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Hanesbrands Slashes Exec Pay, Furloughs Workers While Scrambling on 320M Masks

Hanesbrands is taking fresh actions to navigate the global economic environment caused by the COVID-19 pandemic.

The basics maker is limiting discretionary spending, reducing executive pay, managing inventory, leveraging the company’s e-commerce business across the online channel, and diversifying production to include in-demand face masks.

The company has instituted temporary pay cuts for executives and salaried employees ranging from 10 percent to 30 percent, depending on employee level. The company is also ramping up additional production to make more than 320 million FDA-approved all-cotton face masks over the coming weeks that can be used in the efforts to stem the spread of coronavirus.

Hanesbrands continues to follow a safety-first operating philosophy for the sake of our employees, consumers and partners,” CEO Gerald W. Evans Jr., said. “We also are proactively taking measures to assure balance sheet flexibility and liquidity, seeking to limit the impact on employees and making fast-recovery plans to take advantage of market needs when the pandemic wanes.”

The company, based in Winston-Salem, N.C., has temporarily closed approximately 1,200 brand stores in the United States, Europe and Australia. After paying these employees full pay for two-plus weeks of the closures, retail store employees have transitioned to furloughed status with continuation of benefits. The company said it plans to call these full-time and part-time employees back to work as soon as stores can be reopened.

In addition to the retail employees, the company will temporarily furlough approximately 575 other U.S. workers. Furloughed employees receive company-paid healthcare, life insurance and other benefits.

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Discretionary spending and capital expenditures have been reduced to a critical-needs basis only. The company is managing its inventory levels and has temporarily idled the majority of its production operations with the exception of face mask manufacturing. Distribution centers are operating on a demand-adjusted basis, including serving e-commerce consumers across platforms.

“We are taking actions today to ensure we navigate the pandemic for a successful future for all of us,” Evans said. “Hanesbrands has a 120-year history of meeting the challenges of difficult economic cycles, including recessions, historic input-cost inflation, and other national and social disruptions.

“We have a strong and flexible balance sheet with more than $1 billion of cash and a highly skilled workforce,” he added. “We firmly believe that the strength of our brands, the basic nature of our apparel products, and the flexibility of our company-owned global supply chain positions us well to navigate the current environment and take advantage of the return of more normalized demand patterns to generate long-term growth.”

HanesBrands is part of a coalition of apparel and textile manufacturers that is converting production capacity to making reusable and washable all-cotton, three-ply face masks for the U.S. Department of Health and Human Services. Of the more than 320 million masks the company expects to make, approximately 10 million have been delivered and the company is increasing production to make around 40 million per week.

“We are proud of our supply chain team and scores of employees throughout the organization for pivoting so quickly to convert production to the manufacturing of masks that will help meet such an urgent and critical need,” Evans said.

The masks—designed by the company’s product development team to meet technical specifications, including fabric chemistry—were approved by the U.S. Food and Drug Administration, Hanesbrands noted. The masks are intended for everyday wear to help mitigate the spread of COVID-19 and serve in healthcare settings where N95 respirator masks and surgical masks are not required.

The effort to switch production form apparel and textiles is widespread around the U.S. and the world. Most recently, South Carolina’s Greenwood Mills said its denim jeans production has now switched over to support COVID-19 efforts. The company is now producing non-medical grade masks and hospital gowns to support both conservation efforts of personal protective equipment (PPE) by frontline healthcare workers and supply much needed masks and gowns to related industries and facilities who benefit from their use.

A recent drop in retail sales of denim, coupled with the growing awareness of COVID-19 cases close to home, became the impetus for the company in making the switch in production of masks and gowns. This week’s first full production will result in about 30,000 masks. At full capacity, the company will produce 500,000 masks and 300,000 gowns per week, with flexibility depending on the demand of the products.

Edouard Macquin, president of Lectra America, told Sourcing Journal that the company has used its production technology to help customers from China to the U.S. to make the transition.

Macquin said this has been aided by Industry 4.0 connected technology and automation. In addition, he said, cloud computing, an important component of this smart tech, is allowing teams to work across the supply chain remotely while maintaining control, transparency and coordination.

“I think where we will also play an important role is when the industry gets back and needs to switch back to running normal production,” he added.