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ATLANTA — Material, that is, fabric and components, may be what exhibitors will be offering for sale at next week’s Material World, but the talk at most of the booths will likely focus on the question of where in the world is the best place to produce sewn products?
This story first appeared in the October 1, 2002 issue of WWD. Subscribe Today.
With the months counting down till 2005, when quotas will be lifted among the 144 World Trade Organization members, companies are wondering what will be the future of domestic production. China, with its huge population, cheap labor and well-established textile mills increasingly offering full-package production, is seen as likely to gain market share at the expense of Western Hemisphere countries.
Still, with numerous agreements encouraging trade between North, South and Central America in place — and more being negotiated — exhibitors said they thought that local production would remain competitive. That is likely to be a key issue at the show. The Caribbean Basin Trade Partnership Act, which went into effect in October 2000, has encouraged further business relations between domestic producers and their Latin American counterparts, who together have advantages of proximity.
The effects of the African Growth and Opportunity Act, which went into effect the same time as CBTPA, are also starting to show. A contingent of 10 African exhibitors is expected to show at Material World, including a large Lesotho producer of jeans and trousers that exports 220,000 units a year and Ubungo Mill/Raffia Bags, a manufacturer with annual sales of $10 million that employs 2,000 people.
“The big question is where will we be in 2005?” said Les Miller, senior vice president of worldwide sales at American & Efird, producer of industrial sewing thread in Mount Holly, N.C. “How will business in the Americas, which is doing well, be affected by China?”
Exhibitors and attendees will be looking to explore global sourcing options, and expand their business into niche markets.
Timberland, a Stratham, N.H., manufacturer of apparel and footwear, plans to send five people to the show to look for new sourcing opportunities, and to shop for fabrics such as canvas and knits. Kimberly Krummell, category manager for supply chain, said she will look for ways to speed up basic replenishment programs.
Fashion apparel is still 50 percent of sales for New York textile converter Saxon Textile Corp., a Material World exhibitor, but the company sees bigger growth potential in performance and technical fabrics, as well as uniform and military applications. Gail Strickler, president and chief executive officer, said crossover demand among apparel producers for technical fabrics had helped business.
“Corduroy is also hot and comfort clothes are big,” she said. “The biggest trend now is almost antifashion, an ‘anything goes’ attitude. With such a lack of fashion direction, we shouldn’t be expecting retail sales to improve much. There’s no big fashion need.”
With 60 percent of the company’s production under NAFTA, 15 percent in the Caribbean and 25 percent in Asia, Saxon keeps 2.5 million yards of in-stock fabric in New York. But, Strickler said, that will change as more business moves to Asia.
“In 2005, all bets are off. China could be everything in textiles, apparel and logistics,” she said, adding that Western Hemisphere business could be damaged unless companies capitalize on proximity and communication advantages.
“It’s sad that nations in our backyard, such as Haiti, are suffering, trying to bring up their standard of living, but there isn’t enough incentive for the U.S. to develop it,” she said.
Saxon’s domestic production will decrease, as the company looks to align with vertical operations in China and other Asian countries, for the best fabric-to-finished-product sourcing. Strickler said the biggest challenges in Asian production are communications, building relationships and quality control.
One fabric company focused on selling to Caribbean factories is Texfi Marketing, a New York-based vendor of synthetic blends, mostly bottomweights. Gerald Rubinfeld, president of marketing, said retail clients, such as Kohl’s and Dillard’s, lately have inquired about Caribbean Basin sourcing as an alternative to Asia. He cited the Dominican Republic, El Salvador, Honduras and Guatemala as hot spots for developing production.
“In women’s apparel especially, which is more item driven and more fashion driven than men’s wear, companies are more interested in CBI alternatives that offer timeliness, tariff and cost advantages,” said Rubinfeld. “Niche business, with differentiated product lines, are not easily duplicated by Asia. The current 25 percent of women’s production in CBI countries for Texfi will grow to 100 percent next year.”
At the show, Texfi plans to introduce fabrics with Lycra spandex, Teflon antistain coatings, and other performance qualities, primarily for apparel, uniforms, home furnishings and other specialty markets.
Business has been “on an uptick” this year, after a difficult 2001, Rubinfeld said. As U.S. mills have closed or merged, survivors have picked up business, said Rubinfeld, who attends numerous trade shows and has increased direct mail to drum up more business.
“Nobody in the U.S. is a true manufacturer, they are marketing companies,” he said. “We link up branded lines with contractors and manufacturers.”
Peter Raneri, marketing director of Safer Textile Processing Corp., a Newark, N.J., textile mill and fabric printer, and Material World exhibitor, agreed that marketing is essential as U.S. manufacturers have consolidated. Safer has 800 employees and $90 million in annual sales.
“We had no marketing four years ago,” he said. “Now, to be a player, we have to do trade shows. We walk 15 trade shows a year for potential new customers.”
“Back-door selling,” or going directly to retailers to demonstrate product lines and services, has also become more commonplace to gain market share in a shrinking apparel retail market, he said.
Raneri said the company is looking to Asia for partnerships in key products, such as knits and wovens, and to buy gray goods.
“This is not an easy battle,” he said. “We don’t want to educate our partners so well that they become our competitors.”
Material World, produced by Atlanta-based Urban Expositions, runs Oct. 7-9 at the Miami Beach Convention Center.
About 45 percent of the 320 expected exhibitors are vendors of fabric, trim, yarn and components, with other companies offering technology, full-package apparel production, financial services or trend forecasting.
Between 3,000 and 3,500 attendees are expected, with 20 to 30 percent from outside the U.S., mostly Canada and Latin America. Last year’s show drew around 2,000 attendees, although the Sept. 11 terrorist attacks, which fell on the second day of the event, threw an unshakable pall over it.
Material World is preparing to become a twice-yearly event, with a spring show scheduled for March 17-19, 2003. Organizers are also preparing to make room for exhibitors of machinery and technology — which would be a part of the show once every three years.
“We need a show twice a year to address the seasonal fashion side,” said Tim von Gal, executive partner at Atlanta-based Urban Expositions, which produces the show.
The show has lined up support from some prominent industry groups.
The 520-member American Apparel & Footwear Association formed an alliance with the show in June 2002, and will sponsor the show for the next three years.
Sourcing is the AAFA’s biggest issue, evidenced by the recent creation of an International Network of Sourcing Executives, with between 50 and 60 current AAFA members.
“Ten years ago, our mission was to keep imports out,” said Kevin M. Burke, president and ceo of the AAFA. “Now, we are importers with retailers as customers. Most members have had no choice but to make big investments abroad.”