One of Southern California's largest textile firms is closing its doors, citing the skyrocketing cost of natural gas for its downfall. The looming shutdown is a blow to the local fabric-making trade and underscores the larger risks facing the region's apparel industry.
Pico Rivera-based L.A. Dye & Print Works Inc. will halt operations by the end of April, according to facilities manager Dennis Brimhall. The move will put about 700 employees out of work.
The vertically integrated company, which does everything from fabric knitting to finishing, closed a dye house in December to cut costs and conserve energy as its natural gas costs soared past $600,000 a month--five times higher than they were at the start of 2000.
It was an emergency move designed to help the company weather the storm. But in an industry plagued by intense foreign competition, overcapacity and shrinking margins, the energy crisis became too much to bear, Brimhall said.
"It's impossible to ride it out," he said. "We have to fold up the tents."
Brimhall said employees were told Friday of L.A. Dye's imminent demise. He said the company is investigating all its options regarding the sale or liquidation of the business.
L.A. Dye is just the latest casualty of California's "other" energy crisis.
While the state's electricity emergency has garnered many of the headlines, the exploding cost of natural gas has hurt manufacturers in industries such as dairy, steel-making, brick-making and fabric-dying, all of which use copious amounts of the fuel to fire kilns and boilers.
Southern California's textile industry has been particularly hard hit. With an increasing amount of apparel production heading offshore and cheap imports flooding the market, many textile firms were already watching their profits erode before gas prices jumped last year.
Industry watchers figured the dramatic price spike would quickly sink some of the industry's smaller, weaker players. But almost no one expected a stalwart like L.A. Dye to be among the first to call it quits. Founded in the early 1980s, the company grew to become one of the largest and most respected players in the local industry under the leadership of its president and part-owner, Helmut Ackermann, according to Scott Edwards, president of the Assn. of Textile Dyers and Printers of Southern California.
"It's a shock," Edwards said. "It just shows you how serious this threat is to our industry. . . . We haven't seen the last of the closures."
Edwards said his organization has been lobbying for a cap on natural gas prices and other assistance to help the region's textile industry survive the energy crisis--so far without success.
While apparel employment keeps moving offshore, Southern California's textile industry has been a surprising bright spot thanks to the ingenuity of local entrepreneurs. Los Angeles County is home to nearly 400 knitting, dyeing and finishing mills, 40% of them started since the early '90s. The local trade employs about 16,500 people, a 59% increase since 1990.
But the recent energy crisis, combined with increased foreign competition, has dampened that vibrancy.
Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. said the region's textile industry is a key component of Southern California's quick-turn apparel trade. Local apparel manufacturers and contractors need fast, reliable sources of fabric to maintain their niche.
Losing a major player such as L.A. Dye doesn't bode well for the industry, he said.
"Having the textile industry here gives apparel makers a strategic advantage. It's all connected," he said. "This is not good news."