NEW YORK -- Despite a flattening of the denim market toward the end of last year, mill executives are upbeat about the remainder of 1994.
They said their outlook was based on a better economy, plants that are running at full capacity, the fact that orders are up and that everyone's trying new denim applications. Mill executives also said they were trying to work closer to the season, as manufacturers and retailers become more demanding.
Still, execs are concerned about the rising price of cotton, which is hampering profit margins. As of May 12, cotton had risen to about 82 cents per pound, up from 60 cents a year ago, according to figures from the National Cotton Council, the legislative and lobbying branch of the cotton industry.
"We're being severely impacted by the cotton costs," said William Dunnahoo, Thomaston Mills' vice president, apparel, who noted that his firm, like many others, was forced to raise prices for the third quarter to cover the increases.
"It will be difficult if we don't get the prices up," Dunnahoo added. "It's less than 10 percent, but still, our customers feel that's significant."
Greenwood Mills is another firm that will have to raise prices in order to stem rising cotton costs. "We are going to have to pass those costs on," said Robert Kaplan, president of Greenwood's denim division. Kaplan wouldn't divulge how much Greenwood would increase its prices. "The thing that concerns us is that margins could, and probably will, slip," he said.
"While we are taking an interest in the higher prices of cotton, it's something that is impacting everyone in the industry, so we are all in this thing together," said John Heldrich, president of Swift Textiles. "Everybody's margins are being squeezed throughout the chain."
"Still, our sold position is strong, and looks to continue so through the third quarter," Heldrich said. "The momentum is there."
Swift is currently running at full capacity, said Heldrich, who noted, "The worst of times are behind this industry. I have noticed an improvement at retail, especially in jeans, and I think it's going to be improving as we move throughout the year."
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