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US Textile Trends: The Challenges Continue In 2010

NCTO Chairman and PCCA President and CEO Wally Darneille's perspective stretches from cotton field to finished denim apparel.

By Jim Borneman, Editor In Chief

P lains Cotton Cooperative Association (PCCA) was established in Lubbock, Texas, in 1953 to market cotton. It later added a denim mill in Littlefield, Texas, as well as warehouse operations in Oklahoma, Kansas and Texas. PCCA recently extended its reach into the jeans supply chain by establishing jeans maker Denimatrix LP in Guatemala. The cooperative now offers apparel brands and retailers a completely integrated denim supply chain from cotton field to finished garment -- a first in the Western Hemisphere.

Wally Darneille

PCCA President and CEO Wally Darneille took on added responsibility in 2009 as chairman of the National Council of Textile Organizations (NCTO), a post that focuses on all things governmental that affect the U.S. textile industry. Darneille agreed to sit down with Textile World and share his thoughts on 2010 as they relate to NCTO issues and the U.S. textile industry:

TW: Wally, with all the challenges in U.S. textiles, what is the status of NCTO?

Darneille: We're strong, healthy and growing. Andy Warlick [president and CEO, Parkdale Mills Inc.; and past chairman, NCTO] did a great job in growing the political action committee; and David Hastings [chairman, Mount Vernon Mills Inc.; and NCTO's vice chairman] has grown membership, so our footprint keeps getting bigger. NCTO President Cass Johnson has been very effective in reaching out to other textile organizations in the hemisphere, so our issues are gaining broader backing.

The TexNet initiative is key to developing outreach on important issues and goes beyond our members in alerting all kinds of interested parties to legislation that affects textiles and more. By joining TexNet online at www.ncto.org, you receive an email alert when an issue of concern comes up in Washington, and you can then choose to be part of a grassroots effort to impact Congress and the Administration. It is a free service that expands the ability to participate to many interested individuals and enables them to act on real and timely information.

TW: What is Washington's political climate like as it relates to textile issues?
Darneille: There is a friendlier atmosphere, and one that is more apt to consider "fair" aspects of trade without immediately polarizing the discussion. There are also important issues like cap and trade that we need to participate in if we are not going to be left behind. We have formed an energy task force of CEOs to engage in discussions concerning how future energy costs will be so critical for textiles. The industry also faces challenges with proposed new benefits for Bangladesh and Cambodia, as well as the Obama administration's decision to proceed with free trade talks with Vietnam. There is a good chance Vietnam will be the new China if we let that happen - we need to shine a light on their common mission to pick up China's trade model and go after the U.S. market with questionable practices like government-subsidized predatory pricing.

TW: On the subject of trade, what trends do you observe?
Darneille: The current economic situation has created a need to focus on trade finance, and with the assistance of Gail Strickler [assistant U.S. trade representative for textiles], we are trying to open up new sources of export finance. There is a real need for credit in order to expand our industry's sales.

Customs enforcement is another area where, by giving Customs new powers of trade enforcement, the U.S. government might be able to collect the estimated two-thirds of duties that currently go uncollected, and we support an upcoming bill that will do that.

Another area is engaging with the regional textile groups within CAFTA-DR [Central America-Dominican Free Trade Agreement] and NAFTA [North America Free Trade Agreement]. In many ways, we are up against regional issues when we talk about Vietnam, Bangladesh and Cambodia -- U.S. trade agreements with such countries could have real and very devastating effects on the industry within the CAFTA-DR and NAFTA regions. We have engaged with textile associations throughout the hemisphere to help us get the word across about the effects of such agreements. Even the China currency debate impacts the members of our regional industry - none are left unaffected.

TW: Given the changes in the economy, are you noticing changes in sourcing?
Darneille: Absolutely. Except for China, where the government artificially controls exchange rates, the weak dollar has had a big effect in making us more attractive than some Asian suppliers. Retailers are continuing to re-evaluate their sourcing models. We are seeing more "comeback sourcing," where programs are returning to this hemisphere from Asia. Our customers are finally calculating the real value of creativity and response time, and they're realizing cheap prices alone aren't the answer. We believe we have seen the bottom, and that U.S. consumption of cotton and other textile fibers will recover from here forward.

TW: How about trends in denim?
Darneille: The business will be competitive. We are seeing lighter-weight, softer fabrics, and, you know, fashion is looking for "new." Overall, I see denim as a strong market, and with its growing acceptance for all kinds of occasions beyond the casual tradition, that means more opportunities for different styles and price points.

TW: How about green and sustainable issues?
Darneille: Frankly, there is good information, bad information and misinformation out there on the subject. The truth is that traceability, right down to a warehouse, a gin, a farm, and the farmer's pesticide licensing number, is the real test of whether good practices are being followed. That is an area where U.S. cotton has been leading for decades.

If the retailers of the world want to be logically consistent, they should care about traceability. They should not just give lip service to things like the Better Cotton Initiative, and then run for cover when "20/20" airs a spot about environmental and labor conditions at Lesotho or Bangladesh clothing factories. Traceability puts real teeth into an important issue.

We have also created, with American Cotton Growers, the SAFEDenim program. SAFE stands for Sustainable, American and Friendly to the Environment. The program highlights the uniqueness of the denim we are committed to producing with the best farming practices available today. Our farmers, for example, grow cotton using 45-percent less water than we did 25 years ago. We use half the number of pesticide applications as we did 20 years ago, and use beneficial insects to control pests and reduce human and environmental exposure to chemicals -- this also lowers our input costs.

We have a lot going on for retailers, designers and consumers who are interested in a true, sustainable, green story. The challenge is that all the clutter out there may be more marketing hype than reality. Real traceability? That is the real deal. And only U.S. cotton can deliver that with credibility.

Cotton Incorporated and various other organizations are working to come up with a universal definition of sustainable agriculture. Sustainability offers the entire supply chain a product differentiation factor that provides real benefits in an honest way. Quite a few large brands, like Levi's®, are turning toward sustainability as an economically feasible and appropriate way of introducing corporate responsibility into the textiles and apparel supply chain. When retailers take an honest look at the practices all the way from the field to the shelf, U.S. cotton and the U.S. textile industry are doing the best job in the world of making products with real value in a socially and environmentally responsible way.

January/February 2010