For nearly a century, the red-brick headquarters of Cannon Mills here has been the citadel of Southern corporate resistance to organized labor. That tradition was also revered in Kannapolis, Greek for "city of the looms," where favored employees once were housed in hundreds of identical white clapboard homes that surround the headquarters.

As recently as two years ago, the local Chamber of Commerce of this company town of 37,000 passed a resolution saying that "the traditional and contemporary principles of this community are rooted in an existence without organized labor."

That all ended today.

Pillowtex Corp., parent company of Fieldcrest Cannon Inc. (formerly Cannon Mills), surrendered in a decades-long war, saying it was withdrawing all legal challenges to the June election victory by the Union of Needletrades, Industrial and Textile Employees (UNITE) and recognizing it as the legal representative of the 5,200 employees at the company's six area plants. The final vote approving the union was 2,270 to 2,102.

"The times have changed," said Pillowtex Chairman Charles M. Hansen Jr. "Life is one of change, and one has to adapt to change."

Today's action certifies one of the biggest union election victories in the South, long the most difficult region for the labor movement. North Carolina, which is the home of 30 percent--168,000--of the nation's textile workers, has a unionized work force of just 4.2 percent, the smallest percentage of any state. Workers here cannot be compelled to join unions or pay dues even when their workplace is organized.

The victory comes as unions, which need to sign up 350,000 new members a year just to keep up with current membership levels after attrition and turnover, have added nearly half a million members this year in a major push for survival.

Bruce Raynor, secretary-treasurer of UNITE, has been involved in efforts to organize the workers here since 1974, a period that covers most of his career with the union. "This says to Southern textile workers and owners that workers can organize a union in this bastion of anti-unionism," he said.

After initially challenging the election results, Hansen said he decided to drop all legal action and accept the union because "at the end of the day I realized a continuation of the litigation was not in the best interests of this company."

He said the tensions over the election were "nothing but a divisive force within our factories."

Negotiations on a new contract for workers at the six area plants are scheduled to begin in early December. As part of today's agreement, the company agreed to include in the new contract another 3,000 previously organized workers at company plants in North Carolina and three other states.

Workers at the six nonunion plants organized today earn on average a little more than $8 an hour, or $2 less an hour than their new union brethren. Pensions for employees with as much as 30 years service can be as little as $50 to $100 a month.

Jimmy Beaver, 59, a maintenance technician who has worked at the company 41 years, said his pension will be about $160 a month when he reaches age 65.

Kem Taylor, 35 and a 19-year veteran of the mills, said workers at the nonunion plants receive one week's paid vacation when the plants shut down in July no matter how long they have worked for the company, and get three days off at Christmas and two days at Thanksgiving. There is no sick leave.

An activist in the most recent union election campaigns, Taylor said she believed most of the employees who voted against the union did so out of fear Dallas-based Pillowtex would close the plants if the union won the election.

Hansen made it clear today he has no plans to close any plants and move the work overseas. He said he has invested millions of dollars in new technology since buying Fieldcrest Cannon and did not plan to abandon it.

The union victory here comes 25 years after the events that prompted the movie "Norma Rae"--concerning a J.P. Stevens & Co. textile plant in Roanoke Rapids 100 miles away--helped focus national attention on the plight of the Southern textile worker and the often ruthless tactics of employers to keep the unions out of their factories.

Union efforts to organize Southern textile mills date back to the 1920s. But the then-Cannon Mills steadfastly fought the unionization efforts, using paternalism and its control of almost everything in the community to pressure its employees to vote against the union.

Until 1984, when it was incorporated as an independent community, Kannapolis was owned lock, stock and barrel by the company. Police, fire and school employees all worked for the company, while employees living in the company homes were charged just $65 a month, including all utilities.

"It was like masters and children. You didn't want to cross the man who provided your bread and butter," said Charles Edgison, 60, who has worked off and on at the textile company since 1957.

Four times in the past 25 years, workers at the plants here rejected union organizing efforts. But twice the union protested the election results to the National Labor Relations Board and the federal courts, which ordered new elections after documenting major labor-law violations by the company.

The violations ranged from threatening to fire employees if they voted for the union to interrogating employees about their union sympathies.

Raynor today credited Hansen with running a fair campaign against the union in the last election but gave most of the credit to the NLRB and the federal courts.

CAPTION: Union supporters at the Fieldcrest Cannon plant in Kannapolis, N.C., cheer the announcement of the union vote in June. The company challenged the vote.