Q1 Shaping Up As Expected
Jim Phillips, Yarn Market Editor
Said another: "The year seemed like it was going to start off great, but it has recently tailed off a little."
Perhaps most encouraging is that the business pipeline, down to just days or a few weeks for many spinners this time last year, is beginning to fill up again. "We have a little breathing room now," said one spinner. "Our pipeline is healthier than it has been in a while."
Although business has improved substantially over the last three quarters, spinners are not yet comfortable with the word "recovery." As one put it, "We remain cautiously optimistic about 2010, but we still believe we have a long way to go before we can say it has really turned around."
Responsiveness Is Still The Key
As the business climate continues to improve, spinners say the traditional differentiators - quality, service and responsiveness - will become more important than ever if U.S. spinners are to stay competitive.
"You've got to be able to excel at customer service and provide value adds that your competitors either can't or won't provide," said a spinning executive. "You have to provide fast turnaround times and understand that quick delivery may be your biggest advantage. And you have to have a total commitment to quality. Inconsistent quality from foreign suppliers has been a major reason we've been invited back to the table with some customers."
Said another executive: "For a specialty yarn producer, responsiveness is the key to developing business, whether information, product development or lead times. Therefore, we nurture our relationships with Western Hemisphere supply chain allies in order to support expediting garments to retail."
Communication also is vital in securing and maintaining relationships. "An important opportunity will be to increase the benefit of our customer and brand relationships," he said. "Constructive communication with these partners is essential to improving product lead times, which is vital for our business development."
It's About Product Development
Retailers today are all about differentiation. If one grocer sells a name-brand product, another wants the same brand with a special offering or differentiated packaging. Likewise, apparel retailers are looking for that special something - the tweak in fashion, performance, durability - that will set its offerings apart from the competition. But new ideas have to be offered with the same speed to market as established products.
"We intend for product innovation to serve as the cornerstone of our customer partnerships. Whereas the ability to supply distinctive ideas and yarn prototypes creates opportunity, these development initiatives must progress with responsiveness," one source said.
Another added, "Everyone wants something new. Customers want to know that you are working on innovative products."
Depending upon size, resources and other factors, some spinners actively develop new products on their own and then find a market for them. Others work hand-in-hand with their customers to fill a specific need. Ultimately, though, said one spinner, it's commitment to innovation, not method of development, that matters. "It used to be that if customers knew you were willing to go the extra mile to fulfill their needs, you had an advantage over your competition. Now you need to do that just to stay in the game."
Raw Material Costs Increasing
Spinners are again facing pricing pressures in the wake of steadily increasing raw material costs. Cotton prices, which trended steadily downward, have rebounded sharply. As of February 26, spot prices for the base quality of cotton in seven designated markets selected by the U.S. Department of Agriculture averaged 72.58 cents per pound - up more than 5 cents in less than a month."We are able to push some price increases along because our customers know raw material prices have gone up," said one spinner. "But we have only been able to increase prices moderately, and certainly not by the amount that our costs have gone up. "
Download Current Yarn Prices.