Calculated Gamble

When Burlington Mills Corp. (Bur-Mil), largest U.S. weaver of rayon goods, slashed its prices 10% to 25% a fortnight ago, its 52-year-old Chairman J. (for James) Spencer Love made a calculated gamble. He was betting that the price of rayon fiber, which Burlington has to buy to weave its fabrics, would soon come down enough to make up the difference.

Last week it came down. The Celanese Corp. of America, third biggest U.S. yarn producer, trimmed its prices of rayon (acetate staple fiber) by 12.5% to 42-c- a lb., lowest in its history. As other producers, weavers, converters and jobbers began cutting prices to the new pattern, the whole industry joined in its first big postwar price battle.

The fight affected more than rayon. Now that it was in ample supply, after three years of shortages, rayon men hoped to grab some of the cotton and wool market. In a cocky newspaper ad, Burlington sounded a battle cry: "It is a rough and tumble competitive situation with few holds barred. Business from here on in will go to the firms that produce precisely what the public wants and at the prices the public wants to pay." And the price for women's rayon dresses, Burlington thought, would soon be down 20%.

Infant's Progress. Burlington's Spencer Love, a fast-moving, fast-thinking man who can keep thousands of details of his company's operations in his head, had earned his cockiness. He had parlayed a $3,000 shoestring into a textile empire that last year grossed $288 million (and netted $31.2 million). Born & bred at Harvard (where his father taught mathematics), Love came out of World War I a 23-year-old major. He took his $3,000 in savings to Gastonia, N.C., his father's home town, and got a $120-a-month job in a cotton mill. After talking local citizens into adding $80,000 of their own money to his, he bought the mill. During a real-estate boom, Love sold the mill's land and buildings at a small profit, then moved its machinery to a new $200,000 plant built by eager-beaver boosters in Burlington, N.C. There he branched out into rayon, then an infant industry.

The industry grew fast, but Love's company grew faster. He kept buying small new plants (he now has 81), thus kept abreast of the industry's improvements without too big an outlay. Rayon's recent rate of growth has far exceeded both wool and cotton. Since 1940 the rayon industry has grown 238%, Burlington's sales have risen 700%.

Giant's Stretch. Now Burlington not only makes 10% of all U.S. woven rayon goods, but is also the biggest U.S. producer of ribbons and second biggest maker of nylon stockings. Love keeps a sharp eye peeled for ways to improve Bur-Mil's products. To test Burlington's fabrics, he gets samples of clothing which other manufacturers make from them, and has Burlington's employees wear them. He set up a monthly fashion clinic for the big clothing designers and manufacturers, thus anticipates (and sometimes creates) trends.

With some markets shrinking, flexible Burlington hoped to expand promising new ones. It expects rayon this year to capture 30% of the market for men's summer suits (v. 10% last year). Burlington also expects a big demand for new nylon fabrics for men's hose, nurses' uniforms (quick-drying, don't require ironing), and washable automobile upholstery.

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