Strength And Uncertainty

iven all that has been heaped on the U.S. textile industry in the last year, it’s a
relief to see signs of strength. Spinners, weavers and others note their companies are sold out,
and are participating in the much-reported “work through” during the summer holidays — all
reminiscent of better times.

Industry insiders point out there may be less competition by numbers — acknowledging plant
closings of the last year — but the remaining companies are the really tough competitors. As one
executive remarked, “These are the guys who made it through, and they are not about to take a rest.
If anything, the competition is tougher, and capacity is becoming an issue.”

With signs of relief due to a weaker dollar, strong consumer spending and low inventories,
this may be the beginning of a bit of a run for the industry.

Capital spending is still soft — it’s easy to see this period as an opportunity to enjoy
some positive cash flow and hold off on investment for a while.

But some machinery suppliers see a different picture. Machinery sales are strong for some of
the larger global suppliers, many of which also felt the sting of last year’s plant closings. Much
of their capacity is sold, so delivery times are longer than you might expect. Some suppliers are
adding capacity in Asia to better service and support that market, and note service contracts are
purchased as part of package deals rather than on an “on call” basis common with U.S. mills.

The U.S. market for textile equipment is significant, but it is not the growth or volume
market offered today by Asia. Suppliers are quick to emphasize they fully support U.S. mills, and
the United States continues to have significant sales value. However, machinery suppliers are
facing pressure to compete for their share of growth in China while maintaining sales and service
to U.S. mills.

If you assume better times are ahead, it’s important to realize the U.S. textile industry
will be competing with those machines very soon. Hopefully, U.S. capital spending will pick up to
ensure productivity and product quality to meet the challenge of imports.

But there’s more to it than that — the industry must start to aggressively market and brand
its products; invest in building the network of apparel sourcing managers, and the traditional
textile industry and apparel contractors; demonstrate the viability of U.S. manufacturing to the
financial markets; and push the envelope in nontraditional textile markets.

Sounds like a tall order under normal circumstances, but keep in mind — the remaining
companies are the really tough competitors.

August 2002