MAKERS TOLD AGILITY IS CRUCIAL TO SUCCESS INWORLD OF GATT

Byline: Jim Ostroff

MIAMI--As global apparel competition intensifies in the new GATT age of trade, U.S. firms must adopt nimble manufacturing, sourcing and joint venture strategies to survive.
That was the message James Jacobsen, vice chairman of Kellwood Co., brought as a featured speaker to the 18th Miami Conference on the Caribbean and Latin America held here this month.
"Flexibility in our own operations, in that of our suppliers, in working with retail customers and with governments is the key for success," he said.
Jacobsen said all garment makers, and especially U.S.-based ones, will be forced by provisions of the GATT Uruguay Round to rethink their operations.
Beginning Jan. 1, all 124 GATT-member nations are to begin phasing out apparel import quotas over 10 years. Import duties also are to be reduced. Without import protections, U.S. firms fear their products will be displaced from the domestic market by those from low-cost producers, especially those in the Far East.
Jacobsen, whose St. Louis-based firm expects to do $1.4 billion in sales this year and operates in the U.S. and many foreign countries, asserted quick response in every facet of production and distribution is vital in this new international trade environment.
Overall, he said, "this means shorter lead times, smarter workers, improved quality and product ready to ship to the ultimate customer" wherever it is made.
Kellwood's strategic plans for the inevitable changes are keyed to GATT's three quota-phaseout stages, in which quotas on 51 percent of the textiles and apparel trade are to be eliminated, with the remainder simultaneously ended on Jan. 1, 2005.
"During the first three years, beginning in January, our strategy centers on strengthening and solidifying our current customer base, while also looking for new opportunities, encouraging our sources to invest in new technologies and improve the education levels of their workers," Jacobsen said.
In addition, Kellwood will "encourage our raw material suppliers to improve their responsiveness, producing smaller lot sizes and shorter lead times."
This recognizes that "price pressure, margin pressure, will be getting tougher all the time," he said. "Logistics suppliers also will be brought into the fold, as transit times and schedules must improve both their frequency and reliability."
During the four-year second stage, which begins in 1998, Jacobsen said Kellwood's plan is to encourage its suppliers to implement new technical and management techniques to boost cost-competitive production.
"The countries that have high annual growth on quota items will be the bigger players in the world," he said.
"In the longer term, seven to 10 years and beyond, with the ultimate elimination of quotas, the question is where do we supply our customers from," he said. "As global marketers we will supply them regionally, using quick response, from around the world."
The goal, he noted, is to supply apparel to the Western Hemisphere from factories located there, and to Europe, Africa and Asia from facilities in Asia.
Another key Kellwood strategy during this period, beginning in 2003, is to establish "partnerships and ventures throughout the chain to take advantage of our partners' strengths to provide the best value to the customer," Jacobsen said.
Conceptually, too, he noted, apparel origin rules should be changed "to cover assembly operations to incorporate components that do not originate in this hemisphere; to recognize there is a continual gathering of components through the chain using the skills of different areas. We will need governments' cooperation to facilitate that."
Equally important, Jacobsen said governments' help will be needed in a host of other areas. Customs rules and processing technologies must be revised to speed up product entry, he said.
"Products do no good sitting in a port or warehouse. They must be moved quickly into the stores where customers will buy them," he said.
He said governments should invest in worker training and infrastructure in particular.
"People talk about labor costs, but cheap labor is not the only element in the equation, and perhaps it is becoming less important," he said. It is vital, he said, that "we supply retailers at competitive prices, but we also must be able to get our goods there in a timely manner.
"You can have the most efficient, productive company," he said, "but if you can't serve your customers and meet their requirements, none of this matters."
--Fairchild News Service

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