Review and forecast

Week of January 28, 2002

Taking industry temperature: Fever hits some, but not all

By Devin Steele

In an effort to “take the temperature” of the textile industry and its suppliers for this annual Review & Forecast edition, Southern Textile News sent questionnaires to targeted leaders regarding the health of their companies and their expectations for the new year and beyond.

Following are reports based on their answers. Several responded on the condition of anonymity.

National Spinning Co.

Despite the textile industry’s worst year in decades, National Spinning was an exception to the rule as business in 2001 improved year over year. Jim Chesnutt, president and CEO, said cost cutting and strong fourth-quarter demand helped buoy the Washington, NC-based yarn spinner.

“We do very little the same as in the past,” he said. “We are operating under a completely different corporate culture.”

While trimming costs internally, National Spinning also made purchases that it saw as opportunities for growth, Chesnutt said. The company bought a spinning plant and a dyeing plant from Glen Raven.

With cost-improvements in place and a better-run business, Chesnutt said he is expecting a slight improvement this year, he said, in spite of these impediments: the strong U.S. dollar, raw material prices, customer credit problems, health care costs, weak retailers and government.

Asked to peer into the future, he said his company has adopted the “last-man-standing rule.”

“There will be a textile industry remaining in the U.S. and we plan to be a part of it,” he said. “We hope to grow our company with emphasis on customers, cost reduction and diversification out of the apparel industry. There will be failures, however, but we believe there is a place for textile companies with the right business model. Many of our friends will not be here.”

Quaker Fabric Corp.

Bolstered by growth and market share in the U.S. and growth in exports, Quaker Fabric Corporation, Fall River, MA, also saw improvement last year.

The company added more than 200 employees to support its growth, introduced products into the domestic and international decorative upholstery markets and developed its contract and top-of-the-bed markets.

Quaker anticipates more improvement this year as it continues to increase its U.S. market share and exports and to develop new markets, said Larry Liebenow, president.

Standing in the way, perhaps, are the strength of the domestic economy and the slowness in Congress’ approval of trade promotion authority for the President Bush, which could further open international markets, Liebenow said.

The company plans to stay viable through product quality, product differentiation, service, use of information technology and the development of international markets, he added.

“We believe that Quaker has entered one of the most exciting periods in the company’s history,” Liebenow said. “Over the next five to 10 years we will see substantial growth based on further market share growth, new products in the market and a high degree of product in the international marketplace.”

Cheraw Yarn Mills

Business declined last year over the previous year at Cheraw Yarn Mills, as both volume and margins were down.

The private yarn spinner, based in Cheraw, SC, assigned the blame to a number of factors, according to Malloy Evans, president. Among them: strength of the dollar and weakness of Asian currencies, which allowed the flood of yarn and garment imports into the U.S. to continue; the recession; and the events of September 11.

Asked if the company was forced into layoffs, consolidations, closings or cost-cutting measures or was forced to change the way it conducted business, Evans replied, “We have experienced all of those conditions,” he said. “There is absolutely no way to run a business effectively in today’s textile climate.”

Evans added that the company is pinning its hopes on improvement this year. “We certainly hope that as we pull out of the recession and other recent events, that 2002 will be better than last year,” he said.

The “devastating” impact of the huge monetary exchange enjoyed by foreign countries importing into the U.S. could hinder progress, however, he cautioned.

Factors that could work in Cheraw’s favor are less domestic competition, commodity business and imported yarn, Evans said.

Eltex U.S., Inc.

At Eltex U.S., Inc., Greer, SC, business conditions were worse in 2001 than in 2000, primarily as a result of the downsizing and closure of textile plants and the terrorists attacks, according to Michael Smith, vice president of sales and marketing. The company, which produces electronic yarn control equipment for textile machines, was profitable, however, he added.

Eltex wasn’t forced into layoffs or consolidations, but being a smaller company, it made a strong effort to control costs and spending, Smith said.

The company added a new type of electronic end-break detection sensor with multiple uses, which is less expensive than its traditional sensors and systems, he added. New business last year included some orders to enhance and upgrade older type of end-break detection systems in warper creel processes.

“We are excited about the prospects of doing more of this as we get into 2002,” Smith said. “We are encouraged by forecasts for manufacturing and sales in 2002 and we anticipate improvement in several areas in which we provide our products.”

An upswing in the economy — and foresight by elected officials — could be the boost needed in manufacturing, he said.

“Our hope and prayer is that our politicians on the local, state and national level recognize the plight of our industry and will take positive actions to level the playing field and stop selling us out to foreign competition,” he said.

The biggest obstacle to a turnaround is the continuation of plant closings, he added. “This has to stop!” Smith said. “Our hope lies in the prospect that plant closings will stop and the government will act positively and responsibly in protecting our industry and our people.”

Smith, as others, predicted that industry restructuring will continue, but survival is in the cards for those who differentiate themselves through quality and other means, he said.

“A major emphasis has to be on making the product right the first time, with the highest quality,” he said. “Importance also has to be placed on cost conservation, quality and high efficiencies. We are excited about the future.”

Lang Ligon & Co.

Lang Ligon & Co., a Greenville, SC-based supplier of machinery and accessories for the preparation, weaving and finishing sectors, saw a downturn in 2001 but did remain profitable, according to Harrell Ligon, vice president.

Mill closings and cutbacks by customers were the biggest factors contributing to business conditions last year, said Ligon, adding that a market that continues to shrink could hinder a turnaround.

Multiple product lines have allowed the company to hold its own, Ligon said, but other alternatives may be required in the next few years.“We expect to be fully involved in the textile industry, but we must look outside this one industry, too,” he said.

Hubtex of North America

After an “OK” start in 2001, the “bottom fell out about May” at Hubtex of North America, said Chuck Holmes, vice president. The company, a Spartanburg, SC, maker of material handling equipment, did manage to turn a profit last year, though.

“Activity has begun to increase beginning in December 2001, but it is still below January 2001,” he said. “We forecast 2002 to be slightly ahead of 2001.”

A backlog of orders from 2000 accounted for the healthy start last year, according to Holmes, but the abundance of plant closures soon offset that early surge.

“Plant closings meant many customers were no longer in the need of our equipment and services,” he said. “In addition, the used equipment from the closed plants competed with our new equipment sales. Those plants that did not close were slow to invest also.”

The attacks on America, meanwhile, had a “chilling” effect on an already difficult situation, Holmes said. He added, though, that the country’s spirit, along with business conditions, are beginning to recover.

“A general increase in activity began in December, we feel in large part to a more positive feeling in this country that gave rise to consumer confidence,” he said.

Stagnation forced Hubtex of America into the first layoff in its history last year and costs were curtailed where practical, Holmes noted.

Ironically, the shrinkage of the industry could have a silver lining, he said.

“The closing of some plants will mean better pricing and business levels for those remaining in business,” he said.

He added that a general improvement in consumer confidence could result in more business “if politics do not discourage this. It appears that consumer confidence is higher when we balance the budget as opposed to cut taxes. The best would probably be to do both.”

Future success lies in keeping its market share in some areas and gaining market share in others by expanding sales of current products and picking up new products, Holmes said. With an expansion of product line, he sees, at worst, the company maintaining its present staff and, at best, increasing staff, he added.

“We also see increasing our efficiency and a continued increase in the training and education level of our staff,” Holmes said.

The D E Williams Co.

Officials of Charlotte, NC-based The D E Williams Co., a maker of sliver cans and related products, said they are expecting a better year than 2001, when they turned a “small” profit. They made that assertion due to a “nice backlog of orders,” which enabled the company to add about 75 percent to its labor force.

Davis Williams III, president, attributed the lean 2001 to fewer companies and tight-budgeted customers. But by improving the quality of its products and service, D E Williams is positioning itself to be the supplier of choice, Williams said.

Yarn spinner

An executive with a yarn manufacturer, who asked that his name nor company be given, said his firm was forced into laying off about 150 people last year through one plant closing and several downsizings.

These moves were necessary as a result of customers going out of business and cutbacks in retail purchasing, he said.

The manufacturer added some new business and is attempting to expand into new markets, he said. However, as several customers were added, others were lost last year as well, he pointed out.

He said he anticipates a recovery in 2002.

“We expect the consolidations that occurred last year, in conjunction with new contracts booked for this year, will make 2002 better,” he said. “The capacity utilization of our plants will make a big difference in cost to produce goods, which will help margins.”

Hindrances include an extended recession, increased quota and/or tariff concessions by the U.S. government to countries such as China and Pakistan, a stronger dollar and accelerated closures of domestic producers of fabric, he said.

The hope for this industry in the coming years lies in being part of a supply chain that “makes sense being in the Western Hemisphere,” he said. “It makes sense because of the technical nature of the product, quick turnaround or other logistical advantages,” he said. “Each product needs to be evaluated on whether it is a product that can survive, and those products need to be developed.”

Fabric maker

A top-level official with a fabric maker, who wished to remain anonymous, said his company made money last year, despite enduring a decline in sales and a 16 percent slide in volume.

A number of factors came into play, he said, including the U.S. and world economy; the continued restructuring of U.S. textile businesses; September 11; raw material, energy and labor costs; and customers’ poor financial conditions.

The most drastic step the company had to take in reaction to these conditions was a reduced running schedule, the official said. “Cost control and inventory control are essential in any economic environment and is a focus for our company,” he said.

The manufacturer introduced several new products and entered a new application market for its fabrics in 2001, he said.

A better year is expected in 2002, but several factors must aid the cause, he said. They include an improvement in the U.S. and world economies; financially strong customers; new innovations; good, strong competitors; cost control; good suppliers; and energy and raw material cost containment.

The company weaves, dyes and finishes a very specialized product and provides tremendous service and quality, the executive said, all of which bode well for its future.

“Our future is outstanding if we continue to deter competitive threats and manage the company for appropriate growth in specialized U.S. and foreign markets maintaining a strong balance sheet,” he said. “All industries will have ups and downs and you must work each day to be ready for these occurrences.”

As for the industry as a whole, he said, “the textile industry as we have known it in the past will not exist. Change, modernization, innovation, market selection and specialization are extremely important. Commodity manufacturing will be difficult to maintain after 2005. Help from our government will not come in any long-term measures. Realization of this and changing now for this is the future.”

Yarn processor

An anonymous manager of a yarn processor said that earnings were flat in 2001, but a profit was made. The company lost some commodity business to competition but made up for that loss with new, higher-market products, he said.

The manufacturer was forced to meet lower prices across the board last year. In turn, the company asked its suppliers to help by lowering their prices in areas where the firm was expanding business.

The company increased its labor force by about 5 percent and added some special development equipment.

The official said he expects improvement this year. The firm plans to grow through an expanded territory sales effort and continued development of unique products, he said.

He admitted that doing business in the future will be difficult, but companies that change faster and diversify will live to tell about it.

Review and forecast

Week of January 28, 2002

ATMI: industry sees black in gloomy year

WASHINGTON, DC — After suffering its first-ever financial loss the year before, the U.S. textile industry managed to squeeze out a modest profit in 2001 — but not without paying a hefty price in the form of job losses and plant closures.

The American Textile Manufacturers Institute (ATMI), in its year-end economic report, noted that the industry turned a profit of $300 million last year after losing $360 million the year before. Excluding the 2000 loss, the 2001 numbers were the lowest since the 1960s, the organization pointed out.

The textile industry in 2001 lost about 65,000 jobs, or about 13 percent, to bring its total work force to under 450,000, the institute said. More than 100 textile plants were closed last year, according to the group.

Textile mill shipments fell for the sixth year in a row. Since peaking in 1995, shipments have fallen consistently, and, in 2001, were down another 12 percent to less than $47 billion.

Textile corporate sales declined for the fifth consecutive year in 2001, dropping 7 percent to less than $54 billion, the lowest sales level since 1988.

The work week in the textile industry was less than 40 hours during each month of the latter half of 2001, pulling the average work week for the year down more than an hour from that of the prior year. Meanwhile, the index of total hours worked in the industry fell 12 percent, reflecting the recessionary pace of industry conditions.

“These numbers reinforce the need for the United States government to act swiftly to combat the crisis in the American textile industry,” said ATMI President Charles Hayes, chairman of Guilford Mills, Greensboro, NC.

Among other statistics, following two years with no change, the producer price index (PPI) for selected textile mill products rose marginally in 2001. Within the total in 2001, the PPI for yarn was down 2 percent from the prior year, while that for broadwoven greige fabric rose 1 percent.

While total mill fiber consumption fell seven percent last year to 15.1 billion pounds, the drop was mostly attributable to dramatic declines in demand for fabric and yarn intended for apparel and home furnishings uses, according to ATMI. Thus, total fiber consumption on the cotton spinning system, where yarn for most apparel and home furnishings use is produced, fell nearly 19 percent in 2001.

The weakness in domestic demand resulted in an almost 1 percent decline in imports of yarn, fabric and made-ups. However, despite the overall decline, textile imports increased in 2001 from such large Asian exporters as Pakistan, Thailand, Korea, Taiwan and Indonesia.

U.S. textile exports fell almost 3 percent last year, led by a sharp decline in exports to NAFTA partners Canada and Mexico and to the European Union. However, a near doubling of exports to the CBI countries almost compensated for the declines to other destinations.

Review and forecast

Week of January 28, 2002

New year brings hope for recovery after ‘sock shock’

By Sally Kay

While some people were pleased with business results in 2001, they were few and far between. And with the current state of world events, almost everyone seems glad to begin the new year. Even in good times, it seems to provide a feeling of a fresh start and a new beginning.

So how will 2002 turn out? I don’t think any of us has the perfect, crystal ball view, other than to say that the challenges of previous years (such as increased competition, tighter margins, a difficult labor market and increased technological requirements) will continue to challenge even the best companies. Those in the volume business face global competition. Those in the niche business not only are challenged with developing unique product(s) but also finding outlets to carry them.

Retail sales of all types of men’s, women’s and children’s hosiery were 4.9 percent in calendar 2000, at $6 billion. While women’s hosiery continued to slip (-2.7 percent overall and -5.2 percent in pantyhose specifically) the big shocker was a decline in socks (-5.5 percent). This is the first time the sock industry has seen a downturn in close to 10 years.

For the first three quarters of 2001, both of these downward trends continue, but at a much slower rate. Through September, total retail sales of hosiery in dollars were -2.8 percent compared to the same nine months in 2000. While sheer hosiery was still down (-2.2 percent), pantyhose retail sales were off only -1.1 percent. And socks, while still down, were -4.2 percent.

Final fourth-quarter figures could certainly make both of these sectors appear much better — or much worse. We’ll know soon. We already know that consumers spent more over the holidays than they initially intended to spend, but we don’t yet know how much of it was allocated toward hosiery.

So, the consumer appears to still be spending, even with unemployment rising above 5 percent nationwide. Our challenge is that, in many ways, the ultimate consumer is not our immediate customer. The retail industry continues to go through dramatic consolidation and competition.

There have been major layoffs in traditional department stores and closings of many retail doors. Several of the major retail chains continue to sputter. When retailers go into bankruptcy, their suppliers don’t get paid; and if they close, there are fewer stores and less retail shelf space to fill.

But after talking with many of our industry professionals, here is their take on the current situation: Many believe that the resurgence of the U.S. industrial economy during the first half of this year may bolster consumer confidence, drive the unemployment numbers down and the retail economy could continue its restructuring in an orderly manner. These events could provide us with a 2002 that, challenge-wise, appears very similar to the last two years: price competition; tight labor market; and the constant search for innovation.

And many of the companies that are around today have been through these challenges for several years and are generally prepared to compete in such an environment. It’s the “wild card” events, such as September 11, that create a sense of uncertainty.

These types of events are now engraved in our minds and add a new concern for plant security and employee safety for almost any potential disaster scenario, as well as the potential business impact.

But at least for the moment, there is an uplifting feeling of starting a new year with a clean slate.

Good-bye, 2001 … it is history.

Welcome 2002 … now is where we need to focus to build our future.

Sally Kay is president of The Hosiery Association, Charlotte, NC.

Review and forecast

Week of January 28, 2002

NTA continues to help members expand business opportunities

By Karl Spilhaus

The opportunity created by the Caribbean Basin Trade Partnership Act (CBTPA) was the focus of much of the activity of The Northern Textile Association in 2001.

Notwithstanding the current economic conditions in the industry, the 147th Annual Meeting of the association in Ponte Vedra, FL, held just two weeks after the September 11 terrorist attacks, showed a remarkably strong level of support from the membership of NTA. Attendees and spouses came from all over the United States, as well as from Canada, the Dominican Republic, France, Guatemala, Honduras and Jamaica. Our theme was “How to do Business in the Caribbean and Central American Region.”

The program speakers included the Hon. Minister Phillip Paulwell, Jamaican Minister of Commerce and Technology; Arturo Peguero, Grupo M and Dominican Association of Free Zone; Henry Fransen Jr, Honduras Apparel Manufacturers Association; and Carla Caballeros, Guatemala Apparel and Textile Exporters.

This year, NTA plans to continue to help our members identify, develop and expand markets for North American textile products. In May NTA will be exhibiting members’ products at the Guatemala Apparel Sourcing Show, which is billed as the only international show specialized in the apparel and textile industry in the Caribbean Basin region. We have put a call out to our members for samples of American textile products to show in this important venue.

The current weakness in the textile sector makes it more important than ever that American producers look for new markets and seize every opportunity that our new trading arrangements offer.

With regard to international trade, it is vital that the textile industry, and our elected officials from textile-producing states, hold the Congressional leadership and the Bush Administration to the promises made to get the passage of Trade Promotion Authority. In that regard, NTA, and our member companies individually, have written to the textile delegation in Congress. We have told them that, due to the severe economic crisis confronting the U.S. textile sector, it is extremely important that Congress and the administration work together to expeditiously and fully bring these commitments to fruition.

We especially brought attention to commitments that can be fulfilled in short order with regard to dyeing, finishing and printing; special duty or quota treatment for Pakistan; textile quota phase-out; transshipment, fraud and full enforcement of textile trade agreements; and reciprocal market access.

Recover this year?

“I believe that some time in 2002 we should start experiencing much better conditions than those that we are living now,” said NTA Chairman Jonathan Hurstfield-Meyer. “Maybe the times are a changing. I hope to see the turnaround in the third or fourth quarter, with business returning to 2000 levels.”

Hurstfield-Meyer cited as factors in favor of this turnaround occurring at that time: low gas prices, low interest rates, low inflation and tax cuts.

“The main issue is that of consumer confidence — people have got to start feeling less scared and paranoid and get back to normalcy,” he said.

The factors against are continued job losses through restructuring, excess manufacturing capacity and a media driven by a need for sensationalist content.

The 148th Annual Meeting of the Northern Textile Association has been set for September 22-24 in Prouts Neck, ME. For information contact NTA at (617) 542-8220.

Karl Spilhaus is president of the Northern Textile Association, Boston, MA.

Review and forecast

Week of January 28, 2002

Cotton Inc. keeps eye on boll, despite industry woes

By J. Berrye Worsham

The year 2001 was challenging not only for Cotton Incorporated, but the entire textile industry.

Farm commodity, textile yarn and even retail clothing prices continued to decline from already unprofitable levels. The domestic textile industry closed more than 100 mills in 2001 in response to slow growth and strong foreign competition.

However, despite the depressed state of the U.S. textile industry last year, Cotton Incorporated remained committed to its corporate mission of increasing the demand for cotton through research, creativity and strategic planning.

Cotton Incorporated also addressed profitability issues with dedicated programs on seed breeding, fiber development and fiber quality. In addition, the company still maintained a strong promotional arm to keep the demand for cotton products high. And it succeeded.

Every five years, the USDA requires each commodity check-off program to commission an independent study on the effectiveness of its activities. This past fall, Research Triangle Institute, with assistance from North Carolina State University, completed its review of Cotton Incorporated’s program. The results were impressive. The comprehensive economic study showed a very positive return on investment for the funds paid into the program.

Not only did the report state that the program has a continued, strong and positive effect on the demand for U.S. upland cotton, but the returns to producers and importers exceeded the investment by at least a 3 to 1 ratio.

Additionally, Cotton Incorporated’s research and promotion efforts contributed to a near-record demand for cotton in the United States at 35 pounds per capita (estimated 2001).

Cotton Incorporated remained and will remain committed to programs that foster strong acceptance of cotton products by the U.S. consumer. Following is an overview of Cotton Incorporated’s accomplishments in 2001:

Strategic Planning

The Strategic Planning Department made economic and market analysis presentations to more than 60 companies in the United States, Mexico and Asia. The textile industry was addressed in 2001 through the department’s publications: Textile Consumer, The Monthly Economic Letter, Denim Report and Executive Cotton Update.

Strategic Planning conducted two retail evaluations in 2001, which provided a wealth of data about a variety of products and how they are sold in the U.S. The studies, focusing on women’s undergarments and sheets, covered 15 retail channels, 130 brands and more than 1,000 products.

Through a combined effort with the Textile Research and Global Product Marketing departments, Strategic Planning was able to refine product development and marketing strategies to better meet industry and consumer needs.

R&D areas

Agricultural Research continued to play a significant role in furthering productivity and quality advances of U.S. upland cotton. In 2001, the department was involved in more than 300 research projects in the areas of quality, yield and pest management.

Notable achievements for the year included:

Transgenics: A new research project produced genetically modified plants that have improved cold tolerance and increased yield. Meanwhile, studies that confirmed the principles of variety selection for profitability remained unchanged. Tests of transgenics with pest-control attributes, versus non-transgenics where pests are controlled in traditional ways, will be continued as new varieties appear on the market.

EasiFlo™ Cottonseed: A new gin stand was invented that can remove up to 2 percent more linters during the ginning process. The Powered Roll Gin Stand is showing remarkable effectiveness in the field, and older gins can be retrofitted with this technology to extract the largest amount of fiber possible.

In addition, seven new print advertisements were created for dairy publications to enhance awareness of how cottonseed benefits dairy cows.

In 2001, the Fiber Quality Research Department significantly increased its use of the AFIS System, an analysis tool that provides detailed information about fiber properties. Thousands of samples were processed to gain greater understanding of fiber quality issues, resulting in statistically relevant data for the cotton breeder.

New technology was also employed to better assess the effects of shrinkage on a variety of fabrications, with results that are more statistically reliable than previous techniques.

Fiber Management Research developed new Engineered Fiber Selection System® (EFS®) programs and related services, while updating existing programs, such as MILLNet32™ and USCROP™, to keep these products on the cutting edge of technology.

The GIN-Net™ Program was introduced at the Beltwide Cotton Conference held in Anaheim, CA, earlier in the year. GINNet is an analysis tool that assists cotton growers and ginners to improve the quality of the cotton they produce by giving them the ability to assess and compare their crops using HVI data from the USDA.

The 14th Annual EFS System Conference played host to 304 attendees representing 141 companies and 10 countries, including Canada, Germany, India, Indonesia, Israel, Korea, Mexico, Northern Ireland and Taiwan.

The Textile Research and Implementation department was involved in more than 500 technical meetings worldwide in 2001, 60 percent of which were held outside company offices, while the remaining 40 percent were conducted at the world headquarters in Cary, NC.

The department provided the agenda and speakers for COTTECH technical conferences in Mexico City, Singapore and Kobe (Japan). Technical papers facilitating the use of cotton products were presented to mill personnel in fabrication and dyeing and finishing techniques.

The Fiber Processing Lab continued exploration of new spinning technologies, specifically Murata Vortex (MVS) spinning and Suessen Elite compact spinning.

Additionally, new spinning trials were conducted on new upland cotton varieties, such as the Ultima variant. Finer count yarns were spun, which were previously unattainable with other upland varieties. These yarn counts greatly improved efforts to develop new and finer fabrics for women’s wear as well as higher thread count sheeting and shirting yarns.

In 2001, the Fabric Development department received more than 22,000 requests for knit and woven samples worldwide. While some companies directly adopted these constructions, numerous designers and engineers took inspiration from samples and modified them to fit directly into their product lines.

The department was also actively involved with Cotton Incorporated’s corporate initiatives to expand cotton’s use in a variety of markets, including women’s wear, stretch apparel, nonwovens and rugs.

New dyeing techniques were developed by the Dyeing and Finishing department that resulted in better colorfastness and durability. One advantage of the new techniques is that they don’t require salt, so a cleaner effluent is produced, which is better for the environment.

Chemistry was used to address numerous performance issues, such as abrasion resistance, odor management and anti-microbial treatments, with applications for the medical and food service industries.

The Nonwovens department in 2001 targeted absorbent products, including the hygiene market where demand for cotton has immense growth potential. The Absorblend™ Seal was introduced to manufacturers of cotton nonwoven products in an effort to take advantage of the strong bond between consumers and cotton.

The department also provided manufacturers with research and technical assistance in areas such as fiber finishing and processing. In addition, numerous samples of cotton nonwoven materials reached the industry in 2001, utilizing the highly successful Fabricast™ system of displaying and cataloging fabric developments.

Research continued on flame retardant finishes for cotton raised-surface apparel in the Textile Chemistry department. This Importer Support Program-funded project studied products such as fleece, velour, velvet, terry and other cotton and cotton blended fabrics.

The challenge for the department is to maintain aesthetics, such as color and softness, while minimizing strength loss. The economics of application are also under investigation since any successful process would need to be cost effective.

Sourcing Summit

In partnership with Cotton Council International (CCI) and the Importer Support Program, Cotton Incorporated sponsored the first Sourcing CBI Summit last April in Miami. The main purpose of the forum was to facilitate the use of upland cotton in the ever-expanding Caribbean Basin textile market by helping to create meaningful business relationships. Representatives attended the summit from 120 CBI manufacturers, 102 U.S. mills and 70 U.S. importers.

Advertising

In 2001, the Advertising department took two noteworthy actions. The first was that the designated target audience for television was significantly reduced from three large demographic groups (teens, women 18-49 and men 25-54), to the much smaller core group of cotton’s key customers: women 18-34. Since many women undergo important life changes during this age span — first job, first apartment, marriage, first child — it represents a significant opportunity to build loyalty for cotton textile products.

Advertising also produced two new commercials as part of the current Fabric of Our Lives® campaign, Hotel and Office, which highlight the types of colorful, stylish cotton clothing that men and women wear to work and to go out. Modest changes were made to two existing commercials as well: denim and underwear.

Another highlight of 2001 was the introduction of a highly colorful U.S. trade print campaign using small, lifelike dolls dressed in attractive cotton clothing. Distinctive and dramatic, the dolls became memorable spokespersons for Cotton Incorporated and added synergy to the overall trade effort.

Marketing

To enhance cotton’s presence internationally, the Global Product Marketing department participated in numerous trade shows and conferences around the world. A series of COTTECH conferences were held in Mexico City, Singapore and Osaka, Japan in 2001.

The department continued to focus on companywide initiatives. These initiatives are designed to build the demand for cotton while specifically targeting key market areas, such as women’s wear, stretch apparel, absorbent products, area rugs and “Cotton Is Better,” which extols the virtues of cotton fiber.

It was also a busy year for the Marketing Communications department with both the trade and the consumer press. Successful events ranged from assisting Global Product Marketing with the press at the CBI Sourcing Summit, to press breakfasts organized for trend forecasts from the home fabric and apparel fashion departments.

In 2001, broadcast media, such as radio and television, turned to Cotton Incorporated for information and on-air appearances. A successful series of video news releases, highlighting important cotton themes, were made available to television and cable affiliates nationwide, sending Cotton’s message to millions of viewers across the country.

Retail Marketing focused its efforts in 2001 to enhance retail programs that would drive incremental sales of cotton merchandise and establish cotton as the preferred fiber of choice. Successful spring and back-to-school promotions at 42 malls and more than 2,400 stores nationwide gained exposure for the Seal of Cotton and generated millions of dollars in incremental cotton sales.

A strategic partnership with Federated Merchandising Group showed considerable success. More than 16 million cotton Charter Club products (Federated’s largest private label brand) were supported at point-of-sale in 325 stores through national advertising and direct mail. The partnership is expected to continue this year with a high-profile spokesperson and multi-venue media tour.

Last year, Cotton Incorporated’s Fashion Marketing department used its expertise to create and present color, fabric and silhouette trends to key decision makers at mills, manufacturers, knitters, retailers and converters.

Collectively, they traveled the globe in 2001 to cities such as London, Paris, Milan, Hong Kong, Tokyo, Singapore, Los Angeles and New York, to find and report on those trends that will have the greatest impact on the cotton market in apparel and home textiles.

More than 23 weeks were spent getting cotton ideas into the market, with presentations made to 1700 companies and about 4,000 industry leaders.

J. Berrye Worsham is president and CEO of Cotton Incorporated.

Review and forecast

Week of January 28, 2002

Where’s the vision? Industry leader shares views

Editor’s note: Nicholas Picciotti, vice president of Seville Dyeing Company, recently wrote President Bush a letter with accompanying commentary related to his troubled company and the plight of the domestic textile industry. He shared the piece with other elected officials, along with STN. At the time of his writing, December 22, 2001, he had announced that his company would discontinue operations as of December 31, 2001. That date has since been postponed, however, as outside interests are pondering the possibility of purchasing the Woonsocket, RI-based company.

In his letter to the president, Picciotti wrote, “It breaks my heart to have to make that announcement. I have had many loyal and dedicated workers in my employ for many years. I feel as though I have betrayed them. As I considered what brought us to the current state of difficulty, I wrote down my thoughts and I have attached those pages here. I sincerely hope and pray that my concerns about the future of manufacturing in America have some influence on your position on this issue.”

We believe his comments, printed here, are appropriate for public consumption in our Review & Forecast edition.

More than 20 years ago, my brother Bob and I, together with our good friend and business associate Sandy Rosenberg, joined forces and took over a business on First Avenue in Woonsocket, RI, that specialized in dyeing cloth in big, steamy dye vats. The plant was old, the machinery was old and the business was barely getting by financially. Over the years, we bought new machinery, modernized and enlarged the plant, expanded to other mill properties nearby and added cloth printing and sophisticated, high-pressure dyeing machines.

The company that we formed, Seville Dyeing Company, has been immensely successful! We have processed hundreds of millions of yards of dyed goods and many more millions of yards of printed goods. Just five years ago, we employed more than 500 people, produced 74 million yards of finished goods and had sales of over $51 million dollars. Our payroll that year was over $15 million dollars.

Nevertheless, on July 14th of this year, we had to file a state receivership bankruptcy petition, Rhode Island’s version of Chapter 11! Our work force is down to 140 people, our production is one third of our best year, the payroll is a mere fraction of what it was and our losses are astronomical.

Just a few years ago, we were riding on top of a wave of success and anticipated many years before we would be thinking of retiring. We negotiated agreements with the City of Woonsocket to help us control the costs of power, water and sewer usage. We bought and rehabilitated two plants on River Street (the former Quincy Dye and the former Verhoelst Manufacturing plant). We were renting storage space in several locations in the city and even arranged to lease the former Jed-Delta Dyeing Plant on Allen Street.

How can a business that was so immensely successful, have to file for bankruptcy?

In a nutshell, the problem is that our country is being bombarded with cheaply produced imports and our government seemingly has no policies, plans or desire to protect manufacturing jobs in America! The implications of this fact are astounding and frightening. Where are jobs going to come from in the future? Who will supply our citizens and our military with vital necessities in times of national crisis? Where is the vision of our political leaders? Can’t they see that our country is gradually heading to an economic system that will be totally reliant on other countries for all of our basic needs? Is this really where the country wants to go?

Who are we competing with?

We’re not competing with Canada, England, France, Germany or even Japan, who all have wages, benefits and economic systems that are comparable to America’s. We can fairly compete with those countries and win enough accounts to keep the plant running for years. On an even playing field, I will bet on the quality, efficiency and creativity of the staff at Seville Dye any day. We have the best workers!

Instead, we are competing with countries such as Indonesia, where a salary rate of 22¢ per hour is common, or India, where there was a massive strike in the garment industry last year when the largest manufacturer in the country tried to lower the wage rate from $1.91 per hour to $1.09 per hour! Many workers in the textile industry in China earn $1 per day. How can we compete with that?

Last year, the United States imported more than $250 million dollars worth of textile products from Pakistan. At the time, Pakistan wasn’t the cautious wartime ally that she has become since September 11th. She was instead the leading supporter of the Taliban regime in Afghanistan (one of only three governments in the world to recognize the Taliban.) She was home to the 7,500 madrassas (Islamic schools) where 750,000 to a million students learn to recite and obey Islamic law and where they are drilled to distrust and revile the West and in particular, the United States. “Jihad” rings from the voices of the children in these “schools.” Another 7 to 19 million children under 18 years of age, many of them preteens (estimates vary, but the government agrees with the lower figure) in Pakistan work full time in textile plants, mines, farming and as laborers. They make pennies a day. The carpets that they help manufacture sell for thousands of dollars in American stores. Do our government’s policies help these children? I don’t think so! Do they help American manufacturers? Definitely not! Why was Pakistan allowed trade privileges in this country?

In China, hundreds of thousands of people work in prison manufacturing facilities. They have no income. The goods that they make carry designer labels and sell for top dollar in the United States. For the lucky textile worker who is not in prison, he can expect to earn $1 per day.

Indonesia exported 8.2 billion dollars worth of textile products to the United States last year. It has been estimated that for every billion dollars of textile imports that we bring into this country, we lose 100,000 textile manufacturing jobs.

American manufacturers simply cannot compete against these labor rates! We would already have lost all of our manufacturing capability in this country if there weren’t wide oceans and several tiers of middlemen between the cheap labor of the Asian continent and the American marketplace.

No environmental concerns

But labor rates aren’t the only advantage that Asian manufacturers enjoy. To a great extent these companies have no environmental concerns. They don’t have to worry about installing million-dollar scrubbers on their smokestacks, waste recovery systems or pollution abatement equipment. They don’t care how much their effluent may destabilize the plant life of a nearby river. I’m not complaining about how we do things in this country. But I am trying to illustrate the differences in the cost of manufacturing between America and other countries. If we want to maintain manufacturing in America, the differences in the cost of manufacturing have got to be factored into any remedy to the concept of leveling the playing field.

NAFTA and Mexico

In 1992, when NAFTA (the North American Free Trade Agreement) was being contemplated by the American, Canadian and Mexican governments, Ross Perot made the statement, “That great whooshing sound that you hear will be the sound of American jobs being sucked across the border to Mexico.” Supporters of NAFTA will tell you that our country has benefited greatly by this law and they quote impressive dollar figures to make their point. But what none of them will admit is the fact that NAFTA did indeed suck hundreds of thousands of manufacturing jobs out of our country and continues to do so today.

What does this mean to American manufacturers? Companies that move to Mexico operate with Mexican labor rates that are a fraction of those being paid in this country, they are exempt from all of the environmental considerations and the worker protection legislation that we have and they can ship their products into the United States duty free. How are we supposed to compete with that? What is the vision here?

Further, agreements are already in place to allow Mexican truckers to deliver anywhere in the United States. The next whooshing sound that you hear will be that of all of our largest trucking companies moving to Mexico with all of their fleets of semis! It will happen! Economic principles dictate it.

We are all aware of the traffic in drugs that now crosses the Mexican border, no doubt with a wink from numerous Mexican government and law enforcement officials. The business of smuggling illegal aliens (most recently including terrorist sleepers) is no longer a cottage industry. It is a multimillion dollar element of the Mexican economy. Millions of people have been “muled” across the Mexican border into the United States. Mexico is the major transportation point for all drugs and illegal aliens that come into our country. Is there any question of what else will come inside those Mexican semi-trailers besides cheaply produced goods?

Perhaps NAFTA and the preferred status that it gives Mexico can be justified on the basis of dollar revenue that flows across the border each way, but does anybody factor the negatives into that equation? Where does the money come from for the expensive (but truly inadequate) border patrol enforcement? Where does the money come from to pay the unemployment benefits of an American worker who isn’t needed because some company uses illegal aliens? Who pays the jobless benefits and family maintenance and health costs of families who lose their manufacturing jobs? Who pays for the effects of drug abuse throughout our society?

Eventually, the cost of all of these negatives fall onto the shoulders of the American taxpayer. That being the case, one would think that our politicians would have some concern! Perhaps the dollar benefits of NAFTA aren’t real at all!

These people need jobs!

What is the vision that our government leaders have for this country in the future? Where will our own citizens who aren’t well educated and computer literate find jobs that have benefits and a future? Perhaps a third or more of the American work force are people without high school degrees and without technical training. Where they will find jobs is not some future problem for academics to debate. Manufacturing jobs are flushing out of this country at an alarming rate right now!

And ask yourself, where are all of the immigrants (both legal and illegal who are streaming into this country) going to find work? Already, we have shipped vast portions of our manufacturing base to other countries. The American textile industry is a mere shadow of its former self. Most textile products that you see in American stores come from somewhere else. Providence was once called “The Jewelry Capital of the World.”

Today, that industry is minuscule compared to the past. You would be hard-pressed to find American made costume jewelry in a store. There are no significant textile manufacturing machines made in America any more. Looms, spinning frames, twisters, winders (such as the giant Leesona Winders that were once made in Warwick) are all made in other countries now. When was the last time you saw any American-made electronic device, automobile part, camera, kitchen utensil or pair of shoes?

The increasing cost of manufacturing

As if foreign labor rates weren’t enough of a problem, then we are confronted with the increases in the cost of manufacturing. You might think, “Well, Nick, every business in the world has to confront similar increasing costs of manufacturing.” If all countries had the free enterprise system, that might be true. But in many Third World countries, power, oil and gas companies are owned by the government, which sets favorable rates for its own manufacturers. And to a great extent, the government owns all of the manufacturing plants in these countries. They can control costs any way that they want in order to give advantage to their exports. Their main concern is providing jobs for their workers, not profits.

By working very carefully, sharpening our pencils, watching our expenses, creating no waste and coming up with fast delivery times, Seville Dye used to be able to make competitive offers in certain niches of the fabric industry. But in the time between when we made a sale and the time that we shipped the finished goods, what happened? Our cost of manufacturing skyrocketed .... our slim profit margin disappeared and we took a beating on the sale. Then China comes along and submitted even lower prices the next time!

To say that our cost of manufacturing has skyrocketed in the past few years would be to grossly understate the problems that face us. In the previous full fiscal year period, our energy costs (electricity, gas and oil combined) more than doubled on a per yard basis. When that increase is 9 percent of sales, the results are devastating. Our unit cost of the city’s sewer system increases 9 percent per year. In real dollars, that means that just the increase in our sewer usage fees over a three-year period will be almost a half million dollars.

Who benefits from unleveled free trade?

We are in this mess because of wide-open “free trade.” Free trade is a nice concept in many ways. But there must be some leveling process factored into trade between countries with widely disparate economies.

Open trade should be reciprocal and leveled. Who benefits by unleveled free trade? Any traitorous American manufacturer who moves his business from this country to another to take advantage of the cheaper labor rates, relaxed environmental regulations and open borders. Such companies are often called “multinationals.” Is their political clout so vast that they can convince our politicians to allow manufacturing to disappear in this country?

Scratch any politician and ask him if he wants to see all manufacturing disappear from America and he’ll beat his chest forcefully swearing his fidelity to the American worker. But the truth of the situation is that all of the elements needed to eliminate manufacturing in this country are already in place. Where’s the vision?

The value of small business

We learned during the Reagan and Bush Sr. years and during the recent economic boom periods that jobs in America come from small businesses, not the massive multinationals. If one company such as Seville Dye adds 100 jobs a year in every city in America, millions of people will be off of the unemployment rolls and onto payrolls. Logic dictates that our government should have policies that are more favorable to small businesses than the multinationals. This is common sense! Why isn’t it happening?

What’s the value of small business? We are all familiar with the story of Aaron Feuerstein, the owner of Malden Mills who continued to pay his workers full salaries after a devastating fire at his Malden Mills Complex on a cold December night in 1995. This was an amazing gesture from a generous man. His workers were able to enjoy the Christmas season and look forward to having their jobs back as soon as the plant could be rebuilt. And rebuild he did!

Mr. Feuerstein cared about the people who work for him. And he did what he thought was the right thing for his employees. If he had been thinking of the bottom line (like manufacturers who abandon the American worker for cheap labor rates elsewhere) he wouldn’t have spent the $257 million dollars that he did. He decided that people were more important than the bottom line.

Malden Mills recently filed for Chapter 11 protection, just as we did. He is in danger of losing everything. Why? Foreign imports, market conditions and cost of manufacturing. Who would you rather have as your employer, a multinational conglomerate with their sharp penciled accountants or Mr. Feuerstein?

I know how Mr. Feuerstein feels about his help. In the 30 years that I have been here, I have seen many people come into this plant, work as hard as they could, earn an impressive salary and be able to give their families the full benefits of American citizenship. Seville Dye employment might be called “bridge employment.” We serve as the bridge for immigrants who are coming out of primitive economic systems with skills that are useless in this country.

We offer them a decent hourly wage rate and overtime, far beyond the minimum wage. We give them health coverage for their families. We train them and then we provide them the opportunity to work as many hours as they want. For people who previously made $100 per year, they are astounded at the opportunities available to them and their families in the American economy. I have seen many workers follow this road. In one generation they move from working in rice fields in Southeast Asia to being landlords in the Fairmount section of our city! This really is the American dream! Unfortunately, we are losing that dream! Manufacturing jobs are disappearing in vast numbers!

As an illustration of how a successful business can affect your financial well-being, consider that for many years, Seville Dye has paid one third of the operating expenses of the Woonsocket Municipal Sewer Treatment Plant. If we are not able to stay in business, all of the other users of the sewer treatment plant will have to shoulder the burden of the costs of running the facility. That’s the Woonsocket homeowner!

Every city in America has small manufacturers who contribute significantly to the cost of maintaining the municipality. But there are so many other ways in which small businesses benefit the community.

Seville Dye was a principal sponsor of the Woonsocket Even Start School in Fairmount. We have provided camping scholarships for numerous boys to attend Boy Scout Camp Yawgoog. We were one of the sponsors of the Thanksgiving and Christmas dinners for the needy that were held at a local restaurant for many years. We have done this for so long, that it became a family tradition for some less fortunate families to enjoy these dinners on those holidays.

It broke my heart that we weren’t able to sponsor the dinners this year. The volunteer contributions of Seville Dye and its employees to the community are so numerous that I could never list them. We have loved being in Woonsocket and being active members of the community.

What can you do to help preserve manufacturing jobs in America?

As you read this, you might be wondering, “What can I do about this?”

Inform your legislators that you want the playing field leveled in the area of international trade. Encourage legislation that favors small business. Discourage legislation that favors unrestricted “free trade.” And most important of all, “Buy American!”

Yes, it will cost you more in the short run, but a booming American economy helps all of us in the long run by allowing lower taxes, by paying less in health and living costs to people who are working rather than on welfare rolls and by the decreased cost of running our cities.

Pleasant memories, broken hearts

You can’t run a business such as this for so many years and not become very involved in the lives of your workers. I have seen men who could hardly speak English come into this plant, work so hard over the years, learn the language, develop their skills and eventually work their way into supervisory positions. I’ve seen these same men use their money to buy investment housing that will provide them with the retirement nest egg that they will need in their later years. I’ve seen their children enter our local public and private high schools and excel. I’ve seen their children go off to college, ready to work hard at their studies so they can graduate and grab their share of the American dream.

My heart melts as I see the effects of foreign imports on Seville Dye. We are drowning! We have enjoyed many triumphs, a few losses, great success and now, unhappy uncertainty.

In all the years that I’ve been doing this, there has been no greater payoff to me than meeting, training and working with my wonderful employees. Our team has produced all those millions of yards of dyed and printed material. What an honor it has been to work with these people. How happy I am to have been the means to success of so many of my workers.

Recently, an employee sat in my office and asked me, “Boss, I’ve been working here for 15 years. Have I done a good job for you?” I said, “Yes, of course you did a good job for me! You did a great job! I have no complaints!” He said, “Boss, in all these years, I’ve only been sick out of work three times!” I said, “Yes, I know you’re an example to everybody else who works here a dedicated worker. I couldn’t ask for more!”

He said, “Boss, what more can I do to make myself valuable to this company?” I said, “You have always given me your best effort! I can’t think of a single thing more, that I could ask you to do!”

Then I gave him his severance pay and told him he no longer had a job. We both cried.

We need manufacturing jobs in America!

Review and forecast

Week of January 28, 2002

New school facility attracting industry interest

By Daughtry Hopper

Construction of a new lab/administration building at the NC Center for Applied Textile Technology is expected to be complete by late spring. With the promise of top-notch textile labs, an auditorium and additional computer labs, the facility will be available for both the textile industry and the community.

The North Carolina Center for Applied Textile Technology watched a dream become reality in 2001. Construction began in July on the much-anticipated lab/administration building.

It has been an exciting time for staff, students and the community as the building has progressed toward completion. The facility should be ready by late spring of this year.

The new facility has already attracted interest from many textile equipment manufacturers. The NCCATT has received commitments from several companies that will make the new addition a world-class, state-of-the-art-training center. With the promise of top-notch textile labs, an auditorium and additional computer labs, the facility will be available for both the textile industry and the community.

The NCCATT spent much of 2001 completing the development of the Introduction to Textiles video series. The professionally produced video series features 10 modules ranging from Textiles: Past, Present & Future, Fibers & Fiber Properties to Yarn Manufacturing Technology and Fabric Formation. In addition, the project is currently being developed for computer-based training and should be offered over the Internet by the summer.

During 2001, textile firms moving into North Carolina have relied on the Center for development of training programs, as well as technical assistance. Several instructors spent time in Greenville, NC, training employees at the DSM High Performance Fibers facility. DSM, currently operating out of the Netherlands, has relocated the Dyneema Uni-Directional division to North Carolina.

Through a partnership with Pitt Community College, the Center was able to provide the textile training their employees needed. Other firms have also contacted the Center with similar needs as they prepare to locate to North Carolina.

The partnership with the Gaston County Schools grew in 2001 with the opening of the Homework, Experimental, Learning Program (H.E.L.P.). The H.E.L.P. Center opened on the NCCATT’s campus in the spring of 2001. The program was an immediate success, with an average of 20 students per night.

With the help of certified teachers and volunteers, the middle school students are given the opportunity to complete homework assignments, prepare for tests or use computers for research. The program has continued into the 2001-2002 school year and looks to continue for years to come.

The Center has worked closely with the NC Community College System’s Economic and Workforce Development department to become qualified to offer the NC Manufacturers Certification Program. The courses in this program are based on industry skill standards and feedback from leading NC manufacturers.

The program was developed to ease the shortage of skilled employees by training a world-class work force. NCCATT is certified to offer the level one courses and is solely responsible for the level two Textile Technology training. The training program will begin on the Center’s campus late this month.

Due to the current unemployment situation throughout North Carolina, the Center has put into place a training program called What’s Next. This program is designed to help displaced textile and manufacturing employees with their job search by offering courses such as Creating a Resume, Job Search and Interview Skills.

Instructors will help these individuals determine potential barriers to employment and identify their selling points to meet employers’ needs. These courses will be offered to the community at no charge as part of the Center’s Work Success Skills curriculum. The courses will be available in the spring.

NCCATT is moving into 2002 with a new, updated Web site. The site will offer information about the school, its history, programs and resources, as well as recently developed on line courses, news and community relations. The site is to be unveiled late this month. The address is www.nccatt.org.

Although the concerns for the textile and manufacturing industry are many, the Center continues to offer the support, training and technical assistance needed to produce highly skilled employees and top-quality products. With new programs available, as well as high demand for current programs, such as the Yarn Manufacturing Technician Training and Pay for Knowledge, NCCATT is committed to bringing technology to reality.

Daughtry Hopper is the director of marketing and public relations at the North Carolina Center for Applied Textile Technology, Belmont, NC.

News roundup

Week of January 28, 2002

Briefs

Guilford Mills gets extension of waiver

GREENSBORO, NC — Guilford Mills, Inc. today announced Jan. 18 that its senior lenders agreed to extend further a waiver of the company’s non-compliance with certain financial covenants.

Without an extension, the company had warned that it may be forced to file for Chapter 11 bankruptcy protection.

The agreement reached between the warp knitter and its lenders extends the expiration date of the current waiver, and defers an interest payment date, from January 18 to February 15. The company and its advisors are in active negotiations with its lenders regarding a restructuring of Guilford’s senior indebtedness, the firm said.

“We are pleased that our lenders have agreed to this extended waiver period, as it allows the parties to continue their negotiations toward a mutually satisfactory restructuring of the company’s senior debt,” said John Emrich, president and CEO.

The company is working closely with its investment bankers at Rothschild Inc. in order to develop a senior debt restructuring plan to help the company implement its business plan, Emrich added.

“While Guilford and the entire textile industry are obviously operating under tough economic conditions, we are fully committed to succeed in the face of these challenges and appreciate the support of our employees, customers and suppliers during this period.”

Buffett firm buys remainder of Shaw

DALTON, GA — Berkshire Hathaway Inc., the investment firm headed by the billionaire Warren E. Buffett, has acquired the shares of carpet and rug maker Shaw Industries it had not owned. Berkshire paid about $355 million in stock.

Berkshire completed its $2 billion majority purchase of Shaw last January. The investment firm acquired the 12.7 percent of common shares remaining in exchange for 4,740 Class A Berkshire shares.

The Shaw shares were owned by a group that included Robert Shaw, CEO; Julian D. Saul, president; members of the Shaw and Saul families; and other members of Shaw management.

Blough-Wagner closes Pennsylvania factory

REED STATION, PA — Blough-Wagner, which had gradually reduced its work force over the past few years, closed its manufacturing plant here last week.

About 17 employees from a high of about 50 remained at the time of the closing. The company produced children’s clothing when it was closed, but previously made lingerie for Victoria’s Secret.

Warnaco Group to sell GJM Sleepwear unit

NEW YORK — Apparel maker The Warnaco Group, Inc. announced that it has received bankruptcy court approval to sell its GJM Sleepwear division to Luen Thai Overseas Limited, a Hong Kong-based apparel manufacturing and logistics services provider.

Warnaco filed for protection under Chapter 11 of the U.S. Bankruptcy Code last June. Warnaco received approval for the sale of GJM from the bankruptcy court at a hearing on January 17.

“The sale of GJM is another important step forward in our restructuring process and is part of our effort to dispose of non-core assets and focus on our core businesses in sportswear, swimwear and intimate apparel.” said Tony Alvarez Jr., CEO.

Warnaco also is also seeking to sell other non-core assets, including its Lejaby, ABS and Ubertech businesses.

Transatlantic meeting urges equity in trade

WASHINGTON, DC — Representatives of textile and clothing organizations of the United States, Canada, Mexico, the European Union and Turkey met here January 17-18 to review prospects for international trade in textiles and clothing following the November launch of the World Trade Organization (WTO) Doha Development Agenda, the American Textile Manufacturers Institute (ATMI) announced last week.

Also participating in the sessions were officials of the U.S. and Mexican governments and European Commission responsible for textile and apparel trade matters.

Represented at the meeting were the ATMI; Canadian Textiles Institute (CTI); Camara Nacional de la Industria Textil de Mexico (CANAINTEX); EURATEX, the European apparel and textile organization; and TCMA, the Turkish Clothing Manufacturers Association. The member companies of these associations together currently employ in excess of 5.2 million people.

The association representatives agreed to address the massive imbalance between trade opportunities existing in the developed importing countries compared to the closed markets in the developing exporting countries, particularly in Asia, according to the ATMI.

They further agreed to make it a high priority objective for their governments and authorities to rectify this imbalance and obtain effective access in these closed markets, the organization added. They agreed to pursue this objective and others as described below. Their priority objectives for actions by their governments are:

• To obtain within WTO rules and disciplines a genuine opening of a number of large potential markets in Asia and elsewhere, which are at present almost totally closed to textile and apparel trade. This will require substantial tariff reductions and bindings on the part of those countries, together with the abolition of non-tariff barriers such as excessive taxes and levies, arbitrary customs import licensing and certification procedures;

• To make no concessions regarding the implementation of the Agreement on Textiles and Clothing (ATC) beyond those that are already provided for in the agreement itself and which developed countries have respected to the letter of the agreement;

• To avoid any weakening of WTO safeguards, anti-dumping and anti-subsidy instruments, which will constitute the only remedies against unfair trade practices as of January 1, 2005, the end of the textile and apparel quota system;

• To end at the next WTO ministerial conference in 2003 the de facto moratorium for developing countries regarding infringements of intellectual property rights within the WTO TRIPS agreement. The current moratorium is unfair and inequitable and is a clear encouragement to companies in developing countries to indulge with impunity in counterfeiting and the piracy of trademarks, designs and models, the ATMI said.

• To seek commitments that all WTO members take appropriate and prompt measures to stamp out widespread fraud, smuggling and transshipment of textile and apparel products. These illegal acts not only seriously damage companies and create job losses in the markets targeted, but are detrimental to the interests of bona fide exporters to those markets.

These organizations also agreed that they will follow up this first discussion with a series of further meetings to monitor and influence the WTO negotiations as they progress.

Suppliers respond to Kmart filing

Several textile and apparel manufacturers who are customers of Kmart responded to the giant retailer’s Chapter 11 bankruptcy filing last week.

Dan River, Inc., which makes textile products for the home fashions, apparel fabrics and industrial textiles markets, said it plans to increase its bad debt reserve for its fourth quarter of 2001 as a result of the filing.

The company added, however, that it doesn’t expect Kmart’s filing to have a “material adverse effect on its ability implement its current business plan.”

“While we certainly regret that Kmart was required to seek Chapter 11 protection, we continue to view our partnership as strong and viable and look forward to a mutually successful relationship for many years to come,” said Joseph L. Lanier Jr., Dan River chairman and CEO. “We expect to resume shipments to Kmart in due course.”

Meanwhile, WestPoint Stevens and VF Corporation both said they expects no material impact on their financial results related to its current receivables position with Kmart. WestPoint, a leading home fashions company, said it believes it has adequately reserved for any uncollectable amounts relating to its receivables from the retailer.

“We value our long-standing relationship with Kmart and are committed to helping them preserve a well-defined position in the mass merchant channel through their reorganization,” said Holcombe T. Green Jr., chairman and CEO of WestPoint Stevens.

VF said it is too early to predict the impact, if any, the filing may have on its sales this year and beyond.

“Kmart has been a valued partner of ours for many years and we are committed to working with them as they reposition themselves for the future,” said Mackey J. McDonald, chairman and CEO.

Kmart, the nation’s third-largest discount retailer, operates 2,114 stores and is seeking to close anywhere from 250 to 500 stores, according to reports.

Textile News Index