Spinners Muddling Along
Jim Phillips, Contributing Editor
"I don't think you could say we're disappointed in our sales," said one spinner. "Certainly, from the perspective of the third quarter of last year, we are well below expectations. But, from what we were looking at in late fourth quarter of last year and the first quarter of this one, we haven't dropped as far or as fast as we had feared. December and January were really bad for us, as they were for most everyone. But since then, we've sort of muddled along and done okay, with 'okay' being a relative term. Some weeks have been better than others. We've had some bad weeks and some decent weeks. But it's been a long time since we've had a great week."
Another spinner reported a similar experience. "We've done all right some months, not so well in others. It's almost like one month on, one month off," he said. "Our customers are waiting to the last minute to order what they need. And then they buy only what they are sure they can sell. Then the process starts all over. Our customers are getting the same treatment from their retail customers, who are waiting until inventory is very low before restocking."
"I would estimate our sales are down roughly 10 to 15 percent so far this year," said a North Carolina spinner. "Some of our biggest issues continue to revolve around credit. Money is tight for everyone, but our customers in Central America seem to be having a particularly difficult time getting their orders financed."
The on-again/off-again state of the business has kept many spinners struggling to maintain a consistent production schedule. "It's week-to-week for us right now," said a Georgia spinner. "We are getting business, but what is coming in is in very short runs with even quicker-than-usual turnaround. For the most part, we've been able to run a full schedule, but it has been by the seat of our pants."
Commented another spinner: "We've taken furlough days here and there when there hasn't been enough business. For the moment, we've got enough of a backlog to run full. But there is always the possibility of additional furloughs."
Overall ring spinners are reporting better business conditions than open-end (OE) spinners. "We've got a relatively healthy backlog for our ring-spinning plants," a specialty spinner noted. "Our plant is running a full schedule, and we have enough orders to maintain for a while." The same spinner said orders for OE yarns remain "spotty," resulting in a variable operating schedule.
Prices Remain Somewhat Stable
Despite the overall downturn in orders since last December, many spinners report prices are holding up relatively well. "Obviously, everyone wants to dicker on price. But there is at least some general understanding of what material and production costs are. So, we've seen prices mostly hold their ground. Of course, we were selling on ultra-thin margins even before the current economic crisis began, so we didn't have much wiggle room."
Cotton prices, usually a reliable gauge in yarn pricing trends, have edged up consistently since the November 2008 low of under 40 cents per pound. As of June 5, spot cotton quotations averaged 53.25 cents for base-quality cotton. Prices are down 4 cents per pound over the corresponding period a year ago and well below the season high of 63 cents reported in August 2008.
Earlier in the year, spinners were not optimistic that business conditions would turn around before the end of the year. Now, however, some are hoping for a reasonable uptick in the third quarter. "Things seem to be loosening up somewhat," one spinner said. "Hopefully, all the news about GM and the auto industry won't send things crashing back down."
Said another: "We're hoping - I wouldn't say expecting - for some significant improvement later in the year as consumers gear up for the holiday season. We knew the holidays last year would be flat. But we're hoping increased consumer confidence will spur on more retail spending for the holidays. That would be good news for all of us."
Download current yarn prices.