ATMI's Next President Sets Issue-Based Agenda
World trade and industry image are top priorities for incoming ATMI President Roger Chastain.
By Alfred Dockery, Executive Editor, and Chuck Norton, Assistant Editor
hina. The WTO. CBI/sub-Sahara. Improving efficiently. Increased competition. Automation.
Just the tip of the iceberg of the issues that U.S. textile leaders will deal with in the new millennium.
With many issues needing answers looming for the U.S. textile industry, current textile leaders face monumental challenges to ensure short- and long-term vitality. Even with this difficult task at hand, the technological advances of the past decade have created dynamic and exciting changes within the textile industry.
Harnessing these changes for the good of the industry will be key to the future of this crucial, yet often overlooked industry.
ATI editors recently sat down with Roger W. Chastain, president and chief operating officer of Mount Vernon Mills Inc., Greenville, S.C., to discuss his role as incoming president of the American Textile Manufacturers Institute (ATMI).
Chastain, who will become president at ATMI’s annual meeting in March in Bermuda, has served in various roles in ATMI, including serving as first vice president since November 1998.
Chastain received his bachelor’s degree from the University of South Carolina and did additional graduate work at the University of Michigan and Columbia University. He has been in the textile industry since joining Riegel Textile Corp. in 1964, becoming president, CEO and director in 1985. After Mount Vernon Mills purchased Riegel, Chastain became president of Riegel Textile Division and was named executive vice president of Mount Vernon. In 1993, Chastain was named president, chief operating officer and director of Mount Vernon Mills Inc.
The following are excerpts from ATI’s interview with Roger Chastain.
ATI: How would you describe ATMI’s major roles in representing the U.S. textile industry?
Chastain: The primary role that we have is to represent our members on issues relating to the federal government and to work on anything that’s for the common good of all of our members.
It’s very simple to state our primary mission in today’s environment — to ensure a viable U.S. textile industry. And by that, I don’t just mean that ATMI only lobbies the Congress. We also promote the interest on the industry’s issues with a lot of the regulatory agencies like the EPA, OSHA and executive agencies that carry out trade or administrative policies like the Office of the U.S. Trade Represent-ative (USTR), Department of Commerce, Department of Agriculture. When we get outside the government arena, we like to get involved in issues that assist the industry such as the cotton quality, standards development for fibers and international standards that affect textiles.
ATI: What are your priorities for AMTI during your year as president?
Chastain: While I’ve got several priorities I would really like to just break it down into two that I consider are the most important. They are unity and visibility.
In terms of unity, what I really want to see is the entire supply chain come together to present a unified front to Congress. We have what I feel like is a great industry, and we touch many lives in just about every state.
We’l l l l l ve already started working with these associations and various segments of the supply chain. We’ v e had preliminary meetings with: the Northern Textile Association, the National Cotton Council, the Knitting Trades Association (KTA), the Textile Distributors Association (TDA), American Yarns Spinners Association, the Sheep Industry Association and, of course, the American Fiber Manufacturers Association.
We’ve had joint meetings to try
and look at what are grounds of common interest and priorities that we can focus on. If we present
a unified front I think we’re much better off than with everybody going their own way.
If we can’t be unified on something then everybody has to do what they have to do. There are a lot of things that we would all agree on without any question — such as transshipments. That was number one in every organization. They all say that is something we ought to start with.
Looking at the second factor, visibility, I want to get the story of the total complex. I think it’s a great story. The actual number of people involved in some way with our industry is very vital to the economic well being of our nation today.
The Cotton Council says they have 440,000 people involved in the cotton complex. I think if you look at their web page, its $120 billion they say is involved in raising cotton.
Well, in textiles we say its $59.4 billion, which makes it the second-largest contributor to the gross domestic product.
They (The Cotton Council) may have included that $59 billion in theirs but you’re looking at people that are doing fertilizer, the chemicals and pesticides they’re putting on crops. But when we start looking at the total, we’ve got to look at the chemical industry, warehousing, transportation, energy, paper mills — it’s kind of hard to make rayon if you don’t have pulp — and start looking out at machinery makers, cutters and, of course, labor.
Whether apparel or textiles or farming, the kind of impact on this country we’re talking about really does hit a lot of individual situations that we don’t normally think about.
Every single one of us has got to get out and tell the story. And I don’t think we’ve done a nearly good enough job of that.
ATI: Is it the textile industry’s image that limits its ability to tell a positive story?
Chastain: Probably the greatest disservice ever done to it was filming Norma Rae I guess. That’s all anyone has ever seen. Anyone who saw Norma Rae remembers that that’s kind of a dirty old place to work in.
We don’t do a good job of telling the story. We never have. It takes one heck of a lot of money if you’re going to try to build prestige for an industry and tell a story. A lot could be done if the individuals, the CEO’s, etc., get out and take advantage of every opportunity to make a speech to a civic club or television or the media to tell that story.
I think we would see a huge difference.
ATI In a time of frequent mergers and consolidations, work force reduction and off-shore production, what can ATMI, textile producers and suppliers do to effectively change the public perception of the textile industry in the United States?
Chastain: Look at the actions that Congress took on behalf of the U.S. steel industry. We’ve seen that in the results. They were definitely helped. The steel industry has spent millions and millions of dollars achieving that but I do think that they came out with some good results. They filed a lot of dumping cases, and they were successful in putting duties on some imports. They had substantial dollars well spent on public perception both in the media and elsewhere that actually helped them. I thought they did a pretty good job. I was proud of them.
ATI: You think there is a message in there for the textile industry?
Chastain: I do. Get out and tell our story.
Some of this might be redundant but we each need to make that commitment to tell the industry story, to speak out on behalf of our companies. Going back to the communities, and Washington, our state capitols, news media, educators and students — because if we don’t tell that story, who is going to tell it?
We need to reinforce reality. We are an industry that manufactures quality products that touch a lot of lives. We’re innovative. We’re responsive to consumer needs. We’ve just got to make every effort to get that message across to people.
ATMI does a good job of presenting and publishing a lot of facts and figures about the industry, taking points that people can use on industry issues.
We need to make use of that information. People can incorporate that into what they’re talking about to sell their point. Increase their awareness and appreciation of the industry. I think all that are involved want to place the industry in a much stronger position, a more credible position in Washington, and I don’t know any better way to do it. We need it with the financial community, we need it with our customers, on and on and on. I don’t know of a better way to do it than to get that story out. There’s only one way. And that’s effort.
ATI: Do you think that any kind of national campaign might be in order to remind people that textiles are a successful, high-tech industry?
Chastain: We did one about two or three years ago. And it got a good response. It was directed primarily around Washington, and we seem to have gotten good feedback from Congress. We probably need to look at that again and see how much industry is willing to put into it. But it’s not inexpensive. It gets pretty expensive to start running full-page ads day-in and day-out.
It takes a lot to get people to
actually sit there and read something. Its got to catch their eye. It has to be good. We can’t go
on the Super Bowl and advertise, that’s for sure.
ATI: What do you see as the greatest challenges and opportunities ahead for the U.S. textile industry?
Chastain: The greatest challenges and opportunities are related to each other. They come down to one subject and that’s international trade.
All of our import quotas, as we know, are going to be gone in 2005. This is going to have a tremendous impact on what’s left of U.S. apparel manufacturing and also on the textile industry at that point in time.
The challenge and the opportunity for
our industry really is to use the five years that we have left to develop our markets.
The Senate version of sub-Sahara and Caribbean Basin Initiative (CBI) is certainly the quickest way. Personally I hope it comes to a vote early in this Congress. We strongly support the Senate version of the bill without any question.
I think the other thing that we need is a very supportive administration and Congress. This is one thing that ATMI has to work on.
We hear a lot about the World Trade Organization (WTO) today. A new WTO round could be extremely damaging to our industry if we attempt to pacify developing countries and their demands for greater access to our market while those same countries keep their markets closed.
ATI: What will ATMI do to gain a more influential status with Congress? Would you say that Congress is less protective of the U.S. textile industries than other industries?
Chastain: The question was really how to gain a little more influential status with Congress. I think we’ve been able to maintain a significant influence in the Congress as evidenced by the past in the Senate CBI bill and the sub-Sahara Africa bill. That offers real benefits to our members, and I think we’ve got pretty good unanimous consensus on that.
There’s no question that we need to increase that influence, and one of the ways that I feel like that we can do that is going back to our statement of being unified broader based, textile industry speaking as one voice.
I don’t think anything has hurt the lobbying effort more in the last few years than when we’v e had a divided approach. When that happens I think the result is going to be a lot less than if we present a unified front.
Like it or not, textiles are considered as basically being in a few states. That’s not really true as we know but the perception is there and the perception is reality. So the more unified we get — the better off we’ll be.
How has the recent controversy over China's entry into the World Trade Organization (WTO)
re-directed the ATMI's U.S. and global focus?
Chastain: First of all, China hasn't been admitted into the WTO yet, and they might not be admitted into the WTO.
Second, I don't think we're going to be able to treat China as a WTO member unless Congress grants them normal trade relations. ATMI is going to oppose that effort in Congress because the U.S./China WTO is going to cause a great harm to our industry and to our workers.
Right now, as its set up, China's quotas disappear in 2005. We thought that was extremely unfair. We wanted 2010, the same phase-out as everybody else started out with. I think it's also very questionable if China will open their market up which, under the WTO, you're supposed to do. They may continue to give it a lot of lip service but whether they would actually live up to the WTO's so-called agreements I think is questionable.
For whatever reasons, we gave them a much better deal with the five-year quota phase-out then we did other countries. 1995 is when the 10 years started. We should remember that date. I think it's wrong. I think it's unjustified. I don't know why we did it. We're dealing with a country that customs admits illegally transships $5 billion worth of textiles into this country. If they will admit to $5 billion I don't know what it might really be.
They also violate practically every trade rule of every trading pact we've put together with them that's on the books. I think it was 1992 they agreed to quit infringing on intellectual property. I saw an article recently where they said that they were only violating 90 percent of the copyrights at this point in time. I don't know before if they were violating 100 percent of them or 92 (percent) or what. At least they narrowed it down to 90 (percent) at this point. I guess that's supposed to be progress. It's kind of disturbing.
We let them steal our nuclear secrets, should we just ignore that and also let them steal our jobs? I think that's a question that we have to put to our Congress. I know it sounds harsh but I think without a doubt the China entry into the WTO is going to cause us some problems.
ATMI commissioned a study with a think tank in Arlington, Va. called Nathan Associates. This study found that granting China an early phase-out would cost the United States 154,500 jobs, $7.6 billion in lost apparel sales and $4 billion in lost textile sales. It would also add $9.4 billion to the U.S. trade deficit for textile and apparel. The study reveals that China's textile and apparel imports would triple today's level totaling $27.5 billion and capturing 31 percent of the U.S. apparel import market. That in actuality would nearly equal what our current domestic apparel production is today. That's the main facts out of the study.
ATI: Has the WTO caused the CBI/sub-Saharan issue to take a backseat, or has it become even more crucial?
Chastain: The failure of the WTO in Seattle has demonstrated to members of Congress that trade bills and trade initiatives have to take into account the impact on U.S. jobs and manufacturing in this country.
Personally I believe this will bring added support for the Senate versions of the CBI and sub-Sahara, which are tied together. The studies and the work that we've had show that this will create and add jobs in the manufacturing sector of the U.S. textile and apparel and fiber industries. We think is good for us. Not everybody in this industry might agree, but we can't find a thing wrong with it. From every study we've done it will help us and we think its drastically needed.
Probably the best scenario we could create today would be to just surround ourselves with needles. Textiles don't have to chase needles, but if we're close enough proximity-wise to furnish them the material, then I think we have a great advantage.
ATI: What characteristics will successful textile companies share in the next decade?
Chastain: Primarily, I think they're going to have to be very financially sound. They’'e being beat to death in the stock market and debts being downgraded, etc. So I think that's the number one key.
Secondly, they’re going to have to be very customer focused rather than product focused. I think the idea that you focus on a product and market it is passe. Your whole drive has got to come from what your customer's needs are and that translates down to the ultimate consumer because that's who that customer has got to satisfy.
I think they've got to be innovative without a question, and they've got to be financially sound to be able to use the new technology that's going to keep coming. I don't think the technology is going to slow down and that's the only way machinery people are going to sell more equipment. So if you can afford to buy, you'll have a good company, and if you can't, then you're just going to get further behind the curve. And once you get behind the power curve then you're sunk.
ATI: How important is it for textile companies to stay on top of new technology?
Chastain: I think a lot of people today, right or wrong, are looking at that five- to seven-year window and if they are, they're saying: "Well I need to buy it now because I've got seven years I can depreciate it." 2005 is coming, and that may have driven some of the capital expenditures for the last several years.
ATI: How did the industry fare as far as Y2K problems?
Chastain: The Y2K bug didn't bite. I haven't heard of any major Y2K problems at all. And I think that's primarily due to the efforts that went into it ahead of time. Most people started at least two years ago and it paid off well, which in actuality did us a lot of good. We (Mount Vernon) probably eliminated 40 percent of our code. It gave us a good chance to clean up everything, and purge the systems of things we didn't need, so now we're in a better position to move forward with things that we do need.
All of the software was tailor made. A situation came up and you tailor made it, and that's the only thing it would do. If you can do it all from standardized basis, you are well ahead of the game. I think it was a good exercise for us.
I think it's a tremendous help in the long run. I've heard the expression "We've wasted a lot of money" from people. They didn't waste it. They just don't know it.
ATI: With the substantial technological growth the textile industry saw in the 1990s, what do you see as the most significant new technologies for the upcoming decade?
Chastain: Certainly e-commerce, business-to-business e-commerce primarily, will continue to revolutionize the industry. You can see it today with companies moving more and more in that direction. Internet-based commerce will speed up the whole purchasing process and eliminate a lot of unnecessary paperwork.
Secondly, I would say the area that we're very strong on, and I think probably everybody in the industry is, is the continuing improvements in sensors.
Microsensors and micro electrically mechanical systems (MEMS) allow a lot more precise monitoring of all equipment. Dye ranges are tied in today with computers, along with just about all of the finishing operations. Dyeing operations are untouched by human hands. Mixing of the chemicals, adjusting the shades, etc., are read with electronic eyes. You're seeing cameras doing actual inspection of cloth, and it goes on and on.
Like anything else in this area, the cost of process monitoring will decrease as these technologies mature, and out of that we'll get better process monitoring and control which will lead to improved quality of our products.
In fact, the precise process control using state-of-the-art sensors will lead us to better quality fabrics. We can develop precision-engineered fabrics and yarns and fibers with qualities that were never before possible because we did not have that same precise process monitoring.
Thirdly, during the next decade I don't think there's any doubt we're going to see the introduction of alternatives to wet processes such as dyeing and sizing. In dyeing, super-critical fluids are going to replace water in the application of putting color on fibers and sizing, precision drying methods will allow the uniform applications of size to each end.
We're going to have stronger, more uniform warps than we did in the past. Some of it is being used today. I think we'll see a lot more infrared technology. It's going to reduce the amount of energy needed to dry yarns.
Certainly infrared is a technology that has a lot of applications down the road and a lot of cost reductions are going to be driven on what can reduce energy costs.
ATI: As an industry, where do you see the U.S. textile industry in 2010?
Chastain: None of us can predict the future. I think certainly mergers and acquisitions are going to impact the industry as well as the entire supply chain. When we look at today — we've got less retailers, we've got less banks. In the textile industry I think we're going to see more and more companies being as vertical as possible. Whether that be through to finished goods or actually making garments.
Many of our members are going to have manufacturing capabilities offshore. No question about that. Some of them already do.
I would sum it up saying we're going to have fewer but stronger companies.
ATI: How will fashion and quick response fit into the equation?
Chastain: It's a cycle that goes back and forth without any question. A lot of what is considered fashion in major portions of the world is work clothes in the U.S. Let's go to something as simple as jeans. You go to Europe and everybody is wearing jeans and they’re $60 to $80 a pair. Over here they're buying them maybe for $9.00.
I think there's an advantage. Tremendous advantage. We found that out with Canada. Their exports have certainly increased. Their dollar has devalued, but they credit a large part of their growth to their apparel business. In fact their proximity to the U.S. market helps because they can do a style change if necessary and get it here quickly. Same thing is going to be true of Mexico and the Caribbean, and I think that's why a lot of the sewing is done there.
If you're going to order something from China, and it's fashion merchandise, then it may be out of fashion by the time it gets here and gets made. They're shipping spring goods right now. That's what we saw for November, spring goods coming in. It wasn't goods ready for Christmas. A fact of life: You've got a long pipeline there, and I don't know if anybody is smart enough to figure out that style other than the basics.
ATI: Has the information revolution affected the way ATMI communicates with the industry?
Chastain: I would say it has changed. Absolutely. ATMI has had a website for quite a few years. They have a member/product directory that people can access. We're trying to do more and more. Most of it is members-only. It looks at standards, issues and strategies for member companies.
One of the things we're working on would make it very easy for our members to contact their congressmen. The Internet is a fantastic way to do that. If e-mails are from a constituent, the Congress tells me they read them. They feel, in a lot of ways, that somebody using e-mail is probably more prone to vote, to go to that effort than somebody that doesn’t.
I had 34 e-mails this morning, 54 yesterday. A lot of them only require one sentence, that's the beauty of it, because you're not going into a lot of detail. You say: "Do it." That's it.
ATI: How does open communication combined with a wealth of information translate within the supply chain?
Chastain: Let me take open communication a little bit further. I think without a question we've got to build alliances that strengthen our companies within that supply chain. There is so much information out there to share from retailers sharing their POS information with their customers, to us sharing our inventory positions with our suppliers.
We (Mount Vernon) have no problem in making information available to a customer that you've got a good alliance with. You tap into our system and find out what inventories you've got on hand and what colors you've got on hand, if there is something you need to guide us, direct us, you've got enough of that but you need more of that, whatever the situation may be, the more of that information exchanged I think the more efficient we become.
We do share inventory records; we share quality results with our customers. Let's take it another way. They share quality results with us. They tell us how many hours that they're running based on how many pairs they cut, they give us percentages, and they give us shade charts. Information is out there and not to share it — we won’t get any better. We look at a trend line and say okay this is getting better and better. So do they, because it's money in their pocket. A satisfied customer is going to be money in our pocket in the long run.
Communication at all levels is so vital, and the more we expand it the better off we're going to be.
ATI: How will the exponential growth of e-commerce effect daily business transactions in the textile industry?
Chastain: Basically I think e-commerce is going to have an impact on nearly everything we do in business. Most of the textile industry I think is uniquely positioned because its both a customer for immediate materials and it's a supplier of immediate materials to others. And if our information technology — we call them gurus — are correct, we should benefit significantly from business to business relationships on the Internet.
We (Mount Vernon) can obtain supplies, we can obtain raw materials much more efficiently with direct linkages on the Internet, we can supply fabrics and yarns in a similar way to our customers. That's really only what we know about the technology today.
One of the things that we're doing on one of our websites is linking where our products can be purchased to that particular customer's on-line stores. You can do a lot of good. You can have chat rooms for business; there are a lot of situations in that regard.
I'm thrilled about it and thrilled to be alive in these kind of times when things are changing rapidly.
Bring on the future — let's see where it's going!