The Light Is Shining Brighter
Clarence D. Rogers, Ph.D., Technical Editor
Air-jet spinning is also much improved.” However, he went on to say, “With all of this good news about running and operating at capacity, prices are still depressed. Retailers continue to keep the squeeze on, pressing for that last penny — and that has driven the entire margin out of the system for us. We are barely covering variable cost, and you know that we can’t survive like this in the long run. Running flat out doesn’t always get it. We have to have margins. At some point, we have to find a way to make some profit.”
There have been statements about restocking the pipeline and inventory when the economy turns upward.
A spinner said, “What we are producing right now is going directly into the pipeline — none of it is for inventory. And from what I hear, others that are running pretty good are producing to satisfy orders. Not many are producing anything for inventory. Some are buying to help them meet their commitment.”
“Things are getting much better,” responded another spinner. “Most are running at capacity, six or seven days a week. Some plants that were in deep trouble a few months back have found new life, and they are running full. Maybe the economic turn will be enough for them to survive for the time being and really make it in the long run.”
Raw Material Prices Remain Low
Demand for U.S. cotton continues to be weak. Quotation for the base grade in the seven designated markets averaged 29.43 cents per pound. This weekly average was down from 30.98 cents per pound for the previous week and 47.22 cents for the corresponding week a year ago.
Most indications are that cotton prices will remain relatively low. There are high global inventories, and domestic carryover was high. The farm bill that is in the works will give cotton producers some relief and should further increase supply. Domestic consumption probably will not be much different from last year.
The U. S. Department of Agriculture (USDA) estimates domestic consumption of 7.8 million bales, up slightly from last year.
An interesting note: At a recent meeting of several textile manufacturers, one said, “There is not enough spinning capacity in place in the U.S. to consume what the USDA has projected. The USDA has projected a 7.8 million-bale consumption for the 2002/2003-crop year. The reason is simple. There was a significant loss in spinning capacity last year. With this loss in capacity, there is no way to consume that much cotton — even with all of the current mills running flat out.”
Some are saying we might be lucky if domestic consumption reaches just under 7 million bales. Let’s hope consumption reaches 8 million. This would mean several plants would have to be brought back on-line and consume a lot of cotton.
Domestic Versus Importer Products
One spinner said, “Have you ever heard that cotton ain’t cotton or yarn ain’t yarn or fabric ain’t fabric?” He went on to say, “If you take a product from the shelf of a Wal-Mart/Kmart-type store today and compare it to a product from the same shelf ten years ago, you will find that it is probably a different product. In all probability, it is not the same cotton, yarn, fabric — or perhaps there are small differences in construction. These are differences, maybe very subtle, that the final consumer doesn’t see or isn’t even aware of. And if they aren’t aware or don’t know, then this is a valid reason for not caring.”
This not knowing might be more of the reason that consumers “just” focus on prices. Some might argue that if consumers were really aware and had an understanding of these differences in product quality and performance, they might be more willing to spend an extra buck for the difference.
Maybe it is an educational process. Letting the consumer know and understand that products made in the United States are different from those substitute products that are imported is very important. If they are not different in the consumer’s mind, we know what will happen. If they really are not different in some way, then we have to make them different or go out of business.
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