Although Hickory Industries produces and sells a variety of shoe care products, shoelaces make up the core of its business. The company makes a number of narrow fabric products including shoe and boot laces, cords, trim for apparel and novelty items. Hickory Industries, Inc., is a 67 year old textile manufacturing firm located in Hickory, North Carolina, that braids and weaves narrow fabrics. These fabrics are braided or woven on machines in the 77,500 square factory located next to the airport in Hickory. The company markets its own products in the drug store, supermarket, discount and sporting goods markets. Hickory Industries started in 1923 as the Old Hickory Shoelace Company. The factory was located across from Westmont School on Main Avenue Drive, NW in the Longview Township of Hickory. Leroy Campbell purchased complete ownership of the company in 1947 and moved it to a building on Old Lenoir Road adjacent to the original location of Ellis Mills Hosiery Company. In that year the company generated annual sales of $48,000 with ten employees and 60 braiding machines. By 1964 Campbell had increased annual sales over fifteen fold to $750,000. In 1964 he sold the company to Fendrich Industries, Inc., a former cigar manufacturer that had evolved into a holding company for three separate companies. The new owners asked Campbell to continue to manage the company, so he continued as CEO until he hired Jim Petree in 1967. In 1968 Petree was promoted to president, and he began an ambitious program to expand the distribution channel to include supermarkets as well as the traditional candy and tobacco jobbers in 1970. He also moved the company into its present facility, a 59,500 square foot air-conditioned, energy-efficient factory. In 1971, the company expanded its product line to include elastic products by purchasing the assets and the trademark "Betsy Ross" from I. Miller & Co., an elastic manufacturer. However, the profits in elastic products did not materialize as management had hoped, so in 1975 the company discontinued making braided elastic. It tried another new product family in 1978 with the introduction of the Hickory Tree Family Sock Program. Under this program Hickory dyed and packaged a complete line of family socks for sale to supermarkets. With this additional business Hickory found that it needed a larger factory, so the company added 18,000 square feet of additional production space making the total plant size 77,500 square feet. This product line, like the elastic products, did not meet management's profit goals, so Hickory sold the hosiery business in 1985 to Auton-White Industries. A more successful move for Hickory was its purchase of the majority of the assets and the trademark "Easy Knot" from the Ocean States Company in 1987. The company continues to sell this product. A management group consisting of Bob Bell, Nola Benbow, Phil Gnadt, Russ Fox and Dennis Johnson bought the company in September, 1987. Bob Bell, the majority shareholder, became president, and under his leadership the company generated 1987 sales of $4,100,000 (See Exhibit l for a copy of the 1991 financial statements). Kit Leithiser became the company's vice president of manufacturing in September, 1988 and later purchased Dennis Johnson's shares.
The new management group refocused the company to concentrate on the fashion accessory market. It has developed fashion funwear anklets, bracelets, belts, and metallic and reversible shoelace designs. The attachment of Velcro to the bracelets and anklets caused the company to purchase computer-driven sewing machines which produced a labor cost low enough to compete with the third-world countries. The company's older looms have been replaced by new Muller high efficiency looms in order to reduce its cost. In 1990, the company became a...