MIAMI BEACH — Squeezed by rising competition and pressure from big U.S. retailers to offer lower prices and faster turn times, apparel and textile sourcing executives headed to Material World looking for something to give their companies a competitive edge.
Many executives said a key for Western Hemisphere firms to keep up with China and other Far Eastern competitors now that quotas have been lifted will be the prompt passage of the Central American Free Trade Agreement. The accord gives North American Free Trade Agreement-like benefits to five Central American nations — Honduras, Guatemala, El Salvador, Nicaragua and Costa Rica — as well as the Dominican Republic.
Doug Means, executive vice president of supply chain and logistics at Jones Apparel Group, said the passage of CAFTA would help to make Western Hemisphere sourcing more cost effective, but that the region also needs textile and fabric resources to compete with China.
“Textiles and fabrics are a critical component to take advantage of the speed to market,” he said. “There’s a big opportunity on the fashion side because making decisions today on what’s going to be in style a year from now doesn’t work.”
Means spoke at a panel on sourcing sponsored by the American Apparel & Footwear Association, which together with Urban Expositions sponsors the show. Material World ran March 16-18 at the Miami Beach Convention Center. AAFA is lobbying for CAFTA’s passage.
Apparel manufactured in the CAFTA region may typically be shipped to the U.S. in two or three days by boat, compared with two to three weeks from Asia.
But sourcing executives noted that the key advantage offered by CAFTA is duty-free status, which will effectively reduce prices on goods from the region by about 14 percent.
“As costs become higher, speed offers less benefit,” George Pita, chief financial officer at Perry Ellis International, said in an interview. “The region is lots of small factories now, but needs investments in full-package partners for global competition.”
Along with men’s bottoms and shirts, Perry Ellis produces swimwear under the Nike Swim and Jantzen brands. In the past two years, the company has shifted its swimwear manufacturing from a cut-and-sew operation in Latin America to total production in Asia.
Joseph McConnell, vice president of strategic sourcing at Kellwood Co., said the firm has tweaked its sourcing strategy in the past year, but will hold off making major changes until it sees whether safeguard restraints are imposed on Chinese imports and whether CAFTA passes. Kellwood sources 40 percent of goods in the Western Hemisphere and Africa. If CAFTA fails, that could shift, McConnell said.
Central American suppliers said CAFTA’s passage would be key to the future of their industry.
Alfonso Hernandez, chairman and chief executive officer of Argus International, an apparel manufacturer with operations in El Salvador and Nicaragua, said non-U.S. textile suppliers had been more responsive than U.S. companies in investing in the region.
“We’re forming a coalition of five to six key players in the region called the Apparel Coalition of Central America, to negotiate as a group and offer a one-stop-shop full-package approach,” he said. “If CAFTA passes, U.S. textile people will come to the region.”
CAFTA will allow apparel makers to incorporate Central American-made fabrics in garments that qualify for duty-free treatment. Under the Caribbean Basin Trade Partnership Act, which has been in place since 2000, garments made of U.S.-woven fabrics qualify for that treatment, but Central American fabrics are largely excluded.
While many Western Hemisphere executives expressed concern that they would be unable to compete with Chinese mills now that quotas have been lifted, Chinese participants in the event were not so sure of their dominance.
Gordon Yen, senior vice president of Fountain Set, a Chinese fabric producer, said price deflation, privatization and competition from new players made the business climate in China more problematic than the rest of the world perceives.
“It’s still business as usual to us,” Yen said.
The show featured 425 exhibitors offering fabrics and trim, sourcing services and technological products. On the technology side, firms said they could supply tools to make it easier for importers to manage international sourcing operations.
“Apparel producers will be working in fewer countries with larger, more efficient factories to compete with China,” said Alan Brooks, president of New Generation Computing, a Miami-based software company and exhibitor.
The fabric component of the show featured trend information on color, prints and activewear for spring-summer 2006, along with seminars on research in fabrics with features such as protection from ultraviolet light, fire retardation, moisture wicking, antibacterial and other innovations.
“Fashion is no longer enough,” said Don Bailey, vice president of textile research at Cotton Incorporated. “We’re working on wearable electronics, such as wearable health care systems that monitor pulse rates, dehydration and body temperature and promote individual comfort.”