The subject assigned is the future.
You must have come here very excited to learn of the future.
I will not insult your intelligence.
I must confirm something you already suspect: You are not looking at Nostradamus, Jr., reincarnated up here.
If you learn of Juniors location, please share this information with me.
As we, together, consider the future of textiles and subsequently, textile machinery, perhaps you identify with the words of Winston Churchill: "I have nothing to offer but blood, toil, tears, and sweat."
What more is there to do? What more can we offer to save textiles in the United States?
In preparing the outline for this presentation on the future, I found myself going in many directions. I consulted with several ATMA colleagues and staff, with other resources in our textile industry and with staff of allied associations.
Many, many good ideas came from these conversations.
From my several consultations no clear future path emerged, however, I thank those who shared their knowledge.
I do know this about today: The U.S. customer base is losing 144 employees each business day, people who wont be using our machines.
I know this about the last five years: We have lost 144 employees of U.S. customers, each business day, people who might have used our machines.
I know this about the future: We cannot maintain a textile machinery and services business depending on the U.S. market alone as the U.S. customer work force shrinks by 144 people each business day.
So, historically, all segments of the U.S. textile industry have offered up enough blood, toil, tears and sweatsome at different times than others.
As we look at the history of textile machinery in the United States, perhaps, we can see future survival techniques, for suppliers and most importantly, for the U.S. customer base.
For survival there is neither a crystal ball nor magic formula, nor is there an encompassing solution in the elements offered up by Sir Winston.
For future survival we do have historical precedents, we have current trends, and we have each other.
Perhaps, we have ignored for too long the potentials of "each other" approaches.
With our historical basewe share similar circumstancesit is just possible that together, we can share or exchange knowledge and resources, and survive collectively. I do not exclude the possibilities of joint ventures, or lesser collective pursuits.
So, today, my theme is to focus on the commonalities of possible survival techniques, historically and currently, for all segments of our shared U.S. textile industry, but in particular, the machinery suppliers and the mills.
I will offer this to you with some examples drawn from ATMAs flexible strategy for survival.
First, let us examine U.S. machinery and exhibitions history as possible bellwethers to the market positions of our respective sectors. There are some lessons here.
Second, we will look at ATMAs definition of its industry in terms of adapting its membership criteria to market circumstances. This too, may have use to U.S. textile interests.
Third, in a new world of competition, we require new alliances. ATMA provides more examples.
When ATMA was founded in 1933 the organization already had a legacy of leadership and history of change extending back to the 1800s. It is in this continuum of change that we discover and re-discover some techniques for new age adaptation.
Of 97 founding companies, only six were based in the South.
Massachusetts lead with 37 and bunched behind were Pennsylvania, New Jersey and you guessed it, Rhode Island. Samuel Slaters mill still stands, not exactly a testament to security of intellectual property, but certainly it is an enduring example of American ingenuity and perseverance. Another score of founders were spread about the North.
Only a handful of these companies remain, and fewer, yet remain in strong market positions.
It is fascinating and instructional that the early Yankee dominance of textiles is paralleled by U.S. textile exhibition history, which in turn, is linked to the rise of ATMA.
Machinery makers had order backlogs and developed a sort of quota system. The mills in the North for generations were in effect, controlled by their supplier neighbors!
In less than a generation the world-class ATMA founding companies would realize, largely by their own initiatives, their need to out-migrate to the South. As that occurred, U.S. machinery producers experienced a rather fast fall in the textile hierarchy.
But then, in 1881, ATMAs New England-based predecessor decided to produce an exhibition in Atlanta.
This single event, some textile industry historians claimed, sparked the industrial revolution of the South. Thousands of mills were given rise by this International Cotton Machinery Exposition.
So, in 2006, there will occur in Atlanta, at ATMAs initiative, another new beginning, a Megatex of shows, 125 years after the meteoric rise of textiles in the South.
For several years, between 1881 and 1969, several exhibitions were produced throughout the North by ATMAs predecessor groups and ATMA. Shows sprouted up as textiles in the South expanded. It got expensive for suppliers.
The geographic shift of major mill production required new approaches. Penetration from Europe rooted itself in the Southeast. ATMA took ATME-I® to Greenville in 1969. For a time this suited marketplace requirements, for the majority of textile segments.
And, concurrently the world of textiles rapidly shrank. We quickly became multinationaloperations, transactions, shows, distributionthe works.
This may discomfort you momentarily: But, please consider that textile machinery producers, regardless of ownership location, have been in a global competitive struggle for about one-half century. We have adjusted to that, just as U.S. apparel and textile interests are now challenged with the necessity of adjusting to unprecedented global competitiveness.
The U.S. textile machinery industry, a generation ago, simply looked upon exports as icing on the cake, as long as they didnt take too much effort. And, they looked upon imports as a nuisance.
In recent years, to survive, U.S.-based machinery producers have exported 30-to-50% of production.
Now, time and circumstances impose more change on all of us. We, collectively, are not simply suffering through a down cycle. We are adjusting to a major industrial transformationa revolution of global naturean age driven by technology and computerization.
This is not just a business cycle. The competitive structure of the industry is altered forever and we are trying to catch up with it, wouldnt you agree?
New terms and new concepts have emerged: "Value added services." "Partnering." All of us are now much more than just manufacturers or just a service company as we realize we have to be both and more to survive.
Things are different in the United States. And, in Europe. And, in Asia.
That doesnt mean the U.S. industry is going away. We are reinventing ourselves. We are repositioning ourselves. Companies will disappear, but the industry sectors will survive at some level and in some form.
For my company, for ATMA and for its members, this is a time of regeneration.
A huge contributing factor to U.S. textile industry deterioration is the 1997 devaluation of Asian currencies that has led to a flood of unfairly priced imports into this country, a 30-40% cost advantage. A misguided "strong dollar" policy on the part of the U.S. Treasury has prevented these currencies from recovering.
We are not alone. Last year, according to the National Association of Manufacturers, the nation lost well more than one-and-one-quarter-million manufacturing jobs. Other sources report much more and attribute the losses to the strong dollar and unfairly priced imports.
One outcome is a severe decline in cash flow, working capital at domestic mills and profits. And U.S. banks have been reluctant to lend to the U.S. textile industry at their critical time of need, except at prohibitively high interest rates.
The question for us in the U.S. textile machinery business is can we help our domestic customer survive.
We need to work with our customers to bring a halt to the damage that the industry is suffering and to give them time to develop a long-range strategy.
That includes trying to convince our government to act to bring down the over-valued dollar to a level that reflects economic fundamentals.
An impressive coalition has been created in Washington that has united manufacturing, agriculture and labor to accomplish this. It is called the Coalition for a Sound Dollar and it is putting enormous pressure on the Administration to bring the dollar back down to normal levels.
ATMA has committed to support the initiatives underway in Washington to address many public issues and to lend our voices to the political forces seeking restoration commitments from our government. But what if Washington fails us, are there alternatives? We should design new strategies with or without Washington.
The rapid and dramatic changes of the marketplace now require all of us to expand our "home" market focus now to be the Americas, the Western Hemisphere.
Unfortunately, wesuppliersno longer can look comfortably to four or five geographically concentrated states in the U.S. as the primary source of economic viability.
In short, we have world overcapacity; basic structural shifts of production; the U.S. textile industry is shrinking; the U.S. dollar is overvalued; the textile world is targeting the U.S.A.; and, Washington is not responding sufficiently.
I agree, it is not fair.
But, it is reality: The U.S. government, the U.S. economic system, simply has not responded adequately to what was being done and what is being done to the apparel and textile industries of this nation.
Again, we do not suffer alone. One writer offered this: "Consider what free trade is costing. Americas industrial dynamism and economic independence are vanishing. Company towns are turning into ghost towns. High-paying manufacturing jobs that provided a living wage for one man to raise a large American family on a single income are being shipped to foreign workers."
This industry is no less efficient or productive than those of other countries. However, we do have higher costs imposed by government and other costs consistent with our higher standard of living.
Do we think we can help those countries develop by lowering our standards to their standards? We should not be forced to compete against those lower standards.
When my ATMA colleagues elected me to the Chair in 2001 they did so with full knowledge of my three-part platform aimed at survival as an American association whose membership must now depend on shifting markets.
All three platform parts, to one degree or another, relate to better service offerings to the single-most important market of its membership, that is, the U.S. market.
First, we are re-creating and re-positioning ATME-I®, the American Textile Machinery Exhibition-International.
ATME-I® has been a rapidly declining show in the global show competitive atmosphere. With definitive change it will become of more utility and more representative of your interests.
We now have a plan, it is not the best plan, but it is a logical transitional plan to deliver to you in 2006 an international event that will be second in size only to the European show ITMA. It will be comprehensive and germane to your interests and needs.
As a step toward the redefinition and transition of ATME-I®, there will occur in Greenville in 2004, a consolidated show, which deserves full patronage by suppliers and buyers alike, to meet certain interests and needs of this region.
The 2006 show will be expanded in size, concept and attendance, I think dramatically, and will include as many broadly defined textile industry segments as possible. We have been talking with several other organizing bodies with apparel and textile show interests and intellectual property rights.
The second part of the ATMA platform, quite simply, is to expand ATMA membership. ATMA traditionally limited its membership to metal benders and meticulously held its criteria to the classic definition of manufacturing. For a long time we contemplated the reality of this approach.
We observed that this criteria excluded absolutely legitimate marketplace entities operating in the United States who from the American base established productive working relationships side-by-side with textile companies.
Reliability and serviceability of the association are factors being measured, evaluated and reviewed during my two-year term as ATMA Chairman. I must say this process is harmonious and productive. We have invited participation by prospective members. We have cooperative staff skilled in the administration, and compilation and analysis of member needs and wants surveys.
We are confident that by Summer we will develop a "new product" package without disruption. Historically, ATMA has been adept in re-inventing itself.
It is perfectly acceptable under a non-profit trade association umbrella to direct programs toward profitable enterprise with our customers. And, that is the third part of the platform on which my ATMA colleagues elected me.
While ATMA does have some traditional customer alliances, such as several working relationships with the American Textile Manufacturers Institute (ATMI) and some of the local groups, it has been just in the last few years that we realized the need for more.
We have expanded our alliances with U.S. customer associations and others in the Western Hemisphere. In fact, it is our goal to present to every legitimate textile organization worldwide the virtues and value of dealing with U.S.-based suppliers.
This third part of our platform includes also, alliances within the U.S. manufacturing sector of capital equipment.
ATMA is advantaged that the staff in our suburban Washington, D.C. headquarters have long-term served our specific needs and also have become quite adroit in serving and creating alliances with other capital equipment associations.
There is much to learn from basic manufacturing colleagues. The fruits of this networking process are transferable and directly applicable to better serving our textile industry customers. For example, we have gained insights as to how these colleagues have managed the overabundance of international standards that commonly apply to capital equipment products.
We have gained cost-savings and productivity technique insights to outsourcing.
We have learned more about the utility and future of manufacturers representatives and agents.
There are many more examples of benefits gained by this outreach.
Another example, product liability prevention and defense have a common thread throughout the capital industry sector and we brought much of this to our U.S. customers through cooperative programs with ATMI.
And, on another front, we have gained very valuable insights on the subject of exhibition management, proliferation, and stagnation.
It is importantmore than just a little importantto this administration of ATMA to generate new alliances through peer company association as well as through customer groups, with the goal of expanding marketing opportunities.
The American way is different. In the U.S. of A. trade associations are more prolific and more important to doing business than generally practiced in other parts of the world. Americans place high value on volunteerism and belonging to affinity groups.
It is this recognition of difference, I think, that prompted offshore interests such as the owners of my company, now in the fourth generation, to go beyond looking at America just as a source of sales.
I am pleased to be part of the American system, as I know are many of my European colleagues who have payrolls of American citizenswho pay corporate taxes to a wonderful countrywho have children who are American citizensand who take full advantage of the American system while returning what is expected, and more, to our American communities.
We offer our humility and our gratitude for these conditions of opportunity and contribution.
In the larger context, as the year began, we were told to look for slow recovery, maybe. The National Association of Manufacturers predicted economic recovery overall by close to two percent, but warned that manufacturers cannot expect to share in much of that, particularly capital equipment manufacturers.
It is deplorable that America, once the model of self-sufficiency, now receives 40 percent of its manufactured goods from offshore.
ATMAs purpose is to improve business conditions within the textile machinery industry of the United States within a global context.
We also encourage the use of the products of the industry and protect, promote foster and advance the common interests of our members as manufacturers and distributors of textile machinery on a worldwide basis.
Most of our members are small-to-medium size, centering on the Carolinas, Georgia and Alabama, although member organizations are also located in the Northeast, and Midwest.
In the last decade an increasing and significant number of us around the ATMA Board table, regardless of our citizenship, report to offshore owners. Regardless, the vast majority of us are charged to profitably operate business in the Americas, plural, the Americas.
The U.S. apparels and textile plunge has greatly harmed ATMA members. You know the crippling impact of the loss of tens of thousands of jobs in North Carolina since 1997.
There is no question that the global textile infrastructure is being reinvented. Our survival challenge is to anticipate its eventual design and function.
Recently, top markets for American-made textile machinery include Mexico, Belgium, Canada, Singapore, China, Germany, Brazil, the UK, Japan, and Italy.
The top six U.S. textile machinery import sources are Germany, Japan, Italy, France, Switzerland and Belgium.
Over recent years our trade balance is negative, about 40-60%, but we are not so confident in these delayed and sporadic government statistics.
We hope to obtain more timely and more reliable data resources in the near future.
The Caribbean Basin Initiative and African Trade Bills should promote stronger textile machinery markets in the Caribbean region in the short-to-mid term and many African nations over the long-term. Chinas admittance into the World Trade Organization also could bode well for increased U.S. textile machinery exports over the medium and long-term.
U.S. textile machinery manufacturers, therefore, generally face an improving market position, with world textile consumption increasing or at least, new textile producing markets in development.
I must repeat: ATMA works toward the survival of its members and the common good of the U.S. textile industry. We must operate in world markets in order to serve our most valued market, the U.S. producers.
This is why every year we always ask leaders of ATMI and selectively, other associations, to attend our meetings and if not for delivery of formal speeches, to network, and to share with us in that networking process the goals and predicaments of the industry. We seek to identify respective roles we might fulfill to the betterment of one another.
Another role ATMA has filled quite nicely is to provide some key administrative support services to the American Textile Alliance.
The American Textile Alliance was created three years ago through the efforts of several textile association leaders.
ATMA immediately offered its cooperation and we have directed our staff to provide high priority to participate in and to assist Alliance activities by all means appropriate and timely.
The Alliance agenda is useful and we would like to see its spirit and use expanded at a progressive rate. We see among our customer associations too much duplication, too much of the same, not enough collective action. Suppliers resources have shrunk to the point of being unable to support the dozens of separate organizations.
We are not interested in supporting public dissension. We are most anxious to support a united U.S. textile industry as united positions are deliberated and as they are announced.
I have little doubt of the survivability in the Western Hemisphere of American-based suppliers and mills if we concentrate our forces in new modes. While we work toward political remedies we should not delay consideration of long overdue strategic business cooperation.
There are no short-term fixes beyond miracles from Washington.
Our associations provide fertile ground for creation of strategic business alliances, vertically and horizontally. Realistically, for those companies that have some business and some reserve resources, we are looking at mid-term and long-term approaches.
You have listened politely to this opus on the future. Everyone has opinions based on the information available to them, and based on how hard they have been hit.
From your position, are there any bright lights? Are there possible avenues for pursuit by our collective industry, or for pursuit by individual companies?
I, and ATMA, would most sincerely appreciate your feedback to these questions.
Allow me to summarize what has been offered today directly, or implied, as items for action to survive the future:
1. Our mix of markets and marketing methods will not be the same, ever again. The golden goose has no more eggs to lay.
2. I recommend you read an excellent article in last weeks issue of Southern Textile News, titled "American Textile Machinery." It offers survival insights for all textile segments in the U.S.
The deftness of content pre-empted much of what I anticipated offering today. Read it, please.
3. Markets are shrinking while they are shifting. Specialize. Export. Think about joining ATMA in one of its trade missions abroad, particularly South of the border. Quietly, a few years back, we did just that with some U.S. mills.
4. Adjust. Seek alliances vertically and horizontally, domestically and offshore. Outsource. Offer to be a source. Offer your products to competitors; seek competitor products for your market. Ask your suppliers if they have offshore customers interested in alliance discussions. Inform your suppliers of possible alliances with offshore supplier entities.
5. Promote consolidation of industry collective resources. Eliminate duplicate and triplicate expenditures of dollar and human resources.
6. If you are qualified, join ATMA. It is the only U.S. association that solely represents machinery supplier viewpoints. It is adaptable and agile and it is recognized throughout the world for its longevity.
7. Refocus the worlds attention to our turf, our leadership, our creativity. For example, support Megatex in Atlanta in 2006 to achieve global repositioning. This concentration of exhibitions, conferences, and interests has many virtues.
And again, export.
This is easier said than done because of the requirements of successful exporting. I will conclude with my view of those requirements.
First, have quality product globally attractive.
Second, target a significant market share, whatever or wherever the market.
Third, acquire a solid financial base sufficient to research and develop event of new products.
Fourth, offer a package of services before sale, during sale and after sale. For example, prepare and undertake joint research with your customers. Provide reliable after-sales services.
Fifth, stay close to your customer at all times. Be accessible. Produce close to this place of production.
Adaptation and survival are the key issues in this global market. Let us work together toward this end.