Tultex Corporation History

Company History:

The Tultex Corporation is a leading marketer of fleeced sportswear and licensed sports apparel. The company is a vertically-integrated manufacturer of sweatshirts, sweatpants, and other athletic wear. Throughout most of its history, Tultex concentrated on producing fleeced goods in factories in Virginia and North Carolina. In the 1990s, however, the company branched out to other, fast-growing sportswear lines, and began to make and sell products in locations outside the United States.

Tultex was originally founded as an outgrowth of another textile manufacturing company, the Pannill Knitting Company, which was founded in 1926. This firm was owned and run by William L. Pannill, who had gotten his start in a Mayodan, North Carolina, cotton-spinning mill. At that time, textile mills in the northeast dominated the market for knit underwear. Pannill decided that mills in the south should move in on this lucrative niche, and he got himself a low-level job as a janitor in a plant in Utica, New York, in order to observe how knit underwear was manufactured. After watching and learning all that he could, Pannill returned to the south to inaugurate his new business.

Pannill chose to locate his business in rural Martinsville, Virginia, a town situated in the foothills of the Blue Ridge mountains, near the North Carolina border. The inhabitants of this area were diligent, tradition-minded workers, willing to toil for low wages without demanding union benefits. Pannill hoped to hire the wives of men who worked in the area's other industry, furniture-making, to work in his mill. In this way, he hoped to make his products competitive by keeping his costs low.

In the early 1930s textile manufacturers in New England introduced fleece-lined sweatshirts, knit products in which one side of the nap had been roughed up to produce a thick insulation. Soon after these products came to the attention of Pannill, he began to make them at one of his company's buildings in Martinsville.

In August 1937 Pannill put his son-in-law, E.A. Sale, who had married his daughter Lucy, in charge of this new operation. A new company was organized and given the name Sale Knitting Company. Sale was given a share in the company, and stock was sold to other citizens of the town.

By the end of 1937 the Sale company had outgrown its cramped quarters, and the fleece machines were moved into a new 30,000-square-foot space specially built for this purpose. This move marked the separation of Sale's operations from those of its parent company. The new enterprise, which had 50 employees, manufactured fleece-lined union suits as well as sweatshirts. The company's products came in four colors: white, ecru, silver grey, and gunmetal.

Three years later, Sale added on to its physical plant once again. In addition, Sale purchased an old silk factory that it used for knitting machines. Also in 1941, Sale commissioned the Henry J. Tully Corporation, based in New York, as the exclusive sales agent for its fleece products.

While the United States was engaged in World War II, Sale fulfilled orders for the government, producing sweatshirts in olive drab. In the wake of the war, the company continued to expand the number of colors in which its products were available. Sale transferred its dying activities from their small facility in Martinsville to a larger facility in town. This allowed Sale to introduce fleece products in red, gold, and royal blue by 1949. Within three years, this advance had transformed the sweatshirt from a purely functional product to a fashionable item as well.

In 1953 Sale's founding president retired. He turned the reins of the company over to another Pannill son-in-law, William F. Franck. In addition, Sale's selling agent, the Henry J. Tully Corporation, bought a majority interest in the firm. Four years after this transfer of ownership, Sale Knitting moved to a new building, once a tobacco warehouse, in Martinsville. This move enabled Sale to consolidate many of the processes that had previously taken place in different locations, such as knitting and dyeing.

Demand for Sale's products continued to be strong throughout the 1960s, and the company expanded its production facilities several times. In 1963 Sale constructed a $3.5 million cutting and sewing plant. Three years later, the company bought a building in South Boston, a nearby Virginia town, that had once been owned by a tobacco company. Sale installed a sewing operation at this site, which employed 250 people. In 1969 Sale built a modern dyeing facility.

Sale underwent a corporate transformation and expansion of its activities in the 1970s. In 1971 the company added a packing and distribution center, based around a conveyor belt system, to its site in Martinsville. Also in that year, Sale merged with the Henry J. Tully Corporation, its sales agent and part-owner, and changed its name to the Tully Corporation of Virginia.

As part of this transaction, Tully came into possession of two additional companies, the Roanoke Fashions Group and Tulstar Factors, Inc. The Roanoke Fashions Group ran four mills, located in Roanoke, Lakeside, Chilhowie, and Bastian. With the acquisition of these properties, Tully greatly increased its knitting, cutting, sewing, and dyeing abilities.

In 1973 Tully entered a new field when it purchased yarn-producing mills to augment its fleece production facilities. In this way, the company hoped to become a fully integrated manufacturer, better able to control the cost of its primary raw material. The move into yarn gave Tully the ability to control every step of production, from spinning yarn to packaging the final product. Tully first entered the yarn business in May 1973, when it bought two factories owned by Roxboro Cotton Mills, which made up the Natural Yarn Division of Indian Head, Inc. This purchase enabled Tully to meet its need for 100 percent cotton yarn.

In addition, Tully bought Kings Mills, Inc., which ran 13,500 spindles in Kings Mountain, North Carolina. In 1974 Tully purchased Sawyer Industries, Inc., a modern open-ended spinning plant located in Rockingham, North Carolina. Its operations, which enabled Tully to enter the synthetic and blended yarn markets, were consolidated into the rest of Tully's activities over the course of the next three years.

In the summer of 1976 Tully moved its yarn headquarters to Gastonia, North Carolina. A short time later, Tully changed its name to the Tultex Corporation, and the Tultex Yarn Group was created. Tultex made another yarn acquisition in that year when it bought four-fifths of Sunburst Yarns, Inc., a maker of solution-dyed synthetic yarns.

In the late 1970s Tultex found demand for its sweatshirts and sweatpants increasing on the strength of the growing popularity of jogging and other fitness exercises. The company worked to expand the fitness-wear concept into the fashion field as well, and took a number of steps to increase its production facilities.

In 1978 Tultex expanded its manufacturing capacity by buying a sewing operation located in Reidsville, North Carolina, from Camor Industries. Also at that time, Tultex began to plan a new corporate headquarters building to be located in Martinsville, on the former site of a hospital. This move prompted a range of improvements to be made to the town's center.

In September 1980 Tultex bought the Peerless Spinning Corporation, which ran a fine-combed yarn plant in Lowell, North Carolina, for nearly $2 million. One month later, Tultex announced that it would start trading its stocks on the American Stock Exchange, under the symbol "TTX."

Tultex initiated several other business moves in 1980 as well, including a sewing operation located in the Vesta-Meadows of Dan area. In March 1980 Tultex made another major acquisition when it bought the Athletic Textile Company, Inc. This property was subsequently merged into Reidsville Fashions, Inc., and the combined operations were given Athletic's name. At the end of that year, Tultex's sales had reached $181.7 million, and the company reported earnings of $7.5 million for 1980.

A year later, Tultex consolidated its Athletic Textiles unit into the rest of its operations. Tultex also sold its Sunburst Yarns subsidiary to the Amoco Fabrics company in 1981. The company reported sales of $210 million at the end of 1981, with earnings of $10 million.

In 1982 Tultex expanded its production capacity for fleece apparel further when it purchased the Washington Mills Company for $19 million. With this acquisition, Tultex took over apparel and yarn plants in Mayodan, North Carolina. Tultex installed Swiss spinning machines equipped with rotors that turned 80,000 times a minute, and robot arms to fill spindles. The company was thus able to increase the mill's output by 60 percent while cutting the work force from 250 to 100.

In addition, the Washington Mills purchase gave Tultex plants in Asbury, Dobson, Marion, and Spindale, North Carolina. Earlier in 1982, the Spindale plant had started a centralized cutting operation after its conversion to a dyeing and finishing operation in the mid-1970s. At the end of 1982, Tultex reported sales of $231 million, and profits of $12.7 million.

In 1983 Tultex took steps to enhance the fashion end of its line. The company signed a licensing agreement with Nautilus to manufacture a line of Nautilus sportswear as part of an effort to differentiate its sweatshirts from those produced by factories overseas, where labor costs were lower. Although many other American apparel makers found their market share severely eroded by foreign imports, Tultex continued to maintain a strong presence in the fleece-wear field, in part because sweatshirts and sweatpants required little labor to make. Another factor hindering overseas production was the weight of the products. The sweatshirts were so heavy that shipping them across the ocean became prohibitively expensive.

In 1984 Tultex reorganized its corporate structure once again. Up until that time, the company had continued to operate Sale Knitting, Washington Mills, and Roanoke Fashions under their original names, as separate and independent entities. In 1984, however, all company operations took on the Tultex name, unifying operations that stretched across Virginia and North Carolina and employed more than 8,000 people.

Tultex also moved to consolidate its operations, focusing exclusively on fleeced products. The company eliminated other product lines that were not returning profits. It also sold several money-losing operations, including two North Carolina sewing plants. In addition, Tultex tried to cut costs by decreasing the number of managers it employed. In May 1985 Tultex moved over to the New York Stock Exchange as the company reported $9.7 million in income for the previous year.

In 1986 the company began to automate its administrative, financial, operations, sales, and marketing functions, using computers to coordinate its different areas. Tultex also discontinued a $26-million line of non-fleece knit goods so it could concentrate on its more popular fleece-lined sweat items. The following year, Tultex launched a campaign to fully modernize its manufacturing plants, installing jet dyeing technology that allowed for greater color control.

These upgrades enabled Tultex to survive a shake-out in the fleecewear industry later in the decade. Still, two other major American underwear producers entered the fleecewear market, and Tultex anticipated further competition from abroad. To meet these challenges, the company strengthened its balance sheet and planned further modernization.

A key facet of this program was unveiled in 1989, when Tultex completed a new distribution center with three mechanized storage and retrieval systems, cranes, racks, and conveyors, all controlled by computers. Despite the availability of this high-tech facility, Tultex was forced to postpone use of it until April 1991 because of glitches in the facility's operating software.

As Tultex moved into the 1990s, the company underwent a series of management renewals. A new "vision" for the future was adopted that sought to integrate the needs of all of the company's constituent parts, including shareholders, employees, customers, and communities. In addition, the company inaugurated "Team Tultex," in which employees got together in task forces to work on problems faced by Tultex.

At the end of 1991, Tultex made further headway in its effort to increase marketing tie-ins when it signed an agreement with Levi-Strauss to make fleece goods under its Brittania label. Later, Tultex began to market clothes under the Levi label as well. Tultex moved even further in this direction in 1992. At that time, the company decided to broaden its product line, adding licensed sports apparel to its fleece items. To do this, Tultex purchased Logo 7, Inc., based in Indianapolis, for $58 million. Logo 7 made products emblazoned with professional and college sports logos. Tultex also enhanced its own ability to screen print clothing by opening a new plant in Martinsville. In June 1992 Tultex purchased Universal Industries, Inc., located in Mattapoisett, Massachusetts. This company, for which Tultex paid $11.1 million, made hats and caps decorated with the names of professional sports teams.

Tultex hopes to use these acquisitions to diversify its product line, which was vulnerable to competition from lower-cost products, and step up its emphasis on marketing. While fleece products had helped Tultex to thrive in the past, the company felt that it needed to lessen its dependence on fleecewear. Accordingly, the portion of its sales contributed by fleecewear fell from 95 percent in 1991 to 65 percent in 1992, as sales of hats and t-shirts expanded rapidly.

Tultex launched a new advertising campaign in 1992, dubbed "Tulavision," to promote its new line of products. This program used television commercials, aired on various cable channels, to push the company's products. The quarterback of the Dallas Cowboys was signed to be a company spokesman and promote the Logo Athletic line.

To enhance sales overseas, Tultex signed an agreement with the Nissan Trading Company, Ltd., in which Nissan earned the right to distribute Tultex Maximum Sweats and Discus Athletic products in Japan. Tultex hoped that such agreements would enable it to sell more goods in Europe, Canada, and Japan in the coming years. In addition, the company announced a willingness to manufacture products in areas outside its Virginia and North Carolina home base, prioritizing profits over geographical loyalties.

As Tultex moved into the mid-1990s, the company continued its efforts to become a major marketer of licensed sportswear. In preparation for a shake-out in its industry, Tultex attempted to cut costs and streamline operations. After sales dropped and unsold inventory accumulated in the second half of 1993, Tultex announced that it would implement a reduced work schedule in an effort to avoid further accumulation of unsold goods.

Such steps allowed Tultex to reduce inventories by $27 million the following year. Nevertheless, the company's results suffered in 1994 as a baseball strike and a hockey lockout cut into demand for its sports-related items. Despite these difficulties, however, logo goods still accounted for the fastest-growing segment of Tultex's sales. As Tultex moves into the late 1990s, it looks to these new product lines, as well as its traditional strength in fleecewear, to allow it to thrive in the coming years.

Principal Subsidiaries: AKOM, Ltd. (Cayman Islands); Tulstar Factors, Inc.; Dominion Stores, Inc.; Tultex International, Inc.; Logo 7, Inc.; Universal Industries, Inc.; Tultex Canada, Inc.

Further Reading:

• Baldwin, William, "Golden Fleece," Forbes, August 1, 1983.
• "Tultex Corp.," Barron's, February 8, 1988.

Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.