FORT PAYNE, Ala.—This rural town was once nicknamed the "Official Sock Capital of the World." A decade ago, one of every eight pairs of socks manufactured globally came from Fort Payne's more than 125 sock mills.
Today, all but 14 of the mills are shuttered. Unemployment in the town of 14,000 people, located near the southwest tip of the Appalachian Mountains, is 10.4%.
Most U.S. sock manufacturers—here and elsewhere across the South—have moved production overseas in the past decade, lured by cheaper labor and lower real-estate costs. Now, with record-high cotton prices pressuring profit margins, Gildan-Prewett, the town's largest remaining sock manufacturer, plans to close four mills here by April and shift production to Honduras.
Terry Locklear runs one of the 10 holdouts. The 66-year-old Fort Payne native is owner of Emi-G Knitting Inc., named after his two daughters, Emily and Gina. Far from leaving, he's modernizing his sock business.
In 2009, he and Gina, now 31, launched a line of socks made from organic cotton, called zkano. The socks are sold at several retailers in Alabama, Tennessee and Washington, and Ms. Locklear also sells them at some local farmer's markets. When shoppers learn where she's from, she says, they ask, "Wasn't that the sock capital of the world?"
Mr. Locklear says he thinks the line of organic socks puts them in "on the ground level" of an upscale trend. "I think there's really great growth potential for organic socks," he says. Branching out into the high end represents a departure for Mr. Locklear, who like most manufacturers in this town has always focused on the market's other end—the white athletic socks sold in bulk at big-box retailers.
Mr. Locklear bought his sock mill in 1990, after his brother, another mill owner, convinced him he would make more money and enjoy a less hectic lifestyle than he had as a general manager at a Chrysler dealership.
His 20,000-square-foot facility, with 106 knitting and seaming machines, churned out white cotton athletic socks. His sales were $2.6 million a year. The rest of Fort Payne was humming too. Monthly hosiery association meetings, held at the local Best Western hotel, drew big crowds.
Business was good for Mr. Locklear until about five years ago, when his top customer—a distributor of athletic apparel giant Russell Brands LLC—closed. About three years ago, Emi-G stopped turning a profit, and sales fell to around "$1.5 million," he says.
By that time, other sock mills were closing. Industry association meetings stopped, and the Best Western closed.
The latest departure is Gildan-Prewett, the product of Montreal-based Gildan Activewear Inc.'s 2007 acquisition of V.I. Prewett & Son Inc., a business started by Fort Payne locals in 1953. Gildan-Prewett says its Honduran facility can produce socks for $1.50 less per dozen. "We kept the facilities open as long as we could, quite honestly," says Peter Iliopoulos, Gildan's vice president for governmental affairs. Recent surges in raw material costs, including cotton, have made it "extremely difficult to remain competitive" in the textile industry with U.S.-based operations, he says.
Fort Payne is the largest town in DeKalb County. Its downtown includes a historic opera house and the Hosiery Museum, a one-room shrine filled with old knitting machines and photos of early sock manufacturers.
After Gildan-Prewett departs, the town's sock mills will employ just 600 people. A row of vacated sock mills lines "Mill Road," a sleepy back street, with for-sale signs in the front and empty parking lots in the back.
Mr. Locklear's mill operates now at half capacity. Raw material costs are thinning profits, he says. He's paying $2.40 per pound for cotton, more than double last year's price.
He hopes the organic socks, which sell for as much as $16.50 a pair, will help him recoup some profits.
He's also recycling imperfect socks to shave costs. "Either you got to make socks cheaper, or you got to go away," he says, walking through his sock mill wearing a pair of white company-made socks under his black and green sneakers.
Knitting machines, roughly the size of mini-fridges, suck in and twirl dangling spools of yarn, nylon and elastic. The hissing noise produced by the fast-spinning spools of yarn is interrupted only by the sound of toeless socks plopping out of plastic tubes shaped like candy canes.
The piles of toeless socks are rolled over to a room of seaming machines. Workers stick the toeless socks upside down onto an assembly conveyor, which is like a miniature version of the ones used to hang clothes at a dry cleaner's.
The fully sewn sock pops out of another candy-cane-shaped tube. Manufacturing a sock takes about 70 seconds.
For years, Mr. Locklear says, cars exiting off of Interstate 59 were welcomed by a green sign with white lettering that read: "Fort Payne / Official Sock Capital of the World."
Now, driving a visitor around town, Mr. Locklear notices for the first time that it's gone. "I understand we're not the sock capital of the world anymore, but still," he says.
