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This is the story of how Warren Buffett's Berkshire Hathaway bought Fruit of the Loom, and Kentucky lost the rest of it anyway. Campbellsville lost its factory in 1998. Berkshire Hathaway didn't own the company until 2002. So, if you came here expecting a story where Warren Buffett shuts the doors on a small Kentucky town, that isn't what happened.
And you deserve to know that inside the first 30 seconds. Here's what did happen. The last Fruit of the Loom plant in Kentucky didn't close under Bill Farley, the executive who buried the company in debt and moved it to a tax haven. It didn't close during the bankruptcy. It closed in 2014, 12 years into Berkshire Hathaway's ownership, and the work went to Honduras.
Campbellsville was the first Kentucky domino. Jamestown was the last one. And the most admired investor in America owned the company when the last one fell. Union Underwear came to Campbellsville, Kentucky in 1947. By 1952, the plant on the ridge above town was running at full scale. And for the next half century, it was the largest men's and boys underwear factory in North America.
If you've never seen the inside of a place like that, it's hard to picture the scale. The cutting room sat in the basement, where bolts of cloth the size of tree trunks were squared up and sliced. The bleach and dye house was down there, too, turning white cotton into colors and colors into underwear white.
Upstairs, on the main floor, hundreds of women sat at sewing machines arranged in rows that ran the length of the building, surrounded by bins of half-finished shirts. The noise never stopped. Neither did the work. The jobs had names, and the women took the names of the jobs. Someone was set sleeve.
Someone else was hem bottom. You could work there 30 years and be known around town by the seam you sewed. At its peak, 4,200 people worked inside that building. Campbellsville had a population of about 11,000. The plant pulled workers out of Taylor County and every county touching it. And for 50 years, the arithmetic of that town ran through one ridge top factory.
Your mother worked there. Your aunt worked there. You got hired at 18 and you assumed you'd retire from it. Then, Bill Farley bought the company. In 1985, Farley acquired Northwest Industries, Union Underwear's parent, in a leveraged buyout worth $1.4 billion. dollars. He renamed the operation after its best asset.
Union Underwear became Fruit of the Loom Incorporated because the trademark was worth more than the company that owned it, and Farley knew it. For a while, it looked brilliant. Sales climbed from roughly $500 million to something near two and a half billion. Farley put the Fruit of the Loom label on sportswear, on women's underwear, on socks.
It's He built an apparel conglomerate and he talked publicly and seriously about running for president of the United States. What he'd also built was a debt load the business couldn't carry. Interest payments started eating close to a tenth of annual sales revenue. And in the 1990s, with the North American Free Trade Agreement reshaping where clothing got sewn, and the Caribbean Basin Initiative opening a second door into Honduras and Central America, Farley found the lever every indebted apparel executive in America was reaching for at the same time.
In 1995, Fruit of the Loom closed nine plants in the United States, laid off more than 6,000 people, and began moving its sewing operations to Central America and the Caribbean. That year, the company booked $227 million in losses, much of it one-time charges from closing the very plants it had just closed.
By the start of 1998, Fruit of the Loom had almost entirely eliminated sewing in the United States. More than 60% of production was already happening overseas with a plan to push that toward 80%. Campbellsville found out on a Thursday. The 7th of August, 1997. The rumors had been circulating for months, the way they always do in a factory town, and people had been telling each other the thing people always tell each other, which is that you shouldn't believe rumors.
One woman who'd been on those machines since 1967 described exactly that afterward. You hear about layoffs. You hear about a closing. You go back to your station. The plant wound down and shut for good in June of 1998. By then, the workforce was a shadow of what it had been. 812 people lost their jobs in the final round, which sounds survivable until you remember that this was the end of a 50-year contraction, not the start of one.
The 4,200 had already gone, a few hundred at a time, over a decade. Campbellsville didn't lose a factory in 1998. It finished losing one. And in the same year the plant closed, Fruit of the Loom did something that told you exactly where the company's loyalties sat. It moved to the Cayman Islands. In early 1998, Farley announced that the company would reincorporate offshore, where foreign income isn't taxed.
The corporate rate would fall from 28% to 11%. Farley said the change would save around $100 million a year and that the money would go toward paying down debt. He defended it for years afterward. His argument was that Fruit of the Loom had become an international company. Most of its garments were made overseas, and it shouldn't have to pay American tax on foreign operations.
He was describing a situation his own decisions had created. The garments were made overseas because he'd moved them overseas. The tax argument only worked because the sewing had already left Kentucky. The Cayman Islands didn't save the company. Nothing did. In 1999, Fruit of the Loom posted a net loss of $576.2 million.
Farley was pushed out in the autumn of that year, 4 months before the filing. On the way out, it emerged that the board had approved a $65 million personal loan guarantee for him in mid-1999. A decision that bankruptcy proceedings later examined closely. In December of 1999, Fruit of the Loom filed for Chapter 11 with more than $2 billion in liabilities.
The stock had traded around $44 a share in early 1997. By the spring of 2000, it was worth just over a dollar. The company was delisted from the New York Stock Exchange. Meanwhile, back in Campbellsville, something happened that nobody at the time understood the significance of. In May of 1999, 11 months after the plant closed, amazon.com announced it had obtained a distribution facility in Campbellsville, Kentucky.
The company said it expected to employ 500 people within a few months and as many as a thousand within 2 years. The building Amazon took was the one Fruit of the Loom had left behind. The logic was almost too clean. There was a large, relatively modern industrial building sitting empty on a ridge. There were more than 800 recently unemployed people who knew how to work a shift.
And Campbellsville sits less than 90 miles from Louisville, which is home to Worldport, the global air hub for United Parcel Service. Amazon called the facility SDF1 after the Louisville airport code, the first fulfillment center to ship out of that airport. It is still there today and we'll come back to it because what it pays matters to this story.
Now we get to Warren Buffett. On the 1st of November, 2001, Berkshire Hathaway announced an agreement to buy substantially all of Fruit of the Loom's apparel business out of bankruptcy for $835 million in cash. The deal closed on the 29th of April, 2002, the day after the Delaware bankruptcy court's confirmation order became final.
Buffett was unusually direct about why he wanted it. In the announcement, he gave two reasons and only two. The strength of the brand and the managerial talent of a man named John Holland. Holland had run Fruit of the Loom's operations through its best years and retired in 1996. What followed his departure, in Buffett's own telling, was the debt, the acquisitions, and the bankruptcy.
Holland was brought back in November of 1999 as the company was going under, and Berkshire made the entire purchase conditional on him staying to run it. It's worth noting that Fruit of the Loom had a much longer thread connecting it to Buffett's world. Benjamin Graham, Buffett's mentor and the man who taught him how to read a balance sheet, had invested in Fruit of the Loom's parent company back in 1955.
By the time Berkshire wrote the check in 2002, the brand had been inside the value investing conversation for nearly half a century. There's a genuine argument that this was good for Kentucky. Berkshire brought the tax domicile back to the United States. The headquarters stayed in Bowling Green. A company that had been bleeding out for 5 years got an owner with effectively unlimited patience and no debt pressure.
Compared to a liquidation or to a private equity buyer stripping it for the trademark, Buffett was the best available outcome, and executives at the company said so at the time. But read what Buffett actually praised Holland for in the 2001 letter to Berkshire shareholders and you find the whole story in one sentence.
Buffett wrote that while Holland was fixing chaotic deliveries and soaring costs and damaged customer relationships, he also reduced employment from a bloated 40,000 to 23,000. Bloated, that's the word. 17,000 jobs described in the shareholder letter as a problem that had been solved. And that isn't a gotcha.
It isn't buried. Buffett said it in public in the document he's most famous for writing to an audience that applauded him for it. He was describing the turnaround accurately. A company that couldn't pay its debts had cut its way back to solvency and the man who did the cutting was the reason Berkshire was willing to write the check.
That's the thing worth sitting with. The 17,000 jobs weren't collateral damage in Buffett's acquisition. They were the acquisition's precondition. He wasn't buying a company that made underwear in Kentucky. He was buying a brand that no longer had to. Under Berkshire, the brand did well. Fruit of the Loom acquired Russell Corporation in 2006 and Vanity Fair's Intimates business from VF Corporation in 2007.
It added Spalding. The label kept its place on shelves in every discount retailer in America. As an investment, it worked. Kentucky's share of it kept shrinking. On April 3rd, 2014, Fruit of the Loom announced it would permanently close its plant in Jamestown, Kentucky in Russell County and lay off all 600 employees by the end of the year.
Layoffs began in phases in June. The plant was gone by December. Jamestown was the last one. The company said global competition and cheaper production overseas had forced the decision and that production would transition to its facilities in Honduras. Understand what that plant had been. It opened in 1981 and reached peak employment of more than 3,200 people in 1990.
It survived longer than any other Fruit of the Loom plant in the state, partly because of a pipeline that carried salt-laden waste from its bleaching and dying operations out to Lake Cumberland, a pipeline that drew protest and years of litigation before the state approved it in 1993. The town fought over that pipeline because the alternative was losing the plant.
They got the pipeline. They lost the plant anyway, 21 years later. It was the largest employer in Russell County. Zoom out and the scale of what Kentucky lost is genuinely hard to hold. At its height, Fruit of the Loom employed more than 11,000 people in this one state across plants in Jamestown, Frankfort, Campbellsville, Franklin, Greensburg, Princeton, and Bowling Green, plus the corporate headquarters.
The 1987 Kentucky Directory of Manufacturers ranked it the second largest manufacturing employer in the entire state behind General Electric and nobody else. After December 2014, what remained in Kentucky was a corporate office and a distribution center, both in Bowling Green. The contraction didn't stop there.
In May of 2019, Fruit of the Loom announced it was cutting about 100 more jobs, most of them in Bowling Green, by transferring its information technology services to Wipro, an outsourcing firm based in India. Not the sewing this time. The office work. Today, Fruit of the Loom employs somewhere between 27 and 32,000 people worldwide.
Its production facilities are in Australia, El Salvador, Haiti, Honduras, Mexico, Morocco, Vietnam, and the United States. Kentucky is where the brand keeps its name and its letterhead. It is not where the brand is made. So, what happened to Campbellsville? This is the part that surprises people. The town didn't empty out.
In 1997, when the plant was still open, Campbellsville had a population of about 11,000. Today, it's closer to 11,900, and Taylor County has grown to roughly 26,000. There's a Walmart, two Kroger's, a hospital, and Campbellsville University. Friday nights, you can hear the high school drums. By the crude measure of whether people left, Campbellsville is a success story.
It lost the largest underwear factory in North America, and it did not die. Look at what the town actually lives on now, and the picture changes. Amazon's SDF 1 is still running on that ridge. Warehouse pay in Campbellsville sits around 17 to 18 dollars an hour. And for part of each year, the facility staffs up through a program Amazon calls CamperForce, which recruits people who live full-time in recreational vehicles, travel trailers, and converted vans.
They arrive in the autumn, work the holiday peak through December, and drive on. Many of them are retirees supplementing savings that didn't stretch. Between September and January, Campbellsville's population swells by more than a thousand people living in parking lots and campgrounds contracted by the company.
At orientation, the framing is explicit. It's a job, not a career. Compare that to the building's previous tenant, where the entire premise was that it was a career, where you started at 18, and people knew you by your seam for 30 years. The median household income in Campbellsville is about $49,600.
Kentucky's is nearly 64,000. The national figure is over 80,000. Roughly 23% of the city lives below the poverty line against about 12 and a half percent nationally. Campbellsville kept its people. What it traded away was the thing the plant had actually provided, which wasn't employment. It was permanence.
And the old plant itself? In June of 2009, part of the complex caught fire. It started with a propane tank exploding just after 5:00 in the morning. Then more tanks went up as crews arrived. 55 firefighters from eight departments worked the blaze for nearly 4 hours, and it still wasn't out by early afternoon.
About a quarter of the structure burned. By then, the building was being used for storage. Now, the fair version of the case against this whole story goes like this. Warren Buffett did not close the Campbellsville plant. He didn't own the company when it happened. He wasn't a shareholder, and he was not consulted.
Bill Farley closed Campbellsville. Farley moved the sewing to Central America. Farley took the company to the Cayman Islands, and Farley drove it into a $2 billion bankruptcy. Berkshire Hathaway bought the wreckage and brought the tax domicile home. It's also true that the Jamestown closure in 2014 followed the same economics that had already emptied every other apparel plant in the American South.
Hanes Brands did it. Gildan did it. Everyone did it. Berkshire runs its subsidiaries at arm's length, and Buffett has said for decades that he doesn't manage the operating businesses he owns. All of that is accurate. And none of it changes the two dates. 1998 2014 16 years apart, two Kentucky towns, the same company, the same reason, the same destination.
The first one happened under a man who is now a cautionary tale in business schools. The second happened under a man who is quoted on motivational posters. The difference in how we remember them isn't a difference in what happened to the workers. It's a difference in the debt load of the owner. Farley had to cut because he was drowning.
Berkshire cut because the numbers said to. One of those is a scandal, and the other one is management. Campbellsville never got its plant back. Neither did Jamestown or Frankfort or Greensburg or Princeton or Franklin. What the state kept was an office in Bowling Green and a trademark from 1851 that is now worth vastly more than the factories that built it ever were.
That was always the asset. Buffett said so out loud in 2001. He bought Fruit of the Loom for the strength of the brand and the talent of the man who'd cut it down to size. He got both. Kentucky got the letterhead. Go look at the tag in the back of a Fruit of the Loom shirt right now. The name is the same one those women on the ridge sewed into a hundred million garments.
It just doesn't say Kentucky anymore. It hasn't for a long time, and the man who owns it isn't the one who took it out. He's just the one who never put it back.
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