MATERIAL WORLD FOCUSES ON CBI
Byline: Scott Malone
MIAMI BEACH — Exhibitors at last week’s Material World show were focusing much of their attention on the nations of the Caribbean Basin, which are expected to experience a boom in apparel manufacturing and in their consumption of U.S. textiles as a result of the CBI trade parity law.
But exhibitors at the event, which ended its three-day run at the Miami Beach Convention Center on Wednesday, said even in the last days before parity became a reality, they’re still in a watch-and-wait mode. Only a handful of mills and spinners reported seeing many orders that they could attribute to the new trade law.
Further, given that the U.S. government was not expected to issue the set of interim regulations that will be used to enforce the Trade & Development Act of 2000 by Sunday, when the law went formally into effect, textile makers said it might be some time before they saw a real boom in CBI business.
Nonetheless, a handful of exhibitors said they’ve seen some orders they believe are related to the change in the trade environment.
At yarn maker National Spinning Co., headquartered in Washington, N.C., vice president of sales Steve Feder said, “We have seen an uptick in business and I believe a part of it is directly related to CBI.”
While the law allows a certain amount of fabrics knitted in the region of U.S.-made yarn to qualify for parity, Feder said that thus far the uptick he has noted has been at U.S. fabric makers, who appear to be getting ready for a rise in demand.
“Initially, it appears to be emanating from U.S. knitters, weavers and converters,” he said.
Feder added that it was hard to quantify how much of his company’s recent increase in business was related to the law.
“It’s hard to gauge, because we don’t always know the source of our customers’ business,” Feder said. “But we do know that at least some of it is a direct result.”
Similarly, Roberto Bequillardo, president and chief operating officer of garment contractor Argus International, based in Medley, Fla., said his company had experienced a pre-CBI boost in business.
Argus operates factories throughout Central America, as well as a Miami cutting room, employing about 4,000 workers in total.
Bequillardo said his company had already received orders from companies that were looking to move more of their production into the Caribbean to take advantage of the new trade environment.
In addition to drawing back some manufacturing from Asia, Bequillardo suggested that the new law would put the brakes on the rapid growth of the Mexican apparel industry in recent years.
“What we will see more of is the transfer of production from Mexico to Central America,” he said.
Noting that overall Mexican apparel imports into the U.S. over the last three years grew at a 40 percent annual rate, blowing past the Caribbean’s roughly 18 percent growth rate, he said that he hoped these numbers “will switch back the other way for a while.”
Argus is preparing to expand as a result of the new law, he added.
“We ourselves are preparing to set up a cutting room in Central America, but we’re not going to do away with our Miami cutting,” he added.
Despite the handful of people who’ve already seen new business as a result of CBI parity, the majority of exhibitors interviewed said it probably will take a few months for CBI sales to take off.
“The CBI thing is new for everyone,” said Don Kilgore, director of international marketing at New York-based mill Springfield LLC. “It will take time for everyone to get up to speed.”
He said he believed it was “premature” to predict how much new business would develop as a result of the law.
In the meantime, he said, Springfield is reaching out to those companies producing garments in the Caribbean to see what fabrics they are using, and to learn if there are fabrics that will be needed in the region that Springfield isn’t currently making.
There is a level of general concern among industry observers that many of the garment-making companies working in the Caribbean in recent years have not been using U.S. cloth and that some of the fabrics they are using are no longer made in great quantities domestically.
That’s what Springfield’s reacting to, Kilgore said.
“We want to find out what’s being used down in Central America and start working in those areas,” he added.
He also said it’s yet unclear what moves U.S. mills’ overseas competitors might make as a result of this change in the law.
“It remains to be seen how the Far East will react to this,” he said. “There’s no question that the law has given us an edge, but the Far East won’t take this lying down. If they come in and drop prices, I don’t know how long our edge will last.”
It’s also important to note that the CBI region is not new territory for many domestic mills.
“We do a lot of business in the Caribbean Basin,” said Jack Ferguson, vice president at Delta Mills Marketing Co., with headquarters in New York. “We want to see if there is more of it to be had.”
He noted that over the last two to three years, the company’s sales of fabrics to makers of men’s wear have grown substantially. He said he hoped that the women’s wear business would follow.
However, he noted that as many mid-sized women’s apparel makers have turned away from U.S. fabrics and local production in favor of Asia in recent years, it might take some time for them and domestic mills to reestablish relations.
“They have to reintroduce themselves to American mills,” he said.
Indeed, for a number of the company’s top mills, which haven’t been major participants in domestic trade shows in recent years, coming out to the show was part of an effort to reach out to the region.
DuPont Lycra brought a contingent of 11 mills and spinners, including Delta and Cone Mills, to its DuPont Lycra Global Assured Pavilion. The move was part of an effort to help its customers take advantage of the changing trade environment.
“The North American mills have been handed an opportunity and they need to take advantage of it,” said Steve McCracken, president of Wilmington, Del.-based DuPont’s Lycra spandex operation.
He described CBI parity as “an opportunity for the U.S. mills to go on the offensive again, but it’s going to require some investment.”
Just as U.S. companies were out trying to make sure they profited from the new laws, Caribbean nations sent representatives seeking to attract more investment in their economies.
El Salvador sent a contingent of people from Pro-Esa, a government agency which promotes investment in that country.
Juan Zepeda, an investment advisor with the group, noted that there are currently 218 apparel factories in El Salvador, with about a 50-50 split between locally owned factories and foreign-owned ones. Currently, investors from both the U.S. and Asia own factories in the region; his group was at Material World to attract more U.S. investors.
Just as there was a variety of opinion on how quickly CBI business would ramp up, exhibitors were also divided in their feelings on the show itself. A number of companies said that they had expected to see a bigger event with more traffic, while others said they were pleased to see some new faces that weren’t familiar from the regular circuit of textile shows.
“Customer traffic is not what we’d hoped for,” said John Morris, director of outerwear with Brookwood Cos., a New York converter. “It’s a little below expectation.”
National Spinning’s Feder added, “traffic has been light, but we’ve made some new contacts.”
He said he had hoped to see more Central American buyers at the show.
“We’re a little disappointed that there weren’t more,” he said. “But it was the first show and we think it will evolve.”
Similarly, Steve Selip market director at Greensboro, N.C.-based Guilford Mills Corp. described traffic as “moderate” and said he had hoped to see more people at the event.
Nonetheless, he added, “these things take time” and said that overall the event was “decent” for a first show.
Taking a very different view was Ronnie Mack, vice president, with New York converter Saxon Textile Corp.
“Traffic has been excellent and steady,” he said. “The best part of the show is that we’re seeing new customers, especially from the Caribbean Basin, Central America and South America.”
Likewise, Fred Baumgarten, president of New York converter Majestic Mills, said he was happy with the turnout, particularly from Caribbean-based companies whom he hadn’t previously known.
“That’s the exciting part of it,” he said. “It’s truly a new marketplace with a new series of faces.”
For their part, show organizers said they were pleased with the event.
“We’ve had a pretty overwhelming response that this was a very good first show. I’ll be very happy when they take that qualifier off,” said Tim Von Gal, executive vice president with Atlanta-based show organizers Urban Expositions.
Fairchild Publications, publisher of WWD, has sold its joint-venture stake in the Material World show back to Urban Expositions.
Von Gal said that traffic exceeded his organization’s expectations, and added that he considered the caliber of the attendees a more important measure of the show.
“It’s not only a matter of how many, but who,” he said.
On Friday, he said that organizers believed that more than 2,500 buyers had attended the show but added that final attendance figures were not yet available.
The next scheduled edition of Material World is for Sept. 10-12, 2001, also at the Miami Beach Convention Center.
Within the next month, the company expects to decide whether or not there will be a spring 2001 edition of the show, Von Gal added, though he noted that there will be a spring edition beginning in 2002.