By and  on April 20, 2010

WASHINGTON — Textile and fabric manufacturers in the Western Hemisphere must establish a stronger regional identity through coordinated initiatives on issues ranging from trade policy to financing to remain a viable force, executives said.

Members of the National Council of Textile Organizations ended their three-day annual meeting here last Wednesday with a consensus that, in order to meet low-cost competition from Asia, they have to do a better job of connecting retail companies with producers in the region to build awareness about sourcing, as well as the benefits of faster turnaround time and knowledge of the consumer base.

The meeting also touched on the challenges created by China’s currency policies, trade preference reform, allowing Haiti to bring in more duty free items, customs enforcement and the need for increased dialogue between U.S. companies and their counterparts in Central and South America.

Executives said they debated specific options regarding the difficulties companies face in trying to get credit. Much of the talk focused on purchase order financing, in which an order from a major retailer or brand can be considered as a loan guarantee for a company that doesn’t have enough collateral otherwise.

They also discussed stabilizing the financial markets that do lend to the textile and apparel industry, primarily factors.

Gail Strickler, assistant U.S. Trade Representative for textiles, said the USTR is working to communicate the special needs of the industry to the Export-Import Bank of the U.S. and other creditors. Many companies in the U.S. manufacture items that are exported to other countries where they are made into apparel that eventually reenters the U.S.

“The ability for our banking system or our factoring system to understand what I would call interim exports was basically nonexistent and that is really where our focus has been,” Strickler said. “We are making progress.”

Tightening of credit during the recession, coupled with the bankruptcy last fall of the largest domestic factor, CIT Group Inc.,made finding financing one of the most troubling issues facing the domestic industry, she said.

Walter Kosciow, vice president of the Short Term Trade Finance division at the Export-Import Bank, said he and his team have worked with the USTR and factors to solve the problem.

“We are trying to think outside the box to come up with different ways to help your industry,” Kosciow told executives. “Hopefully, we can come up with some creative solutions.”

NCTO president Cass Johnson pointed out that this year’s meeting, for the first time, included representatives of foreign trade associations from Mexico and Guatemala, who participated in lobbying on Capitol Hill.

To establish a united industry voice on trade issues Johnson said the NCTO would work with trade associations from Central America, the Andean region and Mexico, among others, to establish a council representing the entire hemisphere.

“It’s very important to establish a regional identity that shows that textile and apparel industries throughout this region support so many jobs,” said Wally Darneille, the departing chairman of the organization, who also is president and chief executive officer of Plains Cotton Cooperative Association in Lubbock, Tex.

Darneille is being succeeded as chairman by David Hastings, president and ceo of Mount Vernon Mills Inc., based in Mauldin, S.C.

Francisco Sanchez, undersecretary for international trade at the Commerce Department, said during a panel discussion: “I recognize how important integrating commercially [within] this hemisphere is.”

Sanchez said his counterparts in Latin American countries have expressed concern that China has emerged as the top trading partner for an increasing number of countries in the region.

He touted initiatives intended to help boost U.S. exports, such as increasing the number of trade missions and broadening the pool of foreign buyers that the commerce department lobbies on behalf of U.S. companies.

Kim Glas, deputy assistant secretary for textiles and apparel at the commerce department and chairwoman of the interagency Committee for the Implementation of Textile Agreements, said there might be a role for the government in helping to connect retailers, brands and manufacturers within the region.

Carlos Arias, president of Guatemala-based Denimatrix and president of the board of the Apparel & Textile Commission in Guatemala, and David Garcia, president of Canaintex, the National Chamber of the Textile Industry in Mexico, both said they were interested in closer cooperation within the hemisphere.

The benefits of producing in the hemisphere have not been communicated well to retailers and brands that have grown accustomed to sourcing in Asia, they said.

“We need to start thinking as Europe thinks — as a region,” Garcia said.

Most regions in the world took a hit in the economic downturn, but the Western Hemisphere suffered more than most, despite having the advantage of location, said Jerry Cook, vice president of international trade and government relations for Hanesbrands Inc.

“It’s not about distance; it’s not about proximity,” Cook said. “No one pulled China closer. It is about competition.”

The Western Hemisphere is a complex and difficult place for brands to source because of complicated trade rules, he said.

The industry is also focused on trade issues such as the Trans Pacific Partnership agreement and potential duty free benefits for Bangladesh and Cambodia, said Andy Warlick, president and chief executive officer of Parkdale Mills Inc. in Gastonia, N.C.

The USTR is in the early stages of negotiating the Trans Pacific Partnership, a regional free trade agreement that was forged in 2006 between Singapore, Brunei Darussalam, New Zealand and Chile, and could also include Vietnam, Australia and Peru. United States textile and apparel companies oppose Vietnam’s inclusion because it is considered a nonmarket economy.

“[The domestic industry] exports a lot into Central America,” Warlick said, adding that if countries in Asia had access to the duty free benefits proposed it “will shut down business here.”

The Central American Free Trade Agreement that was enacted in 2005 features duty free trade between the region and the U.S.

Another priority for textile executives is pressing Congress and the Obama administration to confront China on what critics charge is its undervalued currency that drives down the cost of Chinese imports and puts U.S.-made goods at a competitive disadvantage.

Sen. Lindsey Graham, (R., S.C.) pledged to the group of executives he will press hard to advance a punitive bill he has cosponsored with Sen. Charles Schumer (D., N.Y.) targeting China’s currency policies, regardless of whether China allows its currency to appreciate against the dollar.

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