Byline: Jim Ostroff, Washington, and Arthur Friedman, New York

WASHINGTON — In the two years since the breakup of the Soviet Union, Ukraine has been developing as a hot sourcing area for low-price wool coats, but the potential for growth has hit a wall.
Under a new bilateral treaty negotiated this month, Ukrainian shipments to the U.S. of woolen coats for women and girls will be cut about 4.6 percent in 1995 below this year’s levels.
An import quota of 85,000 dozen woolen coats in category 435 was set for 1995, compared with the 88,898 dozen landed here for the year that ended Sept. 30. In addition, a special quota of 25,000 dozen was set for the last quarter of 1994.
Import industry representatives took a dim view of the new pact, lashing out at its protectionist politics. New York coat vendors, however, who have been pioneering Ukraine production, took a more pragmatic view, saying that while they’re not happy with the quotas, they’ll be looking to make up the production elsewhere, including Ukraine’s neighbors — Russia and Belarus — as well as in the Caribbean Basin and with domestic manufacturing.
A U.S. team of textile negotiating officials met with their Ukrainian counterparts in Kiev for two days. This followed what was termed an informal meeting earlier in the fall in Washington to discuss concerns voiced by the Northern Textile Association about a surge in Ukrainian wool coat imports.
Carl Spilhaus, the NTA’s president, who served as an industry adviser during the Kiev talks, said the Ukraine’s plan to convert its old, Soviet-style economy to a capitalistic one and find new uses for plants that once turned out uniforms for the Soviet armed forces caused it to build a wool coat export business where none had existed previously.
Spilhaus said U.S. imports of these products last spring caused a fall-off in orders placed with New England’s four largest wool mills.
About 80 percent of all U.S. imports of these wool coats are not under quota restriction. The Ukraine is one of the U.S.’s smaller suppliers of category 435, holding 7.5 percent of the market for the year ending in September. The Dominican Republic, operating under 807 trade status, shipped almost 288,000 dozen of these coats for the year ended in September, worth about $74 million.
Reacting to the treaty, Laura Jones, executive vice president of the U.S. Association of Importers of Textiles and Apparel, criticized it as another example of the administration stifling new suppliers.
Clinton Stack, president of International Development Systems, averred the quota cutback was misplaced.
“Ukrainian coat exports were not hurting U.S. production, and it represented a light move away from more traditional suppliers in Asia and the Dominican Republic,” said Stack, who often advised foreign nations on textile matters, but, in this case, not Ukraine.
“It’s a bizarre situation where the Ukrainians were doing exactly what the U.S. wants of the former Soviet states and Russia: moving toward a free market economy and exporting to earn money,” he said, noting these Ukrainian wool coat shipments to the U.S. earned about $19 million. “Wool coat exports are the Ukraine’s third biggest venture after steel and chemicals.
One of the first coat manufacturers in the region and the largest producer of coats in Ukraine last year was Lou Levy & Sons Fashions, which made about 1 million coats, jackets and blazers combined in the former Soviet state this year.
Donald Levy, president of the diversified coat company, said: “It’s not my business to set government policy, but it is my business to react.”
“We plan on going ahead with the program to the extent that we can, and expand our overall sourcing capabilities,” Levy said.
Lou Levy owns a factory in Alabama, and makes merchandise in the Dominican Republic under 807 status. He said those areas would continue to be important next year, as well as exploring “some options we’re not disclosing.”
Barry Kay, co-president of Herman Kay Coat Co., said his firm made about 200,000 coats in the region this year, divided evenly between Ukraine, Russia and Belarus. He plans on making the same amounts next year, with production already planned out.
“Quota will be an issue, but not a big one,” Kay said. “One million units is enough for the moment. We’re not looking for growth at retail in this category. The program went fine, and the quality is good, but it’s virtually impossible to get reorders, whereas our reorder business through 807 and domestic manufacturing is very important.”
Kay said the 100 percent wool coats from Ukraine, Russia and Belarus are commodity styles that stores are using as fourth-quarter promotional vehicles, retailing for $99 to $119.
Herman Kay owns two factories in the Dominican Republic, and also manufactures at contractors in Guatemala. The company, which also makes the licensed Leslie Fay coat line, still makes about half of its merchandise domestically. The 807 and U.S. production allows for reorders and Quick Response business, as well as more detail-oriented, trendy styles.
“In today’s coat business you have to be a global manufacturer,” Kay said. “The key is establishing and maintaining a balance where price, quality and delivery are figured in.”
Billy Winter, president of the Billycoat division of G-III Apparel Group, said the program of basic wool coats the firm imported from Russia and Ukraine this year lived up to expectations in terms of quality and delivery.
However, the best-selling items at retail this fall have been more detail-oriented, casual coats and jackets, which are primarily made domestically in the firm’s own factory in Tennessee and at contractors in the South and in the New York area, Winter said.
Winter said his plan next year is to use a combination of imported program-based styles from Russia and Ukraine, with levels equivalent to this year. In addition, Billycoat will increase its domestic production, particularly with contractors here “hungry for work,” as well as more production going to 807 Caribbean basin countries such as the Dominican Republic and Guatemala. Other areas the company is checking out include areas in Eastern Europe, such as Moldova and Romania.

load comments
blog comments powered by Disqus