NEWS

The same team that saved a Waterville shirt factory aims to repeat is success with Biddeford Textile.

Maine Sunday Telegram

By Jack Beaudoin, Staff Writer

BIDDEFORD, ME., - A union-led alliance to buy Biddeford Textile co. has turned fear into guarded hope here.

The effort involves a Portland businessman, Michael Liberty, and Wal-Mart's heiress turned investment banker, Alice Walton -- two of the people who helped save the C.F. Hathaway shirt factory in Waterville. A deal could be reached in Beddeford in the next few weeks.

Returning the 150-year-old mill to local control has been in the works since Nov. 13, the day after Sunbeam Corp. Chairmen Albert Dunlap announced that Biddeford Textile would be sold.

Biddeford Textile makes the cloth portion of electric blankets -- the so-called shells. It is among 18 factories Sunbeam plans to sell or close to eliminate half of the corporation's 12,000 jobs.

Biddeford residents worried that the fortress-like buildings of Biddeford Textile would stand empty, their state-of-the-art looms crated off to some distant plant.

Losing 350 jobs would deal an economic and psychological blow. The weekly payroll of $150,000 would vanish. This city of mill workers would lose a symbol it has traded on since the middle of the last century.

But even as Dunlap announced his plans, a team of investors, financiers and representatives from the Union of Needletrades, Industrial and Textile Employees was closing a deal 90- miles to the north, in Waterville, to save 450 jobs at the shirt factory. Most of that group -- with the exception of former Gov. John R. McKernan -- would soon set their sights south to Biddeford.

"We took the position that rather than wait and figure out who's going to come in and buy the plant we needed to take the initiative," recalls the union's regional manager, Michael Cavanaugh, who is leading the charge to buy the mill. "After all, it was our jobs on the line."

The goal: Using its "sweat equity", the union would team with a investor group to buy the mill from Sunbeam, that supply the blanket for its former parent company for at least five years. The union would agree to wage and benefit concessions totaling 11 percent in return for a stake in the company and the likelihood of future returns on their investment. The other investors -- whomever they turned out to be -- would provide the capital.

But the investors couldn't be just anybody with cash, Cavanaugh said. "Anybody who brought money into the deal had to respect the roles workers play, he said. "Labor's not just a cost -- it's an asset on the balance sheet."

Liberty Shows Interest

Cavanaugh asked one of the Hathaway partners, Michael Liberty, if he might be interested in making another deal in Biddeford, according to Liberty's lawyer, Severin Beliveau. Liberty seemed interested, and as he did in the Hathaway deal, called in a personal friend and investment banker. That friend was one of the country's richest women, Alice Walton, daughter of the late Wal-Mart founder, Sam Walton.

"It's the same group of people," said John Richardson of American Capital Strategies, a Bethesda, Md., investment banking firm that worked on both deals with Cavanaugh. "The union and the investors cut their teeth on Hathaway ... and were ready to respond to Sunbeam's interest in selling the company in Biddeford."

In the Hathaway deal, the 47-year-old Walton -- who is worth $4.3 billion -- helped grease the skids when negotiations stalled with Hathaway's corporate parent, Warnaco.

Walton's investment company, Llama Co. of Fayettevile, Ark., also provided advice and private sources of financing. Wal-Mart agreed to a five-year deal to buy Hathaway products, virtually guaranteeing the shirt company's success over the short-term.

Walton's banking company acknowledges playing an advisory role in the Biddeford Textile deal, but Senior Vice President Reid C. Gibson said Llama won't comment on any transaction in progress. Liberty's spokeswoman, Beryl Wolfe, said Walton's company will be playing the same role in Biddeford as it did in Waterville.

"The same recipe for success in Waterville we hope will work for Biddeford," Wolfe said.

Beliveau said Walton "is in here as a investment banker, and she'll be paid for rounding up the financing."

Only two years ago, when Wal-Mart opened a giant discount store department store on Route 111 on the outskirts of Biddeford, the Walton name was besmirched as the epitome of a downtown-slayer. Now, another Walton is poised to help save it.

Mills Have Endured

Biddeford residents have been working in the city's riverside mills since before the Civil War.

Harnessing the water power of the Saco River cataracts, the huge, boxlike mill buildings have withstood economic depressions, fires and floods.

The mills attracted waves of immigrants, most notably French-Canadian farmhands from Quebec, who came in search of a better, more life than they could make living off the land.

At one point, according to a Biddeford historian, Charles Butler Jr., the entire complex of mills in Biddeford and Saco -- operating under a range of names but essentially the same board of directors -- employed as many as 12,000 workers.

But today, only two textile mills remain -- West Point-Stevens and Biddeford Textile, employing a total of about 700 people.

But as the work force shrank, the mills became industry leaders in automation, productivity and output. Both were profitable.

Operating as a division of Sunbeam since 1971, Biddeford Textile had carved out a niche as the only electric-blanket shell manufacturer for a company that had virtually a 100 percent lock on the market.

The mill seemed secure until Albert Dunlap was named chief executive officer of Sunbeam last summer.

Dunlap got the name "Chainsaw Al" for his manner of running the companies he had been hired by, including Scott Paper. Time after time he has sold operations and slashed work forces to cut costs.

ABOUT BIDDEFORD TEXTILE

History: Although Biddeford Textile Co. has operated since 1971, it can trace its lineage to the 1840s and the York County Textile Co. After a number of mergers, acquisitions and spinoffs, the company gained its own identity when West Point-Pepperell sold its woven blanket division to Sunbeam Co., which created BTC. Products: BTC produced 4 million electric blanket shells for Sunbeam in 1996. It is the sole supplier of the shells to Sunbeam, which in turn controls better than 90 percent of the electric blanket market. Physical plant: BTC has two plants, both in Biddeford. Plant One includes 286,000 square feet of manufacturing space in riverside mill buildings. Plant Two, in the Biddeford Industrial Park, has 111,000 square feet of manufacturing and warehouse space. Work force: BTC has a payroll of about 350 workers who earn an average of between $10 and $100 an hour. More than 50 of those workers were laid off before Christmas. It operated three shifts five days a week. Status: Until it is sold, BTC remains a division of Sunbeam. A very small percentage of its products are sold to companies other than Sunbeam, according to union and company officials.

Plans Form to Save Mill

Immediately after Dunlap revealed his downsizing designs, city and state officials began working on their own plans to save the mill.

A task force that included Dodge, Maine Department of Labor officials, the Biddeford-Saco Economic Development Council, Richard Hodgdon of the Maine Job Service and union representatives began looking for a buyer to keep the jobs in Biddeford.

Even with all the success we achieved in diversifying our industrial base, there's no way we could have absorbed 350 more workers in this worst-case scenario, said Dodge.

The task force achieved two goals quickly.

First, it provided an assessment of the local work force, the overall economic climate in southern Maine, and a compendium of local and state resources -- including work force training, loans, grants and other incentives -- for companies interested in buying Biddeford Textile.

The 37-page assessment noted, for example, that about one-third of the work force at Biddeford Textile had more than 15 years of service, with low turnover and an absenteeism rate of about 3 percent.

But at the urging of Cavanaugh, the task force also helped fund a feasibility study for an employee stock ownership program, or ESOP -- essentially a vehicle for an employee buyout.

Company Hired for Study

American Capital Strategies, which specializes in ESOPs and worked on the Hathaway Shirt deal with the union and Liberty, was retained to do the study.

The union was concerned that a Sunbeam competitor might buy the plant and close it, taking away the jobs and the mill's state-of-the-art looms. Cavanaugh said he was particularly worried about Pillowtex a manufacturer that controls 60 percent of the conventional blanket market.

We knew this was going on in the fall, he said, When this place was put on the block, we knew Pillowtex was a real threat to Biddeford. We felt we ought to find a solution to establish local control. We wanted to do this at Hathaway too. If workers have some stake in the enterprise, they'll have a means of controlling their own future.

While American Capital Strategies refuses to reveal the findings of the feasibility study prior to the deal's completion, Cavanaugh said the results were encouraging. Encouraging enough, that is, for the union's rank-and-file to support the buyout plan by a nearly unanimous margin.

The deal, according to Beliveau, would split ownership in the new company equally among workers, American Capital Strategies and the Liberty-led investor group. The new management team would be led by Rene Boisvert, the man who helped to create Biddeford Textile Co. in 1971 and managed it for Sunbeam until he resigned last December, refusing to play a role in the company's dismantling.

In Industry Since 1952

Boisvert has been in the textile industry since 1952, working his way through a number of supervisory positions until he became manager of the blanket division for the Pepperell textile mill.

Several mergers and spinoffs later, Boisvert found himself the No. 1 man in Sunbeam's electric blanket division, which opened the Biddeford Textile Co. on Nov 21, 1091, with 190 employees.

That year it made 1.2 million blanket shells; 25 years later, when Dunlap decided to sell it off, it was turning out 4 million shells annually.

Despite official pronouncements of optimism for the impending deal, no one is commenting on the specifics, citing obligations of secrecy Sunbeam placed on the negotiations.

And workers, despite their vote two weeks ago, also are reluctant to speak about their hopes for the future. In the back of their minds, there looms the city's first ESOP -- the failed John Roberts clothing manufacturer, which closed its doors for good in 1994.

That was a totally different situation, Cavanaugh said. John Roberts was a last-ditch effort to save a company already in bankruptcy, one essentially being closed down by the banks. It failed after three years when its largest buyer shut down.

Biddeford Textile, on the other hand, was one of the two profitable divisions of Sunbeam, Cavanaugh said. Critically, this deal will have a guaranteed buyer for at least five years, and the capacity to do more than it's doing now.

Still, workers are worried because the deal probably won't close until April. Until then, they don't want to jinx themselves or upset the man who controls their destiny.

Obviously, it's a good place to work, said 41-year-old Michael Boisvert, a dress-spinning fixer, or else we wouldn't have made the concessions. We just don't want to ruin anything because when you're dealing with a man like Al Dunlap, anything you say could upset him.

It's been steady work, with good benefits and good pay, said Bill Duhamel, another member of the maintenance team. We'll see what happens.

But there remain a few workers -- mostly older ones -- who worry about the risks.

Some of us older people, we feel we're going backwards in life, said Jeanette Montpas, who's been at Biddeford Textile 34 years. They claim we'll make profits in upcoming years . . . I hope so. They made the deal. We couldn't refuse it. It's jobs.