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

Keeping An Eye On Demand


T
he volatility of the market of late has caused some yarn spinners to look at long-term
prospects with a somewhat jaundiced eye.

“I would love to be able to look down the road — six, 12, 18 months — and be able to plan
production,” said one noted Georgia specialty ring spinner. “But there are times these days when I
have problems seeing past next week. We started out the year with high expectations, based on the
way the market was running last year. But, so far, most of our expectations have failed to
materialize. Last year, everyone was fairly optimistic. Going into the first quarter of this year,
business was, maybe, okay. Now everybody, especially in the ring-spinning sector, is complaining
about business being soft. I don’t know much about open-end, I hear those guys are pretty busy —
but I don’t know how their volume of business relates to capacity. I just know that, for us, it’s
horrible right now.”

Said another Southeastern spinner: “I’ve been on the road for seven weeks of the past eight
visiting customers. And what I’ve found is that most big retailers expect their business to be down
substantially in the last quarter. And that, I believe, is the key. There is not enough demand on
the retail side for them to consider stocking up. If you look over the past year or so, we’ve been
used to retail growth from quarter to quarter in the high single digits to as high as 10 to 20
percent for some of them. If you look over the last two quarters, it has been very mixed. Minuses
have almost outpaced the pluses, and the pluses, with only a few exceptions, are in the lower
single digits to the mid-single digits. And that, of course, plays in the demand for our textile
products. It is the general uncertainty in economic growth that is now reflected in the order
situation. The stock market is jumping up and down like crazy. One day you’ve got housing numbers
that are bad and everybody kind of buries their heads in the sand. The more you are based on
commodity items, the worse it is. You just can’t compete here in commodity items anymore.”

The prospects of a slower fourth quarter are of less of a concern to some manufacturers than
the possibility of an extended decrease in demand. “I don’t know that I would say demand is
dropping,” said one North Carolina spinner. “But it seems obvious that the growth in demand is
slowing – and that may be a longer-term thing. If you look at the US economy from a historical
perspective, it seems we are near the end of a growth period and are not really certain about what
lies ahead. We are watching the market very closely right now to make sure we are managing our
inventory situation and keeping it in line with our expectations of demand over the next few
months.”

While there are no magic answers to generating business as demand slows, yarn spinners are
almost universally agreed that quick response and enhanced service provide the avenue to continued
growth. “You’ve got to be prepared to go the extra mile,” said an executive of a leading ring
spinner. “You have to provide turnaround times that others can’t or won’t. And you have to be
completely and totally focused on quality. Customers have more choices today about where and how
they buy products than ever before. And while price will always be the biggest driver for many
companies, response, quality and service come a close second. With the constantly changing demands
of the retailer, you can’t leave them hanging with product they can’t sell. Today, more than ever,
it’s about getting products on the shelf and off the shelf as quickly as possible and then doing
the same all over again with a new or differentiated product.”

The question is, should the US economy begin a downturn, is enhanced service and delivery
enough to offset what may become a tendency of retailers and second-tier customers to buy on price
alone?

“I don’t know the answer to that,” said one Georgia spinner. “But I just know that it had
better be, because that’s all we’ve got.”



August 7, 2007

Good News On Costs


C
ontinuing cost containment could well be behind much of the 2007-to-date tolerably good
mill performance. Indeed, with both industry fiber and labor outlays not that much different from
last year’s levels, domestic textile companies are managing to hold their own in today’s
competitive one-world marketplace. Look at fibers first: While there have been some cost advances
over the past year in a few man-mades — most notably polyester — most other man-mades have either
eased a bit or not moved at all.

Not surprisingly then, Uncle Sam’s official man-made producer price index remains pretty much
where it was last summer. Moreover, there is little to suggest any appreciable near-term upward
drift. That’s because of today’s huge man-made fiber capacity glut. Backing this up, the Fiber
Economics Bureau — citing the June 2007 issue of Fiber Organon — notes that the global utilization
rate for these fibers is now hovering at the extremely low 75-percent level.

And another 2.8-percent increase in production potential is anticipated by the end of next
year. Coming next to cotton: True, quotes here have moved higher over the past 12 months — with
some further inching ahead possible this summer, before the new crop is harvested. Nevertheless,
there is little statistical evidence to indicate any significant runup — even with this year’s
reduced US plantings. For one, US cotton stocks — both overall and expressed as a percentage of
usage — are expected to remain well above the levels of recent years through the 2007-08 marketing
year. Also reassuring, the International Cotton Advisory Council’s latest production forecast puts
global ouput in the new marketing year just getting underway at or even slightly above that of the
previous 12-month period.


No Labor Cost Pressure Either

Wages, the other mill cost, haven’t been causing any serious problems for US mills either.
This can best be appreciated by comparing the industry’s current hourly wages with those reported
12 months ago. In the case of basic mills, the pay increase over the past year has only been
something in the order of 3.5 percent. And the comparable wage boosts are even smaller when it
comes to more highly fabricated textile mill products like home furnishings and carpets. Moreover,
those numbers tend to exaggerate the industry’s costs because they are being offset by productivity
gains. Bottom line: Adjust for these efficiency gains, conservatively put at nearly 3 percent per
year, and you end up with basically flat unit labor costs — and that’s the true measure of mill
payroll pressures.




Aug07BFgraph


Overall Costs – Another Perspective

Further confirmation of the lack of any overall cost pressures comes from recent estimates of
combined material and labor cost totals — just released by economic consulting firm Global Insight.
Adjust these cost totals for the modest decline in domestic mill production activity that has
occurred over the 2006-07 period, and resulting material and labor cost outlays — now on a
unit-of-production basis — remain virtually unchanged from last year. And this encouraging trend is
likely to continue, with Global Insight analysts suggesting these costs on a unit basis might even
show a fractional decline in 2008.

In any event, this lack of any major mill cost pressure could be one reason why industry
earnings and margins — while by no means robust — still remain positive and, even more important,
pretty much unchanged from last year’s levels.


The Economy Should Help, Too

Meantime, continuing gross domestic product (GDP) gains could put a floor under apparel
demand and hence overall textile mill operations. To be sure, these GDP increases have slowed down
a bit, but they’ll still be fairly impressive, judging from a recent Wall Street Journal survey of
60 leading business economists. Their prediction: The economy should grow at an annualized rate of
2.6 percent in the July-December period — and at 2.9 percent in 2008. That’s not much lower than
the 3.3-percent rate recorded for all of last year. Combine these projected increases with
continuing advances in worker take-home pay, and it’s almost a sure bet consumer spending totals
will keep rising. More importantly, with auto sales likely to remain on the sluggish side, the new
projections would seem to assure still-strong consumer purchases of apparel and other software
items. Hence, our latest domestic apparel manufacturing estimate sees industry revenues rising to
nearly $38 billion this year — up more than 2 percent from 2006 levels.



August 7, 2007

Huntsman To Acquire DuPont™ Zonyl® Fluorochemical Product Line

The Switzerland-based Textile Effects business of Salt Lake City-based Huntsman Corp. has agreed to
acquire Wilmington, Del.-based DuPont’s global fluorochemical business — comprising its DuPont™
Zonyl® product line for nonwovens applications including automotive, construction, filtration and
medical applications; among others — for an undisclosed price. Zonyl products are used as
repellents for alcohol-, oil- and water-based fluids.

The agreement provides for a short transition period to ensure a smooth changeover, after
which DuPont will supply finished products and intermediates to Huntsman, which will handle all
future business-related activities but will not take over DuPont’s employees or manufacturing
assets. The two companies also agreed to jointly develop new products and technologies for the
nonwovens sector.

“We are delighted with this transaction, as we believe that DuPont’s technology and product
stewardship, with its focus on sustainability, will significantly enhance our product offering in
the technical textile market, which is strategically important for our Textile Effects business,”
said Paul Hulme, president of Huntsman’s Materials and Effects division.


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