ATLANTA — Two key issues — China and Radio Frequency Identification — will be the focus of the upcoming Material World trade show.
With the vast majority of Material World attendees representing Western Hemisphere nations, exhibitors will promote the region’s advantages. But the Eastern threat looms large even at the show, where Asian exhibitors have increased by 40 percent, numbering 24 this year.
Meanwhile, with major retailers ramping up their RFID compliance programs, and vendors and retailers looking to speed up the distribution system, technology will be a high priority as well.
Material World runs May 18-20 at the Miami Beach Convention Center, moving this year from a twice-yearly format to an annual spring event. With 600 exhibiting companies, Material World expands to three shows under one roof — the fabric and sourcing section, also called Material World; Technology Solutions, and a new component called SPESA Expo that focuses on machinery.
Sourcing is expected to be the hottest topic at the trade show, subtitled “Preparation for 2005,” as apparel manufacturers plan strategies in a volatile global climate.
On everyone’s minds is what happens after the dissolution of textile and apparel quotas for the 147 nations of the World Trade Organization on Jan. 1. They’re pondering what the impact will be of a China with no quotas, the world’s largest population, strong manufacturing expertise and millions being invested in infrastructure. Executives are trying to figure out how dominant China will be, or whether Western Hemisphere manufacturers can capitalize on proximity and speed as a competitive advantage.
“Domestic and regional companies, as well as Asian firms, will all review sourcing strategies at the show,” said Tim von Gal, executive vice president of Atlanta-based Urban Expositions, which produces and manages Material World.
Despite the urgency of sourcing, trade and technology, fabric is still at the core of Material World. More than 300 exhibitors, including European, South American, Asian and Turkish suppliers and converters, will show the latest innovations in fabric, fiber, trim and components.
A trend pavilion, themed “Speed of Light,” will offer a look at 2005 fabrics. In a trend pavilion initiated last year, computer software allows attendees to choose fabric samples, code them into computers and then manipulate color, designs and application.
Educational events include trend seminars by Cotton Incorporated as well as presentations on 3D design, color management and digital printing. The profusion of color that has enticed consumers in recent seasons is expected to continue over the next two years, along with more mixed-media texture and lots of stretch.
For fabric suppliers, performance is a must. Exhibitor Milliken, a privately held textile and chemicals manufacturer in Spartanburg, S.C., will show six of the latest “smart fabrics,” which offer odor control, stain resistance and moisture management.
“Performance fabrics are very much in demand,” said Lyn Murajda, division brand manager for apparel specialty fabrics at Milliken. “It started in activewear, but more and more, performance is part of the mainstream.”
One of the other components of the exhibition, Technology Solutions, was added last year and addresses the growing importance of technology, from the latest RFID compliance to any development that can speed operations in the supply chain.
SPESA Expo is joining the Material World fold for the first time. Produced by the Sewn Products Equipment & Suppliers of the Americas, based in Raleigh, N.C., the show will add more than 200 exhibitors of machinery, from sewing machines to the latest in CAD/CAM equipment. Going forward, SPESA will be a triennial show, running in conjunction with the annual Material World event.
More than 30 educational seminars will accompany the show, addressing everything from RFID to color forecasting to how to compete with China.
“We’re approaching the witching hour when quotas disappear,” said Kevin Burke, president and chief executive officer of the American Apparel and Footwear Association, co-sponsor of the event. “Major companies are making decisions about where business is going, and many are spreading risk, hedging bets with a variety of sourcing options.”
Burke said anticipation had already affected manufacturing, as apparel production in Central America declined 9 percent from January 2003 to January 2004, and 4 percent in February. While the AAFA is lobbying Congress to pass the Central American Free Trade Agreement this year, Burke said passage is unlikely during an election year, with opposition from the U.S. textile industry and unemployment still high.
“The issue is a political hot potato,” said Burke. “Without the treaty, there will be a migration of business to China. But throwing up walls of protectionism will only make the U.S. not a world-class player.”
The AAFA will sponsor sourcing events at the show, such as the Executive Sourcing Summit, a kickoff breakfast on May 18. Heavyweight industry players such as Wes Card, chief financial officer and chief operating officer of Jones Apparel Group, and Terry Lay, vice president and chairman of Jeanswear Coalitions at VF Corp., will give the perspectives of two of the largest apparel firms in the U.S.
Mike Todaro, managing director of the American Apparel Producers Network, an Atlanta-based exhibitor, said some Central and South American companies are moving toward full-package production, but many are underfinanced and unsophisticated in their business strategies.
“The region has made remarkable strides, going from an 807 program mentality to independent manufacturing,” Todaro said, referring to the preferential trade program instituted for Caribbean countries in the early Nineties. “Whereas China, with two times more capacity than demand, can always figure a way to do something, Latin American companies tend to see a way why something can’t be done.”
Exhibitor Norman E. Gelber, president of Miami-based Customs and Trade Services, favors the U.S. or China getting out of the WTO.
“The thought of big retail, such as Wal-Mart, pouring money into China, with all quotas gone, is an outrage,” he said. “China, with all its government subsidies, could funnel that money into the military and become a major threat. America doesn’t know how bad China could be.”
Many sourcing and apparel production strategies hinge on technology. Technology Solutions, inaugurated last year, has grown rapidly to include some 50 exhibitors and subsidiaries.
RFID will be the hottest tech buzz at the show, according to Marshall Gordon, industry executive for retail, apparel and footwear at SAP America, a Philadelphia-based software provider to such firms as Nike and VF.
“People will be talking about standards, challenges, return on investment and how RFID can work for them.” said Gordon. “Wal-Mart is requiring its top 100 vendors to implement RFID by Jan. 1, 2005. Then we’ll see the balance of the industry start to adopt it after that.”
Along with Wal-Mart, Target and the Department of Defense have ordered RFID vendor compliance. SAP helps clients initiate RFID pilot programs, beginning with warehouse applications.
“The technology is sound and not complex, but it has many components, and companies are starting with baby steps,” Gordon said.
To compete globally, companies will need to stay on top of technology for a seamless supply chain, exemplified by successful models such as Zara and Chico’s, said Gordon.
First-time exhibitor Avery Dennison, a Pasadena, Calif.-based labels and adhesives company, is growing its retail and apparel information services business. Mark Hansinger, marketing director of Avery Dennison’s Printer Systems for the Americas division, said apparel business has grown significantly since the third quarter of 2003.
“Last spring, we had SARS and the beginning of war,” he said. “Now, we’ve turned a corner. Retail sales are up, and as a result, companies are spending more on equipment and operations.”
SPESA Expo will run concurrently with Material World, at the same location, under a common registration system. Around 100 of 110 SPESA members will exhibit.
“It made no sense to exhibit every year, especially given annual shows in Japan and Europe,” said Dave Gardner, director of international affairs for SPESA. “We need a Western Hemisphere show only every three years.”
With improving economies in the U.S. and Latin America, business is starting to pick up after several tough years, especially in Uruguay, Brazil, Bolivia and Ecuador, said Gardner. Demand has evolved from plain sewing machines to more sophisticated equipment.
“If Latin America is to compete, it must take advantage of its proximity, with quicker turns and better quality,” said Gardner. “Bigger companies are becoming more vertical, even outsourcing and contracting work out.”
Despite roots in North Carolina, where the textile industry has been decimated, SPESA is “110 percent in favor of CAFTA,” said Gardner, although he added that Latin American production would “thrive, even without it.”
Having established healthy Latin American business over the past decade, exhibitors must continually adjust to political and economic fluctuations there, as they steel themselves for Asian competition.
Frank Henderson, president of Henderson Sewing Machine, an Andalusia, Ala.-based machinery distributor, said countries such as Haiti and Cuba can compete with China on wages, but are inhibited by political unrest. Mexico, after years of growth potential, is now less attractive, due to government restrictions, taxes and corruption.
Business in Latin America, 88 percent of Henderson’s total, has grown in the past two years, because China used up its quotas early. Total sales increased 13 percent year-to-date over last year.
“To stay competitive, Latin America needs to concentrate on fashion and style with quick turns, which will be harder to do in China,” said Henderson, who is also exploring joint ventures in Chinese and European markets. “The biggest challenge is recognizing where the market is going.”