Mixed Trends


S
ome good news to go along with the bad: Domestic profits, despite earlier fears of a
sharp decline, have remained surprisingly firm. Latest government figures for the first half of
2005 put the industry’s after-tax margin at 3.15 cents per dollar of sales — up a bit from
year-earlier readings. Earnings in dollar terms are up by comparable amounts. Behind the trend are
better cost controls, more savvy management, increased global outsourcing and more concentration on
profitable niche markets.

Less bullish, however, are reports of slowly declining domestic mill activity. Just-released
figures show textile mill production running about 3 percent under year-ago levels. Mill sales are
down by about 6 percent.

Not all industry segments seem to be feeling the pinch to the same extent. New numbers for
the basic mill sector suggest a disturbing 12-percent decline from last year. On the other hand,
the more highly fabricated mill product sector has been holding up a lot better, with the numbers
here running fractionally above a year ago.

Page16


2006: An Early Look

The same pattern is expected to persist into the new year. Economic forecasting firm Global
Insight sees revenues of basic fibers and fabrics falling 6.5 percent in real or volume terms —
with the drop-off in the mill product area put at a modest 3 percent. In the highly fabricated
product sector, Global Insight sees the possibility of a fractional improvement in profit margins.

While by no stretch of the imagination can all these projections be described as bullish,
they do indicate the domestic textile industry isn’t about to disappear. To be sure, it may be
shrinking, but stronger companies will continue to survive and even prosper in today’s competitive
one-world market — despite the continuing inroads of cheap imports from China and other Far Eastern
nations.


The US-Chinese Pact

The recently inked US-Chinese three-year trade deal should help remove some of the nervousness
and uncertainty that have been plaguing domestic textile and apparel markets over the past year or
so. Not everybody is happy about the agreement — many claim it gives away too much. The National
Council of Textile Organizations, Washington, still views it as an important positive step — noting
that US industry will now know with certainty that China will be unable to flood the market during
the next three years. A spokesman for the group also pointed out that we are retaining our right to
use safeguard quotas should Beijing start flooding the market in categories not covered by the
agreement.

The new bilateral pact limits US import growth in 34 vulnerable clothing and textile
categories. Annual growth of 10 to 15 percent will be allowed during the first year, 2006 — with
the precise advance depending on specific product category. This growth rate should accelerate a
bit to 12.5 to 16 percent in 2007 and 15 to 17 percent in 2008. 


Don’t Expect Miracles

Even with this new, comprehensive US-Chinese agreement, it would be unrealistic to expect
anything approaching a return to the quota-restrained import levels of past years. The relatively
high import growth rates just cited would certainly preclude such a bounceback. Equally important
is the feeling that Beijing isn’t about to allow for any major rise in its currency — a move that
might make Chinese goods more expensive. Many now say that even if the yuan did rise appreciably,
it’s doubtful whether major import relief would be forthcoming. Indeed, these doubters feel China’s
cost advantage over the United States would remain fairly impressive even if the yuan were to climb
20 percent against the dollar. Moreover, to the extent China would lose some of its competitive
edge, other low-cost producers in Asia and Latin America would probably pick up most of the slack.
Upshot: While most world-class US firms are likely to survive, their portion of the overall
domestic market seems all but certain to continue falling. Generally speaking, declines will tend
to be the most precipitous in the apparel rather than the textile sector — with perhaps domestic
slippage of 5 percent or more in real or volume terms likely over each of the next three years.


November/December 2005

 

Lauffenmühle Partners With INVISTA, Nano-Tex

Stretch denim producer Lauffenmühle
GmbH, Germany, recently partnered with INVISTA, Wilmington, Del., to offer fabrics with Teflon® as
part of its Autumn/Winter 2006 collection. The corduroy and flat fabrics offer stain, water and oil
repellency; and a soft hand, making them suitable for outerwear apparel.

In addition, the company has partnered with Emeryville, Calif.-based Nano-Tex to offer
stain-, water- and oil-repellent corduroy fabrics that also feature a unique stain-release system
using Nano-Tex’s nanotechnology.

November/December 2005

First2Print Collaborates With ESPI Fashion Design

First2Print Inc., New York City, and
ESPI Fashion Design, Sacramento, Calif., have partnered to transform original artwork into
ready-to-wear swimwear for ESPI’s 2006-07 fashion line. Using three different polyester fabrics,
dye-sublimation inks, digital textile printers and a heat-transfer process, First2Print digitally
prints vibrant, non-fading finished fabrics.

The entirely digital process — from the digital artwork to the printed fabric — enables
First2Print to deliver customized yardage in a matter of days, instead of the weeks expected
traditionally with screen-printed fabrics, according to the company.

November/December 2005

TrapTek One Of Time Magazine’s Most Amazing Inventions Of 2005

Time Magazine’s annual issue
introducing the most amazing inventions of the year appeared on the stands today and TRAPTEK™
technology incorporated in Cannondale’s Carbon LE garments was selected for one of the world’s most
amazing inventions for 2005. TrapTek’s invention permanently embeds activated carbon, derived from
coconut shells, into fiber and yarns to enhance the performance of fabrics. The new fabrics,
engineered by United Knitting, exhibit a significant break through by not only managing or wicking
moisture, but also drying at unprecedented rates keeping cyclist cool and dry. Additionally, these
knits naturally trap odor and UV in the carbon pore structure, keeping the finished products fresh
and lightweight with superior UPF qualities.

“Being recognized by Time Magazine promotes our fibers many benefits to the consumer and the
amazing fact that it comes from coconuts.” says Brad Poorman, President TrapTek, LLC. “The
recognition for our invention would not have been possible without United Knitting and Cannondale’s
efforts to engineer exceptional fabrics and garments.”

“We first started working with the TRAPTEK™ product a year ago and immediately saw the
superior performance attributes that differentiated the product from anything on the market.” says
Phillip Sporidis General Manager, Global Apparel, Footwear, and Accessories, Cannondale Bicycle
Corporation. “We designed a collection of Men’s and Women’s products, head to toe, that are
engineered to deliver multiple comfort enhancing benefits to cyclists”.

Coconut shells are a waste product from the coconut industry and are well-recognized as
providers of the best activated carbon for filtering impurities from water and air, while adsorbing
unpleasant odors. The Cannondale cycling jersey made with TRAPTEK™ activated carbon particles
creates a surface area equal to that of a football field which rapidly disperses moisture
initiating an evaporative cooling effect.

“Imagine wiping a blackboard with a damp cloth; as the water spreads over the surface it
quickly evaporates. Athletes have noticed that products with TRAPTEK™ yarns aide the body’s natural
process of cooling through spreading and evaporating perspiration. Drier also translates into being
more comfortable in cold weather” says Gregory Haggquist Ph.D., the inventor of TRAPTEK™
technology. “We believe that coconut carbon is the right choice scientifically and by recycling a
natural material, it is a responsible choice. We realize all this attention to detail makes us a
little nuts; but we like it that way”.

TrapTek LLC., has developed a global supply chain and is developing multiple new ways of
delivering performance into yarns, fibers, films and even Chemical warfare protective garments. The
technology will add comfort, as well as freshness, to a variety of apparel products from athletic
gear, to polo shirts / lifestyle pieces, and even to business suits.

“United Knitting is constantly innovating throughout our offerings with new technologies and
constructions. TRAPTEK™ offers a yarn that has multiple benefits permanently embedded in the
product, so one yarn can deliver multiple functionalities.” said Jerry Miller, President of United
Knitting. “We can design our technical fabrics to highlight these benefits depending on what
activities the garments will be used and in what season”.



Press Release Courtesy of TrapTek, Cannondale and United Knitting

November 2005

TRC Candiani & UTIT: Partners


speedyshuttle

UTIT’s Palmo Speedy Shuttle cone palletizer installed at TRC Candiani’s Malvaglio
plant



I
taly-

based TRC Candiani is one of Europe’s
most important denim manufacturers. Since the end of the 1960s, the company has demonstrated
continuous growth, which culminated in a new spinning and weaving mill in Malvaglio, Italy. The
facility opened in October 2003 after a 19-month construction period. TRC Candiani occupies a total
production area of 95,000 square meters (m2) — 65,000 m2 at the Robecchetto mill and 30,000 m2 at
Malvaglio — and in 2004 produced 35 million meters of denim.

Italy-based UTIT Wagner Automation S.p.A. provided the automation systems adopted by TRC
Candiani for a ring spinning expansion at the Robecchetto mill (1997 to 1998) and at the new
Malvaglio plant.

TRC Candiani has invested for years in its operation and has carved out a niche in the
high-end denim market. The company has focused on quality and flexibility to provide customers with
the necessary product within the required time frame.


Competing Competitively

According to Gianluigi Candiani,
Ph.D., president, TRC Candiani, the secret of a company’s success lies not in transferring one’s
know-how to cheap workers in low-labor-cost areas, but in enhancing know-how at home by investing
in the automation of heavy and repetitive jobs, and changing one’s own workers from production
personnel to quality system managers.

Choosing a supplier capable of providing automation systems to contribute to this growth, in
terms of views and know-how, is important. Because of previous successful installations, UTIT has
become the perennial supplier of choice for TRC, as well as a partner.

Design simplicity, ease of management, low operational cost and low investment cost were the
guidelines followed by UTIT in designing the automation for the Malvaglio mill, according to Sergio
Vandolfi, responsible for UTIT’s textile division. These concepts already had been largely
experimented with in TRC Candiani’s previous projects, and here they have been refined by new
technical, simpler and less expensive solutions.

At the Malvaglio spinning mill, 700 spools per hour are handled. The intermediate yarn
warehouse has four planes and 60 channels. Each channel has a capacity of 12 pallets therefore the
warehouse simultaneously stocks 60 articles and 720 pallets.

Areas with automated intermediate package transport include: raw cotton bale handling from
the storehouse to the withdrawal and the return of empty pallets; transportation of full spools to
the spinning frames and empty spools on the reverse path; package take-up and palletization;
loading, management and unloading of the yarn storehouse; cone transportation from the yarn
storehouse to weaving, warpers and loading bays for outside weaving; and management of empty
pallets.

Spider Cross, a quiller’s new servicing system, simplifies the introduction of the full
spool trains and the removal of empty spool trains. Its implementation alone eliminated 250 train
control units, 250 pneumatic pistons and 250 pilot valves for the switch opening and closing.

Other new equipment includes a train-like package transport system (instead of a conveyor
belt system), and the introduction of the AGV system for handling the package pallets downstream of
the yarn storehouse.


usedspools
Automatic bobbin strippers remove used spools from the spinning machine.


Building Relationships

According to Candiani, manufacturers
wishing to continue producing textiles in Italy should shift to product of higher added value in
which the weight of such “Italian”values as culture, creativity, expertise, entrepreneurship and
perseverance is greater.

Value added should be increased not only on the product, but also on market service with
enhanced flexibility and on-time delivery. All components of the company should contribute to the
network operation ensuring maximum productivity and value-added possibilities. This is what TRC
Candiani and UTIT tried to create when building the Malvaglio plant — an experience that has
certainly enriched both companies.

November 2005

Optimizing Apparel Manufacturing

datatexopen



O
limpias

S.p.A., the Italy-based manufacturing
organization of the Benetton Group, has completed the consolidation of 10 servers to optimize its
information technology (IT) structure by leveraging existing skills and resources, and
standardizing applications and data.

Today, the Italy-based Benetton Group S.p.A. is present in more than 120 countries around
the world. With apparel production at its core, it is a group with a strong Italian character and
its style, design expertise and passion are clearly seen in its brands – the casual United Colors
of Benetton, the more fashion-oriented Sisley, Playlife leisurewear and Killer Loop streetwear. The
group produces around 110 million garments every year.

Olimpias operates 12 plants in Italy, with 2,000 employees and a turnover of more than 300
million. Its most important customer is Benetton; however, 30 percent of its output is sold to
companies outside of the group – proof of Olimpias’ production quality and level of customer care.

Its organizational structure to reach these targets is complete – product design, product
engineering, and marketing and sales. The production can be marketed at any level of the bill of
material and of the production cycle – yarn, gray fabric or finished fabric.

Olimpias handles all production steps from yarn to finished fabric – yarns, weaved and
knitted fabrics, printed fabrics, and dyeing and washing operations.

The company recently enlisted Switzerland-based Datatex AG, a leader in enterprise resource
planning for the apparel and textile industry, to upgrade its IT infrastructure. Mario Pillon,
chief information officer, Olimpias, recently gave his view of the consolidation project.

mario
Mario Pillon, chief information officer, Olimpias


Datatex: What’s the primary goal of your project with Datatex?

Pillon: The deployment of the Datatex solution in 12 Olimpias plants drove
significant benefit to our company – enhanced efficiency, measured by the inventory levels, and
reduced time to market. Moreover, the Datatex solution was the tool to align to a single
organization model. The 12 plants previously worked with different structures.

However, our group was not satisfied with the reached level of standardization and
information sharing. Therefore, we launched this project to gather together all resources and to
integrate the data. The project was feasible because every plant was using the same information
system functions, in spite of different manufacturing activity.

Datatex: What are the main phases of your project?

Pillon: The project goal is to concentrate physically and logistically all the
production supporting applications. The target is a unique information system providing services to
all the plants, fully fitting the specific requirements of every manufacturing unit and
guaranteeing a correct interface with the departmental applications.

The first phase was the migration of every plant information system to the iSeries installed
in Ponzano Veneto. Of course it was not a simple removal. We took advantage of this activity to
enhance the level of use of the Datatex solution in all those plants that had implemented a subset
of the available functions.

The second phase is focused on the “logical” consolidation of the information system. For
example, we will have a single bill of material, used by the Olimpias’ plants producing yarns and
by those manufacturing fabric. Therefore, the article code of the yarn has no need to be changed
when it is delivered to the plant using it.

Datatex: Can Olimpias be viewed as a single, integrated plant?

Pillon: Yes, but in order to understand the project size and complexity, it is
useful to remember that the project concerns companies acquired through the years, located in 10
different places, each of them with a significant use of third-party manufacturing operations. The
starting point was 10 Datatex solutions installed in 10 different locations to support a total of
330 workstations.

Datatex: Usually, for a complex project, the hottest item is the respect of the
time budget. What about you?

Pillon: Olimpias management was strongly committed to the project and gave it the
highest priority. Therefore, the plant managers forgot the fear of “losing” their own information
system and were involved by the top management to evaluate and reach the big benefits for the whole
group.

From the operational point of view, we created a team with Olimpias system engineers and
Datatex project leaders. The pace was the consolidation of a plant information system every three
months.

Datatex: Any main direction or idea to make the project feasible?

Pillon: First of all, we worked to fit the specific requirements of each plant. We
are becoming a “virtual” single vertical plant without imposing changes to the structure and
guaranteeing the application functions already implemented by each plant. Moreover, the project
preliminary phase was the creation of analysis standard and of implementation and development
standards. These tools shortened the implementation time and made uniform and consistent the work
of the whole group.

November 2005

Hong Kong Mill Licenses Cotton Incorporated’s EFS® System

Central Textiles (Hong Kong) Ltd. has
become the first textile mill in Hong Kong and China to license and implement the Engineered Fiber
Selection® (EFS®) Cotton Fiber Management System, a suite of software developed by Cotton
Incorporated, Cary, N.C., to facilitate production of high-quality cotton yarn.

Central Textiles operates one 57,000-square-meter spinning mill in Guangdong province and is
set to open a second mill. The family-owned company currently purchases 250,000 bales of US cotton
annually and employs 1,500 people.

EFS software enables users to access and use High Volume Instrument (HVI) data provided by
the US Department of Agriculture (USDA) for each bale of US-produced cotton, which is the only
cotton that is evaluated for its key properties and labeled with USDA HVI data.


October 2005

Textile Innovators Offers WFK Test Fabrics In US, Canada


Windsor, N.C.-based Textile
Innovators has been named exclusive US and Canadian distributor for Germany-based WFK consumables,
such as soiled samples and other test materials. The samples are used in testing the efficacy of a
wide range of detergent products, as well as washing machines.

WFK, a spin-off company from WFK Research Institute, supplies cotton, cotton/polyester,
wool, silk, acrylic and nylon testing samples stained or soiled with natural and man-made
substances such as foodstuffs, lipstick, motor oil, shoe polish, clay, vacuum cleaner dust, and a
peat moss/soot/ cement mixture. The samples are available in standard widths of 80 centimeters and
lengths of up to 36 inches, with other sizes available on request.

Through a reciprocal arrangement, WFK sells Textile Innovators’ consumables in
Europe.


October 2005

Filtration Group Consolidates HVAC Filter Manufacturing

Filtration Group, Joliet, Ill., has
combined its three East Coast heating, ventilation and air conditioning (HVAC) filter manufacturing
operations at one location in a new 235,000-square-foot production facility in York, S.C. The
company previously operated facilities in Delaware, North Carolina and York.

“Having our entire East Coast operations in York is going to improve the speed of delivery,”
said Dave Flynn, director of manufacturing. “Orders can be shipped directly to the customer,
without passing through another distribution point, saving Filtration Group and our customers not
only time, but money.”

The company has added 35 new employees in York and plans eventually to hire 75 to 100
additional people, according to Larry Ost, CEO.


October 2005

Optiant, GlobalReact Team Up To Provide SCM Solutions

Optiant Inc. — Boston-based developer
of the PowerChain® software solution for supply chain management (SCM) — and GlobalReact — a
Charlotte-based software provider and technology consulting firm — have formed a partnership
whereby GlobalReact will supply PowerChain to manufacturers of textiles and apparel, among other
products. The software suite facilitates the design and optimization of supply chains; and includes
tools for management of inventory placements, and integration of sourcing and distribution
strategies.


October 2005

Sponsors