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Michael Penner, president and CEO of Richelieu, poses in their Montreal offices, June 13, 2014. (Christinne Muschi For The Globe and Mail)
Michael Penner, president and CEO of Richelieu, poses in their Montreal offices, June 13, 2014. (Christinne Muschi For The Globe and Mail)

An American revival: A Canadian manufacturer’s quest to rebuild itself Add to ...

They had a pleasant chat. Mr. Penner saw Mr. MacNaughton again the next year when Wal-Mart Canada named Richelieu it’s Vendor of the Year. ‎They wouldn’t talk again until the day Mr. Penner needed a big assist from the world’s largest retailer. To Mr. Penner’s surprise, Mr. MacNaughton had received a promotion – he now was in charge of stocking the shelves of Wal-Mart’s U.S. stores. “I called him and I said, ’Please, just tell me what I have to do,’ ” Mr. Penner recalls.

A strategy for revival

Hickory, N.C., is where you stay when you visit Richelieu’s U.S. location, about 20 minutes west in Hildebran, a community so small that it’s marked on only the most detailed state maps. There’s a Porsche dealership in Hickory, suggesting there is some wealth in the area. (Charlotte, home of Bank of America Corp., is about an hour away; Corning Optical Communications LLC has a factory in Hickory; and Apple Inc. has a data centre in nearby Maiden.) But there also are vacated mini-malls and shuttered restaurants.

The Neuville family built a factory and started making socks in Hildebran in the 1970s. At its peak, the company employed 1,700 people and had sales of $180-million. There was an on-site daycare for employees that at one point minded 99 children. On bad days, Mary Lowman, who now is 65 and still employed in the office at Richelieu, would relax by calling on the children. “They would come to you like puppies,” Ms. Lowman remembers.

The daycare closed in 2006. Like Richelieu and most of the rest of the North American textile industry, the owners of ILG moved production overseas. But the move failed to make the company profitable. At the end, annual sales were $25-million, a sliver of what the owners had inherited when they bought Neuville.

North Carolina was at the heart of the U.S. textile industry. As late as 2000, the unemployment rate in Burke County, which includes Hildebran and parts of Hickory, was 3.8 per cent. The jobless rate now is around 7 per cent. Employment in the textile industry plunged 43.1 per cent to 1,263 between 2000 and 2013.

One day, a worker in Hildebran approached Mr. Penner. “Michael, you got iTunes up there in Canada?” Mr. Penner assured him that Canada had iTunes. The worker asked Mr. Penner to download a song: Death to My Hometown, by Bruce Springsteen. Mr. Penner did so.

I awoke on a quiet night, I never heard a sound/The marauders raided in the dark/And brought death to my hometown/They brought death to my hometown “I’m listening to this song,” Mr. Penner recalls. “I’m like, `Wow, this is what has happened here.’ I started fantasizing about ways to bring manufacturing back. It’s still in our DNA. The pride of being a manufacturer is very hard to be separated from.”

Sewing machines have changed since Richelieu and other North American sock makers gave up trying to produce at home. Older ones could knit the tube, but the toe had to be stitched separately. That meant more fingers and larger payrolls. Mr. Penner found an Italian machine that does both. It was expensive, $35,000, but it could do the work of about six people. With enough of them running around-the-clock, Mr. Penner reckoned he might be able to compete.

But to get the financing to buy enough machines, he would need a buyer.

Re-enter Wal-Mart. In January 2013, the company pledged to buy $250-billion of domestically produced goods over the next decade. Mr. Penner jumped at the opportunity. Still, it took Mr. Penner about a year of “unadulterated persistence, almost stalking” to convince the world’s largest retailer that Richelieu could make socks in the U.S. that Wal-Mart shoppers could afford. Wal-Mart has been accused of crushing smaller businesses. In the case of Richelieu, it turned a little Montreal enterprise into a multinational company.

The persuasive Mr. Penner got his contract.

“That’s the piece of paper we are using to build this factory.”

Southern financial incentives

North Carolina Governor Patrick McCrory takes a break from his pancakes and eggs and leans over the table toward the man across from him.

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