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Delta Apparel begins offshore textile manufacturing initiative

18
Aug '06

Apparel company Delta Apparel Inc announced that the company plans to open Ceiba Textiles, a state-of-the-art offshore textile manufacturing plant.

The 300,000 square foot facility will be located in the Green Valley Industrial Park in San Pedro Sula, Honduras. The facility will knit, dye, finish, cut and sew fabrics into apparel, primarily for the Activewear segment of the business.

The company expects the facility will be completed during fiscal year 2007 and production will begin during the first quarter of fiscal year 2008. It expects production to build to 500,000 pounds per week during fiscal year 2008 and increase to one million pounds per week in fiscal year 2009.

Ceiba Textiles is expected to result in pre-tax savings of approx. $1 million in fiscal year 2008 and at full capacity is expected to result in pre-tax savings of $7 million annually.

The company expects the total capital investment in Ceiba Textiles to be approx. $25 million, which includes the cost of constructing the building. Delta Apparel will be leasing the building from the Green Valley Industrial Park. In addition to transferring some existing equipment from the United States to Honduras, it expects to invest approx. $15 million over the next three years in new equipment for the facility. The new capital is expected to be financed through a local Honduran bank.

Robert Humphreys, President and CEO said, "We are excited to be expanding our operations inHonduras. We are expecting healthy demand for our apparel products over the next several years and believe the opening of Ceiba Textiles will allow us to meet the ongoing needs of our customer base and improve our cost structure. We are focused on maintaining our competitive position and are committed to maintaining efficient, low-cost manufacturing operations."

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