Dan River acquired by Indian company

by Heather B. Hayes
for Virginia Business
February 2006

When the news came, no one was really that surprised. In late December, Dan River Inc., a textiles company that once was Danville’s largest employer, announced it was being bought by Gujarat Heavy Chemicals Limited (GHCL), an Indian soda ash maker. Dan River recently had emerged from Chapter 11 bankruptcy proceedings.

GHCL acquired more than 90 percent of the company in a deal worth $93 million — $17 million in cash plus the assumption of $76 million in short- and long-term debt. Dan River provides high-end home fashions and apparel fabrics to major retailers such as Wal-Mart, JC Penney, Linen & Things and Bed, Bath & Beyond. GHCL is hoping to leverage the Dan River acquisition to transform itself into a major textile player.

GHCL didn’t immediately reveal its plans for Dan River, which at the time of the deal employed more than 1,600 people, 1,100 of whom worked in Danville. Within three weeks, however, Dan River announced it would close its Schoolfield plant in March, cutting 500 jobs. The company also plans to eliminate an undisclosed number of white-collar jobs by May. Dan River is expected to have 500 to 600 Danville employees after the latest round of job cuts. Company officials say the cuts were planned before the GHCL deal.

Peter Kilduff, an associate professor at the University of North Carolina in Greensboro, told The Associated Press that GHCL would be wise to hang onto Dan River’s brand name, retailing contracts, manufacturing capabilities and easy distribution access to North American markets. “They can ship a significant portion from India. But for customer confidence, they will also need local operations that can be responsive to short-term customer demands.”

Laurie Moran, president of the Danville Pittsylvania County Chamber of Commerce, says the community is still assessing the economic effects of the sale. She notes that, for the past decade, Danville has watched the slow, steady decline of its once-booming textile industry. Dan River is only a shell of the company it was during World War II, when it employed more than 14,000 workers.

The good news, Moran says, is that “the community has worked really hard to transition itself away from the textile industry and, while it will be a difficult for a while as people have to retrain and find new jobs, we do believe that we’re in a position to actually move on to bigger and better things.”

The city has created job training and technology education programs. Local companies that once relied heavily on business from Dan River have managed to target new markets during the past several years.

And in the past 18 months, Danville has added 2,500 new jobs, Moran says, as existing firms have expanded and new firms from a range of industries have moved into town, including Luna nanoWorks, Telvista, Yorktowne Cabinetry, EIT, Inc., and Boscov’s, a Pennsylvania-based chain of department stores.