Christian Kuoni (L), CEO and president of Jakob Müller, Switzerland, congratulates Rene Frei, executive vice president of Jakob Müller of America, on the U.S. affiliates 20th anniversary. Kuoni presented Frei a crystal formation from the Swiss mountains, to display in the companys lobby.
Photo by Devin Steele
By Devin Steele
CHARLOTTE, NC Jakob Müller has enjoyed two decades of success in the United States because of one reason: customers.
Thats the message company officials conveyed to clients, friends, affiliates and guests who turned out for the 20th anniversary celebration of Jakob Müller of America, Inc. on March 11.
In my opinion, the most important value in corporate life is customer value, said Christian Kuoni, CEO and president of parent company Jakob Müller, based in Frick, Switzerland. Where would we be today without our customers?
Jakob Müller, which designs and builds machines and systems for the production of ribbons and narrow fabrics, celebrated the occasion with an open house, lunch, speakers and entertainment. The company is the world market leader in its field.
To commemorate the event, Kuoni presented Rene Frei, executive vice president of Jakob Müller of America, a crystal formation from the Swiss mountains.
We have always based our success on building partnerships with our customers and we look forward to many successful projects in the future, said Frei, reiterating Kuonis remarks.
Since building a U.S. headquarters here in 1982, Jakob Müller of America has more than doubled its number of employees to 22 and expanded its facility by about one-third of its original size.
We have found a home here in Charlotte, NC, Frei said. At the beginning we were very fortunate to have found true Southern hospitality. We received a lot of expertise and assistance in various fields from many who are here today.
Addressing economic conditions, Kuoni admitted that business is difficult worldwide at the moment, but that being privately held has enabled the corporation to fare better than others, he said.
Everybody tries to explain why this has happened and I have a strong opinion about that, Kuoni said. I think its due to wrong values. Selfishness and shareholder value thinking were the drivers of the late 90s and I think this is the main reason business looks bad. This shareholder thinking, this artificial growth, these expectations of productivity gain also affected businesses like ours.
It has gotten companies into trouble. It also makes manufacturing a useless thing. I dont believe in shareholder value only.
Kuoni repeated his mantra about the importance of placing customers first.
If we think of customers and customer value, then shareholders, at the end of the day, will be happy as well, he said.
Being family owned and 100 percent self-financed has been a plus, he added.
That means you can look at long-term goals, even in difficult times, he said. We at Jakob Müller especially think about innovation innovation in products and innovation in machinery. Innovation is not a quarterly thing. You have to work on it all year, continuously. And that, we can do, thanks to our financial situation.
And it calms your nerves during these difficult times when you know that nobody from the bank is looking down your neck and saying, what the hell are you doing here?
Kuoni pointed out that, through its efforts toward innovation, it has developed 200 patents.
Another speaker, Alexander Kubli, Swiss consul general based in Atlanta, pointed out that Switzerland ranks among the top seven foreign direct investors into the U.S.
I am particularly pleased with the Swiss presence in the great state of North Carolina, where 50 Swiss companies are currently domiciled, he said. Mecklenburg County will, Im sure, continue to provide hospitality and a committed work force to the Swiss companies active here and the Mecklenburg community can, in turn, profit from the very sound business practices of the Swiss companies.
Meanwhile, Mike Almond, president and CEO of the Charlotte Regional Partnership, also congratulated the company for reaching the milestone.
Jakob Müller is a company that sells everywhere in the world, that has facilities in 10 different countries, 1,000 employees and is known worldwide as the absolute market leader, product leader and technology leader, he said. Customers such as Jakob Müller come to the United States, bring their technology, bring their patents and they add to the community woodpile in a place such as Charlotte.
I hope Charlotte has been good for Jakob Müller because I can tell you for sure that Jakob Müller has been good for Charlotte.
The Northern Textile Association (NTA), which has the Narrow Elastic Manufacturers Association under its umbrella, was represented at the podium by David Trumbull. He congratulated Jakob Müller on its anniversary before updating the group on activities within his association and trade agreements that will affect the way Müller and others will do business in the future.
Even before September 11, the textile industry was experiencing hard times, Trumbull said. But we are survivors, and innovative companies are seeking out new markets, developing new products and adapting to the global market for textile products.
Traditional opponents have united in hopes of stemming the tide of job losses that has plagued the domestic textile industry in recent years.
Roger Milliken, chairman and CEO of manufacturing giant Milliken & Co., has joined forces with Bruce Raynor, president of the Union of Needletrades, Industrial and Textile Employees (UNITE), to form a group aimed at lobbying Washington leaders to save whats left of the U.S. textile industry.
Milliken and Raynor, along with George Shuster of Cranston Print Works, recently convened a private meeting of about 40 textile representatives in Washington to set the groundwork for the coalition, according to Jock Nash, Millikens Washington counsel.
The group is being formed because such trade associations as the American Textile Manufacturers Institute (ATMI) havent taken a hard stand against trade-liberalization legislation, including NAFTA and the Trade and Development Act of 2000, Nash told STN.
Milliken, a charter member of ATMI, left the organization two years ago after a dispute.
More details will follow in forthcoming editions.
Editors note: The writer of this opinion piece is the former director of Latin America and Asian sales for Gaston County Dyeing Machine and also held similar positions with Fab-Con Machinery.
By Michael Fonzo
These piece does not intend to present more market data, which is otherwise amply available from trade publications. Instead, it is intended as reflections and observations of current U.S. textile machinery manufacturing, vis-a-vis the strong international competition.
Fight or flight? Although we would like to answer only fight, this may not be the case. We have seen a few very old and distinguished manufacturers with a track record of technological innovations that have preferred to withdraw rather than face the challenges. Why?
The enormous U.S. textile market of years ago was a boon and export business levels of just 5 to 10 percent was an accepted and satisfactory norm. For manufacturers with an enormous domestic market, export sales did not merit much effort.
For most of the last five decades, the high-profile U.S. market generated overseas sales without incurring much costs in sales and marketing efforts: U.S. exposure was sufficient. Meanwhile, Asian, European and Latin American manufacturers began to experiment with their designs, some countries imposing high import tariffs to protect their home machinery manufacturers.
Beginning in the late 80s or early 90s, the writing was already on the wall: machinery competition became intense even from countries not before associated with a manufacturing tradition. Parallel to this, the United States began to release its exclusivity on fabric manufacturing, witnessing an accelerated rate of imported textile products and an exodus of jobs. The influence of European haute couture carried along the European machine manufacturers.
In the face of a dwindling domestic market, the only logical plan was to seek business overseas, where new textile plants were emerging: countries such as Turkey devised national plans to become major players in the textile markets. These countries enticed their manufacturing sectors to install the latest technology machinery through incentives and generous tax breaks. These were the markets buying textile machinery.
Traditionally, American machinery was designed by American engineers for use by American customers. Features of interest were innovation, high productivity, heavy-duty construction. American industry did not pay undue attention to the aesthetic aspect as long as the bottom line justified the use and purchase of the machinery.
But a reality check came to many companies at a time when they needed to increase dramatically their international presence, to double and triple our machinery exports. While the U.S. was not preoccupied with machine looks but focused mainly on productivity, the European manufacturers designed machines that were adequate for the service but included visual appeal. What American designers considered a feature, potential international customers perceived as a liability, or were not interested.
Areas as diverse as the Philippines and Guatemala have mentioned, we need a machine that is just enough and we cannot afford and do not want heavy duty, since technology changes every four or five years, so we dont need a machine to last 20 years. These customers compare American offers with Asian and European: not only are the European designs visually appealing, but they will do the job and cost considerably less.
For these customers, the Made in USA label carries little significance and no clear competitive advantage. As a consequence, these machine buyers will require a machine that can be paid off in perhaps one fabric contract and, as such, must be purchased at the lowest price possible. This results in a very fluid industry, booming for a short while in one area of the world but quickly moving on to another where cost ratios are more attractive or a fraction less. Paraphrasing Hemingways A Moveable Feast, it represents todays textile machinery markets. A very moveable industry: here today and there tomorrow.
Manufacturing methods and size of machinery must be analyzed. U.S. companies require large production runs. Hence, machines are mega-size, They are made to order, one by one. We lose the advantages of economies of scale: the smaller the machine, the higher the unit cost. On the contrary, foreign mills have small production runs and operate with high diversification. Their requirement is for small-sized machinery. What is normally a lab size machine size is most often a full production machine overseas. The current U.S. manufacturing method does not cater to producing small machines at low sales price.
So now, fight of flight? Some traditional U.S. manufacturers have seen their revenues erode by 50 percent. Others are barely struggling. Will the golden era ever return? We see no indications that this will happen, even though special trade bills are on the Congress floor.
Todays international market is telling us very clearly: Make what we need to buy, not what you want to sell!
How should these textile machine manufacturers act to remain operational? How should they approach the international markets, in light of the reduction in the number of operative textile mills in the U.S.?
The changes that may be required will evolve as a result of analyzing some of the following ideas.
Let us assume the following distribution of types of international machine buyers:
(a) Those who will specify 100 percent American-styled machines: about 10-15 percent of total market;
(b) Those mills selling to the U.S. but will specify just enough machinery. These are the price-conscious, utility minded buyers: about 65-70 percent; and
(c) Emerging mills in new-to-market countries or producers, buying used machinery: about 15-20 percent.
The first ones are those traditionally supplied and may include U.S. business.
The second group is found everywhere, from Ecuador to the Philippines, from Peru to Syria. Characteristically, these companies are relatively well established, well connected yet unsure of their own future. Their ROI is measured in months or, per contract.
The third group is an emerging group, strictly utilitarian and will consistently buy used machines, regardless of age or country of manufacture.
These customers are abundant and are typically new-to-market individuals starting into the cloth production business. Their initial target is their own domestic markets until their business evolves and they are ready for larger and better machines. Countries such as Slovakia, Uzbekistan or Romania are in this category.
Their second stage is to take advantage of their geographical situation and focus on the more profitable European market. At that point they may become customers for more sophisticated machinery.
American machinery, generally perceived as strong, heavy duty, enjoys name recognition, but not enough to sway a purchase in its favor. The visual appearance of a typical U.S.-made machine will not entice these customers to a purchase, despite the enormous efforts displayed by sales forces of every U.S. company to present the advantages of bottom line benefits.
It tends to be a losing battle, starting from a visual appeal point of view and continuing with non-competitive pricing. I believe this to be an area where serious improvements must be made to remain viable players.
While U.S. mills continue to operate, focus must be made to keep the old friendships and service as a priority. Every U.S. textile machine manufacturer should decide on a market share as a minimum of 30 percent.
Plans should be developed for high-volume production rather than the customary custom-made machine. The entire manufacturing systems will be affected, as a successful plan will allow low unit profit focusing on yearly averages rather than per unit profits schemes. Additionally, excellent inventory and cost controls may no doubt be instituted.
Some considerations for a comprehensive marketing plan:
Quick delivery of standard machines: it would offer additional edge over competition.
Manufacturing for stock rather than to order. It will increase demands for accurate short and long forecasts issued by the marketing divisions at each company. Sales forces will become much more global, totally in tune with the business requirements and outlooks in their assigned marketplaces.
Is the plant prepared for large sales volume? Is this of interest?
Should the company continue to carry special order machinery or should it reduce the amount of Bill of Materials?
Using a basic, stripped-down machine and provide options packaged together, automotive industry style. It reduces the amount of Bills of Materials.
Can manufacturing divisions rely on less-costly, non-essential parts from overseas? Is this an option?
Should we assemble elsewhere as well?
Re-engineering: revamping the entire product line, making it visually appealing. All new international mills invite potential customers to see their installations: they want to show a spectacularly good-looking plant. Turkey, among a few others, for example, recognized this over a decade ago.
Review engineering to design steel sections that are adequate for the job.
Consider the cost of shipping to overseas destinations. If possible, designs should fit within a shipping container to reduce freight costs, which customers do consider as part of their installed cost.
Manufacturing in one or more places in the world, as well as multi-continent sourcing and assembly in different parts of the globe: export only U.S.-made technology and procure low-tech parts at destination.
Should company technology be licensed or should the company remain in control?
It seems work is just beginning. It should be an exciting challenge.
ATLANTA Gene Cone, president and CEO of Johnston Industries in Columbus, GA, addressed almost 30 members of the Atlanta Textile Club during its monthly meeting on March 11.
Echoing statistics by the American Textile Manufacturers Institute (ATMI), Cone said, The textile industry had lost more than 160,000 jobs since 1997, 65,000 of these last year. And more than 200 companies have closed since then, 100 of them last year.
But he was also positive about his companys prospects.
We cannot compete on cost or price, he said. There is no magic bullet. We have to understand this business, take ownership of our company, work as hard as the immigrants who made this country great.
He outlined five strategies: make Johnston Industries a world-class, global player; focus on solving customers problems; create innovative, unique products; demand excellence in every person in the company; and partner with customers, suppliers and other textile companies.
The April meeting is a golf outing, scheduled for April 8. A luncheon on Monday, May 6 features Royce McInnis, vice president of sales for Alkahn Labels, who will discuss trends in the technology and laws of labeling.
Mike Todaro serves as president of the club. He succeeded Tom Franklin, a 30-plus-year club member.
The ATC is a historical group of talented professionals with a rich history of accomplishment for the industry, career networking, friendship and enjoyment meeting with one another, said Todaro, managing director of American Apparel Producers Network (AAPN), The Sourcing Network of the Americas®. Despite the economy we continue to get exciting new members from within the fiber, fabric, apparel, technology and other industries, plus the press who covers them and the universities who educate them.
Other officers for 2002 are Don Byerly; Alkahn Labels, secretary; Franklin, outgoing president; Sue Strickland, American Garment Council, treasurer; and Kelly Waldrop, Johnston Industries, vice President.
The Atlanta Textile Club dates back to the 1930 and continues today. The ATC is open to anyone involved in the global textile/apparel/sewn goods supply chain.
The club meets the first Monday of every month. For more information, visit www.usawear.org/atc.
RESEARCH TRIANGLE PARK, NC The American Association of Textile Chemists and Colorists (AATCC) announced that it has signed two memorandums of understanding (MOU) with other organizations.
AATCC and the U.K.-based Society of Dyers and Colorists (SDC), the worlds two leading professional bodies specializing in textile coloration, have signed one of the memorandums, which formally recognizes the common aims of both groups. The agreement initiates the process of exploring new areas in color science and the chemistry of textiles to mutual advantage, they said.
In addition to stimulating and advancing research and development in color science and textile chemistry on a global basis, the two organizations undertake to explore mutually supportive initiatives to promote education, training and the publication of scientific information in these specialist fields.
They also agree to continue with the joint development, promotion and maintenance of the Color Index, the internationally recognized classification system for dyes, on which they have successfully collaborated since the early 1950s.
Finally, they will continue to administer the co-secretariat for ISO/TC38/SC1 Textiles-Tests for colored textiles and colorants on behalf of ANSI and BSI, while mutually respecting each others technical position and continuing to partner on the relevant technical committees, they said.
John Darsey, president of AATCC, emphasized that the two organizations have mutual areas of technical interests, and that both societies will continue to explore projects where joint participation may be advantageous and provide value to our members.
Meanwhile, AATCC and ASTM International signed a memorandum of understanding listing mutual cooperation in certain areas. John Y. Daniels, AATCC executive director, and Kay M. Villa, chairman of ASTM Committee D13 on Textiles, signed the understanding.
AATCC and ASTM International initiated a program of mutual cooperation that will coordinate the development of textile standards from fiber to finished product.
GREENSBORO, NC The George C. Moore Company has recently invested in a new e-commerce Web site, the first in the narrow elastic fabrics industry, according to the company.
The fundamental reason for developing this site is to make us easier to do business with, said Goran Elovsson, executive vice president.
According to Elovsson, the site will help George C. Moore eliminate and reduce inefficiencies in the current order entry process and drive lead-times down to a minimum.
The system will be extremely flexible and allow our customers to easily use the information available in our system, around-the-clock, he said..
Key features and functions of www.GeorgeCMoore.com include: password-protected entry system; on-line order-entry system; around-the-clock access to information regarding order status, order history and pricing; vendor managed inventory (VMI) capability; online product catalog; overstock inventory listings; and new product developments.
John Levicki, director of Supply Chain Best Practices for Vanity Fair Intimates, said the new Web site will enable Vanity Fair to become more efficient in its procurement process.
George C. Moores Web-based initiative should require less directed follow-up by the buyers and allow them to spend more time in supplier development, supplier certification and other value-added sourcing activities, he said. Ultimately, we want to take the buyer out of the daily purchase order process and follow-up, and enable other functional areas to have access to purchase order status.
Elovsson explained that the company would ideally like to receive all orders over the Internet and is working with individual customers to integrate their current purchasing system with The George C. Moore Companys.
George C. Moore is part of The Moore Company, which is headquartered in Westerly, RI. Founded in 1909, The Moore Company is family-owned and in its fourth generation of management.
The Moore Company is a group of manufacturing companies that contribute significantly to the success of the leading names in health-care disposables, apparel, graphic arts, sporting goods and marine products.
HIGH POINT, NC Culp, Inc. is seeking a buyer for its wet printed flock upholstery fabric operations, the company said Monday.
If a deal isnt made by April 28, Culp said it will idle those operations until business conditions improve. Included in that unit is a printing facility in Lumberton, NC, as well as some related operations in Burlington, NC.
About 76 people are employed at the Lumberton factory, while about 25 work at the Burlington facility.
Culp blamed the potential moves on the prolonged strength of the U.S. dollar and the shift in consumer preferences for other styles of upholstery fabrics.
Sales of wet printed flocks contributed $17.6 million to the companys sales of $374.6 million for the 12-month period ended January 27. In the same period, these assets resulted in an after-tax loss of $1.3 million, or 12 cents per share.
The company said it expects an after-tax charge from selling or idling the operations of $3 to $6 million, of which $2.5 to $5 million would be a non-cash item representing the write-down of manufacturing equipment. The charge will be reflected in the results for the fourth quarter.
Culp added that it has invested about $14 million in the wet printed flock operations, including fixed assets with a net book value of about $9.5 million. The company estimated that if the business is not sold, the annual after-tax carrying costs on the idled assets will be about $250,000, or 2 cents per share.
International markets have historically been an important source of demand for our wet printed flocks, and the prolonged currency shifts have made it increasingly difficult to compete against marketers with foreign-based manufacturing resources, said Robert G. Culp III, CEO. We also are experiencing a broad shift in consumer preferences toward other upholstery fabrics, especially textured fabrics, which we are unable to manufacture on the same equipment used to produce wet printed flocks.
NORTH CHARLESTON, SC Polymer Group, Inc. (PGI) revealed details of a comprehensive financial restructuring aimed at reducing more than $550 million debt.
The worlds largest non-wovens fabric producer said that CSFB Global Opportunities Partners, L.P. (GOP) will invest about $50 million in cash to reduce senior indebtedness and a $25 million letter of credit to support certain amortizations of bank debt. GOP will also convert $394.4 million in Polymer senior subordinated notes into equity.
PGI also is offering to exchange all of PGIs remaining Senior Subordinated Notes for new notes due 2008.
Also, shareholders will vote on a proposed 1-for-10 reverse stock split at a special meeting.
The restructuring is expected to result in $550 million in debt reduction and an increase of shareholders equity. When complete, GOP will own 87.5 percent of the companys equity, with shareholders retaining the balance.
PGI and senior lenders also are discussing amending an existing credit facility.
GREENSBORO, NC A U.S. Bankruptcy Court judge entered 14 first-day orders to ensure that Guilford Mills, Inc. will continue operating its business by providing continuity of payments to its suppliers and uninterrupted salaries to its employees.
The orders, entered on March 14, covered all of Guilford Mills requests, and there were no contested hearings.
The companys pre-arranged bankruptcy filing on March 13 is being made to implement a debt restructuring on which the company and its senior lenders have already agreed in principle. Under the restructuring, Guilford will cut its $270 million senior debt to about $145 million.
Weve gained the cooperation of our lenders and have an agreement in principle with them, said John A. Emrich, president and CEO.
Emrich said he visited customers the day Guilford filed its reorganization petition to continue his efforts to communicate freely and frequently with the companys customers and suppliers.
Judge Burton Lifland in the U.S. Bankruptcy Court for the Southern District of New York also approved an agreement allowing First Union National Bank to furnish a debtor-in-possession revolving credit facility of up to $30 million. Other court orders allow Guilford to:
gain immediate access to the first $10 million of the DIP financing;
continue its long-standing factoring relationship with CIT to finance Guilfords accounts receivable;
issue paychecks following Guilfords normal schedule; and
continue honoring customer incentive programs.
The court also allowed Guilford to retain Nightingale & Associates, LLC as financial adviser and Togut Segal & Segal as bankruptcy counsel.
Its very reassuring to know these guys are going to be here for a long, long time, said Bill Scott, business director of textile and automotive products for BASF, an automotive supplier to Guilford since 1974. We see ourselves as a Guilford supplier for years to come.
WINSTON-SALEM, NC Frisby Technologies lost $5.2 million, or 72 cents per share, on sales of $8.2 million in the fiscal year.
A year earlier, the company lost $4.8 million, or 77 cents per share, on revenues of $10.2 million.
The global downturn in the consumer apparel, outdoor footwear and sporting goods market segments reduced consumer demand for the companys COMFORTEMP materials and commensurately reduced demand from our licensed manufacturers that use our thermal additive materials to produce COMFORTEMP materials, said Duncan Russell, president and chief operating officer. Weakened consumer demand during the 2000/2001 winter season left very high carryover inventory levels, further reducing apparel manufacturer demand for our products.
MINNEAPOLIS Cargill Dow LLC announced a Federal Trade Commission (FTC) designation for NatureWorks fibers. The designation classifies PLA as a new, generic fiber, while the trade name will remain NatureWorks.
To receive new generic classification Cargill Dow had to show properties and chemical composition that is radically different from other fibers; what commercial use is foreseen; and that the new generic is of importance to the public. PLA now joins other classifications including cotton, wool, silk, nylon and polyesters as a recognized fiber category.
NatureWorks is distinguished as the first fiber generic of the new century to earn FTC approval and gain acceptance by the commission, according to Cargill Dow. It was approved unanimously by a 5-0 vote.
For a fiber to be classified as PLA it must be a synthetic fiber manufactured from polylactic acid or poly lactate derived from naturally occurring sugars, such as those in corn or sugar beets.
The process to create NatureWorks fibers allows the company to harvest the carbon that plants remove from the air during photosynthesis. Carbon is stored in plant starches, which can be broken down into natural plant sugars.
The carbon and other elements in these natural sugars are then used to make a series of polymers, called polylactide.
GRAHAM, NC Apollo Chemical Corporation has reached agreement with Vulcan Chemical Products to market Vulcans textile specialty chemicals in the U.S.
The initial phase of the transfer of the business from Vulcan to Apollo begins on April 1. Vulcan Performance Chemicals will continue to manufacture all of its textile products and provide technical support for these products, while Apollo will focus on the sales and service requirements of the Vulcan textile specialty chemical product line.
MIAMI New Generation Computing Inc. announced that Tennessee Apparel, a manufacturer of military uniforms, has deployed New Generations Apparel Management Accounting System (AMAS) and The Production Manager (TPM) software systems.
Launched this month at Tennessee Apparels headquarters in Tullahoma, TN, the systems will enable the company to manage operations at its cutting facilities and warehouses within the state. With AMAS, Tennessee Apparel has integrated its sales, distribution, finance, production planning, administration, accounting, electronic data interchange and other functions onto one PC-based system.
TPM automates the companys production and payroll functions.
PHILADELPHIA Hitoshi Ujiie, assistant professor of textile design at Philadelphia University, is currently an artist-in-residence at The Textile Museum in Washington, D.C.
He is collaborating with five other leading textile artists from around the country to present the exhibition, Technology as Catalyst, which opened in February and will run until July 28.
Curated by Rebecca A.T. Stevens, Technology as Catalyst features the work of six contemporary textile artists who use digital printing and/or digital weaving equipment to create their art.
The artists works are created through blending the use of high-tech machines and equipment with the roots and basics of textile design.
LOWELL, MA The first major exhibition in New England from the company archive of Jack Lenor Larsen, long considered to be the dean of modern fabric design, will open at the American Textile History Museum in here on June 15.
The exhibit, Jack Lenor Larsen: The Company and the Cloth, celebrates the genius of the man and the contribution of his company to 20th century design. It tells the story of creative design and production of high-end textiles from the 1950s to the present. The show features more than 100 fabrics reflecting Larsens talent for incorporating both the newest and the oldest techniques.