Spinners Note Improving Business Conditions
Jim Phillips, Yarn Market Editor
"We've had a number of inquiries and have begun writing some business," said one spinner. "We had a few slow months earlier in the year, but business began picking up in late April and early May. It still isn't where we would like it to be right now, but it is not where we feared it might be."
Added another spinner: "We have orders in-house, but they are relatively small and quick-turn. There still seems to be some hesitancy at retail to commit. With the price of cotton continuing to drop, customers remain a little wary. But there is a good bit more activity than just a few months ago."
Overall, cotton prices continue the plummet started in early 2011, when the price peaked at more than $2 per pound. As of the last week in June, quotations for the base quality of cotton in the seven designated markets measured by the U.S. Department of Agriculture averaged 66.63 cents per pound. The weekly average was down from 70.28 cents the previous week, and from 134.49 cents reported the corresponding week in 2011.
Keeping Up With The Competition
Over the past several years, U.S spinners have been more price-competitive on the world stage than at many other time in recent memory. But it seems that advantage may once again be disappearing, leaving U.S. spinners to revert to the tried-and-true differentiators that have separated them from the competition in the past.
"We had a unique combination of circumstances for a relatively sustained period," said one industry observer. "For nearly two years, shortages of raw materials, escalating demand, volatile pricing and long backlogs kept industries in many nations focusing on filling their domestic orders. For example, you are not going to see a large quantity of product from India in the United States if yarn producers in India cannot fulfill local demand. Now, however, prices are continuing to fall and demand is spotty pretty much everywhere. So you are likely to see some very aggressive pricing from overseas competitors."
For U.S. spinners, this means refocusing on those business attributes that made them successful when they were at a price disadvantage in the past.
"Speed to market is a key factor," said one U.S. spinner. "Our advantage is that we have been able to get product to our customers faster than our competitors. The combination of fast delivery and expedited shipping allows our customers some flexibility they might not get from other suppliers."
Added another spinner: "We have kept our customers happy by having an aggressive delivery strategy. Our ability to get business often hinges on whether we can get product to our customers — particularly those in Central America — faster than anyone else. Getting product manufactured and on the shelves in the shortest time possible is perhaps the single-biggest thing that sets us apart. If you can produce a quality product quickly, there will always be opportunity out there."
Customer service is also highly important, both before and after the sale. "One of the strengths of our business is customer service," said a U.S. yarn seller. "You can't just make a sale and go away. You need to follow up and make sure you are continuously meeting customer needs. Even in this high-technology world we live in, selling is still, by and large, relationship-based. Unless there is an overriding advantage in price or quality, people are generally going to do business with the people and companies they like."
Another differentiating aspect often enjoyed by U.S. spinners is superior product quality. "Few things ruin business relationships faster than a product that is not quite up to specs," said one spinner. "That's a distinct advantage we have. Our customers tell us they often have quality issues when they buy lower-cost products from companies in developing nations. Sometimes the product isn't up to specifications. Other times they get the wrong product entirely. When they buy from us, our customers know they are going to get exactly what they ordered. We know we can't always be competitive on price, but we can make the commitment to have the best quality, the fastest delivery and the best service."
Click here to download current yarn prices