GREENVILLE, S.C. — Looking toward 2005, textile executives addressed strategies to remain competitive in the cotton market, trends at retail and new cotton quality measurements at Cotton Incorporated’s 16th annual Engineered Fiber Selection System Conference last week.
The three-day meeting wrapped up on June 11 at the Embassy Suites Hotel & Conference Center in Greenville and attracted a variety of industry figures including cotton growers, ginners, spinners and mill executives from the U.S. The conference also hosted international spinners and growers as well as other companies on the supply chain that use the EFS System from countries including Egypt, Mexico and Germany.
The EFS System includes a series of products — MILLNet, GINNet, QRNet and CI-EDI, for example — designed to enable mills, merchants and ginners to benefit from High Volume Instrument data, which rates cotton’s color, quality and thickness, as well as other attributes. HVI data is generated by the U.S. Department of Agriculture in about 12 classing offices throughout the cotton belt. Currently, the U.S. is the only country that rates cotton characteristics and the EFS System is the only software that makes sense of that data.
The USDA began universal testing of the crop in 1991, though Cotton Inc. created the EFS program in 1982.
Unlike man-made fibers, cotton’s consistency varies each crop season and from one bale to the next. If there were no way to evaluate it, no member of the cotton supply chain would know what it was getting, in terms of consistency and quality. Polyester and nylon, by way of comparison, are man-made, so their consistency and characteristics are easily controlled.
For example, a spinner looking to make high-quality cotton yarn to sell to a mill specializing in fine shirt fabrics can benefit from knowing it has bought high quality cotton. This aids the spinner not only for of the end product, but also for deciphering how much cotton to buy and how to run it through its weaving machinery.
At the opening dinner, Dean B. Turner, Cotton Inc.’s senior vice president of global product marketing, spoke about quality — regulating quality is the basis of the EFS System — and the research he has done which shows that consumers are not willing to pay more for quality. He explained that this is not because consumers don’t think it is important.“You can’t skimp on quality just because you’re being forced to sell at a lower price,” said Turner. “The bar has been raised in that a consumer doesn’t expect that the quality of a garment will differ if she buys something at Wal-Mart or Bloomingdale’s.”
In short, nowadays quality is becoming less of a price differentiate because it’s expected to be there no matter what. Turner said that, regardless of what distribution channel a manufacturer is targeting, if quality fails to be delivered, the consumer will be disappointed and perhaps not buy the brand again.
The EFS System technology is intended to help spinners know exactly what type of cotton they’re using, which in turn, allows them to make decisions about how to use it most efficiently.
Over 85 percent of cotton consumed in the U.S. is evaluated using the EFS System and over 20 domestic companies use it, according to Cotton Inc., including some of this country’s largest cotton spinners, such as Parkdale Mills, Avondale Mills Inc. and Cone Mills Corp.
According to the USDA, the U.S. in the crop year ending this August will produce 17.2 million bales of cotton. Domestic consumption amounts to 7.4 million bales, while 11.4 million bales are exported. The U.S. draws on its cotton reserve, built up from previous years, which boosts its total consumption figures. The world’s production of cotton for the current crop year is projected to be 87.4 million bales.
J. Berrye Worsham, president and chief executive officer of Cotton Inc., said while the U.S. remains the largest exporter of raw cotton today, Chinese competition has shrunk profit margins since retailers are being forced to source products for less. Meanwhile, costs to produce cotton domestically, such as water, chemical and technology, are not going down.
Worsham said China grows about 20 million bales of cotton per year, but produces up to 30 million bales worth of cotton apparel products per year. Though that might be good for the cotton export business, it’s bad news for the domestic apparel industry, which is an important user of U.S.-grown cotton.
Since the U.S. produces roughly 20 percent of the world’s cotton supply, Cotton Inc. is looking to license the EFS System technology to other mills and spinners in foreign countries. Spinners abroad using the program include Grupo Kaltex in Mexico, Argo Manunggal in Indonesia and Legnano in Italy. Foreign mills looking to license EFS are required to use a certain amount of U.S. cotton, said Worsham.For Cotton Inc. going forward, Worsham said there are several areas on which the company consistently focuses. They include improving the cost of growing cotton, improving fiber quality, thinking of new ways to get a better return on cotton products and maintaining a presence with the consumer.
“We can’t just survive on technical developments,” said Worsham. “We have to protect cotton from other fibers’ taking over solely on the basis of being cheaper.”
John Bakane, chairman, president and ceo of Cone Mills said his business was on an upswing — last year was the first profitable year for Cone since 1994 — until the demand from consumers fell earlier this year and continued to fizzle.
Bakane said he believes the dropoff was a result of the anticipation of the war and that consumers still have not gotten back into their old shopping habits.
As 2005 approaches, Bakane said he has noticed banks are reluctant to extend credit to domestic textile companies since they’re not sure what to expect when quotas are lifted. Part of the apprehension, Bakane said, has been caused by the high-profile bankruptcies of top mills including Burlington Industries, Guilford Mills and Galey & Lord.
“Banks used to offer revolving credit for three to five years,” said Bakane. “Now they’re only offering credit for one or two years.”
Walter Bostic, senior director of technical development at Polo Ralph Lauren, said one of the most important things to remember for cotton spinners was offering innovative product, but said it doesn’t always have to be futuristic to catch his eye.
“Mills need to continually develop new products using old raw materials as well as look at new raw materials,” said Bostic, who works at Polo’s research and development center in Greensboro, N.C. “When I say old raw materials, I’m referring to old techniques and older machinery that’s not always as state-of-the-art as a newer machine. It may mean old spinning methods and processing methods, but innovatively using those techniques to produce new and better products.”
That could mean making yarns that are softer or twisted in various ways, yarns with slubs in them, stronger yarns or yarns made into fabrics that give unique and different look, he said.Bostic also said he was impressed with the amount of innovation going into different ways of processing cotton and returned from the conference with several new ideas for new products.
Recognizing that experimentation takes time and doesn’t always fit into spinner’s production schedules, Bostic said he thinks spinners should approach product development with an entrepreneurial mind-set. It’s innovation that’s going to give longevity to the industry, he said.
“You are either an innovative and inventive-thinking person and you lead people or you are not,” said Bostic. “The main thing is to create a creative atmosphere when developing products. It’s the only way to get new and unique products into the industry.”
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