Ruddick Corp.’s Uncommon Thread

JON SPRINGER

The list of companies running both a thread business and a retail food business is a short one. There's Ruddick Corp. and … that's it.

But the unusual combination (Ruddick is a holding corporation that runs the American & Efird industrial thread company and Harris Teeter as separate entities) has some benefits. Ruddick executives say the diverse arrangement benefits shareholders, by producing greater risk-adjusted returns and diversity. The combination also provides each business with a lower cost of capital.

The textile industry is also a part of the culture of Ruddick: Its returns to the founding Dickson family helped to pay for the purchase of Harris Teeter in 1969.

Though its name is not well known outside of the textile world, American & Efird is one of world's largest manufacturers and distributors of industrial sewing thread, embroidery thread and technical textiles. Manufacturers of apparel, automotive materials, home furnishings, medical supplies and footwear rely on A&E to provide the materials to produce their items.

Thomas W. “Tad” Dickson, Ruddick's president, chairman and chief executive officer, spent 16 years at American & Efird. Observers say skills developed while at that business — particularly attention to processes and managing operations in multiple countries — have helped bring strong discipline to the organization.

The rapid growth of Harris Teeter in recent years has made A&E an increasingly smaller part of Ruddick's overall business. Textiles accounted for 13% of Ruddick's total revenues 10 years ago and about 4% last year, although earnings from A&E helped the company maintain profits in 2009, when deflation and a flight to value in the grocery industry threatened Harris Teeter's bottom line.