KTA: PRICE HIKES COMING

Byline: Michael McNamara

AVENTURA, Fla.--Running out of margin to squeeze, knitters say price hikes for their fabrics are on the way--and it's going to happen soon.
That was the message from attendees at the annual meeting of the Knitted Textile Association, a three-day parley that ended Sunday at Turnberry Isle Resort & Club here. The prime topic, both on the podium and in the corridors, was the surging cost of raw materials and eroding profits, and now knitters are saying that they're going to do something about it.
They pointed out that they have been paying up to 50 percent more for raw materials over the past seven months, with hikes particularly big in cotton and polyester. But the generally tough business environment--with retailers constantly pressuring apparel manufacturers on price--has blocked most thoughts of passing on increased costs.
In an attempt to begin recouping normal margins, some longtime knitters of commodity products said they've begun producing--or, are at least, looking into making--novelty knitted products. Even so, pricing pressures remain.
And while no one knows exactly how their customers are going to react, most knitters said they have no choice but to start increasing their prices.
"It's going to happen imminently," said Ed Moskowitz, president and chief executive officer of Fabrictex, a supplier of knits for sportswear, activewear and swimwear and a heavy user of cotton and polyester. Moskowitz sent letters to key customers informing them of the possibility of higher prices later in the year.
"I've been fair, and it shouldn't come as a surprise to anyone," Moskowitz said. "Margins have been eroding for a long time now, and there's only so much more we can be squeezed."
"We've passed some on, but we haven't been able to pass them all on," added Richard Arnold, vice president of sales of Cleveland Mills, a dvision of Spartan Mills. While he wouldn't give a timetable for raising prices further, Arnold did say, "It's going to happen soon."
Cleveland, a longtime supplier of commodity fabrics--primarily in cotton and blends of polyester and cotton--has also come out with its first offerings of novelty fabrics. Called Scaly Bark, the group is a collection of textured polyester, cotton and rayon fabrics.
"If you do them right, and because they're different, you can get better margins with novelties," Arnold said.
One knitter, requesting anonymity, said, "I'm sick and tired of my customers telling me, 'I can't pay because I'm getting squeezed by the retailers.' Well, that's too damn bad, because I'm much smaller than my customers, and I'm getting killed by the fiber producers."
The knitter did say he was looking at producing more rayon and polyester novelty fabrics to "hopefully recover at least some margins, but this whole business climate really stinks."
"We've been absorbing prices for nearly a year," added Joel Stern, executive vice president of dyeing for Safer Sales Corp., a knitter in Newark, N.J. "We've become more efficient, we've reduced overhead, but we have to pass these costs on soon. We can't keep them down anymore."
There are some mills, however, that say they will hold prices--for at least the time being. One is Malden Mills Industries, manufacturer of the trademarked Polartec and Polarfleece fabrics. "We are holding firm with our prices," said Howard Ackerman, general manager of the firm's apparel division. "If I were a bigger cotton user, maybe we'd be raising them. But we have been able to absorb most of the price increases in polyester. If we have to, we'll take some lumps. I think in the long term, we'll benefit from that."
Although executives from fiber companies said they understand the plight of the knitters, they too are being hit with higher prices for raw materials. Fiber producers said most of the chemicals being used in the production of specific fibers go into other end uses.
"We have absolutely no control over what we are paying for our chemicals," said one fiber producer. "The knitters can complain all they want about how we're squeezing them and their customers are squeezing them. Well, I can't speak for their customers, but from our end, we are not screwing them."
Doug Noble, vice president of sales for Lenzing Fibers Corp., a manufacturer of rayon fiber, noted that rayon prices in Europe are actually 5 to 6 percent higher than they are in the U.S. "None of these increases are going into our pocket," Noble said. "However, the retailers have to begin to understand what's happening and do business accordingly."
On the organizational front, the KTA is now grappling with the idea of recruiting West Coast knitters into its membership. The idea to incorporate the West Coast firms grew out of a KTA board meeting during the convention.
Currently, all of the 180-member firms are based in New York or in the South, said Peter Frank, division manager of Malden Mills and the KTA's new president.
"We're forming a task force to look at the possibility of having some of them join us," Frank said. "It's not going to happen next week, but perhaps by the next time we have our convention, some of them may be KTA members."
"Logistically, it could present a problem, because most of our meetings are in New York," added Peter Lazare, vice president of Gurney Industries and the KTA's executive vice president. "But with the new technology we have, perhaps we can have meetings via satellite, or, perhaps even meet halfway for important meetings."

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