MALDEN’S EURO-PUSH

Byline: Michael McNamara

NEW YORK — Malden Mills Industries’ move to begin producing its Polartec line of double-sided polyester fleece apparel fabrics in Europe is just the first step toward reestablishing itself as the dominant supplier of high performance fabrics on that continent.
Malden, as reported, disclosed plans last week to build an $80 million vertical manufacturing plant — complete with dyehouse — in Gorlitz, Germany. Construction of the plant, pending final regulatory approvals and the support of the German government and local financing institutions, is expected to begin next month, with the initial fabric shipments slated for “the end of 1995,” said Howard Ackerman, Malden’s vice president and general manager, apparel. Malden’s corporate sales of $400 million are roughly equally split between fabrics for apparel and upholstery.
While Ackerman wouldn’t divulge specific locations for future plants, he did say the firm is “looking at several different sites.”
Ackerman said that even though GATT has opened many doors to increased European business, Malden’s decision to manufacture fabric there was borne out of decade-old challenges.
“When we first started exporting into the European market about 10 years ago, we owned it,” said Ackerman, in a telephone interview last week from ISPO, the International Fair for Sporting Goods and Sports Fashion, in Munich. “Then, we began to lose control of our destiny.”
Ackerman said currency devaluations, duties of up to 12 percent, exorbitant shipping costs and the lack of Quick Response programs hampered Malden’s European performance.
“Customers were demanding shorter runs, but more frequently,” Ackerman said. “We eventually got no reorders. It was hell. We went from having 90 to 95 percent of the European performance fabric business to about 20 percent. We need to get some of that back.”
Malden currently exports about 25 percent of its production to Europe, with its global export business at about 30 percent. When export business was at its peak in Europe in 1992, it accounted for about 35 percent of Malden’s production.
All production from Germany will be for the European market. The company will continue to service North America and the Pacific Rim from its Lawrence, Mass., plant. Ackerman wouldn’t divulge the capacity of the Massachusetts plant.
While the German plant will initially produce about 55,000 yards per week, that quantity “won’t be missed” at Lawrence, he said.
Within three years, Ackerman continued, production at Gorlitz will be up to about 220,000 yards a week.
“That figure is a conservative one,” he added.
“I know the 220,000 yards will never get back the share we lost, but it’ll give us something to build on,” Ackerman said.
About three years ago, Malden began mulling opportunities for international expansion. However, it was only in the last 18 months that those efforts intensified, as the company zeroed in on such countries as Ireland, England, Scotland and Germany.
“We wanted a central location, so we could serve the former Eastern bloc countries, where there is now more cutting and sewing,” said Ackerman. “It’s a central shipping point, and things can get to all parts of Europe within three days.”
Ackerman also pointed to Germany’s highly educated work force — especially when it comes to high tech textile production — and a good supply of water and energy as key reasons for choosing that country.
In addition to the Gorlitz plant’s management team, headed by veteran Malden production executives Tony Fernandes and Jerry Bowe, the unit initially will employ 150, swelling to about 450 within three years, Ackerman said.
“We don’t want to move faster than our capability allows,” Ackerman said.
He noted, “They have to be quality goods, and again, Europeans want quicker turns and smaller dye lots. It’s a more complicated market.
“That’s why we can’t establish just one plant in Europe the size of our Lawrence plant,” he continued. “It would be too cumbersome.”
“The magnitude of the investment reflects our belief in the tremendous opportunity for growth of innovative, high quality fabrics,” said Aaron Feuerstein, Malden’s president. A merchandising team to educate retailers about Polartec performance characteristics is being established. It will be headed by Susan Roth, who will support English and German-speaking retailers from a base in Munich.

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