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Olympic Group Acquisition Of Five Plants To Create 1,000 New Jobs
Operations of one Puerto Rico, one Mexico, and three stateside apparel plants to be consolidated on the island
by Daniel R. Garza
April 6, 2000
Reversing a trend that has hurt Puerto Ricos apparel industry in recent years, Guaynabo-based Olympic Group Inc. will purchase five manufacturing operations from Hampshire Group LTD, North Americas largest sweater-maker, and move them to the island.
The deal, expected to be announced this week, could create at least 1,000 new jobs and make Quebradillas, in the words of Olympic Group Chairman and CEO Luis Rivera Siaca, "the sweater capital of the world."
Company President Alejandro Asmar confirmed Monday the deal was all but certain to close this week. Olympic Group Inc., formerly Coachman Inc., will acquire Hampshires plant operations in San Francisco, Calif., Aguas Calientes, Mexico, Winona, Minn., Chilhowie, Va., and Quebradillas.
Those plants, except for Quebradillas, will be closed and their equipment moved to the Glamourette Fashion Mills plant in Quebradillas. The 500 employees of that plant will be added to Olympic Groups 600-person work force, Asmar said.
The consolidation of the plants will be done under a new company to be named Glamourette Olympic Group Inc.
With the new equipment, including state-of-the-art knitting machines, the company plans to establish a high tech apparel-manufacturing center in Quebradillas. The company expects to make about 2.5 million sweaters a year, which could boost its revenue from $29 million to $100 million annually in two years.
"This is very significant because were proving that the apparel industry can succeed in Puerto Rico," Asmar said.
Olympic group will present a plan to the Puerto Rico Industrial Development Co. (Pridco) to create a research and development center. "We cant compete with other countries, like China, in terms of labor costs, but we can compete in technology," Asmar said. "We plan to research different kinds of yarn, knitting procedures, and bleaching and dying to meet rapid changes in consumer tastes."
Pridco is negotiating an incentives package with the company, but the agency declined to give details yet. "This project is very important because it shows we are taking radical steps to promote jobs on the western part of the island," said Alving Rivera, deputy secretary of the Department of Economic Development and Commerce.
Olympic began pursuing the deal more than a year ago when executives learned Hampton wanted to get out of sweater manufacturing, and instead become solely a distributor. Hampton had planned to close its plants, including the one in Quebradillas, Asmar said.
Hampshire, which is listed as HAMP on the Nasdaq, has been struggling to stay competitive according to earnings reports filed with U.S. Securities Exchange Commission.
"Over the past five years, the retail industry has consolidated through acquisitions and mergers. Further, retailers have concentrated more volume with a fewer number of vendors. The Company has responded by increasing its utilization of foreign sources and by reducing its dependence upon domestic manufacturing," the company said in its 4th quarter earnings statement.