Wal-Mart, Penney to TDA: If Price is Right, They’ll Purchase More from U.S.

TAMIMENT, Pa. -- The domestic textile industry, starving for any amount of good news about its future, got at least a small portion on Wednesday from two giant retailers.<BR><BR>Executives from Wal-Mart Stores and J.C. Penney Co. said as the firms...

TAMIMENT, Pa. — The domestic textile industry, starving for any amount of good news about its future, got at least a small portion on Wednesday from two giant retailers.

Executives from Wal-Mart Stores and J.C. Penney Co. said as the firms continue to expand globally, they’re going to search for more top-notch domestic suppliers to service their sourcing needs.

The Wal-Mart executive, after his talk, even said the chain wants to build closer relationships with U.S. fabric suppliers.

In addressing about 350 mill and converter executives at the annual convention of the Textile Distributors Association at Tamiment Resort and Conference center here, John Lupo, Wal-Mart’s senior vice president and general merchandise manager for apparel, and W. Barger Tygart, Penney’s executive vice president and director of merchandising support operations, said as those two retailers set up more operations around the world, their customers will want U.S.-made goods.

Still, mills and converters were cautioned that the only way they would be considered for that business would be to make top-quality products at the most competitive prices possible, and to ship them quickly.

“The media has given us a lot of heat for the Made in the USA campaign, but where we’ve been able to go with U.S.-made products, we have,” Lupo said. “However, we need to be a price leader. The real issue is what the consumer thinks of our prices. We are not the fashion leaders, but we do want to give our customers better domestic products whenever available.”

On the expansion front, Lupo said Wal-Mart is planning to open eight more stores in Mexico this year and 14 more Sam’s Warehouse Clubs there. Wal-Mart currently has three stores and 10 Sam’s in Mexico. The increased number of stores, he said, will make it necessary to go with suppliers that can service Wal-Mart in a timely manner.

“We apply a lot of pressure on our domestic suppliers and they have learned to accept it,” Lupo told the gathering. “But we also pay more for U.S.-made goods where we feel it’s beneficial. We are not flag-wavers, but we try to do the right thing.”

The problem of doing business domestically, said Lupo, is that sometimes a particular supplier will not be able to fulfill a commitment, either by not having ample capacity, or, by not being able to deliver the goods on time.

Although he couldn’t say what percentage of apparel sold in Wal-Mart is made from domestically produced fabric, he did say it was substantial. In an interview after his talk, Lupo also noted that Wal-Mart has been remiss in building better relationships with U.S. mills and converters.

“We haven’t had enough contact with the domestic textile industry and that’s unfortunate,” said Lupo. “We are going to start planning more meetings, trips and seminars with key domestic mills, fiber producers and converters to establish better partnerships.” Lupo went on to say, “When it comes to establishing those types of relationships, we are well behind the efforts of J.C. Penney.”

As for Penney’s, Tygart told the gathering that two of the store’s largest private label apparel lines — Worthington, a $600 million career sportswear collection, and Arizona, a $600 million group of denim apparel — used predominantly U.S.-made fabric.

“We sell an equivalent to 70 million yards of denim fabric a year, and the wide majority comes from U.S. mills,” Tygart said. “As we continue expanding into new markets, such as Japan, the domestic mills can get a bigger chunk of that pie.”

While the TDA’s collective spirit was lifted by the comments from Lupo and Tygart, they weren’t as thrilled with what another speaker, Jennifer A. Hillman, chief textile trade negotiator, had to say.

Hillman noted that the textile and apparel industries stand to gain from the trade agreements, and heard an earful from mill and converter executives who didn’t share her positive outlook. They challenged her on U.S. trade policies, primarily GATT.

“We are going to see our business eaten away day after day with GATT,” said Albert Fenner, president of Malibu Textiles, a New York converter. “We sit here and listen to the benefits we’ll have, and how trade is a two-way street, but China, which is one of our biggest trading partners in textiles and apparel, is the biggest abuser,” said Jerry Iason, chairman of Erlanger Blumgart, another converter. “Whether through transshipment, false visas or child labor, something illegal is going on there.”

Hillman then told Iason, “While we recognize problems in China, we are working to alleviate those problems.”