Two decades ago, a New England textile company earned national acclaim when it kept its staff on the payroll after a fire destroyed the company's biggest factory and its owner agreed to rebuild in Lawrence, Mass., rather than take the $300 million in insurance and retire or move the business offshore.
Although the 110-year-old textile company has since gone through bankruptcy, an ownership change and several rounds of staff cuts, Polartec has kept production in the U.S. for the successor business at the original Maldin Mills, begun in 1906.
But after more than a century of doing most of its textile production in New England, the company is moving south.
On Monday, Polartec cut the ribbon to celebrate its new U.S. production headquarters in Cleveland, Tenn., where it is investing nearly $10 million and adding more than 150 employees.
Polartec has already doubled the plant's 65-employee staff and expects to add even more workers in the next year.
Bradley County Mayor Gary Davis and other local officials welcomed Polartec to Cleveland and thanked the business for expanding United Knitting Mills, which like other textile companies was forced to cut operations and staff during the Great Recession.
"I think it says a lot that a company like this relocates and expands in our county," Davis said.
Gary Smith, the president of Polartec, said United Knitting Mills was a supplier to Polartec and the 175,000-square-foot plant in Cleveland offered Polartec room and staff to grow its business "in a very business friendly environment." Smith said energy and tax costs are less in Tennessee than in Massachusetts "and there is a strong work ethic here in Cleveland."
Versa Capital Management, known then as Chrysalis Capital Partners, bought the former Maldin Mills out of bankruptcy for $44 million in 1977 after the company had previously gone bankrupt twice before. The company was renamed Polartec and last December it acquired United Knitting Mills in Cleveland after that company, which began in Cleveland in 1982, also had downsized in response to weaker textile sales.
Merging the two companies will allow Polartec to employ its innovative technology - the company has more than 150 patents - in a more efficient plant, officials said. Jerry Miller, the former head of United Knitting Mills, will continue as president and general manager of Polartec's Tennessee manufacturing operations.
"This is a strong combination that made a lot of sense," said Miller, who helped orchestrate the sale last year following the untimely airplane crash and death of United Knitting Mills' former owner, Peter Mallen, in 2013.
Polartec produces specialty polar fleece ideal for light-weight winter apparel sold by companies such as Patagonia, The North Face and L.L. Bean. The company also has developed a number of fire and heat resistant apparel items for the U.S. military and its special operation teams.
"We are not the lowest cost textile producer, but we try to be the most innovative and offer the best products," Smith said.
But the union that represented the more than 300 employees who worked at Polartec's fleece plant in Lawrence, Mass., accuses the company of misrepresenting its intentions last year when Polartec bought United Knitting Mills.
"They lied to us by saying this acquisition was only going to help the business to grow," said Ethan Snow, chief of staff for the New England joint board of UNITED HERE! which represents hourly employees of Polartec in New England. "The company turned around this year and told us no matter what we did they were closing our plant in Lawrence. We had to fight just to get any severance pay for workers who have an average of 18 years seniority."
Snow said unionized workers at Polartec "reluctantly agreed in 2007 to slash wages and to take pension and other benefit cuts" to help save the business during its bankruptcy.
"Many of the workers risked their own lives to save the company during the 1996 fire," Snow said. "But even after all that, the company still decided to just up and leave Lawrence."
Polartec is keeping its headquarters and much of its research and development in Lawrence. But Smith said the plant built after the 1996 fire was not efficient enough and Tennessee will offer lower costs of operations "and the workers have shown a great work ethic here."
Smith said the hourly pay for workers in Tennessee "will be within pennies of what we pay in Lawrence" and he denied the company moved south to cut wages or escape labor unions.
But Lawrence, Mass., Mayor Daniel Rivera said Smith's comment about a "strong work ethic" is just code words for "a workforce without union protection that he can exploit."
"I would warn Mayor [Tom] Roland and the citizens of Cleveland, Tenn., to be careful," Rivera said in a statement Monday. "This business has shown us regardless of city, state or federal government investment or business friendly environment, they will move where the cheapest labor costs are. Next stop will probably be their South American plant."
Contact Dave Flessner at email@example.com or at 423-757-6340.