Europe Strikes Back


A
fter the first and very successful International Exhibition of Textile Machinery (ITMA)
Asia in Singapore in 2001, many so-called opinion leaders predicted the traditional ITMA in Europe
would be out of favor. However, recent textile machinery association presentations suggest European
textile machinery suppliers did their homework and are ready for a successful ITMA 2007 in Munich
this September.

The European Committee of Textile Machinery Manufacturers (CEMATEX) was founded on Oct. 20,
1952, to concentrate the textile machinery market at one trade fair venue. The first attempt to
hold an international textile machine exhibition had been in Lille, France, in 1951. The show had
floor space of approximately 12,000 square meters (m2), and some 280 exhibitors took part. Since
that time, ITMA has been held at different sites in Europe every four years
(See Table 1).

itmaarial
An aerial view of the New Munich Trade Fair Centre,

the venue for ITMA 2007.


Most Important Textile Machinery Show

Over the years, ITMA has gained importance and today is the most important meeting place for
the textile machinery industry. ITMA gives an overview of innovative technology and the latest
information available. It is owned by CEMATEX, which in turn hands over responsibility for
organizing each trade fair to one of its member associations. ITMA has very strict rules: It is one
of the few machinery exhibitions in the world that demands exhibitors bring a new exhibit. This
rule guarantees a high standard of new technology at ITMA shows.

In view of the booming markets in Asia, ITMA inaugurated its sister show, ITMA Asia, in
Singapore in 2001. This venue was chosen for its easy access by visitors around the globe. The
event became an instant success. After two consecutive shows in Singapore in 2001 and 2005, the
next ITMA Asia will be held in Shanghai in 2008. CEMATEX made the decision to change the show’s
venue, and also to combine it with the biennial China International Textile Machinery Exhibition
(CITME) show held in Beijing, to underline the importance of the Chinese market.

Page38




Munich: The Place For Innovation

aim is to show new exhibits that answer upcoming challenges in the textile chain — from fiber
preparation to apparel. More than 1,400 exhibitors have already booked more than 100,000 m2 of
exhibition space, an increase compared to ITMA 2003 numbers. Of great value for the show and the
visitors is the fact that producers of knitting and warp knitting machinery — totaling more than 70
exhibitors — are back at ITMA.

The net exhibition area of Asian companies already surpasses the value of 2003 by 19 percent
with more than 11,500 m2. Suppliers from China, India and Japan have booked substantially larger
areas than at ITMA 2003. Registered exhibitors from Turkey have increased approximately 10 percent.
Seventy-five percent of total floor space is booked by companies from Italy, Switzerland and
Germany.

As the textile industry grows and changes, European textile machinery manufacturers face an
increased demand for high-performance machines and systems. Substantial need for replacements and
modernization, especially in newly industrialized and developing countries, strengthen this trend.

On the other hand, energy costs have a significant impact on production costs and
competitiveness in the textile industry. Energy savings, reduced consumption of water and
chemicals, low maintenance, and recycling are just a few key concerns. These issues are at the top
of the priority list for European textile machinery manufacturers. In this context, CEMATEX member
countries Switzerland, France and Germany recently invited journalists to press conferences with
the purpose of unveiling ITMA highlights. Italy’s Association of Italian Textile Machinery
Manufacturers (ACIMIT) also shared information about Italian exhibitor innovations that will be
displayed at ITMA.


Switzerland To

Showcase A Wide Array At ITMA


Traditionally, Switzerland has been among the leading global producers of textile machinery.
Forty-three suppliers are members of the Swiss Mechanical, Electrical and Engineering Industries
(Swissmem) Textile Division, a founding member of CEMATEX.

President Christian Kuoni opened Swissmem’s recent pre-ITMA meeting, which was organized by
General Secretary Dr. Lukas Sigrist and his team. Swiss textile machinery means innovation to
Kuoni, and not only because this is the slogan for ITMA 2007. He mentioned that all important
developments in the last 40 years were made in Switzerland. “ITMA is the place for innovations,” he
said. “And today and tomorrow you will see a lot of innovations.”

Page40

Tables 2 and 3 show the importance of Swiss textile machinery exports in 2006 — the export
share is 99 percent.

Page40b

Asia is still the most important market for most Swiss companies. China and — more and more —2
2 s s 2 s s 2 s 2 s s 2 s 2 s 2 s 2 2 s 2 I ndia are playing very big roles as contributors to
turnover. However, for technical textile applications, the United States and Europe remain the main
markets.

Swiss textile machinery manufacturers’ exports rose by 10 percent in 2006 compared with
2005, and reached a total volume of CHF 2,112 million
(See Editor’s Note for $ exchange rate). Forty percent of all exports go to Asia. While
exports in the first half of the year already were 8 percent above 2005, this positive result was
topped by another 11 percent in the second half. The most significant impact again came from the
Asian markets, which enjoyed a gain of 17 percent, resulting in a market share of 53 percent.


Added-Value In Demand

To remain cost-competitive, mainly in Asian markets, most Swiss manufacturers have their own
production sites in China. What was considered to be a negative aspect in the past is today
communicated as a price advantage.

The rising market share of machinery for technical textiles and nonwovens was apparent in
most of the Swissmem presentations. Some companies already achieve 40- to 50-percent of turnover in
the technical textiles sector. Also featured in many presentations was the goal of reducing energy
costs and waste. With rising raw material costs, almost every ounce of material needs to be
reclaimed and brought back into the production process. Swiss companies will show some new
developments at ITMA that aim to save on raw materials.

Another key point brought up at the Swissmem meeting: The markets are requesting more and
more turnkey installations, driving each machinery manufacturer to become a system supplier.
Strategic alliances on all levels — and cooperations between companies to supply and build turnkey
installations — are in demand. Many acquisitions in the past few years were executed based on this
market need.

After company presentations at the Swissmem event, the trends were very clear: quality,
flexibility and service are no longer sales arguments, but prerequisites for success. Included in
the service package is the possibility to conduct extensive trials for new products in the
supplier’s laboratory. This is very important; the market is constantly demanding new products,
mainly for industrial applications. All Swiss suppliers are expecting a lot from ITMA, and all
agreed and are convinced that the European textile industry is strong and will remain strong. The
actual positive sales trends underline this fact and will support the Swiss manufacturers’ market
share.




Textile Machinery À La Française

France is a country with a long-standing textile tradition. Today, it ranks fifth on the list
of the world’s top exporting textile machinery manufacturers. On the occasion of a presentation at
this year’s Techtextil in Frankfurt, the French ITMA exhibitors declared themselves to be ready for
the trade show in Munich.

The French textile machinery builders are integrated in the French Association of Textile
Machinery Manufacturers (UCMTF). Approximately 8,000 people are directly or indirectly active in
this industry. Bruno Ameline, UCMTF president, said French textile machinery manufacturers spend 8
percent of their turnover on research and development. In 2006, the 35 French producers achieved a
turnover of 1.2 billion euros
(See Editor’s Note for $ exchange rate). This is a global market share of approximately
6.5 percent that continues to rise. The export breakdown in regional markets is shown in Table 4.

Page41

Japan, with 11.4 percent of market share, is the largest market; followed by Belgium, 10.8
percent; Turkey, 9.7 percent; Italy, 9.1 percent; China, 7.5 percent; the United States, 6.5
percent; and Germany, 6.2 percent. Ameline mentioned that many machines become re-exports to Asia.
India, with 3.2-percent market share, and Russia, with 2.1-percent, also are promising markets. The
breakdown by sectors in 2006 is shown in Table 5.

Page42

Sustainable Growth, Changing Needs

Ameline also referred to rising energy costs and growing concerns about the environment.
Registration Evaluation and Authorization of Chemicals (REACH) regulations of the European Union,
adopted in December 2006, are still the talk of the town. In accordance with a German study, the
energy costs from 1998 to 2006 roughly doubled from 5 percent to 10 percent.

The French machinery manufacturers also see a rising demand for technical textiles. “Also in
this sector we have specialists who operate in very successful ways,” Ameline said. “For many
years, NSC nonwoven and Rieter-Perfojet have been producing machines and lines for the production
of accurate nonwovens. And on recycling lines from Laroche, nonwovens are produced for all types of
technical textiles for applications such as felts, mats and geotextiles.”

The French manufacturers have invested a lot of effort in the forthcoming ITMA in Munich.
“We want to show the world that we can offer high-tech machinery for high-tech markets,” Ameline
said. “In France, we don’t have any large machinery groups, but there are very active and
specialized small and medium-sized enterprises that operate very successfully in the global
markets. We are ready, and are looking forward to ITMA 2007 with great expectations.”


The German Perspective

The German Engineering Federation (VDMA) Textile Machinery Association held a lively
discussion among the VDMA committee and journalists present during a pre-ITMA meeting. One thing
became clear: One can see a lot of new products from German companies. Those present at the meeting
gave some hints, however, that most companies aren’t ready to unveil their new machinery until the
show.

Germany has been the world’s number-one supplier of textile machinery for a long time. After
a weak year in 2005, the German textile machinery industry is back on the road to success. “With
exports worth 3.6 billion euros, the industry reached an increase of 6 percent compared to last
year,” said Johann Philipp Dilo, chairman, VDMA Textile Machinery Association’s Executive Board.
“We are also expecting an increase of some 13 percent for the current year.”

Approximately 310 German companies will exhibit at ITMA 2007. This represents an increase of
34 percent when compared to ITMA 2003. The area booked by German exhibitors totals 29,567.5 m2, an
increase of 25 percent over 2003. Everybody agreed that Munich is an ideal location for ITMA.

Top export markets for Germany are China, with a 28.6-percent share; and India, with 11.8
percent. China and Hong Kong accounted for shipments worth 929 million euros, leaving China as the
undisputed top market for German textile machinery. For additional 2006 VDMA textile machinery
export statistics by country, region and sector, please see ”

Textile World
News,” this issue.

vdmameeting
The German Engineering Federation (VDMA) Textile Machinery Association,  responsible
for organizing ITMA 2007 in Munich,  held a lively discussion among its committee members and
journalists present during a pre-ITMA meeting.


The ITMA For Everybody

For the first time since 1991, Germany will host ITMA. “Our goal is that everybody can come
to ITMA in Munich,” said Thomas Waldmann, managing director, VDMA Textile Machinery Association.
“For this, we have prepared all information in 10 languages. Many people would like to see the
Oktoberfest after ITMA — that’s another challenge. Not to be forgotten is Ramadan. Many exhibitors
and visitors are Muslims, and we take this fact very seriously and will do everything to meet their
requirements. To make an easy access to Munich for everybody, we informed most of the countries
around the world that we are expecting a lot of visitors and we kindly requested all authorities to
issue visa applications in a very easy way.”

All companies at the VDMA meeting agreed that ITMA is still very important because visitors
can compare the machinery in one place. That’s why ITMA is still the top event for sales. “We show
three complete lines,” said Dilo, who is also managing director of ITMA exhibitor Oskar Dilo
Maschinenfabrik KG. “For this reason, our customers can see not only machinery, but also products.”

Producers of knitting machinery are back exhibiting at ITMA after their absence in 2003. “We
have had a very good response that the knitters are back at ITMA,” said Gerhard Berger, director,
advertising and communication, H. Stoll GmbH & Co. KG. “Many customers came back, from Europe
and Asia too. And we, as Stoll, must show our presence.”

Everybody wants to show faster and better machinery at ITMA. According to Peter Dornier,
owner of Lindauer Dornier GmbH, his company will show a so-called concept machine, which should be
a center point for discussions about the future for textile machinery.

It’s vital for Heinrich Trützschler, managing partner, Trützschler GmbH & Co. KG, that
the exhibition is taking place in a country where production is still an important factor of the
gross domestic product. “There must be an ITMA in Europe,” Trützschler said. “Europe is still the
place for innovation. All new developments are still made with European customers.”

“The finishing companies in Europe are very successful today,” said Regine Brückner,
managing director and co-owner, Brückner Trockentechnik GmbH & Co. KG. “With our new machines,
one can save up to 35 percent in energy. This is a lot if the actual energy costs are taken into
consideration.”

“All present companies here at this table are market leaders in their sector,” Dilo said,
wrapping up the VDMA event. “The machines become more powerful, and a lot of money is invested in
research and development. But there is still a lot of education needed. For example, we as a
manufacturer of needling machines know that needling is the most cost-efficient technology to form
a textile substrate. With an annual increase in our turnover of 6 percent, we can see that many
customers already know this fact. However, we have to keep the pace so ITMA and our companies
remain at the top of the list.”

The German Engineering Federation (VDMA) Textile Machinery Association, responsible for
organizing ITMA 2007 in Munich, held a lively discussion among its committee members and
journalists present during a pre-ITMA meeting.


Italy Ready For ITMA 2007

The number of Italian companies attending ITMA 2007 is approximately 355 — 13 percent more
than attended ITMA 2003. Italy ranks second in the world in exports of textile machinery,
outweighing countries that have a long tradition in the manufacture of textile machinery, such as
Japan and Switzerland.

Moreover, the Munich edition is taking place at a time that is expected to confirm the
recovery of the whole textile machinery sector worldwide — and, in particular, of the Italian
sector, which closed 2006 with quite positive results.

In 2006, Italian textile machinery production recorded an increase of 4 percent over 2005
figures, for a total of 2,680 million euros. A similar increase occurred in exports, which reached
a value of 2,100 million euros — 3 percent higher than in 2005. The Italian market saw a rise in
orders of 33 percent.

Export figures reported by ACIMIT confirm the consistency of the major Asian markets,
especially China and India. These two countries are the main destinations for Italian machinery,
accounting for about 30 percent of all exports. The year 2006 was also characterized by a global
increase in sales to Latin America and Africa.

Italy also saw a recovery in 2006 in its domestic market, where the demand for textile
machinery exceeded 1,150 million euros — an increase of 4 percent over 2005.

“The ITMA in Munich will offer the opportunity to display the Italian machine sector with
its highly competitive production, which succeeded in maintaining its leadership worldwide,
notwithstanding the difficult economic conjuncture, thanks to its appreciated peculiarities such as
quality, creativity, reliability, and to the high level of the offered technology,” said Paolo
Banfi, president, ACIMIT.

The Italian textile machinery industry is claiming a leadership position, partly because of
its constant cooperation with the Italian textile and fashion industry. This relationship plays a
particular role in the finishing machinery sector, which realized a turnover of some 560 million
euros in 2006 — 21 percent of total turnover. More than 78 percent of turnover is generated by
exports, which in 2006 totaled about 440 million euros. Main export destinations for Italian
finishing machinery are India, with 39 million euros; China, with 31 million euros; Turkey, with 31
million euros; Germany, with 22 million euros; and the United States, with 22 million euros.

“Within the sector of machines for processing semifinished materials, the open-width lines
manufactured in Italy in the last decade for the continuous washing of woolen fabrics are of
particular interest,” Banfi said. “These lines established themselves worldwide, and their
manufacturers attained the leadership in the field of solvent washing thanks to their sophisticated
technologies.

“Our sector underwent in the last years a deep transformation, but could find inside itself
the motivations and the resources from which to draw the strength for resuming a winning course,”
he added. “It is an irrefutable fact that the textile machinery industry, with a favorable balance
of trade amounting to 1,520 million euros, is the feather in the cap of the instrumental mechanics
of our country and is at the same time a sector of strategic importance for the future of our
economy.”


Editor’s Note: As of
Textile World‘s press time, exchange rates were as follows:

1 CHF = $0.83

1 euro = $1.38



July/August 2007

Executive Roundtable


Q
uite often, what separates the haves from the have-nots is not capability or capital or,
even, desire. In the manufacturing arena, it’s not just diversity or innovation or production
efficiency. Certainly all of these have tremendous influence on the degree of success either an
individual or business enjoys. But quite often, what really separates the front runners from the
also-rans boils down, plain and simple, to attitude. Some people – and some companies – just flat
out refuse to lose. They find a way to turn adversity into success.

History books are full of lessons of people who succeeded just because they refused to quit.
For example, in 1878, Thomas Edison announced to the world that he would invent an electric light
to replace the gas light that was the standard of the day. Of course, everyone knows that is
exactly what Edison did. What many people may not know is that he endured more than 10,000 failures
before, pardon the pun, the light came on. Napoleon Hill, one of the pioneers of personal success
literature, said: “Before success comes in any man’s life, he’s sure to meet with much temporary
defeat and, perhaps, some failures. When defeat overtakes a man, the easiest and the most logical
thing to do is to quit. That’s exactly what the majority of men do.” And from Lisa M. Amos:
“Entrepreneurs average 3.8 failures before final success. What sets the successful ones apart is
their amazing persistence. There are a lot of people out there with good and marketable ideas, but
pure entrepreneurial types almost never accept defeat.”


US Textile Industry’s Struggles

For the past quarter of a century, newspapers and trade magazines around the
world have reported on what was seen as the defeat of the US textile and apparel
executiveglobe
industries. Over that period, the industry lost the majority of its employees and hundreds of
manufacturing facilities. In once-booming towns, particularly in the Southeastern United States,
prosperity became just a memory. People who grew up depending upon an industry for survival found
themselves without a base of support and moved on or, worse, just faded away.

At some point, US textile executives began to realize that the old way of business – the one
that had been successful for the better part of a century – would no longer work. The Edisonian
perseverance kicked in, and the industry decided the role of whipping boy no longer suited. From
the husk of once-dominant giants – the Burlingtons, the Stevenses, the Cones – a leaner, more
responsive and more realistic industry began to emerge.


Textile World
recently interviewed a number of key executives to get their takes on the current
opportunities and challenges facing the US textile industry. Some executives were ebullient in
their excitement about the direction and prognosis for their companies and the industry as a whole,
while others were more cautiously optimistic. But the one attitude that resonated in virtually
every interview was a fierce determination to succeed – regardless of the odds, the level of
competition or the fairness of the playing field.

Companies are changing the way they operate, the way they go to market and, even, the way
they perceive the market.

At the same time, these bullish executives also recognize that real threats are out there,
whether in the form of a nation that consumes 45 percent or so of the world’s raw cotton and has
millions of eager, productive and low-wage workers – or in the form of trade agreements that
continue, as one executive says, “to give the house away.”


Then Versus Now

The difference between now and, say, 15 years ago, is that these executives are not
complaining about the lot they have been cast. They are doing something about it – often in big
ways – and are leading a US textile industry that, they say, will be responsive, aggressive and
global. Just like Edison, they may get knocked on their heels from time to time, but they get up
fighting and more determined than ever to make the US textile industry a global force for the
future.

Executives interviewed spanned the range of the industry, from research and marketing
operations to fiber producers, yarn spinners and large vertical operations. CEOs or senior
executives who generously took time to speak with

TW
included Ken Kunberger, president, Burlington Worldwide Apparel; John Bakane, president
and CEO, Cone Denim; Mark Messura, executive vice president, Cotton Incorporated; Jim Chesnutt,
president and CEO, National Spinning Co. Inc.; Harding Stowe, president and CEO, R.L. Stowe Mills
Inc., and current National Council of Textile Organizations (NCTO) chairman; Andy Warlick, CEO,
Parkdale; Werner Bieri, president and CEO, Buhler Quality Yarns Corp.; and Greg Rogowski, president
and CEO, Performance Fibers Inc.


TW
posed questions to each of these executives about both the opportunities and threats they
perceive for the industry as a whole and for their individual companies. Key issues relating to the
growth of their individual industry segments, as well as background company information, were
discussed. Some enterprises are looking at product diversification, while others are exploring
product innovation. Some are expanding manufacturing and production on a global basis, while others
are looking at optimizing their existing supply chains to provide quick, efficient services. They
know that the road to continued prosperity is a difficult one, but just like Edison and those
imbued with the entrepreneurial spirit, they just don’t seem to have any “quit” in them.


Burlington Worldwide Apparel

Going back again about a quarter of a century, one would find the US textile landscape
dominated by large companies that put production quantity ahead of almost everything. The largest
US companies had 60 to 90 plants and ran three shifts a day, seven days a week. At this time,
Burlington Industries was the world’s largest publicly held textile company, and the company’s warp
and weft logo was among US industry’s most recognizable.

Shift forward, and you find the Burlington of today to be a much, much smaller company. It
is part of Wilbur Ross’s International Textile Group Inc. (ITG), Greensboro, N.C., and focuses on
product innovation and research, as well as on expanding operations globally to be in close
proximity to the company’s varied customer base.

“Our business is broken down into three primary categories of product: worsted wool;
man-mades – 100-percent polyester and polyester blends; and, then, cotton,” said
Kenneth T. Kunberger, president. “We have a strategy for business within each one
of those areas.”

kunberger
Kenneth T. Kunberger, president,

Burlington Worldwide Apparel

In the worsted wool business segment, Burlington has a three-pronged strategy to garner
market share and compete with imported products. “For the United States facility, we focus on a
niche business,” he said. “We have a plant in Mexico that gives us speed to market. And we have a
new facility in India that provides us with a low-cost platform.

“In the United States, our Raeford facility has been combined for yarn and finishing. We are
the largest producer of worsted wool for the US government in this hemisphere. The good thing about
this is that, because of the Berry Amendment, all worsted wool sold to the US government has to be
manufactured in the United States. So, obviously, we feel very good about the longevity of this
business going forward.

“We have done a lot of restructuring, particularly on the domestic front,” he continued. “It
has become a lot more difficult for some US businesses to survive because of the global competition
out there. But, because of the way our worsted business is structured, we feel very confident that
it will stay on and be a long-term contributor.”

Burlington also operates a vertical worsted wool facility in Mexico, he said. “That services
our non-government uniform business in the United States. It is also targeted for quick response in
the branded apparel worsted wool business. So we really feel like that plant, which is
state-of-the-art and totally vertical, has longevity in the fact that we have speed to market and
innovation built into it.

“To round out our worsted wool strategy,” Kunberger continued, “Mr. Ross has just purchased
an Indian worsted wool company. With that, Burlington Worldwide will manage the export business for
the company, which would be anything coming back into the United States or going into Europe.”

In its man-mades and cotton business, Burlington has looked to Asia to enhance productivity
and expand distribution, while it has consolidated operations in the United States to focus on
niche businesses, enhance speed to market and provide longevity, Kunberger said. “We’re no longer
running the low-cost, commodity business. We have recently consolidated our synthetic operation
into the Burlington Finishing Plant in North Carolina, which is a smaller box. We have closed the
big synthetics facility in Hurt, Va., which Burlington had for many years.”

In China, Burlington is in the process of launching its JBT facility, a brand-new,
state-of-the-art dyeing and finishing plant for man-mades. “The reason there is no weaving there,”
Kunberger said, “is that there is tremendous capacity for greige fabrics in the area, but the
dyeing and finishing space is more limited. That’s where we can provide the most value-add. We’ll
do some men’s and women’s synthetics there – some commodity products, but will also expand barrier
fabrics into China and into Europe – and we will target uniform synthetics and activewear. Volume
for the new China operation is about 25 million yards.”

In its cotton business, Burlington is also looking to Asia. It has recently invested in a
joint venture for a plant in Da Nang, Vietnam, with Vietnamese company Phong Phu Corp. “We feel
there is a tremendous opportunity in Vietnam. Vietnam is what China was 10 or 15 years ago. They
have great cut-and-sew operations throughout. The one thing the country lacks is textile
operations. Thus, there was a great opportunity for a venture with Burlington, whose core
competency is in textiles, and Phong Phu, whose core competency is really in cut-and-sew. We are
under construction now with a totally vertical facility in Da Nang. We have in Da Nang what we call
our ‘Supply Chain City Concept,’ which includes weaving, dyeing and finishing, cut-and-sew and
laundering for total garment package with a focus on cotton and cotton blends. The facility should
be totally operational by April of next year. It will have the potential for 60 million yards of
cotton and cotton-blended products and 20 million garments. It will be a state-of-the-art facility
in a low-cost area. Our core philosophy is to take our quality standards, processes and procedures
and put them into those areas of the world where our customers are doing business. It allows us to
add value and bring the level of consistency in product above and beyond where it is today.”


Cone Denim

Cone Denim, Greensboro, has been a leading producer of denim in the United States for decades
and was one of the earlier US proponents of global manufacturing. “If you look at Cone, up to the
1970s and 1980s, we were looking at protecting the US border with quotas and tariffs,” said
John Bakane, president and CEO. “It seems, then, that every day we woke up with
another chink in the armor. In 1993, we decided to stop fighting and embark upon a global strategy
of our own. We began construction that year on a plant in Mexico, which opened in 1995. In the
’90s, we noticed how efficient Mexican workers could be with the right leadership – and the
underlying low-cost price structure was attractive.

bakane
John Bakane, president

and CEO, Cone Denim

“In the fall of 2003, our strategy was to continue our global expansion. We had a site down
in Mexico, but no funding. We had planned to go into the Caribbean, and at some point expand into
India and China. The big problem we had at the end of 2003 was that we had a lot of debt and no
cash to execute these strategies.”

At that time, Wilbur Ross acquired Cone and put it together with Burlington Industries to
create ITG. “One of the good things he did on the front end was to consolidate and rationalize some
of the operations,” Bakane said. “In doing that, Mr. Ross transferred the Burlington Mexican
operation to work under Cone, which consolidated all of the company’s denim factories under Cone’s
leadership. That gave us a second operation in Mexico, which Cone had been wanting for a number of
years. Secondly, very shortly thereafter, Mr. Ross sent me to China to assess the market and come
back with recommendations. Our assessment at that time was to put a plant in China. We decided on a
site south of Shanghai. Our plant just began start-up production in July, with full production
capacity to come in September. Like many other US companies, Cone has a local minority partner in
its Asian ventures.”

Additionally, after Cone began planning for its China site, it began a new search for a
facility in Central America. After evaluating a number of locations, the company chose Nicaragua.
“It is our belief that Nicaragua will become the low-cost producer in Central America,” Bakane
said. “We began working with the Nicaraguan government and recruiting office to put a plant outside
of Managua. We will begin start-up at the end of this year, with full production to come around
March 2008.

“If you look at our strategy, we want to be a leader in this hemisphere and in the eastern
supply countries,” Bakane continued. “We believe, given the situation with the dollar, that our
facilities in Mexico, the United States and Central America will have a fairly long life ahead of
them, and we will be able to opportunistically take advantage of low-cost production in China.”

Cone has repositioned its remaining US plant to be a supplier of premium denim products,
Bakane said. “What we’ve done with the White Oak Plant is to position it as a premium denim fabric
producer in this hemisphere. We’ve migrated away from the popular-priced and mid-tier markets and
plan to be in the premium markets exclusively.”

Despite Cone’s resurgence, Bakane notes there are challenges ahead, both for his company and
the industry as a whole. He urges caution for the US industry, particularly at this point in time.
“Everyone in the textile and apparel pipeline needs to pay very close attention to the US macro
economy. We are in the late part of this expansion. We need to be careful about growth rates, as we
have seen some slowing. And we need to be careful about inventory management. While we’re keeping
an eye on that from the standpoint of both Cone and other producers, we still need to be moving
toward a global model – with a certain percentage of production in this hemisphere and a certain
amount outside. And we need to be able to simultaneously balance the short-term macro with a
longer-term strategy.”

Another issue Cone is facing is a need for first-class talent. “Fewer people are entering
the industry,” he said. “While we’ve managed to secure some younger talent, we’re relying upon a
lot of people who have been around a while to remain in operations so that we can rely upon their
experience.”


Cotton Incorporated

Unlike most of the other companies featured in this article, Cary, N.C.-based Cotton
Incorporated does not have a particular geographical agenda. The role of Cotton Incorporated is to
promote the use of cotton as the fabric of choice for textiles and apparel throughout the world.
And in that context,
Mark Messura, executive vice president, sees tremendous opportunity for this
fabric in the coming years.

messura
Mark Messura, executive vice president,

Cotton Incorporated

“One opportunity for cotton, in particular, is in the developing markets like China and
India,” he said. “These are markets that have tremendous opportunity at the consumer level for
increased growth in the demand for textiles. So the growth in the consumer markets in these
developing nations, along with the emergence of national brands and retail private-label brands in
these nations, provides significant opportunity. And this is not just a short-term opportunity, but
is one that will be prevalent 12 months, 18 months, five years, even 10 years down the road.”

Overall, Messura said, there continues to be a strong increase – about 3 to 4 percent per
year – in the total worldwide demand for cotton.

Among the challenges he sees is a new focus at the trade level on environmentally
responsible manufacturing. “This is something that’s going to be a challenge for cotton. We need to
be able to communicate all of the good things – that cotton is a natural, renewable and sustainable
fiber.”

Perhaps the biggest challenge on the long-term horizon for producers of cotton goods is the
lack of return on investment, he said. “Margins are tight. We have to go back and examine how we
market products. A lot of clothing has all kinds of performance features – antimicrobial, stain
resistance, all sorts of things – that we tend to lump into one garment and market it that way.
When we do that, the consumer doesn’t see the value of these attributes in the same way they would
if we would debundle them. As the industry continues to develop innovations, we tend not to get the
value of these innovations back. How these innovations are presented to the consumer will determine
the premium consumers are willing to pay for these value-adds.”

On the performance side, Messura said cotton continues to make strides in product
innovation. “One development in performance apparel is a moisture-management technology for
100-percent cotton that is among the best out there for any type of fabric. Consumers can get the
comfort of cotton, moisture management and less clinging in performance fabrics. Another
development is in a product known as Storm Denim(tm), which is weatherproof, breathable denim.”

Down the road, Messura said sustainability will surface as a big issue for the textile
industry. “It’s going to be an issue of how you continue to meet demand five or 10 years from now
as consumers are demanding more and more fabric. And cotton is an answer. It is sustainable and
renewable.”


National Spinning

For National Spinning, New York City, business is good and the company is on solid financial
footing. The company has established a significant Central American presence and continues to work
to take advantage of various efficiencies in place there. “We have a sweater plant in El Salvador,”
said
Jim Chesnutt, president and CEO. “We would like to see El Salvador become a
sweater-producing arena.”

chesnutt
Jim Chesnutt, president and CEO,

National Spinning Co. Inc.

Additionally, National Spinning has been able to capitalize on several specific niche
markets. “With three distinct spinning systems in place, a dyehouse and increased capacity to run a
multitude of fibers and products and blend those, we’ve been able to get into a number of specialty
markets – and it has been paying dividends for us. As well, many retailers are intent on quick
turnaround, and we are able to provide that.”

However, Chesnutt is concerned about the potential impact of the US-Korea Free Trade
Agreement (FTA) on the Central American sweater business. “If sweaters are excluded from duty – if
the Korean deal is done – it very well may be the kiss of death for sweaters in Central America
because we’re duty-advantaged. Acrylic sweaters are the highest-duty product in the textile line
item at 32 percent.”

Despite the potential impact of the Korean agreement, the biggest challenge Chesnutt and his
company face is the escalating price for fiber. “There is no doubt that it is the biggest challenge
at the moment. The cost of fiber is escalating, and there is an inability on the part of our
customers to pass along anything to their customers. Frankly, we don’t understand why there hasn’t
been the same kind of change in costs from goods that come in from other parts of the world. Those
companies have to pay for fiber, too.

“Another issue is free-trade agreements – not just any one free-trade agreement, but the
cumulative effect of the portion of our market that has been given away by this administration in
the last three to four years.”


R.L. Stowe Mills

Harding Stowe, president and CEO, R.L. Stowe Mills Inc., Belmont, N.C., is a busy
man these days. In addition to maintaining the business of one of the nation’s prominent yarn
spinners, Stowe, as the new chairman of NCTO, has been working diligently to protect the interests
of the US industry. And with recent changes in Washington, it’s been a somewhat daunting task.

stowe
Harding Stowe, president and

CEO, R.L. Stowe Mills Inc.

“The shift in power from the Republicans to the Democrats has created a lot of congressional
leadership changes. It’s always a challenge to keep textile issues in front of the leadership. We
are spending a whole lot of time informing members of Congress and their staffs about the issues
that face our industry.”

Among the issues at the forefront are FTAs with Panama, Peru, Colombia and Korea, he said.

NCTO also is working on exploring the consequences of the expiration in 2008 of safeguards
regarding Chinese products, and is carefully monitoring reports of transshipped products from the
CAFTA-DR region, Stowe said.


Parkdale

If there’s been any one major success story most people are likely to point out in the US
textile industry over the past decade, it would likely be Parkdale, Gastonia, N.C. The company has
basically set the standard that many other US companies try to emulate. And Parkdale’s business
continues to be strong.

warlick
Andy Warlick, CEO,

Parkdale

“Overall, market conditions are pretty good,” said
Andy Warlick, CEO. “The T-shirt market is strong. Denim, what we have left in this
hemisphere, is doing exceptionally well.”

With plants in Honduras, Colombia and Mexico – in addition to those in the United States –
Warlick sees quick response as a key issue in continuing to develop business. “With our quick
response program, we can take a week off of the shipping time that it takes to get product to
market. Quick response is going to continue to be a major issue. One of the things a lot of people
don’t realize is that our ports system is going to be clogged by 2010. On-time deliveries will
continue to erode. For a retail store, the biggest expense is not being able to make a sale. And
second to that is the product it has to discount because it doesn’t sell. So being proactive around
quick response in this hemisphere – with plants that support our production capacity in the States
– is critical.”


Buhler Quality Yarns

For Buhler Quality Yarns, Jefferson, Ga., fast turnaround and diversity are the issues of the
day, according to
Werner Bieri, president and CEO. “We’ve invested a lot in the past year to enable
us to run more than just 100-percent cotton yarns. And diversity, quality and fast turnaround
enable us to be competitive in the marketplace. Fast turnaround is particularly an issue. If we
quote deliveries of two to four weeks, we won’t get the order anymore. So we have to be
particularly responsive. If you can’t do that, you’re out of luck.”

werner
Werner Bieri, president and CEO,

Buhler Quality Yarns Corp.

As a ring spinner, Buhler has experienced a softer-than-expected market this year. “This
time last year, everyone was bullish, but this year hasn’t been what has been expected. What I have
seen is that most of the biggest suppliers to US retailers expect business to be down compared to
last year. If you look at the sales reports, retail growth over the past two quarters has been
mixed. This plays in the demand. The general uncertainty about economic growth is now reflected in
the order situation.

“If you focus on commodity items, you just can’t compete here anymore,” he continued. “Look
at the recent plant closings, and you will see that there is a further restructuring going on in
the market in response to market conditions. Look at cotton consumption last month, for example. It
was down to 4.9 million bales, down from 5.3 or 5.5 million a year ago.

“In my travels, people are telling me they are having a hard time making sales right now.
The important thing is to focus on quick turnaround and being able to provide the quality and
response your customer needs to be competitive.”


Performance Fibers

Performance Fibers, Richmond, Va., is a multinational manufacturing company with production
sites on three continents. The business has sales, marketing, technical and applications support,
as well as manufacturing, in North America, Europe and Asia, and is a leading supplier of fibers
and fabrics for tires, automotive safety belts and industrial fibers.

The company recently conducted an independent survey of more than 100 of its key customers
in Europe, Asia and the Americas to better understand issues affecting the fiber marketplace,
according to
Greg Rogowski, president and CEO.

rogowski
Greg Rogowski, president and CEO,

Performance Fibers Inc.

“The results showed that the majority of industrial fiber customers are growing faster than
the industry average, particularly in the Americas and Asia,” he said. “Economic factors and
globalization are driving the growth in the industry. Customers surveyed say the double-digit
growth rates of recent years will continue into the next four years.

“Future growth opportunities in the fibers marketplace will depend on three important
factors: differentiation – bringing uniqueness to the industry; discover- finding new
opportunities, geographically or in niche applications; and development – introducing innovative
new products and technologies,” Rogowski continued.

“In the same survey by Performance Fibers, globalization and increasing performance
requirements were the two trends that customers said are and will continue to be their greatest
challenges,” he added. “More than half of the customers in the Americas said they are concerned
with price pressures and sourcing from offshore competition. At the same time, half of the total
respondents from Europe expressed concerns about the increasing technology and product
specifications coming from their customers, as well as complying with regulations. Asian-based
customers of Performance Fibers said they are primarily concerned with finding more growth
opportunities in the future.”

In the end, it is innovation and response that are the keys to the continued success of the
industry. As Rogowski says: “There’s no question that customers want a quality product at a
competitive price. Customers want material suppliers to catalyze big change that will contribute to
major growth. They are looking for fresh solutions that will provide them with increased
performance at a lower price, and innovations that will enable their entry into new markets.”



July/August 2007

Little Progress On US/China Issues


A
lthough US and Chinese trade officials have held two high-level negotiating sessions in
the past six months, little progress has been made on resolving a number of thorny issues. When the
two groups met in Washington this past May, the Chinese came to town complaining about US
protectionist policies, and US government officials and manufacturers complained about the
burgeoning trade deficit. Returning home after two days of meetings, the Chinese delegation still
was complaining about protectionist trade policies and US interests still were complaining about
the trade deficit.

After much rhetoric about agreement on fundamental principles, very little of a specific
nature came out of the meetings. Any meaningful resolution likely will be the result of
congressional concern over the trade deficit and its impact on US jobs.


The Currency Issue

A primary target is what many in Congress and the business community say is China’s alleged
illegal currency manipulation. They contend China’s refusal to let its currency float amounts to as
much as a 40-percent subsidy for Chinese exports entering the US market. Legislation has been
introduced in the House and Senate that would declare currency manipulation an unfair trade
practice and permit US manufacturers to seek relief under anti-subsidy countervailing duty laws
that could be applied to both market and non-market economies. The legislation enjoys the strong
support of textile manufacturers and other members of the China Currency Coalition, but it is
strongly opposed by retailers and other importers, who contend the legislation would result in
higher prices for consumer goods and would do nothing to save US jobs.

Fuel was added to the fire in June when the Department of the Treasury, in its semiannual
review of foreign currencies, declined to brand China a currency manipulator. The department said
that while Chinese currency is clearly undervalued, it does not meet the technical requirement that
it is being used as a means for gaining unfair competitive advantage in international trade. The
Bush administration, and particularly Treasury Secretary Henry M. Paulson Jr., are continuing to
support a go-slow policy that relies on negotiation rather than punitive tariffs or other measures.
Members of the House and Senate have introduced legislation to address the currency manipulation
issue, but it faces a difficult road in view of strong opposition from the president and consumer
groups. Its greatest strength is as a means to bring pressure on the Bush administration and China.
The international currency report said Treasury “forcefully raises the Chinese exchange rate regime
with Chinese officials at every available opportunity and it will continue to do so.” It also said
Treasury should not hesitate any longer to take “far more aggressive action to rebalance its
economy and achieve far greater flexibility with its exchange rate.

An area that could yield specific results with China relates to the Department of Commerce’s
recent decision to apply countervailing duty laws to nonmarket economies such as China and Vietnam.
While the initial case in this area involves coated paper products, the department’s leading trade
officials have said it could be applied to other industries. That has sent a signal to the US
textile industry, which is looking into opportunities to file countervailing duty cases following
the precedent set in the paper case.


Trade Legislation

Congress is looking into areas other than currency manipulation to attack trade problems. The
Senate Finance Committee is considering legislation that would strengthen anti-dumping and
countervailing duty laws. In launching the hearings on possible changes in trade remedy laws,
Finance Committee Chairman Max Baucus, D-Mont., said the United States must do all it can to
enforce trade remedy laws at home, but at the present time “we are falling behind.” He raised the
question of whether existing laws are adequate and if agencies such as the office of the US Trade
Representative have enough staffers, and if they have the capacity and tools to deal with
modern-day trade issues. “We need to back up our trade enforcement purposes with action,” Baucus
said.

At a hearing on Trade Enforcement for the 21st Century Economy legislation, Jennifer A.
Hillman — a highly respected former commissioner of the US International Trade Commission and
general counsel for the chief US textile negotiator — raised questions about existing trade
enforcement practices.

“The central question with respect to imports is whether we are making it possible for those
who are entitled to relief under our trade remedy laws to obtain that relief in a timely, effective
manner and at a reasonable cost,”Hillman said, concluding that for now the answer is “yes,” but she
expressed concerns about problems in the future.

She said both sides of the trade issue — enforcement of trade remedies against unfairly
traded imports, and enforcement of rights for access to foreign markets and the protection of
intellectual property rights — “are facing major challenges.”


Retailers’ Opposition

Appearing at the same Senate hearing, Eric Autor, the National Retail Federation’s vice
president and trade counsel, warned the proposed trade remedy law would “lead to more
protectionism.” He said there is no need to strengthen current laws to make it easier for
petitioning industries to obtain relief, and he added that US trade remedy laws are already “
vigorously and even zealously enforced.”

“Waving the banner of fair trade, some domestic industries have taken advantage of popular
anxiety over trade and globalization to push for protectionist measures and legislation to limit
foreign competition and pad their own profit margins at the expense of US consumers,” he added.

Another bill gaining support is the Border Tax Equity Act of 2007, which would provide US
exporters with relief from value-added taxes (VAT) that some 150 countries impose on US exports
entering their countries and grant a tax rebate for their exports. Introduced by a bipartisan group
of House members, the border tax bill was quickly endorsed by textile and apparel lobbyists in
Washington, but, predictably, importers don’t like the idea. The bill would direct the US Trade
Representative to negotiate a remedy for the VAT inequity on goods and services within the World
Trade Organization (WTO). If there is no negotiated solution by Jan. 1, 2009, the United States
would charge an offsetting assessment at the US border on imports of goods and services equal to
the amount of the VAT rebated by the country with a VAT. The United States also would issue rebates
equal to the amount of VAT taxes paid by US exporters. Because these practices would require
amendments to WTO rules, this idea faces pretty rough sledding.


Worker Adjustment Assistance

Legislation to liberalize the government assistance eligibility criteria for workers who lose
their jobs due to import competition is pending in the House and Senate. The legislation would
expand the long-standing trade adjustment assistance program, and by streamlining the process would
make it easier for displaced workers to receive retraining that could help them re-enter the work
force sooner. One important step would automatically qualify displaced workers for adjustment
assistance benefits in the event of layoffs or plant closings.

Displaced workers enrolled in training programs would receive up to two years of unemployment
benefits while in job training. Workers also could be eligible for relocation allowances and
re-employment services.



July/August 2007

US Textiles: Determined To Succeed



I
t is great to hear the message of optimism and determination shared by textile industry
leaders in the Executive Roundtable featured in this issue of

Textile World
. Thanks to those who took the time to speak with Contributing Editor Jim Phillips, the
recurring themes of challenge and opportunity facing the US industry — as well as a determined
commitment to success — come through loud and clear.

Often the very nature of news tends to be negative. Even in

TW
’s weekly e-newsletter, the most-read stories tend to be of plant closings and
bankruptcies. And

TW
still, unfortunately, has some of those stories today, but Phillips’ peek inside the
industry shows the bigger, healthier picture of an industry transforming its role in the global
economy.

US textiles continues to face an extremely — whether fairly or unfairly — competitive global
marketplace.

If you really listen to what successful companies are saying, you’ll hear they are
continuously looking for and finding their unique way to compete. Often it isn’t the traditional
way. Success seems to be linked to shifting customer demands, meaning significant change is an
integral part of the day-to-day business environment.

There is a strong theme of investment, a theme of global expansion, a theme of concern about
sustainable, renewable resources. Limited access to capital for many companies makes investment,
growth and acquisition an extremely creative process. In an ITMA year, with an expensive euro,
maybe more creative than ever.

Trade issues continue to cause shifts in business strategies and demand vigilant work by
NCTO and its member companies. It is striking how many CEOs have a significant knowledge of trade
policy, law and the intricacies of trade legislation. The days are gone of being strictly for or
against trade agreements. Today’s CEOs understand the nuances of an agreement as well as its effect
on existing agreements. For instance, NCTO raised the question of a new agreement with Korea, but
also the effect on existing agreements and trade flows linked to NAFTA, CAFTA-DR and the Andean
agreement. To see this in action, have a look at National Spinning CEO Jim Chesnutt’s comments.
Here is a company that is on solid footing, has invested in Central America — one of the primary
incentives for CAFTA-DR — and now is forced to look over its shoulder with concern for the overall
success of the region as it might be impacted by an agreement between the United States and Korea.
A far cry from focusing on making string and knitting sweaters.

Stories of innovation, product development and speed to market continue to draw attention.
With ITMA fast approaching, the current tone of the industry bodes well for the exploration of new
technologies and processes.

As Phillips writes with regard to the executives surveyed, “They may get knocked on their
heels from time to time, but they get up fighting and more determined than ever to make the US
textile industry a global force for the future.”



July/August 2007

World Fashion Exchange Launches Smart E-mail

Princeton, N.J.-based World Fashion
Exchange Inc. (WFX), a developer of online solutions for the apparel industry, has released its
Smart E-mail service, enabling WFX On-Demand customers to interact with their trading partners in
real time through the company’s Web PDM (product data management) and Web PLM (product lifecycle
management) On-Demand programs without buying additional program licenses.

The service allows users to send and receive requests for quotes, samples and approvals to
and from partners around the globe via personal e-mails containing style details. Partners’
responses are logged with the style in question in the user’s WFX program.



August 7, 2007

Bejimac Handles Sales For M-tec

Luxembourg-based Bejimac S.A.
recently took over the sales activities for Germany-based M-tec Textilmaschinen GmbH. Bejimac now
handles all sales and spare-parts inquiries for m-tec’s finishing machinery, which includes Sistig
and Menschner napping and shearing machines, Hemmer wet finishing systems, Kettling + Braun dry
finishing systems and Menschner making-up machines.

M-tec has moved its manufacturing to a new facility in Geilenkirchen, Germany.



August 7, 2007

SGIA Award Nomination Deadlines Near

The nomination deadlines are drawing
near for a number of awards to be presented at SGIA ’07, sponsored by the Fairfax, Va.-based
Specialty Graphic Imaging Association (SGIA) and scheduled to be held Oct. 24-27, 2007, in Orlando,
Fla.

The submission deadline for the DPI Innovator Award is September 7; the DPI Product of the
Year Award, September 14; the Golden Image/Andre Schellenberg award, September 21; and the DPI
Vision Award, September 30.

For more information, and to make nominations, visit www.sgia.org, keyword awards.

In other news, SGIA has made available the latest version of its Right-To-Know Training
Program, which aids specialty imagers in complying with government-mandated safety training for
their employees. It is now available for the first time on DVD, in English or Spanish.

SGIA also has made available its wage and salary survey and results of its market strategies
survey at www.sgia.org, keyword surveys.

The association is currently conducting its biennial wage and salary survey in an effort to
determine competitive pay rates for employees in the specialty imaging industry, according to Marci
Kinter, vice president, government and business information. “The Surveys Statistics area of
SGIA.org compiles data specialty imaging professionals need to make the best possible business
decisions — and compensation is one of the most important of those decisions.

SGIA’s Market Strategies Survey report, which gives an idea of how graphics producers and
garment decorators generate new clients, is now available at its website.

In addition, SGIA has made available results of digital equipment evaluations conducted by
SGIA staff on roll-to-roll printers and ultraviolet flatbeds from EFI/VUTEk, Océ and MacDermid
ColorSpan Inc. SGIA plans to add more manufacturers in additional digital equipment categories in
the future. The resource is available at www.sgia.org, keyword evaluations.



August 7, 2007

Honeywell Introduces Spectra Shield® II

Morristown, N.J.-based Honeywell has
developed Spectra Shield® II, a new line of ballistic materials for body and vehicle armor that
incorporates Honeywell’s Spectra S3000 fiber, produced from ultra-high molecular weight
polyethylene using a patented gel-spinning process. The materials provide up to 20-percent greater
ballistic performance than the company’s first Spectra Shield line, according to the company.

Spectra Shield products, which are produced by bonding parallel fiber strands in place with
an advanced resin system, are used in an array of advanced armor systems that incorporate such
products as bullet-resistant vests, breast plates, helmets, military aircraft and vehicles.

“Our armor materials have been used to protect military and police personnel for nearly 20
years,” said Joe Gelo, business director, Advanced Fibers and Composites, Honeywell. “We continue
to invest in improving our materials to meet the future performance requirements of advanced
military and law enforcement agencies. Our latest offering demonstrates our commitment to continued
innovation in the ballistic protection arena.”

Honeywell has upgraded several lines to produce Spectra Shield II and plans to invest in
additional upgrades as demand dictates.



August 7, 2007

Fiberweb Americas Sells Natural Fibers Business

Old Hickory, Tenn.-based Fiberweb
Americas has sold its Natural Fibers business to Barnhardt Manufacturing Co., Charlotte. At its
facility in Griswoldville, Mass., Natural Fibers bleaches cotton fiber to be used as a raw material
for other processes.

“Although this business is no longer one of Fiberweb’s strategic core competencies after the
sales of the Hygiene wipes business to Ahlstrom, it is a key business for Barnhardt,” said Dave
Rousse, president, Fiberweb Americas. “We can expect this business to continue under Barnhardt’s
ownership.”

The sale of Natural Fibers follows the announcement earlier this month of the impending
closure of the company’s spunbond polyester production facility in Gray Court, S.C. Fiberweb is
currently concentrating on reinvesting in its hygiene products manufacturing capability in North
America.



August 7, 2007

Democratic Leader Blasts Administration Policy

The chairman of the House Ways and
Means Committee’s Trade Subcommittee has sharply criticized the Bush administration’s trade
policies with China and says changes will have to take place.

At a Ways and Means Committee meeting August 2, Rep. Sander Levin, D-Mich., said the
administration has failed to deal with “China’s trade distorting policies that have led to a major
imbalance in trade.” He said that China, because of its size, human resources and its “major
combination of individual enterprise and government involvement in the economy,” has become a major
force in the global economy that has resulted in changes “more profound than we expected.”

Levin charged that the administration has failed effectively to use the special safeguard
mechanism Congress included in legislation granting permanent normal trade relations status to
China. He also said the administration has been unwilling to use the World Trade Organization’s
dispute resolution mechanism despite repeated requests from members of Congress that it do so.

He singled out the administration’s go-slow approach to resolving the Chinese currency
manipulation issue as a failure because Treasury department officials are relying on technicalities
to avoid branding China a currency manipulator. He concluded his statement by saying, “For years
there has been a hands off approach to trade policy while some of our trading partners have taken a
gloves off approach.”

Testifying at the same hearing, Auggie Tantillo, executive director of the American
Manufacturing Trade Action Coalition, said, “China’s predatory trade practices are crippling US
manufacturing, and hopefully this hearing is an indication that Congress intends to take prompt
action this fall against those policies.” He called for congressional enactment of legislation to
combat currency manipulation and a measure to offset what he said is a trade disadvantage to US
manufacturers and service providers caused by the imposition and rebating of foreign border
adjustment taxes, mostly in the form of value-added taxes.



August 7, 2007

Sponsors