MEXICO CITY — The U.S. textile industry Tuesday began sizing up its future in Mexico as companies showed their lines to curious — and cautious — Mexican apparel makers during the first trade show targeted to North American free trade in textiles.
The first day of the three-day Expotela show at the World Trade Center here seemed like a long-awaited blind date after the Jan. 1 implementation of the North American Free Trade Agreement.
“I think everyone is on a fishing trip. I don’t think anyone really knows what the market is,” said Jeff Mednick, vice president of Burlington Menswear, New York, who had just loaded up a potential Mexican buyer with worsted wool swatches for men’s and women’s suits.
Approximately 130 U.S. textile companies are showing their wares at the event, produced by Bobbin Blenheim.
“I don’t think anyone is going to leave here with orders to cover their cost of coming to the show,” said Peter M. Roaman, executive vice president for marketing at Forstmann & Co., New York.
But Roaman and others said making a stab at the Mexican market is worth the work each side will have to undertake to understand each other’s way of doing business.
The U.S. already has 35 percent of the Mexican textile import market, which the U.S. Embassy here expects to grow by 8 percent over the next three years.
For their part, Mexican buyers interviewed seemed eager to make contacts. They also shopped with an eye to cost.
“The Far East prices are cheaper. But the American quality is better,” said Moises Rodriguez Diaz, director general of Prestigio En Moda, SA de CV, who for two years has bought 60 percent of the fabric for his office uniforms business from Burlington Worldwide, Greensboro, N.C.
Producing 120,000 uniforms a year, Diaz sources 30 percent of his supplies from Mexican textile makers, with 10 percent coming from the Far East.
“For a long time, the Mexican apparel industry was tied to 10 domestic suppliers. Now we see an infinite number of suppliers of quality fabric that we won’t have any problem consuming.”
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Joaquin Colomer, manager of shirtmaker Bima Internacional, SA de CV, said he is still weighing the benefits of the proximity of U.S. mills, with their higher prices, to the lower cost of Far East textiles and the high shipping costs and time. About 50 percent of Bima’s fabric comes from the Far East, 40 percent from Mexico and 10 percent from the U.S.
“Mexico needs a lot of fabric, but we also need lower prices,” he said.
The Mexican apparel industry of some 20,0000 manufacturers largely comprises small- and medium-size companies, many of which are undercapitalized.
They purchase textiles in limited quantities. Writing small orders, some U.S. textile makers say, could be a problem.
Others say they want to develop distributors in Mexico to bring in bulk orders.
“You have to determine which of the manufacturers can buy enough. When I do piece-dyes, I need a 5,000-yard minimum order,” said Robert L. Kennedy, regional manager of finished goods for Thomaston Mills Inc., who is based in Los Angeles.
“The only way you can overcome this is through a distributor. But there are people in Los Angeles we sell to that are in the same position, who are undercapitalized and with limited resources.”
Another concern among U.S. mills is the general lack of credit information for many potential Mexican customers. For now, some U.S. mills say until they get a handle on their Mexican customers’ credit worthiness, most deals will be made strictly on the basis of cash — or at least a substantial deposit — up front, or a letter of credit.
This can be expensive for Mexican manufacturers, however, because of the extraordinarily high interest rates charged on commercial loans, with rates hovering around 20 percent.
Some say that in return for getting the money up front, the Mexican customers may ask for price concessions, which some U.S. executives acknowledge would be a legitimate request.