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Parkdale Positions For Growth

Andy Warlick not afraid to redefine strategies and processes as world's largest yarn spinner prepares for 2005 and beyond.

Leadership ProfileBy Jim Phillips, Executive Editor 

Parkdale Positions For Growth Andy Warlick not afraid to redefine strategies and processes as world's largest yarn spinner prepares for 2005 and beyond. If the American textile industry is in its sunset years; if the pressure of foreign competition is causing many domestic manufacturers to pull down the shades and lock the doors for a final time; if the outlook for the next 10 years is all gloom and doom then someone forgot to tell Parkdale Inc. and its youthful president, Anderson D. Warlick.In January, Parkdale, the worlds largest supplier of spun yarn, moved its corporate headquarters from one of its manufacturing plants in Gastonia, N.C., to a modern brick and glass building a few miles into the suburbs. At first glance, the new facility looks like it should belong to some futuristic, forward-thinking, high-technology enterprise. Then, with a dawning clarity that is nothing so much as a blinding glimpse of the obvious, the realization sets in that Parkdale is a forward-thinking, high-technology company.Perhaps such a revelation shouldnt be so startling. But, then, Parkdale is a part of the textile industry, and the textile industry is supposed to be, well, just different. To the uninitiated, textile manufacturing still conjures up images of poorly lit, steamy mills, with spinning frames that sound like whining turbine engines, and dexterous men and women doffing bobbins by hand almost as fast as the eye can follow. And, despite the successes of individuals with such names as Milliken, Kimbrell, Close, McKissick, Klopman and others, the uneducated public perception is that the industrys management is somewhat backward and reluctant to take bold steps in opening and developing new markets. It would come as a quite a shock, then, for those who so misperceive the industry to get an up-close and personal view of Parkdale and its management. The company is a veritable research and development haven, with a commitment toward new products, state-of-the-art manufacturing technology, increased efficiencies and customer service. Many have said Parkdale is the textile industry as it should be. Others might say it is representative of what the U.S. industry must become. TI managed to catch Warlick, president and chief operating officer of Parkdale, on one of those rare days when he could spend a few hours talking about the direction Parkdale is taking, as well as what he sees as the major issues facing the textile industry in the coming years. A Proactive LeaderWarlick is the heir apparent to the position of chairman and CEO of Parkdale, now held by his father-in-law, Duke Kimbrell. While a few eyebrows might have been raised years ago when Warlick was first named president of the company, there are few today who doubt his ability. Warlick has become one of the most respected leaders in the industry and is considered by many observers to be among the most dynamic of the industrys new generation of leaders. Warlick came to Parkdale in 1984 and, on his way up to the presidency, he has worked in plant management, yarn sales and materials procurement.His office in Parkdales modern headquarters is attractive and comfortable, furnished both tastefully and conservatively much as Warlick appears himself. He looks as if he would be just as comfortable on Wall Street as on Gastonias New Hope Road. He carries himself with an air of unpretentious sophistication. When Warlick speaks, he is passionate, yet soft; forceful, yet demure. And when he listens, he gives his complete attention. He exudes nothing if not optimism and enthusiasm. Not that he isnt a realist in his position at Parkdale, he is more than aware of every challenge that faces both his company and the textile industry in general in the United States. But, unlike so many people in so many industries, Warlick is not content to sit back and wait for something to happen. Reacting to existing conditions just isnt in his game plan. Rather, while others are busy figuring out how to make a buck today, Warlick and Parkdale are already thinking about 2005 and beyond. Positioning The Company To Be A Global PlayerWhat were trying to figure out right now, he said, is how we are going to become a global player. We certainly want to be a dominant player in CBI and NAFTA. We have taken some initiatives and, quite frankly, some risks to try to step out and do this.In 1997, in a joint venture with Burlington Industries, Parkdale established an operation in Mexico. Summit Yarn, also known as Hilos de Yecapixtla, is located approximately 65 miles south of Mexico City and is part of a three-plant complex, two of which are operated by Burlington. 
Quite frankly, one day Duke and I sat down and started talking about it, Warlick said. Hed had some experiences in other parts of the world that werent that favorable. The way we rationalized that decision was, basically, that we were a large player in what we were doing, and we wanted to remain the leader in our business, so we couldnt afford not to try. That eliminated a lot of the second-guessing. At that time, so many companies were adamant that getting into Mexico was the right approach. But, we didnt look at it that way. Instead, we thought those people might be right, but they could just as easily be wrong. The one thing we would never know was how it would be for Parkdale unless we tried.The bottom line is that Parkdale has learned how to operate outside the United States a crucial lesson for a company intent upon positioning itself in a global market. That is of great value, he said, because you dont realize until you actually do it what the differences are. Its not like moving out of North Carolina and going to South Carolina. Its an entirely different world, with different types of thinking and a different type of management style. It requires a different mentality in the organization.To this point, Warlick says Parkdale has been extremely pleased with the operation in Mexico. Were pleased with the progress weve made. Are we where we want to be No. But, then, I can say that about virtually every plant in our company. Were pleased with what weve learned and we now know how to do it better. It gives us a head start on our next project.Regardless of how and where Parkdale decides to expand, the company and the rest of the industry will be facing harsh realities over the next few years. The rollback in quotas in 2005, as mandated by U.S. membership in the World Trade Organization (WTO), is hanging like the sword of Damocles over the collective head of the American industry. While many decry the U.S. trade philosophy that resulted in such a potential blow to the fortunes of the industry, Warlick maintains it is time to start acting.  Investment Objective: To Stay In The ForefrontParkdale began preparing for the inevitable back in the mid-1990s, when it became clear what direction U.S. trade policy would take. Investments that we made then were to shore up our manufacturing processes, Warlick said. If you look at our operations, they are all very, very modern. We dont have a plant out there that is a dog. We are in a good position with our open-end spinning, and in a great position with air-jet spinning. We are in a very good position with our ring spinning. In ring spinning, we took on partnerships with customers that needed to shut down older facilities and purchase from us. Our open-end spinning growth has been led by consolidations in which we have developed partnerships with customers so we can bring value to them. We are constantly investing in new technologies to improve our competitive position. For example, we have a full Murata Vortex spinning installation. We are trying compact spinning, with an installation from Suessen. We also have a Zinser machine. Weve worked closely with Rieter, as well, in the development of this concept. Right now, we are trying to figure out exactly where these technologies fit into our business. Some of these markets dont even exist here today, but they will in the future. So, it is important that we have these technologies. Its important, as well, that the machinery manufacturers have some place to go where they can test new concepts that help us long-term. We have to be partners with our machinery suppliers just like we have to be partners with our customers. 
The strong dollar certainly is a factor in Parkdales favor as the company continues to seek out and install the most modern and efficient machinery. The disadvantage is it just makes makes imports cheaper and cheaper, but it certainly helps in capital investment. It seems like every currency in the world is now pegged on the dollar in seeking a competitive export advantage.So, we try to stay abreast of the latest in technology, whether its German, Japanese or Italian. Were well-positioned in that regard. In air-jet spinning, for example, we had 95-percent market share just a few years ago. This was great, but then the market expanded with too much wildcat production. The supply doubled, and it virtually destroyed that market for us, even though all the equipment was modern and fairly new. But, we had an opportunity to take out some of the first air-jet machines that we put in they were only eight years old at the time and replaced those with the new Vortex machines. Weve been working with Murata to make this a good opportunity for us and for them, and for our customers as well.The year 2005 is pretty significant. Depending upon what you read, the impact could be tremendous. Therefore, it is incumbent upon us to have both the product range and the production capability to remain competitive on a worldwide basis, regardless of the impact.You know, the generic issues facing the textile industry probably havent changed a great deal in the past 20 years. The U.S. industrys primary challenge is still low-cost imports. But, the specifics of those issues have changed tremendously. For example, there is a dominant model of capitalism in the world today and that is the U.S. model. Twenty years ago, that was up for grabs. Would it be the German model, the Japanese model or the U.S. model Ten years ago, a lot of people forecasting the year 2000 predicted it would be the Japanese who would be in control of the system of capitalism that was practiced around the world. You look at the value of the dollar 20 years ago. There was, at least, some volatility in the value of the dollar. You just dont see that today. I dont know if that is healthy for us or for U.S. manufacturers of any kind. It affects your export opportunities; it shuts those down and opens you up to the importation of products produced with cheaper labor. It just accelerates the cheap labor leverage that some developing nations have.Another thing is the information systems that are in place. You dont have the fear you might have once had, if you are a buyer, of going offshore. Communication has enabled people to become more and more comfortable with that versus, say, 20 years ago. Added Value, Specialization Provide Competitive EdgeWarlick is a great believer in adding value to products, of giving the customer the opportunity to do something different, of developing and producing yarns that enhance properties and augment hand, appearance, durability and such. The future of American manufacturing, he says, lies in superior product development and delivery, as well as enhanced customer service. 
Youre not going to have as many of the great commodity runs youve had in the past, he said. Its too easy for a foreign country to put a scope on you and shoot you. Its a lot harder for them when youve got more specialization, maybe shorter runs if you are more responsive, quicker and more agile. We try to position ourselves so that we will be in good shape when the dust settles. But, you see a lot of companies that have started up in the last few years that go after the largest commodities being produced here. They concentrate on low cost. But, ultimately, where are they going to be the low-cost producer in their community or in their state It is unlikely, as things develop, that they will be the low-cost producer of commodity products in a global marketplace. It just doesnt make sense to add capacity in a shrinking market. It is an easy strategy for the short-term, but it becomes a long-term problem. It doesnt take as much knowledge. It is a simple strategy, although it might not be a profitable one.Therein, perhaps, lies the root of the problem the U.S. industry faces as a whole.Its like a lemming effect, Warlick said. People look at a specific company, perhaps, that has good numbers and speculate that the reason is that the company has lower cost. So everyone goes out and loads up their balance sheet with debt to get lower cost and, in the end, all they do is up their cost because the investment might not be wise. But, traditionally, thats how companies have shown better earnings. With the approach of 2005, though, we cant afford to play the game the way it has always been played. Its almost as if were not a business that were just this thing called the textile industry and we think only in terms of our limited scope of experience. We dont always think in terms of the market in general. That cant be good for us. Thinking Outside The BoxWarlick is intent, however, that Parkdale will play by a new set of rules. It all goes back to thinking outside the box, he said. Just because weve always done something a certain way thats just not good enough any more. Weve got to look forward, not back.Ultimately, the successful textile company today, more than at any time in our history, has to know exactly who its customers are and what their needs are. The industry must become more entrepreneurial, more aggressive and more adventurous.And thats exactly how Warlick sees Parkdales future. At Parkdale, were in the idea business. We want to look at our business, our customers and our needs from a fresh perspective. Were not afraid to reinvent the process if it will make us better.

April 2001