A Look Back At 2010

arn spinners enjoyed their most successful year in recent memory in 2010, with many
having little to no excess capacity over much of the first part of the year. “I think I would have
to go back to the mid-1990s, maybe even further, to find a time when business conditions were this
good,” one spinner said earlier this year. Another commented: “A lot of spinning has returned to
this hemisphere. And, due to the weak dollar and the need for quick turnaround, it looks like it is
going to stay around for quite some time.”

That forecast proved accurate, as many spinners produced at or near capacity for almost the
whole year. While there were many reasons for the boom, most spinners interviewed over the year
agreed that three factors were the primary drivers of increased orders:

  • Economic conditions improved throughout the first part of 2010, prompting consumers to begin to
    increase spending. This, in turn, encouraged retailers to begin aggressive restocking of inventory
    goods to sell.
  • Domestic capacity has been reduced to near the equilibrium point. After years of excess
    capacity, enough spinners have consolidated or closed shop to the point that demand and supply are
    roughly equivalent.
  • Major customers have become disenchanted with yarns imported from China and other Asian
    nations. Throughout 2010, prices for Chinese textiles increased without any corresponding increase
    in quality, service or delivery. Additionally, the weakness of the U.S. dollar strengthened the
    position of U.S. yarns against their foreign competition.

Ring-spun yarns were in high demand all year – to the point that, by the end of the second
quarter, spinners had difficulty shipping yarn in a timely manner. Customers used to getting their
orders within a week or two were having to wait four to six weeks, and sometimes longer, to receive
their product. As one spinner noted, “We’ve had some capacity to take on new orders off and on
through the second quarter and the first part of the third, but it has been very limited. Right
now, we’re doing everything we can to fill our existing orders in a timely fashion. Delivery
schedules are slipping out to where they haven’t been in a long time.”

And open-end (OE) yarns, demand for which had been sagging for nearly two years, enjoyed a
resurgence mid-year. As one spinner said, “Ring-spun yarns have been strong for quite some time.
But now, we’re seeing a big jump in OE orders. It looks like a lot of the T-shirt manufacturers let
their product pipelines run almost dry.”

Despite Success, Problems Remained

Despite the near-universal success enjoyed by spinners this year, 2010 was not without
difficulty. In January, one of the largest diversified spinners, Wellstone Mills, was seized by its
creditors. Most of its assets were acquired by Parkdale Mills. But with the closing of R.L. Stowe
Mills in 2009, Parkdale was left as the sole surviving large and diversified U.S. spinner.

Of particular concern for all spinners was the rapidly escalating price of raw materials,
particularly cotton. On Jan. 18, 2010, quotations for the base quality of cotton averaged 67.66
cents per pound. On November 4, the average had increased to 129.54 cents, the highest price
recorded since records were established in 1917.

“We’re lucky, in that we’ve bought the cotton we need to fill our orders,” said one spinner.
“But if you don’t have it in-house or on the way, it is hard

to find.

Added a yarn broker: “I’ve got customers and I’ve got orders. What I don’t have is yarn. With
the way the market is right now, you just have to get in line.”

And man-made fiber yarn manufacturers, hoping to step in and fill the void, also had to face
increasing prices. “We’re concerned that steady increases in our prices will work to negate some of
the advantage [over cotton],” one spinner said.

Of concern to many spinners as 2011 nears is that the current pricing and delivery schedule
for domestic manufacturers will negate the traditional advantages of fast delivery and service that
historically have set U.S. spinners apart from their Asian competition. “This may open the door for
them to get back in,” one spinner said.

November/December 2010