By Devin Steele
U.S. Secretary of Commerce Donald Evans (L) speaks with Rep. Sue Myrick (R-NC) as industry representatives Duke Kimbrell (C), chairman of Parkdale Mills, and Max Huntley, president of Parkdale America, look on.
Photo by Devin Steele
BELMONT, NC Attempting to reassure the beleaguered U.S. textile industry that the Bush Administration is intent on making progress in leveling the playing field, U.S. Commerce Secretary Donald Evans on Jan. 25 made his second trip to textile country in as many months.
Evans, one of the presidents closest friends, met with industry executives and employees here and near Rockingham, NC, telling them that we are taking action now to make the domestic industry more competitive in the global arena.
Specifically, he announced the formation of an interagency textile working group to deal with the problems the industry is facing and follow up on commitments made during the House vote on trade promotion authority (TPA) legislation in December, he said.
It will be the first time that we bring in all the departments together to focus on this very important industry and these very important issues, he told industry leaders at the North Carolina Center for Applied Textile Technology (NCCATT) here, and there are lots of cross-cutting issues.
The working group will include the Treasury, Justice and Labor departments, along with Customs and others, he said, and will focus on such issues as transshipment, compliance and enforcement, trade negotiating objectives, tariff preference programs, export expansion and trade adjustment assistance.
The group will be led by Evans, who will report to Bush, he said.
The president believes, and I believe, that the textile industry can be globally competitive as long as there is a level playing field, and I dont think theres a level playing field right now.
We dont think so, either, responded Duke Kimbrell, chairman of Gastonia, NC-based Parkdale Mills, one of several executives on hand for a short meeting prior to a larger group gathering of about 100 industry representatives at the center.
Rep. Sue Myrick (R-NC) accompanied the secretary on his visit to and tour of the center. She was one of several Republicans from textile-producing states that voted for the TPA measure after concessions to help the industry were made by the Republican leadership.
Earlier in the day, Evans met with about 40 textile employees at a Burlington Industries fabric plant near Rockingham. On hand for that function were NC Gov. Mike Easley and Rep. Robin Hayes (R-NC), who also backed the TPA legislation and has since taken heat from certain constituents.
In December, Evans visited a Springs Industries plant in Lyman, SC, at the request of Rep. Jim DeMint (R-SC), whose vote also helped put the measure over the top.
One of the cornerstones of solving the problems in the industry is opening markets for its products around the world, Evans said.
Im a little bit confused as to why other countries are able to sub
Dr. Jim Lemons (R), president of the NC Center for Applied Textile Technology, explains to U.S. Commerce Secretary Donald Evans and Rep. Sue Myrick (R-NC) the training and services the school provides, during a tour of the center.
Photo by Devin Steele
sidize their industries and, yet, keep much higher tariffs on our textile and apparel products going into their country than we have on their products coming into our country.
As such, he pointed out that the president has been very clear and specific that in future trade negotiations, one of the principle areas that will be focused on is reciprocal market access, he said.
Were focused on it, he said. Youll see results.
But beyond reciprocal market access, the U.S. will prioritize which markets need opening so that, in negotiations, the U.S. trade representatives office can go to them and say, we need to talk to you about opening up your markets for our textile industry, Evans said.
Regarding transshipments and holding countries accountable for the agreements they sign, the former Texas oil company executive said the United States is going to be very, very tough.
We announced the largest transshipment charge-back ever, which was against China, not too long ago, he said. It was 400,000 dozen shirts, I believe, and it was a $28 million charge-back.
So were going to send messages around the world that if youre trying to get textiles or other products into this country illegally, theres going to be a price to pay.
After Evans visit to the NCCATT, Myrick was asked by STN to address those who would perceive the cabinet-level visit as a P.R. stunt.
All I can say is that, if they knew Don Evans and the president the way I know Don Evans and the president, they would understand that it is not just a P.R. thing, she said. He sincerely cares. The man is in public service because he cares. He, and the president, will do what they say they will do.
The fact that the textile issue has been immersed in a brighter light in Washington is encouraging, Myrick added.
I dealt with a past administration, which wouldnt even talk to us, she said. When you mentioned textiles and transshipments, literally, they would not talk to us. They said there was not a problem. I mean, give me a break.
I really do believe that we have an opportunity, for the first time in the textile business, to make a difference.
During his address to the larger group at the center, which was closed to the media, Evans took on a rather point-blank remark from an audience member, according to several people on hand. The comment, in effect, was, we have heard this before. You say youre going to do something and by the time you get around to looking at us, we are going out of business, according to one observer.
I think (Evans) handled himself well in response to that comment, said Dr. Jim Lemons, president of the NCCATT. He said, President Bush is honorable and I am looking you in the eye and saying that I am going to do something and, if I dont, hold me accountable for it.
During their time together, Lemons offered Evans the services of his school to help train new U.S. Customs agents coming aboard as a result of a new customs and security act. If youre going to enforce the law and youre trying to look at something that is 100 percent cotton, you have to have some basic skills on how to identify things, said Lemons, whose school provided such services during the Bush Sr. presidency. Is it cotton? Is it a poly/cotton blend? You need to know those things.
Lemons said Evans was receptive to the offer.
During the Clinton administration, we offered to do that type of training and we didnt even get a response, so the man (Evans) physically coming to the campus and saying, yeah, you have got a good idea, is very impressive.
So lets give him the benefit of the doubt. He is saying, trust me, we are going to do something. Now it could be just lip service. Im not saying Im that naive a person. But I am saying that if the man comes here and stakes himself out and says he is going to do this and if he doesnt follow through, then lets all remember in November.
Evans also earned high marks from several people on hand at the center, including Kimbrell, who Myrick described to Evans as the chairman of the board of textiles in our district.
I am grateful that he would come down, take the time to listen to our story, he said. I believe him to be an honorable, respectable man who will do everything he can to help the textile, furniture and other industries in North Carolina. How much he can do is yet to be seen. But he has heard our story and he assures us hell do what he can.
Harding Stowe, president and CEO of Stowe Mills, Inc., based here, also said he was pleased that the secretary came and added that he would wait and see if the administration will do anything to help the industry.
Ric Craig, president and COO of A.B. Carter, Inc., a mill devices supplier based in nearby Gastonia, NC, said he hopes Evans and the administration understand the sense of urgency the industry and its suppliers are feeling. But at least theyre listening and its on their agenda, he said. People are glad to hear that.
Steve Dobbins Jr. added that he hopes that Evans listening to the concerns of industry representatives will increase that sense of urgency.
We need some help right now, said Dobbins, vice president and COO of Carolina Mills, Maiden, NC. I didnt hear that exactly, but I am encouraged he came. Weve never had that before. We didnt have that in the past administration, and at least were at the table, were being heard. But again we need help quickly.
Bill Carstarphen, senior vice president of Pharr Yarns, McAdenville, NC, called Evans a sincere, honest person who he believes in.
I think he is going to do everything he can to help our industry, Carstarphen said. I just hope that its not too late. There are a lot of mills that probably cant hold on for as long as its going to take to start doing the things that are going to help.
By Devin Steele
In responding to changing times, the American Textile Machinery Association (ATMA) is holding its annual meeting this year in conjunction with similar gatherings of two other capital equipment-related organizations
The Tripartite Annual Meeting will include members of ATMA, the American Paper Machinery Association (APMA) and Process Equipment Manufacturers Association (PEMA®). The meeting is scheduled for Wednesday through Sunday at the Westin Regina Hotel in Puerta Vallarta, Mexico.
By staging a combined event, the associations were able to pool their resources to attract bigger-name speakers, according to Harry W. Buzz Buzzerd, ATMA president, whose staff handles the executive functions of each of those groups.
Last week, Buzzerd addressed the issue of holding the meeting offshore. Gathering in Mexico is probably as economical or perhaps more economical than meeting at comparable places in the United States during high season, he said.
Besides spreading the costs of the function, holding a joint meeting makes sense for other reasons, as well, Buzzerd said.
All three groups have interest in the markets south of the U.S. and they use this meeting as a take-off point to visit customers, either coming from or going to the meeting, he said.
Buzzerds office in Falls Church, VA, also oversees four coalitions that serve individual member companies of these associations and others. They are the Product Liability Prevention and Defense Group, the Capital Equipment Export Council, Capital Equipment Legislative Coalition and the Capital Goods and Standards Coalition.
But a real driving force in combining the meetings is to network with similar manufacturing companies serving different markets, addressing problems that are unique not just to textile equipment manufacturers but to capital equipment manufacturers, Buzzerd said.
Despite these worthy objectives, Buzzerd admitted that these are terrible times and that people are trying to cut costs. But canceling or moving the meeting was irrational, too, he said.
Again, there is a marketing reason and even if it wouldve been desirable to move it, the plans were made too long ago and it wouldve cost the associations too much money in penalties, he said. The trade-off wouldve been too great.
He added: And who wouldve thought the (manufacturing) recession wouldve lasted this long? This recession has lasted much, much longer than the economic geniuses have told us it would. They were predicting upturns.
Keynote speakers include Peter Schutz, former president and CEO of Porsche AG, and James Thompson, a senior-level consultant of 14 years and founder of Talo Analytical International, Inc. Schutzs topics in two sessions are The Changing Face of Leadership and Getting Extraordinary Results from Ordinary People.
Thompson will talk about e-commerce during two sessions.
Other speakers include Carlos Moore, executive vice president of the American Textile Manufacturers Institute (ATMI), who will speak twice on varying topics; and Leon Bendesky, director of Sirem, an international economic consulting firm specializing in Latin America, who will explore Latin American market opportunities.
Moore will cover The U.S. Textile Crisis and Outlook and Economic Legislation of the 2nd Session of the 107th Congress and International Trade Issues Affecting Competitiveness.
Kurt Scholler, chairman of ATMA and CEO of American Truetzschler, Charlotte, NC, will preside during the annual business meeting.
Morning roundtables with members of each group also are scheduled.
We think the morning roundtables are going to generate a lot of very valuable information from one company to the other and we think it will be the spawning ground for identifying mutual topics for future meetings together, Buzzerd said.
By John W. McCurry
James E. Echols, NCC chairman, addresses attendees.
ATLANTA With a poor cotton business climate asthe backdrop, more than 29,000 cotton growers, processors and others in related fields such as textiles convened here last month at the annual Beltwide Cotton Conference (BCC).
Sponsored by the National Cotton Council of America (NCC), the BCC offers a forum for the industry to learn of industry issues and technological developments.
Leading off the conference, James E. Echols, NCC chairman, offered an assessment of cottons challenges. Cotton prices at the farm level, Echols said, are hurting from a variety of reasons, including:
a sluggish world economy;
a strong dollar;
Chinas internal cotton policy;
a world glut of manmade fibers;
too much worldwide textile capacity;
weak prices for alternative crops.
A healthy increase in U.S. raw cotton exports was welcome, but it provided only mild support for prices, Echols said. U.S. mill use, on the other hand, experienced a pronounced downturn. Failing to get a boost from implementation of the Caribbean Basin (Trade) Partnership Act, U.S. mill consumption fell below 8 million bales.
Echols said that progress on new farm legislation offers room for optimism. While the House has passed the current farm bill, the Senate will soon deliberate on its version. He said the industry has been persistent in getting lawmakers to recognize that their counterparts heavily subsidize agriculture and contribute to a supply/demand imbalance.
However, Billy Dunavant, chairman and CEO of Dunavant Enterprises, the worlds largest private cotton merchandising firm, said he believes proposed farm bills encourage too much U.S. production which has led to low prices. He said that will continue until there is a major production crisis in China, India, Pakistan, Central Asia, West Africa or the U.S.
Even a robust world textile economy does not solve the problem if the world continues to overproduce, Dunavant said.
While the U.S. and China have produced huge crops this season, Dunavant said China has fortunately, for world prices, not been an aggressive exporter. He said he thinks that will continue at least through the next marketing year, with Chinas entry into the World Trade Organization eventually being a factor.
Another plus for U.S. growers, Dunavant said, is that Southern Hemisphere countries will produce 2 million bales less due to low price. These countries are price responsive due to a lack of substantial government subsidies, he said.
Mexico will continue to be a big user of U.S. cotton, Dunavant said. Hopefully, their industry will come out of their current textile recession. They have a lot of high-priced contracts with U.S. cotton merchants and a substantial volume of these contracts have not been performed on. Some of these sales will be rolled into next year and we think Mexico will buy 1.8 million bales from the U.S. next year.
Representatives of Cotton Council International (CCI) and Cotton Incorporated provided an update on past and future efforts to promote the use of U.S. cotton overseas. Participating were Hans Kretschmer, CCI president; Allen Terhaar, CCI executive director; and Dean Turner, senior vice president, global product marketing, Cotton Incorporated.
Kretschmer said he realized the enormity of the global cotton value chain after visiting Texworld and Premiere Vision trade shows in Paris and Interstoff Asia in Hong Kong.
Even a robust world textile economy does not solve the problem if the world continues to overproduce, said Billy Dunavant, chairman and CEO of Dunavant Enterprises, the worlds largest private cotton merchandising firm.
It was exhilarating to see so many of our customers displaying their goods made from U.S. cotton, he said. I also came to the conclusion that we, the sellers of U.S. cotton, must begin with a quality product and must continue to add value to every pound of cotton we ship. If we can offer our customers an advantage, they are likely to remain loyal to our fiber.
Last April, Cotton Council International and Cotton Incorporated held a Caribbean Sourcing Summit in Miami to pair up Caribbean apparel manufacturers with U.S. textile leaders and apparel importers in an effort to take advantage of new Caribbean Basin Trade Partnership Act (CBTPA or, casually, CBI) legislation. The event was so successful, organizers plan an even bigger gathering this spring. This time, apparel manufacturers from sub-Saharan Africa will participate.
While Terhaar said CBI legislation has not lived up to its potential and the U.S. Customs Dept. has yet to publish final regulations, he said CCI will continue to work the region to develop new sales opportunities for U.S. mills.
While demand for cotton by U.S. consumers remains strong, the same is not true outside the U.S., where cotton is losing share to other fibers, Turner said. In part, this is because no other country invests in cotton promotion to the extent we do year after year, he said.
To help stem the overseas trend away from cotton, CCI and Cotton Incorporated will collaborate on a new program with Cotton Incorporated to stimulate underlying demand for U.S. cotton in overseas countries. CCI has been given a $2 million grant over the next three years to try innovative approaches to stimulate demand. Broad target regions are the Indian subcontinent and South America.
Dubbed the Cotton Gold Alliance, the program will use the Seal of Cotton and Cotton USA trademarks while targeting middle- and upper-income consumers. The program will involve the full chain of cotton processing, from mill to apparel manufacturer.
Our intent is to pick one or two countries in those two regions to focus our activities to determine the success of this approach and to determine how
Dean Turner, senior vice president of global product marketing for Cotton Incorporated, said that no other country invests in cotton promotion to the extent the United States does.
and whether this program can be expanded, Terhaar said. With the challenges we face from manmade fibers, we cannot afford to have developing countries moving wholesale from natural fibers to synthetics.
The National Cotton Council debuted its Cotton Counts consumer awareness campaign aimed at improving the understanding of and the attitudes toward U.S. cotton. The new campaign replaces Grown and Made in the U.S.A. It Matters, but will retain some of its elements. Members of the National Cotton Womens Committee will lead the educational effort. The Cotton Foundation is providing support with a grant from Aventis CropScience North America.
In making the Cotton Counts announcement, James F. Johnson, foundation president, said, U.S. cotton, which is part of the worlds most efficient agricultural system, is a champion of the nations economy and the environment. For example, the U.S. cotton industry provides more than 440,000 jobs, contributes a value-added retail impact of $120 billion to the U.S. economy and uses such environmentally sensitive technology as genetically engineered, insect-resistant plants.
U.S. and Canadian manufacturers of organic fiber products have seen sales grow 22 percent annually over the last five years, said Sandra Marquardt, fiber council coordinator for the Organic Trade Association OTA), citing a survey by her organization. Sales of clothing made with organic fiber products, which include products made from organic cotton, wool or other fiber crops, grew by 11 percent, according to the survey.
The estimated U.S. harvest of 10,799 acres of organic cotton yielded 4,099,680 pounds of cotton in 2000, according to data collected by OTA in a separate survey funded by a grant from Cotton Incorporated. In 2001, U.S. growers planted 11,459 acres of certified organic and transitional cotton. Harvest figures for 2001 are not yet available.
The 2003 Beltwide Cotton Conference is set for Jan. 6-10 at the Opryland Hotel in Nashville, TN.
MEMPHIS During its National Cotton Councils (NCC) Annual Meeting this week in Dallas, delegates will develop policies and programs to help restore profitability to all industry segments.
The event is scheduled for Thursday through Monday of next week.
Policy, Program, Purpose is the theme of the meeting, which is expected to attract 1,000 leaders from U.S. cottons seven segments and industry stakeholders from across the Cotton Belt.
National Cotton Council delegates face a major challenge in charting a course of action to restore the U.S. cotton industrys economic health, NCC Chairman James Echols said. The economic viability of the U.S. cotton and textile industries is essential to our nations economic strength and national security, yet our cotton growers are facing prices well below USDAs estimated production costs.
Growers and the rural economy also are being negatively affected by a shrinking U.S. textile industry devastated by cheap imports sourced primarily from countries with undervalued currencies. Sagging consumer confidence and weak retail sales following the devastating attacks of September 11 also have adversely affected the U.S. cotton industry.
During the meeting at the Hyatt Regency, delegates will develop and adopt specific resolutions for NCC action in farm and economic policy; international trade; public relations and international market development; research and education; packaging and distribution; and health, safety and the environment.
Echols said that enactment of more effective farm and trade policies will receive major attention at the meeting.
In the years ahead, U.S. cotton profitability will be achieved by successfully recapturing a significant share of the U.S. domestic market from imports that have no U.S. cotton content and by increasing exports of U.S. raw cotton and manufactured cotton yarn and fabrics, the Memphis merchant said. It is imperative that U.S. agriculture and trade policy provide the industry with the tools to effectively compete in domestic and international markets by addressing the imbalances wrought by external economic forces or distortions caused by policies of competing countries that damage U.S. manufacturing and agricultural interests.
Echols will cover the state of the U.S. cotton industry and outline a plan of action in his address to the general session next Monday.
Joining him on the program will be Secretary of Agriculture Ann Veneman and Sen. Kay Bailey Hutchison (R-TX), a member of the Senate Appropriations Committee. Charlie Cook, a Washington political analyst, and J. Berrye Worsham, president and chief executive officer of Cotton Incorporated, also will address delegates in that session.
House Agriculture Committee Chairman Larry Combest (R-TX) also is scheduled to attend the meeting and likely will address one of its functions.
Among other key sessions conducted during the annual meeting are: the NCCs Policy Advisory Committee on Trade, the Cotton Council International board of directors and the American Cotton Producers (ACP), the NCCs producer policy development group. Results of the NCCs annual Planting Intentions Survey, which provides the first insights into growers plans for the 2002 season, will be announced at the ACP meeting on Friday.
On Saturday, Drs. Mark Lange and Kent Lanclos will present NCCs economic outlook report to a joint session of the NCCs six program committees, and the National Cotton Ginners Association will conduct its annual meeting. A special luncheon will feature Scott OGrady, the Air Force fighter pilot who survived after being shot down over Bosnia.
As the unifying force of the U.S. cotton industry, the Memphis-based National Cotton Council brings together industry representatives from the 17 cotton-producing states to work out common problems and establish programs of mutual benefit for its members. The NCCs mission is ensuring the ability of all industry segments to compete effectively and profitably in the raw cotton, oilseed and U.S.-manufactured product markets at home and abroad.
CHARLOTTE, NC Dont apply for a job at your local burger joint just yet, according to Bob Speizman.
Though the domestic textile industry appears to be dying and many in the sector have already tasted fates fickle hand, thats no reason to throw in the towel, he told members of the Carolinas Textile Club during its January meeting.
I personally do not think that we should all give up and go to work at Burger King, said Speizman, CEO of Speizman Industries, Inc., based here. I believe that we, as a textile industry, constantly underestimate our abilities and our resilience.
The industrys metamorphosis into a different animal is just that a metamorphosis but that doesnt mean rigor mortis has set in, he indicated.
I believe that all of us are going to have to have a lot leaner companies with greatly reduced overheads, he said. I also believe that we can find our individual markets and that people in the United States will continue to wear clothes. Burger King wont let you in if you are naked.
The answer to finding those markets and remaining viable is through technology, he said. The only way companies can compete is to demand from machinery suppliers automation that eliminates the edge of cheap labor, he added.
Each of us has to find our own chunk of cheese, he said, having earlier referred to the best-selling book on change, Who Moved My Cheese? The cheese may be getting smaller, but with some ingenuity and tenacity, it can and will be profitable.
Speizman also addressed issues on the machinery import/export side. His company specializes in the sale and distribution of industrial machinery, parts and equipment. The company acts as exclusive distributor in the U.S., Canada, and Mexico for leading Italian manufacturers of textile equipment and is a leading distributor in the U.S. of industrial laundry equipment for American manufacturers.
Speizmans major supplier of textile machinery is Italy-based The Lonati Group, which controls about 95 percent of the worlds production of pantyhose machines and 70-80 percent of the production of sock machines.
Our Italian suppliers have been able to gain marketshare through their focus in continuing to develop new technology, rather than trying to compete on price, Speizman said.
Unlike many segments of the textile business, the domestic sock-manufacturing sector has, until recently, been virtually immune to imports. But imports of these types of goods, particularly double-cylinder dress socks, have begun to erode the U.S. hosiery industry, he said.
Again, though, automation is the key to competing in this labor-intensive area, he noted.
The reality of the marketplace for U.S. and Canadian sock manufacturers is that they are either going to have to buy this automated equipment or their long-term future will be very cloudy against their U.S. and Canadian competitors who do buy the new, automated equipment, as well as their foreign competitors who have the advantage of cheap labor.
As an aside, Speizman said that many of his customers think they can become distributors rather than manufacturers of goods, which he said is amusing.
This may last for awhile, but I can guarantee you that once a manufacturer is importing more than they are producing, that Wal-Mart can figure out where he is buying it from and go buy it direct. Or, his supplier in China or Honduras will find Wal-Mart.
In conclusion, he said that he has always believed that attitude is about 90 percent of any endeavor.
Telling each other how bad things are can only become a self-fulfilling prophecy, he said. We need to cut our expenses, look at what we do best and better than our competition, both here and abroad, and concentrate on it. There are workers and there are weepers. Lets be the workers and let someone else do the weeping.
GREENWOOD, SC Greenwood Mills, a fabric producer with sales in excess of $300 million annually, has retained Equity Partners, Inc. to seek the sale of its recently closed manufacturing operations here and in Liberty, SC.
Greenwood Mills, Inc. was established in 1889, grew to one of the largest textile manufacturers in the United States, and now, after its most recent plant closings, employs 1,100 people in two plants. The two recently shuttered facilities employed 700 people and produced greige fabric and denim. Following extensive capital investment over the last five to 10 years, the debt service and loss of customers to foreign competition resulted in a decision to close these manufacturing facilities, according to company officials.
Equity Partners, Inc. is a Maryland-based firm that specializes in the sale of financially distressed manufacturing companies. Ken Mann, a partner at the firm, said that he believed Greenwood, to be an outstanding opportunity for investors to enter the market with brand-name customers, well below the normal start-up cost.
The Durst mill was constructed in the 1950s and at the time, was the largest weave room in the world with more than 2,000 looms. A modernization project was started in 1995, making it a state-of-the-art sheeting mill.
In 2000 and 2001, the plant had sales of more than $40 million to all the major sheeting mills. The 425,000 square-foot facility, located on 29 acres, has more than 330 looms.
The Liberty, SC, operation consists of two manufacturing plants (Liberty 1 and Liberty 2), producing denim for all major labels worldwide. In 1980, the plant was converted to produce denim, while under the ownership of Dan River.
The facilities were sold to Greenwood Mills in 1985 and a modernization project was completed in 1996. In 2000 and 2001, the facilities had annual sales of more than $37 million. The combined manufacturing space is 359,000 square feet located on more than 30 acres. Both plants have been ISO-9000 certified and perform opening, carding, drawing, O.E. spinning, warping, indigo dyeing, rebeaming, slashing, weaving, finishing and sueding. Greenwood Mills said it was the first denim manufacturer to introduce on-line quality detection in its process. New cotton cleaning equipment and Picanol Omni looms have been installed within the last five years. Customers have included all the major jeans makers in the world, including Levi Strauss and VF Corporation.
Mann says that, In spite of the exodus of U.S. mills, he believes that Greenwood Mills will survive due to its flexibility to make what the customer wants, the way he wants it and service before, during and after the sale. The management and employees needed to operate these two plants are available and bring decades of experience. It is our hope that these plants can be sold to someone who will resume operations.
NORTH CHARLESTON, SC Nonwovens producer Polymer Group, Inc. (PGI) said Thursday that it and an investor are in talks aimed at restructuring the company.
PGI said the terms of any restructuring are expected to include a reduction in outstanding indebtedness in return for the issuance of a substantial amount of new equity.
The company may seek to reorganize under Chapter 11 bankruptcy protection if senior lenders rescind a previously disclosed forbearance agreement and exercise their remedies under the senior credit facility.
Under terms of the forbearance agreement, PGI was required to deliver to the senior lenders, among other things, a complete and comprehensive recapitalization proposal by Thursday. The company said had not fully satisfied this condition, but is in active negotiations intended to satisfy such requirement.
Polymer Group said it does not expect that the lenders would rescind the agreement as long as the company is continuing to negotiate the possible restructuring proposal.
PGI also said that it has substantial liquidity, with about $50 million in cash and short-term investments available to fund its operations.
MIDDLEBURG, PA Clothing manufacturer Blough-Wagner, which shut the doors of a plant near Elysburg, PA, on Jan. 17, said it also is closing a plant here.
About 60 people will lose their jobs here, where it is headquartered. The Elysburg closing put 17 people out of work earlier.
The company had no choice but to close, due to a decline in work and trouble competing with cheaper foreign manufacturers, the company said in a letter to employees.
BURLINGTON, NC Great American Knitting Mills, Inc., a hosiery manufacturer for nearly 100 years, has changed its name to Gold Toe Brands, Inc. to reflect the strength and heritage of its premier brand, Gold Toe®, the company announced.
The National Association of Manufacturers (NAM) said it anticipates a sluggish recovery in 2002 from a recession that began in manufacturing more than a year ago because of declines in investment and exports.
Recovery for some sectors, including capital equipment manufacturing, will be slower than others.
We are likely at the bottom of the business cycle, said Jerry Jasinowski, president of NAM, but the recovery in 2002 will be ugly and U-shaped, in my judgment, without significant growth in investment and exports.
Unlike the recessions of 1982 or 1990, the current slump is a business-led recession. This time around the manufacturing sector went into recession a full six months before the rest of the economy followed suit, said Jasinowski. As manufacturing goes, so goes the overall economy.
According to NAMs outlook, the disparity between business and other sectors of the economy are more pronounced than in previous recessions, when slower economic activity was more evenly dispersed.
The manufacturing sector was already in recession by the end of 2000. This was caused by a convergence of multiple factors in 2000, including a spike in energy prices, high real-interest rates, zero pricing power, an overvalued dollar, and inventory overhang. Since September 2000, manufacturing output has declined by 7.6 percent (through October 2001) and manufacturing employment has dropped by more than 1.3 million (through November 2001).
The terrorist attacks of September 11 had an immediate effect on the economy. According to NAM, personal consumption expenditures dropped by 1.3 percent in September and cut third-quarter growth in personal consumption to just 1.1 percent. Exports were down 17.7 percent and investment down 10.7 percent.
The terrorist attacks knocked down an already struggling economy and overall GDP growth declined by 1.1 percent in the third quarter. NAM estimates that the final figures will prove that the economy continued to falter in the fourth quarter with an annual rate of -2.7 percent, moving the recession into 2002.
The current contraction is due primarily to large declines in inventories, investment and exports.
It has been countered partially by government spending that increased following the events of September 11.
At a recent meeting of manufacturing association staff executives, Jasinowski, during a Q&A, briefly further distinguished between capital equipment projections and those for overall manufacturing. Many of the former sectors and those they serve directly likely will experience slower and recovery and growth.
NAM predicts that the economy will grow by a modest 1.7 percent in the first quarter of 2002. This growth will be due to increased defense-oriented government spending and business inventory correction, both temporary in nature. Growth in the second quarter should be slightly stronger at 2.4 percent, in response to eight percent growth in government spending.
CHARLOTTE, NC William H. Lash III, assistant secretary of commerce for market access and compliance, International Trade Administration within the U.S. Department of Commerce, will be on hand during an Export Roundtable Forum scheduled here for February 20.
Lash has requested the participation of textile industry executives in the forum, to take place at the Carolinas U.S. Export Assistance Center, according to organizers. He seeks to discuss the opinions and concerns of industry representatives in accessing foreign markets and compliance with existing U.S. regulations in the importation of foreign-made textiles.
The meeting is scheduled to run from 9:30-11:30 a.m. at 521 East Morehead Street, Suite 435, here.
For more information, contact Juanita Harthun at (704) 333-4886 or send e-mail to Juanita.Harthun@mail.doc.- gov.
Editors note: The following letter, signed by Karl Spilhaus as president of the Northern Textile Association and by the CEOs of several of Americas leading textile companies, was sent January 25 to 159 members of Congress from textile-producing states.
As part of the recent effort in the House to gain votes in support of Trade Promotion Authority (TPA), both the Bush Administration and the House Republican leadership extended various trade related promises of assistance designed to benefit domestic textile and apparel manufacturers. 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 want to bring to your attention commitments that can be fulfilled in short order. Listed below are some of the major promises that were recently extended to our industry:
On the day of the TPA vote, the House Republican leadership, including Speaker (Dennis) Hastert, provided Congressman Jim DeMint (R-SC) a letter stating their intention to correct a severe problem associated with the Caribbean Basin Trade Partnership Act (CBTPA). The letter commits the House Republican leadership to clarifying the CBTPA so as to mandate that all dyeing, finishing and printing processes performed on U.S. fabrics (woven as well as knit) that qualify for preferences under the CBTPA program be done in the U.S. As part of this commitment, the House Republican leadership has agreed not to pass any further trade legislation until the dyeing, finishing and printing issue is properly resolved.
Dyeing, printing and finishing procedures regularly account for 54 percent to 78 percent of the value of a finished fabric, and represent a significant percentage of the remaining jobs in the U.S. textile industry. If the U.S. government encourages offshore investment of dyeing, finishing and printing, the U.S. industry will be relegated to producing basic, commodity fabrics. We have seen with disastrous clarity, the inability of U.S. textile producers to compete with Asia in the commodity fabric market.
Shortly after the TPA vote, President Bush met with a number of House members from textile states that supported TPA. These members reported that the Administration would back off of an effort to provide Pakistan with textile quota and tariff concessions. Due to their support for the war on terrorism, the Administration had proposed allowing Pakistan to over-ship its 2001 quotas in several sensitive textile categories, as well as seeking authority from Congress to suspend U.S. duties on Pakistani textile and apparel exports for the next three years.
We feel strongly that the U.S. textile industry should not bear the brunt of Pakistans support for the war on terrorism. While we strongly support the war effort, our industry simply cannot endure any further liberalization at this point. In fact our industry has lost 678,000 jobs during the past seven years, mainly due to overseas competition that enjoys production and labor costs that are a fraction of those experienced in the U.S. Pakistan is already a substantial low-cost supplier of textiles and apparel to the U.S. Any duty reductions or the ability for Pakistan to ship in excess of their quotas would certainly cost thousands of additional jobs in our industry.
Shortly after the TPA vote, Commerce Secretary Evans sent a letter to several House members outlining various steps that the Administration is willing to undertake on behalf of the U.S. textile industry. Per the Evans letter, the Administration committed to maintaining the current textile quota phase-out schedule under the Uruguay Round agreement, without acceleration.
In essence the Administration is simply agreeing not to violate earlier commitments to the industry in regard to the quota phase-out schedule. The industry was told in 1995 that they would have a set 10-year quota phase-out schedule that would not be liberalized. However, it should be noted that the Evans commitment regarding the quota phase-out schedule will be severely tested later this year. As part of the recent WTO Doha declaration announcing a new round of multilateral trade talks, the U.S. agreed to review the question of liberalizing the Uruguay Round phase-out schedule. The WTO Council for Trade in Goods has been instructed to review this matter and to provide a recommendation to members by July 31, 2002. At that point, we expect the U.S. to come under severe pressure from textile exporting countries to significantly liberalize the quota phase-out schedule. The U.S. is not required under either the Uruguay Round or the recent Doha declaration to grant any concessions beyond the phase-out schedule established in 1995, nor should we.
As part of the Evans letter, the Administration commits to full enforcement of existing trade agreements, including an aggressive crackdown on illegal transshipment of textiles and apparel. Certainly the industry has long requested assistance in dealing with this pervasive and serious problem. Unofficial government estimates place the amount of illegally shipped textile and apparel products to our market at $10-$12 billion annually. This problem must be dealt with. Congress should demand quarterly reports on Customs activities in this area.
These reports should not merely detail the number of cases that have been opened, but instead emphasize cases that have been successfully concluded.
Secretary Evans also stated in his letter that the Administration will aggressively pursue the opening of foreign markets to U.S. textile and apparel products in any future trade agreement. For far too long, U.S. textile and apparel exports have faced prohibitive tariffs and unfair trade barriers. While we have consistently received promises from our government to balance the playing field, very little has been done. In fact, many of the largest exporters of textiles to the U.S. are the worst offenders, such as India, Pakistan, China, and Brazil. The U.S. should grant no further tariff reductions until our trading partners are required to provide our exports similar treatment when we attempt to access their markets.
Moreover it should also be noted that the Evans commitment contradicts language agreed to by U.S. Trade Representative Robert Zoellick as part of the November 15 Doha Declaration. Provided below is the relevant language from the Declaration pertaining to tariff issues:
Market access for non-agricultural products (paragraph 16).
We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. Product coverage shall be comprehensive and without a priori exclusions. The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including less than full reciprocity in reduction commitments.
This language clearly indicates that the U.S. will be sensitive to the needs of developing countries in regard to tariff reductions. Since practically all developing countries are major exporters of textiles and apparel, we can expect that the reduction or elimination of U.S. textile tariffs will be a key demand in this area. At the same time, the U.S. conceded that it will not seek reciprocal market access for our exported textile products in relation to developing markets. This position is simply unacceptable. The tariff discussions in the new round will be critical in that textile quotas, as of January 1, 2005, will no longer be in place.
As stated earlier, it is vital that the various commitments made to our industry be fully and swiftly brought to fruition. Many times in the past we have been extended trade commitments by previous Administrations, only to see them ignored. As a result, the U.S. textile industry finds itself confronted with a flood of cheaply produced, often subsidized imports, with very little reciprocal access in many major overseas markets. This disastrous environment has cost hundreds of thousands of U.S. jobs. However, nearly 1 million workers in the U.S. are still employed by the textile and apparel sector. This does not include countless jobs in industries that supply textile manufacturers.
In addition, textile manufacturing jobs have a high multiplier in the economy, with many service and other industry jobs being supported by the presence of a textile mill in a community. The full implementation of the commitments listed above will go a long way toward saving the remaining jobs in the textile and related sectors.
Thank you for your attention to this critical issue.
Karl Spilhaus, president, Northern Textile Association
Jonathan A. Stevens, president, Ames Textile Corp.
J. Keith Crisco, president, Asheboro Elastics Corp.
John Englar Sr., vice president, Burlington Industries, Inc.
Peter M. Hadley, vice president, research and development, Claremont Flock Corp.
Joseph L. Gorga, CEO, CMI Industries, Inc.
George W. Shuster, president and CEO, Cranston Print Works Co.
John M. Webster, president, Crescent Woolen Mills
Kevin J. Webster, vice president, marketing, Crescent Woolen Mills
Neil R. Tilmont, executive vice president, Darlington Fabrics Corp.
Larry Himes, CEO and president, DURO Industries, Inc.
Gerald J. Mauretti, president, Engineered Yarns Co.
Brian Abramek, vice president/general manager, Flock Tex, Inc.
Neal Grover, president, The Forstmann Co.
Allen E. Gant Jr., president and CEO, Glen Raven, Inc.
Walter R. Mercier, vice president, Hanora Spinning, Inc.
Michael P. Albert, president, Harodite Industries, Inc.
David M. Jagger, president and treasurer, Jagger Brothers
Joanne Gallonio, president, Kenyon Industries, Inc.
John L. Glidden Sr., president, L.W. Packard & Co., Inc.
Roger Milliken, chairman and CEO, Milliken & Co.
C. Jack Gwaltney, president, textile division, The Moore Company
Grégoire Giraud, chairman and CEO, Narrow Fabric Industries Corp.
Broughton H. Bishop, chairman and CEO, Pendleton Woolen Mills and Dorr Woolen Co.
John H. Elliott, president, Rhode Island Textile Co. and South Carolina Elastic Co.
Hemendra K. Shah, president, Spectro Coating Corp.
Laura Ouimet, senior vice president, Spectro Coating Corp.
James B. Carson, chairman, Sullivan Carson, Inc.
Henry A. Truslow III, CEO, Sunbury Textile Mills, Inc.
William E. Giblin, president, Tweave, Inc.
Guy Birkhead, vice president of operations, Warren Corp.
Lisa Cornish, vice president, finance and administration, Warren Corp.
Roswell Brayton Jr., president and CEO, Woolrich, Inc.
GREENSBORO, NC Unifi, Inc. lost $3.5 million, or 7 cents per share, on sales of $221.7 million in the second quarter.
For the same period a year ago, the textured yarn producer and processor lost $3.4 million, or 6 cents per share, on sales of $299.1 million.
Results were negatively affected by non-cash losses of 1.5 cents per share stemming from the sale of the remaining assets of Unifi Technology Group and a 6 cents per share charge to write off fees associated with the refinancing of the companys bank debt. Additionally, Unifi absorbed a loss of 1.5 cents per share from unconsolidated equity affiliates and a 7 cents per share charge for severance costs associated with the consolidation and reduction of SG&A.
The company said it has reduced funded debt by $181.6 million since September 2000 and reduced its bank debt from $240 million to $58.4 million during the same period.
Exiting the quarter with our lowest level of total funded debt in more than four years is a tribute to the fact that Unifi has created a sustainable business model, said Brian Parke, president and CEO. Our 15-month focus on cost reduction initiatives in raw materials, manufacturing costs and SG&A has put us in a position to be successful and competitive.
GREENVILLE, SC Delta Woodside Industries Inc. lost $2.3 million, or 10 cents a share, for the second quarter, compared to a gain of $802,000, or 3 cents, for the same period last year.
Sales fell to $44.1 million from $59.7 million from the year-ago period, but were better than first-quarter sales of $37 million.
The U.S. textile environment remains extremely difficult, with no strong signs of lasting improvement, said W.F. Garrett, president and CEO. We are managing our business as cost effective as possible while focusing our employees on service to our customers and product development in all marketing departments. This strategy is beginning to show a favorable effect on the performance of our company.
The company also announced that it will effect a 4:1 reverse split of its common stock expected to be effective before the opening of trading on Tuesday.
DULUTH, GA Delta Apparel, Inc. earned $700,000, or 28 cents per share diluted, on sales of $24.3 million in the second quarter.
For the same period last year, the company made $1.39 million, or 56 cents, on $26.3 million in sales.
While results in the December quarter, traditionally our weakest quarter, were below the prior year quarter, we are encouraged with the improvement in profitability compared with the first quarter of the current fiscal year. We expect this improvement to continue in the second half of the year.
As previously reported, the companys tender offer expired January 10. A total of 338,171 shares were validly tendered, not properly withdrawn, and accepted for purchase by the company at a price of $22 per share.
CHICAGO Sara Lee Corporation said that sales in its Intimates and Underwear line of business declined 4 percent and operating income fell 27 percent in the second quarter.
Corporate-wide, sales were up 5 percent, to $5 billion, while earnings per share, excluding unusual items, were 37 cents, down from 43 cents a year ago.
WILMINGTON, DE DuPonts apparel-related business saw its after-tax operating income fall by more than half to $66 million for the quarter. Sales in the DuPont Apparel & Textile Sciences unit were $1.03 billion, down about 10 percent.
ATLANTA Russell Corporation announced that it will increase its bad debt reserve for the fourth quarter due to Kmarts recent Chapter 11 filing.
Kmart accounts for about 3 percent of Russells annual sales, the company said.
Although we are still assessing the appropriate level to reserve, our accounts receivable with Kmart is about $12 million, said Jack Ward, chairman and CEO. While we certainly regret that Kmart was required to seek Chapter 11 protection, we will be working with them as they reposition for the future.
Russell continues to project 2002 earnings per share of $1.40 to $1.60, Ward added. The firm will report earnings on Thursday.
WINSTON-SALEM, NC Frisby Technologies, a maker of climate control materials, announced that it has obtained separate three-year revolving credit facilities totaling $1.25 million from two lenders.
The lenders received a security interest in the companys assets, plus five-year warrants to purchase shares of Frisby Technologies common stock, the company said.
DAMAD Holding AG and Bluwat AG, both of Switzerland, provided the financing. DAMAD is the parent company of Southern Spear Inc., an existing stockholder of Frisby. In connection with the DAMAD facility, Daniel Guggenheim, a finance executive from a European industrialist family and vice chairman of DAMAD, has been appointed to Frisbys board of directors.
KNOXVILLE, TN Innovo Group Inc, a sales and marketing organization designing and selling craft, accessory and apparel products, announced that it is projecting 2002 revenues to exceed $25 million.
The companys products include canvas and denim totebags and aprons, backpacks, totebags, waist packs and handbags, knit shirts and womens jeans.
ATLANTA Fabric, upholstery and carpet maker Interface, Inc. said it has closed its private offering of $175 million aggregate principal amount of 10.375 percent senior notes due in 2010.
Four investment banks participated as initial purchasers in the notes offering. The $171.5 million of net proceeds from the sale were used to refinance the companys revolving credit facility, which was amended and restated in connection with the offering.
CORNELIUS, NC Allertex of America, Ltd., based here, has recently been appointed to represent two companies in the United States.
The company will represent Prato, Italy-based TECHNO-plants S.R.L, which manu- factures high-speed winding, cross-cutting and pad-stacking machinery for nonwoven lines. This addition to the program enables Allertex to supply U.S. nonwoven manufacturers with complete turnkey lines.
Allertex also will serve Santex Nonwoven AG, a Swiss manufacturer of thermo-bonding ovens, Wavemaker vertical web forming systems, powder application and lamination technology. This addition complements the Laroche SA nonwovens program represented by Allertex.
In other news related to Allertex, the new ASTROTEC Plus, which is a disposable faller bar designed for use in chain driven gill boxes, has been approved by N. Schlumberger & Cie as a permitted repinning option on their GC gill boxes. Allertex distributes the line in the U.S.
GET BACK to your normal life, the president told us early on after the attacks on America. If you dont, the terrorists win, he said. We have similar advice for the wobbly U.S. textile industry and its suppliers, only on a less-grand scale: Continue to run your business, or the doomsayers win. Whining about terrible conditions instead of trying to improve them cannot serve a useful purpose.
Bob Speizman, CEO of Speizman Industries, Charlotte, NC, voiced sentiments to that effect during the last meeting of the Carolinas Textile Club: Telling each other how bad things are can only become a self-fulfilling prophecy, he said. We need to cut our expenses, look at what we do best and better than our competition, both here and abroad, and concentrate on it. There are workers and there are weepers. Lets be the workers and let someone else do the weeping.
Amen, Mr. Speizman.
True, there has been plenty to weep about in recent times. Last year alone, textile-manufacturing jobs plunged by 67,000, while apparel-making jobs dropped by 79,000. Also during that year to forget, more than 100 textile plants closed their doors. And countless other companies that supply those industries have been forced into job cuts and closings, as well.
BUT MOANING and groaning isnt going to help, folks. We need action. We need companies willing to convince themselves that there is a future for textile and apparel manufacturing in this country and run their businesses accordingly. That means embracing change and seeking new markets, niches and technology. We need more leaders with vision to step to the forefront, as Speizman has, those who can look beyond the trees to see a future manufacturing forest less dense but just as productive in this country.
And, yes, we need leaders in Washington who share that vision. It seems, at least on the surface, that those types of elected leaders do exist. U.S. Commerce Secretary Donald Evans may be one of them, if you are to believe his message during recent visits to Carolinas textile and related facilities. Skeptics exist, sure, particularly among members of the textile and apparel communities, who have seen their interests become bargaining chips by the U.S. government in the global trading arena.
But you have to hand to the Evans and the rest of the Bush administration. They are making an effort to reach out to this battered industry, hear its concerns and commit to doing something about the problems it is encountering. As some have said in this publication, thats more than was done by a previous administration.
Even if it appears as a mere photo-op or a P.R. stunt to appease naysayers of the trade promotion authority measure, Evans is doing his part to reassure people that the interests and concerns of the industry are also his interests and concerns. During his recent visits to the Carolinas, he vowed to work hard to level the global playing field for the textile and apparel industry, through a newly organized interagency textile working group charged with upholding a nine-point plan developed to aid the industrys cause. By most accounts, he is an honorable man and a man of his word. And if we cant depend on top-level leaders to help, who can we depend on?
AS FOR THE business of maintaining normalcy, one group that has refused to buckle to the doom and gloom is the American Textile Machinery Association (ATMA). The organization, as you can read in this edition, has kept its plans to hold its annual meeting in Mexico, despite the woes of its members domestic customers. Harry W. Buzz Buzzerd, ATMA president, explains his organizations reasoning in this edition, which we wont rehash here. Also, two other groups under his executive offices umbrella are meeting jointly with ATMA. This arrangement is ahead of its time, perhaps, but shows this associations willingness to think differently, as many of us should, during these difficult times.
Keeping its plans of meeting offshore demonstrates ATMAs optimism in this industry which more people should share.
Even the doomsayers.