Overall Tide Is Rising
Clarence D. Rogers, Technical Editor
usiness has picked up quite a bit,” one spinner said. “After a bad last quarter, or even
last year, we have seen an increase in shipments over the past two months. This has provided us
with a little shot in the arm. Prices are not good, but we are happy that the bills can be paid.
Hopefully, prices and margins will improve soon.”
Another spinner responded, “Everybody seems to be very busy. They may not be happy with the money, but they are very busy — spinners, as well as vertical mills. This may be in part because of such a sluggish Christmas and lower inventories. Also, a lot of capacity has been taken out of the market, so those that remain are very busy.”
"Things seem to have stabilized a little," responded another spinner. "Demand is up some, and prices are more firm. But even with this, we are not making a profit. We can't go very long like this, so we need to have more of an upswing in prices. The current price is not rewarding spinners in the United States, so I expect to see an upward movement in prices in the near future. If we don't, there will be fewer spinners in the long run." He went on to say, "This quarter is better than last quarter, and I think that the economy is picking up some."
A spinner’s customer said, “We see some signs of improvement, so someone has to spin more yarn,
increase output/volume. More business means more pricing opportunities, so you would expect an
upward pressure on prices. I don’t see that happening anytime soon, especially under current market
conditions. The WalMart/K-Mart mentality has put downward pressure on price at every link in the
“The squeeze on prices continues,” a buyer of yarn said. “Downstream customers continue to put pressure on their suppliers to lower prices, and that has to work its way back upstream to the spinner. That may seem okay. But if you think about it, what will be the long-term effect? Many suppliers can only lower their prices so much. At some point, there is no hope, the light goes out and the doors close, production must stop. Is this what customers want?” The answer, apparently, is “yes.”
But, in the long run, is this truly in the best interest for all segments in the complete pipeline — from fiber producer to the final consumer, including spinners? Further, is it in the best long-term interest of the American consumer?
Competing On Price?
At a recent conference, a presenter said, “Low-wage producing countries will continue to gain
market share. Demand for your product will depend on economic growth and market share. Growth in
demand will be driven by world economic growth. And prices will be driven by global supply/demand
factors.” All of this is true. Can we relate this to U.S. mills?
Consider this: most U.S. mills are continually working to take cost out of the system. The reasoning behind this is to have an opportunity to be more competitive in the global marketplace. Sounds like a valid reason.
Certainly, by lowering cost we should be more competitive. But wait — what happens if the competition lowers its cost by the same proportional amount or more? Are you more competitive?
Further, one might question whether it is in our best economic/survival interest to expend our resources to become only price-competitive. Some may conclude that manufacturing companies in the United States will not be able to compete on price alone. Labor and raw-materials costs will continue to be above those in some competing countries. So those countries will always have a certain distinct price advantage.
A few have said that U.S. mills cannot compete in the global marketplace. There will always be countries out there with a lower price for whatever reason. Therefore, we must position ourselves differently — something that we should have done decades ago.
We talk a lot. But do we walk like we talk? We talk about niche markets, but niche today probably won’t be niche tomorrow. Are we really working to be out front, the leader rather than staying the course or keeping up? We talk about product differentiation, high-value products, creativity, new names, brands, new products, hard-to-copy products and more. We talk about it, but do we ever act on it?
Download Current Yarn Prices.