MATRO SETS DIVISION TO GO GLOBAL
Byline: Stuart Chirls
NEW YORK — When it comes to competing against low-cost imported fabric, at least one domestic converter has decided to join the importers rather than try to beat them.
David Caplan, president of Metro Fabrics, one of the textile industry’s largest domestic converters, is focusing his company’s efforts on developing an international division that will source fabrics directly overseas, primarily in Asia, for sale globally.
“I see most of the growth for this company coming from international sales,” Caplan said.
Metro has named Scott Wallach to head its international division. Wallach has spent 17 years in international trade, running the U.S. divisions of several Asian apparel trading companies, including his own firm that was backed by Marubeni, the Japanese textile conglomerate.
He also served as national sales and merchandising manager for Samsung America’s textile division.
Converters have been hit hard in recent years, their margins squeezed on one side by the rising cost of gray goods, and on the other by hard-bargaining apparel manufacturers, themselves squeezed by retailers seeking ever-lower prices. To get their costs down, apparel makers have been turning increasingly to overseas suppliers, especially in the Far East, where the cost of fabric and engraving for prints is lower than in the U.S. Converters are being forced to turn to new strategies to survive the changes in the market.
“We are importing fabric from Korea, Turkey, Taiwan, Japan — wherever the product’s strong and wherever the market is good for buying,” said Caplan. “The future for us is brighter overseas because the variety of goods you can get is just not obtainable in this country.”
By sourcing directly from foreign makers, Caplan hopes to beat the imports while still maintaining the reliable service of a domestic supplier. But Caplan noted that there’s a learning curve to international sales.
“The converting business, as long as you recognize it’s changed, is still a good business but totally different than what it was. The guy who just rushes into the international business, something that is much more complicated and difficult to control than domestic operations, is just making a big mistake,” said Caplan. The key to Metro’s success, he added, is Wallach, who will be Metro’s watchdog.
“I am in the Orient every six to eight weeks,” said Wallach, who also speaks fluent Korean. “I am working directly with the mills, not the trading companies. We want to do our best to get right to the source. The problem with trading companies is that you can lose control, you never know what mill they are buying from, what dye plant is doing the finishing. I’m watching every one of our orders. I choose the printer, the dyer, the gray goods. The bottom line is, we can buy it better, we can sell it better, and can offer better quality. We are controlling the product from the yarn on up — that’s our strength.”
Metro is targeting $25 million in sales through its international division in 1997, and Caplan said that eventually he plans for international sales to account for 70 to 75 percent of Metro’s total business. Caplan would not disclose overall volume of his company, but market estimates place it at nearly $100 million.
Caplan further sees the global shift as the linchpin in a larger strategic plan in which Metro will evolve into a broad-based, service-oriented company rather than a narrowly focused specialist, a move that could take it into garment manufacturing.
“Years ago, your success was based on a hot pattern or a hot fabric, something that made you different from the pack. While it’s still true you have to give people the right product, it’s just as important to offer exceptional service, to be able to give them what they want, when they want it.
“The buzzword today is ‘sourcing,”‘ said Wallach. “The Orient is already set up to handle the logistics of textile sourcing and apparel manufacturing, such as drop shipments for goods that go on to a manufacturer in a third country.”
Said Caplan, “We feel that we will do the whole apparel manufacturing package someday. But we have to learn the business. The timeline is a year, year and a half. You have to make the investment and assemble the staff.”
“You can be savaged over there, you can lose everything if you’re not careful,” agreed Wallach. “You have to proceed cautiously, but our growth is in that direction…becoming a true full-service organization.”