Delta Apparel To Purchase M J Soffe

Vertically integrated knit apparel manufacturer Delta Apparel Inc., Duluth, Ga., recently signed a
definitive agreement to purchase Fayetteville, N.C.-based M.J. Soffe Co., a producer of
activewear.The transaction, expected to close in September of this year, is valued at up to $72
million, including $52 million in cash that includes retirement of debt, $8 million in promissory
notes and up to $12 million in contingent payments based on performance targets.Jim Soffe will
continue to serve as CEO of M.J. Soffe.Robert W. Humphreys, president and CEO of Delta Apparel,
said, We believe the manufacturing, distribution and marketing synergies between the companies will
allow both operations to expand at a faster pace than would be possible on a stand-alone basis.

August 2003

Competition In Goods And Currency


C
 ompetition is a basic principle of sound capitalism. Throughout US economic history,
every time an industry giant generates a healthy whiff of monopoly or market domination, the US
government has responded by trying to break things up. Think Ma Bell, Standard Oil, Microsoft or
the scrutiny major corporations go through when they merge.

It seems that competition is integral to the way the US economy works. So why, in a time of
mass globalization, does the US government fail to see the importance of maintaining a competitive
business environment globally?

Competitive fairness in a global economy should appeal to the most ardent free-trader. Free
trade is dependent on free markets — not markets that will be free. The law of comparative
advantage — the basis for most free-trade arguments — was cast in a competitive marketplace. The
World Trade Organization supposedly promotes this idea. However, something is lost in translation —
maybe courage?

The basic concept of market-determined value for currencies is difficult to explain.
Capitalists assume it to involve the simple process of exchange. When you think about it, currency
only exists for exchange — it is difficult to haul livestock around. But in a capitalist economy,
even the livestock’s value as currency is market-determined.

In recent months, the US dollar has lost value in most of the world. The United States has
been importing a tremendous amount of product. As the dollar has weakened, imports and the prospect
of future imports should ebb, and the atmosphere for US manufacturers of all types should improve.

But, not so fast — with European currencies consolidated into the euro, Europe will feel the
brunt of this currency slide. The sticking point is that the Chinese currency (yuan) has declined
with the US dollar. This infers that the US economic climate that caused the dollar’s slide is also
apparent in China — not so.

Since 1994, China’s currency has been artificially fixed, or “pegged,” to fluctuate with the
dollar. As the US trade balance has chased away demand for US dollars, the dollar’s value has
dropped. Demand for US exports should rise — putting US-made goods “on sale” around the world.
China’s failure to float its currency derails the process. If the dollar fell against the yuan, US
goods would be in a competitive position to export to China, while stemming imports from China.
Fair yuan valuation would reflect China’s amazing economic growth since 1994.

If China floated the yuan, its estimated adjustment of 15 to 40 percent would raise the yuan’s
value — and global competitive free trade would benefit. China also would face slower growth and
increased unemployment. Even with bipartisan efforts by Senators Schumer, Dole, Bayh and Graham in
asking the Treasury Department to take action, political will must build further to address the
issue effectively.

US manufacturing is competitive. What is needed is fairness. If the US government is willing
to sue Bill Gates, how about some action on global competitive fairness?

August 2003

Belmont Partners With Resch

Belmont Textile Machinery, Mount
Holly, N.C., has entered into a partnership with Resch Power Heat-Set GmbH, Germany. Belmont now
serves as North American sales and service representative for Resch’s Horauf/Suessen GVA (yarn
heat-setting) machines. Resch purchased the GVA program from Horauf/Suessen in September
2002.

supplier2


Resch Power Heat-Set’s Horauf/Suessen GVA machine
 “

With the combined experience of our two companies, we can assure our customers in
North America that the team of Resch and Belmont will provide them with fresh ideas, superior
service and a renewed commitment to customer satisfaction,” said Peter Resch, president and CEO,
Resch.


July 2003

 

Datatex Sells CATS To Bossa, Partners With 3C Software

Milan-based Datatex S.r.l. has sold a
Computer Aided Textile Supervisor (CATS) tool to Bossa, a Turkey-based vertically integrated
textile manufacturer of cotton and blended man-made yarn and fabric. Datatex says CATS, an
automated optical fabric inspection tool, improves productivity and efficiency, reports production
faults in real time and optimizes fabric quality.

In other news, Datatex has entered into a strategic partnership with Atlanta-based 3C
Software Inc. The companies have combined Datatex’s Textile Integrated Manufacturing (TIM)
enterprise resource planning (ERP) solution and 3C Software’s Impact: ECS™ cost management system
to provide a comprehensive cost management and manufacturing solution for the textile and apparel
industries.


July 2003

Dornier AirGuide Offers Contact-Free Guidance

Dornier
AirGuide Offers Contact-Free GuidanceLindauer Dornier GmbH, Germany, has developed the AirGuide, a
contact-free solution to guide mechanical elements. The device can be retrofitted on Dorniers
P-type rigid rapier weaving machines. The AirGuide directs air to the rapier rod through a guide
plate that replaces conventional ball bearing guide rollers. A temperature monitor allows for
automatic shutdown of mechanical filling insertion systems in case of heat build-up. The air guide
cools the rod, reducing friction and increasing lubrication intervals, according to the company.
Other benefits include reduced maintenance costs, increased service life, improved efficiency, a
self-cleaning effect that enables weaving of clean fabrics and fail-safe features.Older rapier
machines also can be retrofitted with the AirGuide.
July 2003

Enzyme Could Help Break Down Hydrogen Peroxide

A catalase enzyme recently discovered by scientists at the US Department of Energys National
Engineering and Environmental Laboratory (INEEL), Idaho Falls, Idaho, could reduce the harmful
effects of industrial bleaching process wastewater on the environment. The new enzyme is able to
chemically change hydrogen peroxide often used in industrial bleaching processes into water and
oxygen.Taken from the Thermus brockianus microbe found in a hot springs pool at Yellowstone
National Park, the catalase thrives in a high-pH and high-temperature environment, and so works
well in hot, alkaline process wastewater.High-temperature stability makes this enzyme potentially
viable and economically attractive for industrial applications, said William Apel, INEEL. This new
catalase [lasts] for days, where the typical performance limit of many industrial-use enzymes is a
mere 10 hours.

July 2003

Cotton Incorporated Offers CDs Cosponsors Cotton Days

Cotton Incorporated Offers CDs, Cosponsors Cotton DaysCotton Incorporateds New York City-based
Consumer Marketing Division has launched an interactive series of educational programs covering
knitting, weaving, and dyeing and finishing processes. The five programs, available on CD-ROM, are
funded in part by the Importer Support Program of the Cotton Board.

Cotton Incorporateds The Art of Knitting is part of a series of interactive educational
programs covering textile basics. Developed for sourcing professionals, the series illustrates the
transformation of raw cotton to fabric. Presentations include actual manufacturing operations, 3-D
animations, technical illustrations and a glossary of terms. The first two programs, The Art of
Knitting and The Science of Dyeing and Finishing, are now available. The Art of Weaving, Color
Science and The Art of Printing will be introduced later this year and in early 2004.In other news,
Cotton Incorporated and the Washington-based Cotton Council International (CCI) joined forces to
sponsor Cotton Days, a week of celebrations in Osaka, Japan; Seoul, South Korea; and Taipei,
Taiwan, designed to promote US cotton and Cotton USA licensee textile products in Asia.The event
first took place in 1995 in Japan with support from the Japan Spinners Association. That first
Cotton Day promoted Japanese cotton textiles and celebrated casual Fridays in the corporate
workplace. Cotton Incorporated and CCI later expanded the celebrations, bringing Cotton Day to
Taiwan in 2001 and to Seoul in 2002.
July 2003

Industry Seeks Relief From Chinese Imports

Industry Seeks Relief From Chinese ImportsThe American Manufacturing Trade Action Coalition (AMTAC)
is expected later this week to file a series of new petitions with the US Department of Commerce
seeking relief from Chinese imports by employing the “safeguard mechanism” in the US/China
bilateral textile trade agreement. The announcement will be made on Capitol Hill in order to
demonstrate support for the petitions by the industrys friends in Congress.Under the safeguard
mechanism, a provision in Chinas accession to the World Trade Organization, the US retains its
rights to impose import quotas to address surges in imports from China. The action will be taken in
view of Chinas rising imports that, during the first five months of this year, are 16.6 percent
higher than the comparable period of 2002.Several steps are involved in utilizing the safeguard
mechanism, and it can be a fairly drawn out process. First, industry petitioners must provide the
Committee for the Implementation of Textile Agreements (CITA) with specific information regarding a
claim that Chinese textiles or apparel are resulting in market disruption. Then CITA will seek
public comment on the request. CITA must determine within 60 calendar days of the close of the
comment period whether the claim is valid. If it decides it is, CITA will request “consultations”
with China. If agreement is reached during consultations, quotas may be imposed on a bilateral
basis. If there is no agreement, the US has the right to impose unilateral quotas.Last August, the
American Textile Manufacturers Institute (ATMI) filed a petition with CITA seeking reimposition of
quotas on Chinese products where triple digit growth occurred when quotas were removed, but no
action has been taken. By James A. Morrissey, Washington Correspondent
July 2003

Management Team Acquires National Textiles

Management Team Acquires National TextilesMembers of the management team of National Textiles LLC,
Winston-Salem, N.C., have acquired a majority interest in the company from its financial investors.
Jerry Rowland, president and CEO, and Keith Huskins, chief administrative officer, are leading the
new ownership group.The companys roots go back nearly 45 years to when it was part of Hanes Corp.s
manufacturing operations. In 1979, Hanes was acquired by Consolidated Foods, which was renamed Sara
Lee Corp. in 1985. National Textiles gained its independence in 1997, when Sara Lee spun off most
of its textile manufacturing operations. Rowland and Huskins have been with the company since it
was part of Sara Lee and have held their current positions at National Textiles since its creation.

Jerry Rowland (right) and Keith Huskins head National Textiles new ownership group.Employing
more than 4,000 people in Georgia, North and South Carolina, Tennessee and Virginia, the company is
one of the top US manufacturers of yarn and knit fabrics. It counts Sara Lee as its major customer,
and also sells knit fabric and cut parts to cut-and-sew suppliers and companies such as Gap and
Levi StraussandCo. According to Huskins, much of the downstream production for these companies
takes place in the Caribbean Basin.With management as owners of the company, well have a more
focused group, staying closer to our operations and our customers than have our financial investors
in the past, Huskins said. We plan to continue to grow our share of non-Sara Lee business, while
also continuing to service Sara Lee.
July 2003

Outlook Remains Cloudy


T
 he latest batch of textile reports suggests a relatively mixed picture. There’s still no
real sign of any sustained near-term industry recovery. Odds now favor a quickening of consumer
spending for apparel and household furnishings as new tax relief frees up income.

This year’s record wave of mortgage refinancings should also help loosen consumers’ purse
strings. Textile prices continue to disappoint. Government reports do show greige goods edging a
bit higher, but they’re still nearly 3 percent under year-ago levels.

TW
 ’s overall Textile Price Index, also up fractionally, still lags comparable 2002
readings.

Also worrisome is the continuing weakness in mill production, where totals now run close to 6
percent under a year ago. Profits continue to be squeezed, with the latest evidence being WestPoint
Stevens’ decision to seek Chapter 11 protection. The move follows similar actions over the past few
years by Malden Mills, Guilford Mills and Burlington Industries.

bfindex


Cotton Concerns

Raw cotton fiber tags, after taking an early spring pause, have again turned stronger, thus
adding to the overall textile mill profit pinch. Quotes at last report were in the low 50s —that’s
10 to 15 cents per pound above year-earlier readings.

Behind the fiber’s firming, new US Department of Agriculture estimates suggest both
increasing raw fiber exports and a close-to-5-percent reduction in end-of-crop-year stocks (from
6.2 million bales down to 5.9 million).

Adding to overall cotton buoyancy are reports of disappointing crop conditions. Uncle Sam’s
farm experts now rate 20 percent of the current year’s crop as poor or very poor. Given these
market conditions, cotton prices are likely to remain high, and perhaps will edge up a bit more
over the coming months.

Nor is cotton the only fiber contributing to mill cost pressure. Man-mades, too, continue to
inch up, spurred on by continuing high petrochemical feedstocks. In any event, such bellwether
areas as polyester staple, rayon staple, acrylic staple and textured polyester are now all running
above a year ago. Bottom line: All these cost hikes have to hurt, as the currently prevailing
buyers’ market makes mill pass-throughs increasingly difficult, if not impossible.


Trade Trends Also Bear Watching

There’s still no sign of relief on the import front either. The latest figures show year-to-date
imports of textiles and apparel (square meters equivalent basis) running close to 18 percent above
2002 levels. But there’s now some hope that gains may ease off a bit. For one, there’s weakness in
the dollar, which — other things being equal — tends to make imports more expensive. Then, too, the
recent SARS outbreak and other international problems point to the advantage of having more
reliable close-to-US sources.

The industry is now readying an intense lobbying effort to get Washington to limit Chinese
shipments. Spokesmen cite China’s World Trade Organization membership rules, whereby it is possible
to impose temporary category-by-category limits when Chinese shipments damage the domestic
industry.

Meantime, the weaker dollar also should tend to help exports by making them cheaper to
overseas buyers. Indeed, there are already signs of this. The Institute of Supply Management now
predicts a rise in textile exports over the next six months.


More Statistical Changes

Textile employment and earnings figures have been substantially revised, reflecting updated
benchmark data and changes in seasonal adjustment factors. More significantly, the overall
classification system has been changed — from the old Standard Industrial Classification system
(SIC) to the new North American Industry Classification system (NAICS). The latter involves the
splitting up of the industry into two major segments — textile mills and textile mill products
(carpets and rugs, other home textiles, tire cord and fabrics, canvas and textile bags).

Starting next month,

TW
 ’s textile barometers table will include data for both of these industry segments.

Preliminary analysis suggests the employment decline has been more precipitous in the textile
mill sector, where the number of jobs fell 7.1 percent over the past 12 months. That’s considerably
more than the 4.1-percent decline noted for mill products. Textile mill worker pay currently runs
more than 8 percent above textile product compensation.




July 2003

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