lead the company. Meanwhile, DMC's fortunes continued to fade, with revenues slumping to FFr 6.2 billion in 1996 for a net loss of FFr 592 million--nearly ten percent of the company's revenues.

DMC, led by Boubal, once again restructured its activities, focusing its activities on four primary markets, including its clothing fabrics and sewing threads, but also trimmings and fabrics for home decoration. The company also took steps to move the bulk of its production to the Asian, African, and eastern European markets to take advantage of lower wage costs, while maintaining only high valued-added operations in western Europe. Particularly promising for the company was its newly created chain of Loisirs et Creation stores. Launched in 1995, the retail chain featured a crafts specialty focus, a concept that, while long a success in the United States, was new for Europe. Initial success of the chain was encouraging enough for the company to open ten French stores by 1998, with plans to reach 30 throughout France, before expanding throughout Europe. In addition to the Loisirs et Creation concept, DMC also introduced a network of Hobbyland in-store boutiques, featuring a more limited selection of crafts supplies and kits. By 1998, Hobbyland boutiques had been opened in more than 85 Carrefour hypermarkets, with agreements to introduce the concept into the Continent and Cora hypermarket chains as well. The company expected its retail crafts activities to represent as much as FFr 500 million by the end of the century.

The results of DMC's restructuring remained to be seen; however, the company's initial expectation to restore profits and revenue growth by 1999 were considered too optimistic. Nevertheless, the company hoped to have solved its latest difficulties by the year 2000, while maintaining its position as a world leader in the textile industry.

Principal Subsidiaries: DMC Tissus; Gebruder Bochmann (Germany); Buntweberei Ahornberg (Germany); Veclorex of France (U.S.); Inoseta (49%); KBC (Germany); Herose Textil (Germany); Maya Fashion Print (Hungary); DMC Prints (U.S.); CDP Textiles Ltd. (China; 51%); China Dyeing Holdings (49%); Dollfus Mieg & Cie; DMC Creative World (U.K.); DMC Espagne (Spain); DMC Italie (Italy); The DMC Inc. (U.S.); DMC Needlecraft Asia (Singapore) DMC Accessoires; Donisthorpe (U.K.); DMC Industria (Spain); Polilinha (Portugal); DMC Czeckia (Czech Republic); DMC Polska (Poland); Filteries du Mahgreb (Morocco); DMC Mediterranee (Tunisia); Satexco (Colombia); Toga Linings (South Africa; 50%); Tejidos DMC (Spain); KBC Textile Wohnen (Germany).

Principal Divisions: Apparel Fabrics Divison; Crafts; Trimmings; Household Textiles.

Further Reading:

• Chirot, Françoise, "DMC accélere son développement international,' Le Monde, December 22, 1988, p. 27.
• Epinay, Bénédicte, "Le groupe DMC diffère une nouvelle fois son retour à l'équilibre,' Les Echoes, September 23, 1998, p. 9.
• Lagoutte, Christine, "DMC sous l'oeil des investisseurs,' Le Figaro Economique, February 2, 1998, p. 16.
• Leboucq, Valérie, "DMC tisse sa toile sur les travaux manuels,' Les Echoes, June 9, 1998, p. 49.
• Payne, Mark, "Profiles of DMC and Chargeurs,' Textile Outlook International, July 1997, p. 70.
• Tissier, Corinne, "La tempete que DMC pouvait eviter,' Le Nouvel Economiste, March 14, 1997, p. 48.

Source: International Directory of Company Histories, Vol. 27. St. James Press, 1999.

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