THE FALL GUYS: MILLS, COVERTERS

Byline: Michael McNamara

NEW YORK — Textile mills and converters have become the unwilling buffer between surging fiber prices and a tightfisted consumer.
Fabric suppliers have been hit by at least two price hikes for all man-made fibers since the beginning of last year. In addition, key natural fibers — such as cotton and wool — have risen sharply from year-ago levels.
Yet despite having to pay more for fiber, mill and converter executives said they haven’t been able to pass most of those increases along to their apparel manufacturing customers. Since consumers are not willing to pay more for apparel, retailers are putting pressure on their vendors.
And that scenario isn’t likely to end soon, mill and converter executives said.
The key apparel fibers being hit with increases are cotton and polyester. Currently, cotton commands nearly 58 percent of the apparel market at retail on a fabric weight basis, according to NPD, a Port Washington, N.Y., research group. Polyester is the leading man-made fiber, with a 25 percent share of the apparel market.
In the past year, cotton has gone from 71.5 cents a pound, mill delivered, to 95.2 cents. Recently, the price of cotton futures climbed over $1. Cotton hasn’t been that high since the Civil War. Polyester staple is nearly 90 cents a pound, up from roughly 70 cents a year ago.
Yet while both have increased, they’ve done so for different reasons.
Cotton’s price hike stems from a world shortage of the fiber caused by poor weather and disease in China and Pakistan, key cotton-producing countries. As with all increases in man-made fibers, the price boosts in polyester have been caused by higher costs of key commodity chemical ingredients.
“Polyester and cotton drive the apparel market,” said Richard Arnold, vice president of Cleveland Mills. “Until they get back to some normalcy, it’s going to be difficult.”
“We can do things such as cut costs, but that only goes so far,” added George Henderson 3rd, president and chief executive officer of Burlington Industries. “Raw materials prices dominate most discussions we have these days — both with our customers and internally. When raw materials are 30 percent of your costs, that’s what happens.”
Henderson went on to say that manufacturers are not accepting price increases that come close to covering the fiber hikes.
Some mill and converter executives said one way to combat price hikes — at least in the short term — is through new, one-of-a-kind items that will allow them to charge normal markups.
“Novelty products are seen as somewhat value-added, so they aren’t as sensitive to price as a commodity fabric,” said Ed Moskowitz, ceo of Fabrictex, a knitter here. “But retailers will still try to get it for the lowest possible price.”
Among luxury fibers, cashmere and silk have been bouncing back dramatically from depressed levels of a year ago, although silk is still sharply below 1990 prices, and cashmere now is somewhat more expensive than it was in 1990. For silk, an influx of cheap apparel items created a soft market last year. Cashmere is up due to short supply. When cashmere reached $120 in 1990, it began a steady decline until last year.