S.C. textile mill adjacent to crash site set to close

Trains Magazine General Discussion
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By GREGORY RICHARDS, The Virginian-Pilot
© May 31, 2006

The January 2005 collision of two Norfolk Southern Corp. trains in Graniteville, S.C., contributed to another death Tuesday: that of textile manufacturer Avondale Mills Inc., owner of a textile plant adjacent to the crash site.

Toxic chlorine gas released from that crash floated through the plant that spins, weaves and dyes fabric for Boy Scout uniforms and Levi’s jeans, corroding equipment, ruining computers and killing six employees, as well as three others.

The Georgia-based company said Tuesday that the crash, when layered on top of increasingly tough global competition, was a blow from which it could not recover.

It said in regulatory filings that it would “close substantially” its 17 manufacturing plants by July 31 to “maximize value” for its creditors and shareholders. About 4,000 jobs are said to be at stake.

“We have worked hard for a year and a half to recover, but the damage is too great,” G. Stephen Felker, Avondale’s chairman and chief executive officer, said in a news release. “Without the train derailment and chemical spill, we were challenged. With it, we were destroyed.”

Last year, Avondale had revenue of $569.2 million but lost $2.6 million, according to securities filings.

Avondale said it will “vigorously pursue” a lawsuit against Norfolk-based Norfolk Southern that it filed in September 2005. The filing seeks an unspecified amount of actual and punitive damages.

The exact cost of the losses sustained by Avondale was unknown Tuesday. Avondale officials did not return calls for comment.

I ts losses were higher than $215 million, the amount Avondale received this month from its insurance company, the company said in regulatory filings.

Norfolk Southern spokeswoman Susan Terpay cited the pending lawsuit in saying Tuesday that she would not comment on Avondale’s decision to cease operations.

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Let me understand this - one accident near one plant of a 1/2 billion dollar company with 17 factories is causing the company to go bankrupt - even after receiving an insurance settlement of nearly 1/2 their annual revenue?

It was a horrible accident - but this appears to be another case of management grasping at straws to explain their own mismanagement.

dd

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Boy, the lawyers had a field day with this one, didn’t they? It just doesn’t add up – looks to me like the company needed an excuse (abeit a flimsy one) to shut down the plant.

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idiots

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I want to announce to everyone that a bird hit my windshield this morning. Thus I have decided to sell both my cars and seal the garage doors and never drive again.

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For a business article, it is very poorly phrased.

For a cause and effect scenerio, it sounds like a Hollywood production. Did the lawyers also write a screenplay about this case?

Andrew F.

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The industry was already in freefall with the jobs moving offshore. Odd that they have nothing but VERY short term institutional memory. Manufacturing in this country (light to heavy) is very capital intensive and sensitive to market change. The cost of labor can make or break the very thin margins that manufacturers survive on.

I’m not buying the company’s convenient excuse and, for that matter, the line put out by a gullable, spineless newspaper reporter pandering to the local constituancy.

[soapbox][soapbox][soapbox]

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I guess both people as well as corporations are unwilling to take responsibility for their actions. Instead, let’s blame the big, mean, old railroad.

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Ever hear of someone who had a car totaled, and just cashed the insurance check instead of buying another car?

I’m thinking this may be a very similar situation - the company had a very dim long-term future from the sound of the article and may have been underinsured. Rather than invest the payment in what was ultimately a doomed operation, it’s probably better from a business standpoint to sell what’s viable, shut down the rest, and pass out the proceeds to the stockholders or owners while they’re temporarily in a good cash-flow position.

Sad day for the employees, though.

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If you’re going to tell a lie, you might as well tell a whopper. A company with $569.2 million in revenue closing because of damage to one factory? Not total destruction, mind you, possible damage to some of the machinery. Total HOGWASH, for lack of a stronger term. I’ve worked in a textile factory, and you could buy all new equipment for $2 million and have money left over. Given that so many other textile factories are closing or have closed, you could replace the stuff damaged at Graniteville for a song, because used equipment is a drag on the market.

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Underinsured? One would think in a case like this, that NS would be the one whose insurance is paying the bill.

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I was thinking about taking accordion lessons but decided not to because of the wreck.

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Murphy - from the sound of it, Avondale received the $215 million from its own “business disruption” (for lack of a more precise term) insurance carrier.

Rest assured that their carrier will seek compensation from Norfolk Southern, the shipper, the consignee, the individual employees, the manufacture of the tank cars, and anyone else they can drag into court whose own insurance company might cough up a few dollars.