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Dealing With Worldly Issues

The impact of the war and SARS on sourcing in a number of global hot spots has yet to play out for makers. Here’s an update.

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NEW YORK — The war in Iraq, global terrorism and the SARS epidemic in Asia have not had a major impact on intimate apparel companies, according to executives.

But these factors are making everyday life and business even more stressful and unpleasant when added to the harsh reality of a sour economy and poor retail sales. Vendors generally said spring business is down by 5 percent against a year ago.

The result has yet to be played out for manufacturers, for whom more than 90 percent of underwear, foundations, daywear, sleepwear and robes, as well as fabrics used for intimate apparel, are sourced and produced in several global hot spots: Israel, Jordan, Egypt, Pakistan, India, Syria, Bangladesh, South Korea, Indonesia, Thailand, Singapore, Hong Kong and China.

Innerwear executives, a number of whom have offices in Hong Kong and factories in China and Indonesia, said all corporate trips have been canceled to and from Asia. In some cases, trips to the Mideast have been cut, as well. Technology, whether through e-mails or video conferencing, and air-courier pouches, have become invaluable tools in keeping communications up to speed, they said.

Despite all of the global upheaval, vendors contend their main problem stems from the war on terrorism: customs’ inspections. The process now takes two weeks or longer to clear crates and trailers off ships, instead of the typical four to six days. The problem lies mainly with the Los Angeles port, where the bulk of Asian-made goods are shipped, said makers.

However, a number of firms began taking precautions after the Sept. 11 attacks by moving up the production cycle time two to three weeks ahead. They also point out that a majority of retailers have stayed ahead of the curve by placing orders earlier than usual.

But advance planning is not helping retailers deal with travel restrictions. Many stores have canceled trips with the expectation that foreign producers will come to the U.S. But few contractors, factory owners, manufacturers and quality-control specialists are traveling to America, vendors said.

Chuck Nesbit, president and chief executive officer of Sara Lee Intimate Apparel, said: “With the SARS situation, we have cut travel to the Far East, so we conduct business through video conferencing, telephone and mailbags. It’s a less convenient way of doing business, but we are doing what we need to do to get the job done.”

This story first appeared in the April 14, 2003 issue of WWD.  Subscribe Today.

Nesbit said Sara Lee’s office in Hong Kong remains open and continues to operate with a full local staff, as do several satellite offices in Asia.

Regarding deliveries, Nesbit said: “Last fall, we anticipated there would be a war and we began planning shipments with longer lead times. Fortunately, we put in place contingency plans. But once in a while, customs will impound an entire trailer and that’s inconvenient.”

Nesbit added that Sara Lee has not experienced any terrorism issues in countries such as Indonesia, but noted: “We continue to monitor the situation.”

Richard Murray, president of Wacoal America, the U.S. unit of Wacoal Japan, said: “Unless it’s an emergency, corporate travel has been cut to and from Asia. People are not shopping in Asia right now and business is very tough. People just want to stay scarce.”

However, Murray said: “We have a lot of Chinese employees who will be taking their vacations in China. I can’t tell them where they can go on their vacations.”

Murray noted that sourcing and production for the licensed Donna Karan Intimates and DKNY Underwear lines is conducted in countries such as Israel, Turkey, Egypt and South Korea.

“Wartime events generally have had an effect on the consistency of manufacturing on time for companies,” he said. “There most likely will be confusion and concern in a postwar environment.”

Josie Natori, ceo of Natori Co., which sources in Asia and the Philippines, said: “SARS has not been an issue in the Philippines, and SARS is not a problem for us in China because our sourcing is done in Shanghai, which is not where the epidemic is prevalent. To date, there has not been any disruption in manufacturing.”

Natori said the firm has consistently shipped goods by air to retailers because, “We don’t want to take any chances.”

Mary Green, ceo of San Francisco-based ManSilk Inc., a silk knit specialist that sources and produces exclusively in China, said: “Shipments used to take four days. Now it’s 12 days or more. That’s a very big window. And the wartime ambience is affecting the way business is being done with retailers. Everybody’s on edge and we haven’t had the orders we normally get.”

“We haven’t noticed any delivery problems yet,” said David Komar, senior vice president of marketing at Charles Komar & Sons. “The war doesn’t seem to have as much effect on business as SARS does. Sourcing in Turkey hasn’t been an issue, but we’re being careful who we deal with in Singapore and Indonesia right now because we can’t be there.”

Rene Rofe, ceo of International Intimates, said: “The SARS issue is affecting us in different ways. We were one of a number of intimate apparel firms invited by Wal-Mart to be part of a global intimate apparel forum on April 3 and 4. But it was canceled because their overseas people did not want to travel.”

Rofe, whose firm sources and produces intimates in Hong Kong, China, Macau, Thailand, Pakistan, Dubai and Oman, said: “It’s interesting to check the U.S. import figures. Who would think Syria is manufacturing panties? Last year, 38,335 dozen were imported to the U.S. But I don’t think anyone now wants to travel to Syria to book panties.”

Peter Cooper, vice president of Lady Ester Corp. said SARS has not impacted the firm’s products manufactured in China, because “there’s such a pool of people there.”

“Our offices overseas are running as usual,” Cooper said. “But the real problem is what’s happening Stateside — people are not shopping. They’re staying home and watching the war on CNN.”

Wendy Shum, vice president of sales and merchandising at JWE SILK, which deals exclusively with Chinese operations, said shipping by air has become unaffordable for many companies.

“The rates have been skyrocketing, running as high as $1 to $2 apiece, no matter what it is,” Shum said. “Retailers also want the products delivered on hangers and that adds to the weight. We just can’t afford to do airfreight because we can’t make up the margin.”

Richard Leeds, ceo of Richard Leeds International, said: “We already would have sent our merchandisers and designers overseas to do sourcing of new fabrics and trims, and that’s a problem.”

Leeds said he has not experienced any terrorist incidents in Indonesia, where the firm does a good deal of sourcing and production. He added, though, that he and his staff have begun “taking a helicopter from the Jakarta airport directly to the factory” to avoid any potential problems.

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