NEW YORK — Developing new sources of business — whether through new product niches or increased exporting — is the key issue confronting companies in the knitted textile industry.
If the industry fails to meet that challenge, say some of its leading executives, it faces an uncertain future.
Knitters, they asserted, are doing many of the right things. They continue to make innovative fabrics, using state-of-the-art equipment; they continue to improve delivery times through Quick Response programs, and they are as cost-effective as they have ever been. Still, competitive pressures from suppliers around the world continue to threaten their well-being.
Potential solutions include developing lasting partnerships with key customers and suppliers and the sharing of more nonproprietary information among industry members. Also looming prominently on the horizon is home shopping. Some see this as a potential boon for their businesses, while others said it will have little, if any, impact.
These were the key points that emerged in a recent roundtable discussion by several executives from the Knitted Textile Association who met at WWD’s offices in advance of their annual convention, which begins Thursday in Aventura, Fla.
The group consisted of Ellen Green, vice president of Andrex Industries and president of the KTA; Peter Frank, division manager, Malden Mills; Gerald Lubin, president, Ge-Ray Fabrics; Alfred Greenblatt, president, apparel and home fashions business unit, Guilford Mills; Van Lloyd, market manager, PFP Fabrics division of Milliken & Co.; Richard Arnold, vice president, Cleveland Mills, and Earl Kramer, president and chief executive officer, Concord Fabrics.
The executives said they will continue to seek help from the Clinton administration to create a level playing field in their attempts to compete with low-cost producers from around the world. Still, they may be on their own, as many feel the government sold out the textile industry when negotiating the North American Free Trade Agreement, and more recently, the GATT Uruguay Round.
“No one is going to help us, so to survive, we all have to diversify our arteries of distribution,” said Frank, who also is executive vice president of the KTA, which has 165 member firms. “At one of our conventions a couple of years ago, someone said, ‘Export or die.’ That’s one area we should all be striving to increase.
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“The other is targeting niches with proprietary products so that we don’t hit head on with firms from the Orient and, hopefully, keep this industry alive,” said Frank, whose firm is a leading supplier of fleece fabrics. “For example,” he continued, “there is a lot of polar fleece being made the Far East that doesn’t compare with better goods that we are doing. The problem is that when the garments are made there, that’s where they get their fabrics.”
Green added: “In addition to hitting head-on with firms from the Orient, we also have to be concerned about hitting head-on with ourselves. We all need to bring something different to the table. If a certain type of fabric is hot, we can all do different things with it.” The group pointed out that novel, proprietary products are experiencing moderate to strong export activity to Europe and Asia. Still, they said, a producer of basic, commodity fabrics is hampered when it comes to exporting.
“It’s not easy to say you’re going to become a global producer when you are producing commodity goods,” said Kramer of Concord, whose commodity fabrics are primarily polyesters and blends of polyester and cotton. “The world emphasis has shifted from political power to trade power and, being a producer of commodity goods, I’m in a quandary as to how to take advantage of that.
“I don’t know how you can export those goods to Third World countries and, as far as Europe is concerned, you are now going to have Eastern Europe as a low-wage producer.”
Kramer did say that one way for a producer of commodity goods to survive is by targeting those fabrics to makers of more stylish garments, and not those producing me-too apparel.
“The manufacturer that makes better products can afford to pay you a little more than a commodity manufacturer and, perhaps more importantly, the guy who makes stylish goods respects you for the fabrics you can bring to them,” Kramer said. “The commodity maker’s respect for you hinges mainly on what price you can give him.”
Milliken’s Lloyd said that to successfully participate on an international level, a firm must have a strong domestic base and know exactly what types of customers it wants to target.
“Until we as an industry can do that, it’s going to be difficult to go overseas and be competitive,” he said. “I think any knit producer has to find those customers and accounts where they can satisfy needs and not just sell fabrics. “Until you find out where you belong, you’re out there calling on the wrong people, sending the wrong products.”
“That’s also our biggest problem, identifying who our customer is,” Ge-Ray’s Lubin said. “Is my customer The Gap, or, is my customer one who manufactures for The Gap?”
Cleveland’s Arnold said his major concern is that there are only a certain number of niches in which a firm can become a player.
“We’re all dealing with the word ‘too,”‘ he said. “In our industry there are too many spindles, too many rotors and too many knitting machines, all chasing the same business. Everybody, whether a commodity or novelty fabric producer, is saying, ‘I need to find something for that machine to do.’
“We’ve all spent tremendous amounts of money on R&D, and we’re all rethinking our businesses,” he added. “The trouble is, there are no secrets anymore. We all know within 15 minutes what each of us is doing.”
The group said one way to maintain a competitive edge is through partnerships with customers and suppliers. Still, with mounting competitive pressures, long-term partnership may not be a total answer.
“In this business, there are a lot of diverse players with competing interests,” Arnold said.
“For instance,” he continued, “we buy a lot of our polyester from Hoechst Celanese, so we think we have a partnership with them. But my competitors have the same partnership arrangements with Hoechst that I have. So, my partner is also a partner with my competitor.”
Guilford’s Greenblatt noted, however, that by having a good relationship with a firm, “You become more in tune with what his needs are.
“Even if he may want to alter some of his products,” Greenblatt said, “you can at least have a shot at that business because you work closely with him. A lot of times, ‘partnership’ is a euphemism for what’s simply a nonadversarial relationship. But we have a number of close partnerships going on right now. One is a product development and marketing situation with DuPont. We are understanding each other’s businesses a great deal that way.”
“If you approach your partnership as a one-on-one relationship it can be something that’s very strong,” Lloyd said. “We have found partnerships to be difficult, but once established, they are very beneficial. Still, you must never let the level of communication drop between the two companies because procedures have taken over.”
Arnold said the key problem with trying to establish partnerships is that “most firms in this economy act in their own best interests.”
“If my customer goes to a woven fabric next season, I would lose out,” he continued. “They could care less whether I survive or don’t survive.”
While partnerships had the potential to increase business among individual firms, the sharing of nonproprietary information could be beneficial to the entire industry, most of the group agreed.
When she assumed the presidency of the KTA last year, Green said it was important to her to encourage the industry to share information, “and it still is, so long as it doesn’t hurt someone’s competitive edge.”
Some argued, though, that every bit of information is proprietary.
“I wouldn’t share anything I do from a cost or technical standpoint with anyone, and I don’t expect them to share with me,” Concord’s Kramer said. “It’s not practical.”
Frank disagreed.
“If our industry doesn’t stand together, we will disintegrate,” he said. “I’m not talking about what dye stuffs you use, or what types of fibers you may be using, I’m talking about a philosophy of sharing certain things, such as ways to improve industry standards, that will help all knitters.”
Lloyd said he agreed with Frank. He said Milliken has made an effort to establish better testing procedures, “because that’s what retailers are doing.
“If we know what the retailer is looking for, and how he may be testing certain things, it’s a minimal but necessary level of sharing that we need to do,” Lloyd remarked. “But I agree, there are too many things that are difficult to share.”
As more partnerships and increased information-sharing could help knitters compete on a worldwide basis, the home shopping retail area could also prove beneficial, the knitters said.
Although still in its infancy as a retail distribution channel, the medium is seen by some knitters as having a huge potential. Still, their enthusiasm is tempered by the low level of interest home shopping executives have shown regarding the fabrics used in the clothes they sell.
“Still, even if we don’t know the outcome, it can’t be a negative,” said Greenblatt. “It’s another avenue of distribution, and if they sell clothes, it’s another opportunity for us. They sell a hell of a lot of things in short time frames.”
Andrex’s Green said home shopping, in its current state, resembles a catalog. The key, she said, “is getting someone to turn on the television set at the right time, to catch that garment.”
“Unfortunately,” she added, “right now, the television market isn’t buying fabric, they’re buying clothes.”
Guilford’s Greenblatt contended that the primary reason the home shopping industry hasn’t become more involved in the fabric segment of apparel “is that it lacks the people who are sophisticated enough to know what role fabric plays in apparel. “They’re still into the names of brands,” he observed of that audience.
“But as the home shopping phenomenon moves further along, and that industry begins to see fabrics showing up in slightly off-standard colors and weights, they will want to get more involved,” added Greenblatt. Greenblatt also noted that about 20 years ago, most retailers never got involved in the decision-making process when it came to fabrics.”
“As soon as a garment producer has to inform the telemarketing people, ‘I can’t make a shipment because a fabric guy screwed me up,’ they’re going to want to get involved in who they’re doing business with,” Lubin said.