For nearly 126 years, textiles sustained a way of life in Danville. To endure, the community lifeblood ultimately known as Dan River Inc. couldn’t stagnate.
Continual challenges — competition, industry advances, recessions, wars, bankruptcy filings and even a hostile takeover — compelled Dan River to grow, evolve and die.
This necessitated vision, continued investment and innovation to stay on the cutting edge. Most importantly, survival meant leveraging the company’s fundamental asset — its people.
The people, former company leaders and employees said, floated Dan River as its business “ebbed and flowed” through the years.
As American textile mills moved South after the Civil War, six businessmen — Thomas Benton Fitzgerald, Dr. H.W. Cole, Benjamin F. Jefferson and three brothers Robert A. Schoolfield, John H. Schoolfield and James E. Schoolfield — saw an opportunity to enter the industry by tapping into the Dan River’s water power and agrarian labor.
With the initial capital of $75,000, they chartered a joint stock company called The Riverside Cotton Mills on July 27, 1882. Although many start-up cotton mills in the South would fail, the founders — even without textile experience — knew to keep expenses and construction costs low and attract experienced supervisors from other mills in the South to train the new employees.
Within just three years, Mill No. 1 reached its capacity. Fitzgerald continued to urge investment in more mills to diversify production. More mills meant a need for more power, and the company continued to buy up waterpower lots along the Dan River.
The failing Morotock Manufacturing Co. merged with Riverside in 1890, giving Riverside a five-story Mill No. 4. By 1896, the company completed Mill No. 7.
Riverside Mills started as a manufacturer of cheap southern plaids, increasing production 16-fold from 1884 to 1899. Borrowing, stock issues and reinvesting its earnings financed the rapid expansion.
Fitzgerald marketed the high quality of the product and broke into markets not well covered. In 1891, a New York sales office opened and foreign sales began.
Around the same time, Dan River Power & Manufacturing expanded mills upstream. The company went outside the city limits in the area now known as Schoolfield as the city feared pollution of its water. Riverside was the stockholder in Dan River Power.
Mill No. 1 in Schoolfield began operations in 1904.
In 1909, the two companies merged to form Riverside and Dan River Cotton Mills. From 1909 to 1920, sales grew 12-fold from $2.5 million to $30.6 million.
In 1921, two stock issues financed the $3.37 million investment in Mill No. 8, also known as the White Mill — an icon where the welcoming “Home of Dan River Fabrics” sign would be installed in 1948.
The Great Depression
In 1930, sales dropped by $4.5 million and losses exceeded $1.5 million, resulting in a 10 percent reduction in wages and a workers’ strike. The time 1932 to 1940 is known as the “Nine Lean Years” with 1932 sales dropping to $9.8 million, the lowest since 1915.
While wartime brought an increase in sales for supplying fabric for uniforms, it also brought challenges.
With World War I (1914-18) the company lost a major source of labor. From April to August in 1917, the mills lost 500 men to the military. More women joined the mills, but labor still ran short, especially as European demand for U.S. goods increased during wartime.
Additionally, the shipyards lured workers where they could make two to three times as much in a day than in the cotton mills.
During World War II (1939-45), sales more than doubled from $22.76 million in 1939 to $53.93 million in 1945. The company employed more than 14,000 workers during this time, according to Encyclopedia Virginia online.
In 1949, business dropped when a sharp recession hit. The company reduced hours and began more than 2,000 temporary layoffs.
Yet, business came back with the Korean War (1950-53), when sales volume increased 37 percent and profits doubled in 1950.
In 1951, 30 percent of the company’s production represented defense orders.
Becoming a bigger player
In 1946, the company changed its name to Dan River Mills Inc. and by 1949 half of all fabrics manufactured in Danville had tags, labels or wrappers identifying them as products of Dan River Mills.
In 1945, Virginia and North Carolina residents owned nearly 90 percent of the company, but by 1979, local ownership declined to 19 percent as New York owners and institutions owned 46 percent.
The 1950s and 1960s were a time of mergers and buy-outs as Dan River began buying up smaller competitors throughout the South, like acquiring assets and common stock of Iselin-Jefferson Co., Inc. in New York and the properties and business of Alabama Mills Inc. in Birmingham, Ala., in 1956.
By 1955, Dan River stock was listed on the New York Stock Exchange and 1959 marked a record sales year with $173.7 million.
The “heyday of permanent press” made a lot of money for Dan River with Dan-Press comprising 47 percent of Danville’s apparel fabric production by 1965. By 1966, sales would reach $281.4 million.
Dan River also got into the carpet business with the purchase of Kingston Mills in Georgia in 1964 and Wunda Weve Carpet Co., Inc. in Greenville, S.C., in 1965.
Dan River brought velour to Danville after the purchase of Marco Fabric Manufacturing Inc. in Roanoke in 1964.
In 1965, the company acquired lingerie fabric manufacturer Webco Mills Inc. and greige (unfinished) fabric maker Clifton Manufacturing Co.
In 1969, Dan River acquired Crystal Springs Textiles Inc. (sold in 1976) in Georgia and Morganton Hosiery Mills Inc. (sold in 1983) in North Carolina.
In addition to acquisitions, Dan River also constructed several new plants to increase production capacity.
In 1965, the company approved building a new corporate headquarters a mile from Schoolfield in Danville and changed its name to Dan River Inc. in 1970.
The late 1970s and early 1980s proved profitable when Dan River got more into denim with customer Levi Strauss, Wright said.
From 1966 through 1980, capital investment in new textile machinery totaled more than $300 million. By 1979, Dan River exports rose 40 percent and in 1980 sales reached $607 million with $19.6 million in net earnings.
Dividends for common stockholders increased for the fifth year in a row. Book value increased to $33.80 per share.
This value enticed corporate raider Carl Icahn who started buying up Dan River stock in 1982.
“Icahn was the worst … you had your ups and downs, but the period of fighting Icahn was probably the most intense,” said Rodney Reynolds, who retired as senior vice president and chief financial.
Dan River’s leaders knew if Icahn bought the company, he would sell off its assets and it would be “bad for the Danville community,” Reynolds said. At one point, Icahn controlled 29 percent of Dan River’s common stock, according to past Danville Register & Bee reports.
“It created a great deal of uncertainty,” Reynolds said.
It was in the best interest of Dan River and Danville workers to buy the company from the existing stockholders. So, the company went to an employee stock ownership plan using employee pension plan money. Dan River Inc. put up the collateral assets of the company and borrowed $150 million to pay off the stockholders.
That probably marked the beginning of Dan River’s decline, as that burden of debt didn’t allow the company flexibility to change its business model to find its niche in the global economy, Reynolds said.
Icahn and Dan River sued one another, but settled with Icahn making $8 million off the deal.
“It was survival,” recalled Odell W. Hutson Jr., who worked as an engineer in the maintenance department, about the employee ownership plan.
In the 1980s, business got tough with plant shutdowns and a cutback on employee hours and some layoffs, Hutson said.
The fear that Icahn would take over lasted about a year, recalled Diana Raines, who worked as an invoice clerk. Employees knew Icahn’s reputation of shutting down companies and selling off assets to make money.
“It was scary when the Carl Icahn thing was going on,” Raines said.
When Joe Lanier Jr., along with Richard L. Williams and Barry F. Shea, bought Dan River in November 1989, employees felt relieved.
“When he bought us out it was like, ‘Oh, boy! We got a job next week,’” Raines said.
Textile World magazine named Dan River Inc. a “model mill” in 1996 because of the company’s “tremendous turnaround” under the visionary leadership of Lanier.
Lanier, a Georgia textile magnate, understood the need for modern machinery to realize efficiencies and to diversify Dan River to take it to new markets.
First, to pay down the debt from taking the company private, Dan River sold its chemical products division for $24.5 million.
Under Lanier’s leadership, the bed-in-a-bag concept grew the home fashions side of the business, Reynolds said. Lanier also updated machinery and computer systems in a modernization program investing more than $200 million.
Raines, who typed the orders for the new machines, was amazed at all the changes in the 1990s.
“The first time I typed a million dollars, I just couldn’t get over the zeroes,” Raines said.
Sales improved from $270.5 million in 1990 to $385 million in 1995. Now, Dan River was poised for more growth.
In 1997, the company acquired The New Cherokee Corp., a manufacturer of woven fabrics for shirting and sportswear of Rutherford County, N.C., for $65 million to help the apparel business compete globally.
“We’re not getting big for bigness sake,” CEO Joe Lanier Jr. told the Danville Register & Bee at the time.
The purchase placed Dan River at the top of the market for lightweight apparel fabrics (including oxford, fancy broadcloth, twills and seersucker) with customers like Phillips Van Heusen, Liz Claiborne and Brooks Brothers, according to a past Register & Bee report.
That purchase also expanded Dan River’s shirting business more strongly into the military market and uniforms, Wright said.
On Nov. 20, 1997, with sales more than half a billion dollars, Dan River Inc. re-listed on the New York Stock Exchange at $15 a share, Reynolds recalled, looking at a photograph of Times Square where the listing scrawled on the ticker.
“It’s a super milestone,” Reynolds said.
The public offering helped raise the money needed for modernization and growth.
In 1998, Dan River acquired Atlanta-based Bibb Co. to expand in home fashions and to serve Dan River’s biggest customers like Kmart and Walmart. That $250 million purchase also helped Dan River supply hotels, motels and hospitals.
One mistake leaders later realized was Dan River not protecting its bed-in-a-bag concept and its marketing more, to at least prevent others from using the “Bed-in-a-Bag” name, Reynolds said. Similar bed-in-a-bag products proliferated in stores.
But by 2000, Dan River employees sensed something was wrong.
“It was starting to be on a downhill slide,” said John Dickerson, who joined Dan River in 1995 as an electronics technician. “You could see the writing on the wall.”
The early 2000s recession that struck developed countries hit Dan River in the summer of 2000 as consumers spent less and textile manufacturers and retailers were caught with too much inventory, Dan River CEO Joe Lanier Jr. said in a company newsletter. Dan River began cutting back hours and layoffs began by 2001 when Dan River downsized operations at some facilities.
Then, it kept getting worse. The company lost $21 million after sales declined 5 percent to $631 million, according to a 2002 company newsletter.
Dan River’s largest customer, Kmart Corp., filed for Chapter 11 bankruptcy protection in January 2002, leaving Dan River with $4.9 million in bad debt. The company lost $15 million in 2002.
Sales plunged 22 percent in 2003 as the company garnered about $100 million in debt. The company laid off 200 people in Danville and shuttered its operations in Fort Valley, Ga., and Juliette, Ga., and weaving plants in Greenville, S.C., and Sevierville, Tenn.
In 2004, a tornado gnarled the “D” of the iconic “Home of Dan River Fabrics” sign, symbolizing the hits Dan River took as employees lost their jobs.
In January 2004, the company was de-listed from the New York Stock Exchange for not maintaining a price of more than $1 a share. In March, Dan River filed for Chapter 11 bankruptcy protection.
Dan River purged 200 jobs in April and laid off 312 third-shift sewing and comforter production workers in June. Thirty people lost jobs at the distribution center in July. In October, 375 workers lost their jobs when the finishing and sheet-sewing in Schoolfield was transferred to plants in Brookneal and North Carolina.
Dan River sold its engineered products division for $9.37 million in December.
Dan River emerged from bankruptcy protection in Feb. 14, 2005, reducing debt from $270 to $90 million, according to Home Textiles Today reports. The company put its apparel division employing 650 workers up for sale to concentrate on home fashions.
Closing the Piedmont plant in June 2005 eliminated 250 jobs. In August, the RiverPointe facility shuttered, resulting in a loss of 175 jobs.
Fears of outsourcing panicked Danvillians when India-based Gujarat Heavy Chemicals Limited finished buying Dan River for $93 million — $17 million in cash plus the assumption of $76 million in debt — in January 2006.
Then, office workers lost their jobs when GHCL moved administrative and back-shop functions within the year.
When GHCL came in, their leaders were amazed at the technology and how efficient the plants were, recalled Reynolds, senior vice president and chief financial officer. Unfortunately, the plants still weren’t cost-competitive with overseas producers.
In January 2006, the Schoolfield complex was sold and operations ceased there in March, resulting in a loss of 500 jobs. In March, the company laid off 110 people from the Brookneal plant while the Morven, N.C., facility shuttered. About 280 workers lost their jobs when the Brookneal plant — the last Dan River production facility — finished closing by 2007.
When the mills closed, Raines, an invoice clerk, knew Dan River would shutter. She saw what happened with other companies because of overseas labor.
“I mean, that’s what we did,” Raines said. “When you stop manufacturing, what are you going to do?”
Last worker leaves Schoolfield
It broke Esther Pearson’s heart when her mill family members began losing their jobs. She was the last one to leave the Schoolfield mill on Dec. 29, 2006.
“Dan River was more than a job. It was a way of life to me,” Pearson said, before her voice cracked and tears came. “And they were good to me.”
Around 2000, employees grew wary of layoffs but the dominoes mostly fell in 2004. It seemed like once a month, then every week and then every day, people would lose their jobs, recalled daughter Jeanne, who also worked at the mill.
The finishing department was hit later, but employees there knew what was coming. For her, Dan River started downhill when fabric came in from elsewhere.
“It was hard to deal with, to tell you the truth. We knew that our jobs would be gone,” said Pearson, who worked for Dan River for 46 and a half years. “But who would know that God would keep me till the last one to leave the building.”
The clerk, who worked her way up from the sewing room floor, cried when thinking of clocking out co-workers for the last time. People would call Pearson and co-worker Polly Eastwood “Polly-Esther.”
Pearson remembered men coming in to move the last 600,000 yards of cloth to a warehouse. She punched herself out and they took away the computer.
Upon leaving the No. 6 gate, Pearson saw about 25 friends and family members gathered with a banner declaring, “Well Done Esther Pearson, Good and Faithful Servant.”
Sources: “Mill on the Dan: A History of Dan River Mills, 1882-1950” by historian Robert Sidney Smith, published by Duke University Press in 1960; “Dan River Runs Deep: An informal history of a major textile company 1950-1981” by Malcolm A. Cross, published by Whitlock Press, New York, in 1982; past Danville Register & Bee reports; and Dan River Inc. newsletters
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