U.S. Textile Exports Increase; Imports Set Record

The U.S. Department of Commerce trade
and economic data for the first quarter of 2000 show that textile and apparel exports totaled $4.4
billion, up 5.4 percent over the same period of 1999, while imports for the first quarter reached
an all-time high, totaling 7.8 billion square meters equivalent (sme) or $18 billion.

The increase in textile imports has been influenced by the three-year-old Asian financial
crisis on one hand and by the North American Free Trade Agreement (NAFTA) on the other, according
to ATMI President Roger W. Chastain. Regarding the surge in Asian imports, he cited increases of 44
percent from Pakistan, 32 percent from Thailand, 25 percent from Bangladesh and 14 percent from
China.

Helping to balance the increased imports from Mexico, at 17 percent, and Canada, at 21
percent, was a reciprocal increase in exports, primarily of fabric and cut pieces, to those two
countries totalling 15 percent.

“Unfortunately, we have not had that kind of success in exporting to other countries around
the world because many markets are closed to our exports,” said Chastain. “All the U.S. textile
industry asks is that it obtains its fair share of access to world markets so it can compete on a
level playing field where everyone plays according to the agreed-upon rules.”

Chastain also commented on the potential negative effects of the U.S. granting of permanent
Normal Trade Relations (NTR) to China and the phaseout of quotas against Chinese textiles and
apparel upon China’s entry into the World Trade Organization (WTO): “This makes it imperative that
we take advantage of new opportunities with our Caribbean partners under the just-passed Caribbean
Basin Initiative (CBI) trade enhancement legislation, especially prior to 2005 when all of the
quotas will be removed.”

Commenting on other economic news related to the textile industry, Chastain said, “After
many months of difficult times, we are starting to see improvement in some key areas, such as fiber
consumption and new textile orders.”

Consumption of fiber on the cotton spinning system increased 5.7 percent in the first
quarter of 2000, the first quarterly gain since first quarter 1999. However, the total consumption
of 1.6 billion pounds, excluding fiber consumption in carpet, woolens and worsted, and some
industrial uses, was still 9 percent below first quarter 1999 levels.

New textile orders rose more than 3 percent in the first quarter of 2000 from the previous
quarter. This represents an increase of nearly 7 percent over the first quarter 1999. Unfilled
orders in March 2000 were 3.6 percent above March 1999 figures.


July 2000

Picanol, Radici Group Agree To Acquire Fimtextile

The Belgian weaving machine
manufacturer Picanol and the Radici Group, the Italian conglomerate which includes the
manufacturers Somet and Vamatex, have come to an outline agreement to acquire Fimtextile, the
Italian producer of cam motions and dobbies. Negotiations are also underway with a financial group
which is interested in joining this new venture.

The current acquisition initiative is being taken in order to preserve the variety of
products offered by Fimtextile, whose survival has been threatened by the worldwide recession in
the textile machinery industry. Currently, the Radici Group is its largest customer, and Picanol
has entrusted certain projects to Fimtextile for some time. It is anticipated that other
manufacturers will also be interested in this new company.

Details of the agreement will be worked out in the next few weeks.


July 2000

Producers Ready For CBI, Question China


C
 otton spinners’ reaction to the Caribbean Basin (CBI) and China trade initiatives are
mixed, although there seems to be a more positive consensus with CBI.

Spinners feel that trade with countries in the Caribbean will at least result in an increase
in domestic yarn sales. China trade, on the other hand, has a diverse reaction, but mostly
negative.

Most spinners feel that past experience with the Chinese shows them to be dishonest and
self-serving in negotiations and agreements.

Interestingly enough, not one spinner had anything to say about human rights in China. Shows
the difference in thinking between politicians and people in business.

Concerning the Caribbean, one spinner said, “We currently have business requests for as far
out as the third quarter of 2001. This is mostly for ring-spun yarns and customers who don’t want
to be caught short when CBI goes into effect. They will, of course, need domestic yarns to take
advantage of CBI.”

At the same time, spinners are reluctant to quote too far out because of the uncertainties in
future pricing. They are expecting an increase in pricing primarily due to the increasing demand
for yarns.

Another spinner who feels this initiative will be beneficial said, “CBI will help the overall
scenario in yarn markets. It will result in more demand for ring-spun yarns, which at present are
very tight. This may be a good thing because the demand for open-end yarns may improve.”


CBI Good For Polyester Spinners

Synthetic spinners feel CBI will be good for domestic polyester markets and will give them the
chance to regain a place in the world markets (lost to Asian producers). One such spinner said, “
Given the chance, we will prove we are competitive.”

Texturizers also feel the CBI will have a positive effect on their business, but they cannot
predict the extent to which they will be able to participate.

As for China, one spinner observed, “Products from China may be cheap, but they are a long
way from our markets. In spite of what we hear from the industry, the sky is not falling, and I
personally am not really concerned.

“We can’t put our head in the sand. We must compete on a global basis. Our company will
thrive in this business.”

Yet another spinner feels that trade with China is a mistake because of the distance they are
from our markets and from our general business ethics.

Texturizers, like cotton spinners, have mixed feelings about trade with China, but most feel
that the business effect will be negative. A synthetic spinner summed up the whole situation
concerning China in one word — “scary.” He also said, “China must develop a lot before they will
become consumers.”

Free trade has the potential to be a great thing, but everyone must play by the rules. The
consensus is — it is, but they won’t.


Ring-Spun Markets

Spinners report that current ring-spun markets for both carded and combed yarns is exceptionally
good. One spinner said, “I have nothing to sell until after the third quarter. Also, the market has
firmed up on pricing.” Another spinner reported that his company had increased prices on ring-spun
yarns by five cents per pound.

Open-end yarns, reported as steady, are still in a dog-eat-dog situation, according to
spinners. Oversupply of yarn resulting in low pricing is the problem.

One spinner says that the fourth quarter will be the turning point for OE yarns. “In
December, the new crop cotton prices will help determine OE yarn pricing and hopefully get more
realistic.” If CBI causes a major increase in demand for this type of yarn, the pricing may well
turn upward.

Markets for textured yarns are pretty good, but August is the normal seasonal slowdown for
these yarns. Markets have been so good that inventories have been sold off, so production for a
portion of this period will be used to rebuild them. Beyond that, there is some uncertainty, but
texturizers feel markets will hold up.

Synthetic spinners say, “Markets are inconsistent. There is no long-term business. Both
demand and pricing are better for the long staple markets. Short staple is inconsistent in both
areas, but at least the trend is up.”

One important fact to remember in this business of global competition is that if you plan to
be a player who thrives, you must be ready to compete, like the spinner noted earlier in the Yarn
Market.

ym2000final_941

July 1999

Nilit Unifi Plan Joint Venture

Nilit Ltd., Israel, and Unifi Inc.,
Greensboro, N.C., have agreed to form a joint venture in Israel to produce nylon 6,6 POY yarns for
texturing. The nylon produced will be used in apparel, industrial and home fashion yarns.

Both companies regard this decision as a reaffirmation of their commitment to quality and
customer service.


July 2000

Avondale Mills Announces Modernization Plan

G. Stephen Felker, chairman,
president and CEO of Avondale Mills Inc., Monroe, Ga., has announced a company-wide $115-million
modernization plan to be executed over the next 18 months. An additional $30 million in
expenditures is being considered for the same time frame.

The projects include expenditures totalling $74 million in Alabama and $41 million in South
Carolina to upgrade equipment and provide the newest technology to increase production and enhance
quality and cost effectiveness. Improvements at the Bevelle Plant in Alexander City, Ala., will
also increase employment by adding 51 new positions.

According to Felker, Avondale’s willingness to invest the expenditures in Alabama are due to
the passage of the Alabama Tort Reform Act of 1999 and the cooperation of governmental entities in
providing tax incentives, which contribute to the feasibility of planned projects.


July 2000

Textile Activity On The Upswing In Europe

Fueled by a 16.9-percent rise in
Europe, worldwide yarn production increased during the fourth quarter 1999 by 4.2 percent compared
to the previous quarter. Asia experienced a 3.4-percent increase, while U.S. production slipped 1.8
percent.

Global fabric output was 3.5 percent higher due to a 12.8-percent upswing in Europe, while
weaving activity in Asia and the United States declined by -0.7 percent and -0.4 percent,
respectively.

On a quarterly basis, yarn inventories grew by 2.8 percent worldwide. During the preceding
12 months, a 6.2- percent reduction in European stocks was more than offset by a 7.5-percent
buildup in Asia, resulting in a 1.7-percent increase overall.

Fabric inventories continued to decline for the fourth consecutive quarter, with a drop in
Europe of 2.0 percent and in Asia of 0.8 percent, for an overall decline of 0.9 percent. Compared
to the corresponding period in 1998, global fabric inventories fell by 14.3 percent, with U.S.
production falling by 29.4 percent and European by 14.6 percent. Asian inventories increased by 1.0
percent.

The European index for outstanding yarn orders improved 8.5 percent during 1999.

On a quarterly basis, outstanding fabric orders fell by 1.0 percent in Europe and 3.4
percent in the United States. Compared to the corresponding period in 1998, order levels were up
4.9 percent in Europe, but declined in the United States 14.8 percent.


July 2000

VF Corp. Installs SAP Apparel Footwear Solution

VF Corp., Greensboro, N.C., announced
that it has successfully implemented the first phase of the SAP Apparel Footwear Solution (AFS) in
its domestic jeanswear operation.

AFS is a comprehensive industry-specific enterprise resource planning (ERP) solution that
simplifies the way companies plan, process, track and ship products.

SAP AFS controls the systems that comprise the informational backbone of the supply chain.
The procurement, materials management, production planning and finance components of SAP went
“live” in February in VF’s Jeanswear coalition, marking the first successful large-scale
implementation of an apparel-specific SAP solution.

“Three years ago, we identified SAP as a partner who could help us design a real time
interactive supply chain solution specific to our needs as an apparel manufacturer,” said Mackey
McDonald, VF chairman and CEO. “Now, with their help, we have been able to create a world-class ERP
platform that will streamline our internal ordering, tracking, shipment and goods fulfillment, and
achieve operational efficiencies throughout our system.”


July 2000

Lectra Tecmath To Offer Body Measurement Solutions

Lectra Systèmes, Paris, and
Germany-based Tecmath have signed a letter of intent to enter into an exclusive partnership to
develop and market integrated body measurement solutions for mass customization under the
Lectra-Tecmath Body Measurement Technology brand.

The combination of body measurement solutions with CAD/CAM virtual reality and Internet
technologies opens doors to the new economy. For apparel retailers, pre-order risk and inventory
costs are eliminated, and they can provide custom-made garments and establish close relationships
with their customers. Manufacturers reduce investment and inventory risk by producing on-demand.

Designers can offer a larger variety of styles and combinations. And information on customer
preferences becomes vertically available in the entire textile chain.

Lectra will market, sell and service the integrated solutions on an exclusive basis
worldwide, while Lectra and Tecmath will both market, sell and service the Tecmath body measurement
solutions in Germany and the Benelux.


July 2000

WestPoint Stevens Terminates Recapitalization Plan

The Board of Directors of WestPoint
Stevens Inc., West Point, Ga., has terminated its plan of recapitalization approved by the company
in March 2000. Due to a significantly higher cost of debt financing, the principal new equity
investor withdrew its investment commitment.

“I and the rest of our management team are optimistic about the company’s prospects for
substantial sales and earnings growth over the next few years,” said Holcombe T. Green Jr.,
chairman and CEO, WestPoint Stevens. The Board also voted to cease the company’s exploration of
strategic alternatives, which included a sale, merger or recapitalization, that the company
announced in November 1999.

The Board declared the company’s regular dividend of $0.02 per share, as well as a special
dividend of $2.00 per share, both payable on June 1, 2000, to stockholders of record on May 29,
2000. The Board also approved the resumption of WestPoint Stevens’ open market share repurchase
program, with authorization to purchase up to 3.9 million company shares.


July 2000

Increased Consumer Spending, Surge In Business Investment Fuel Continued Expansion


T
 he U.S. economy is still running strong as it enters the tenth year of expansion. Real
GDP grew in the first quarter at an annual rate of 5.4 percent on top of the blistering 7.3-percent
gain in the fourth quarter.

Consumer expenditures shot up 8.3 percent at an annual rate, after rising 5.9 percent in the
fourth quarter. Business fixed investment shot up 21.2 percent, following a modest 2.9-percent
increase the previous quarter. Investment in business equipment and software surged 23.7 percent,
while spending on residential structures rose 13.4 percent. Only inventory investment was sharply
down in the first quarter, which subtracted 1.4 percentage points from GDP growth.

The latest reports indicate that the U.S. economy, with part of the first-quarter strength
arising from a mild winter coupled with the latest increase in interest rates by one-half of a
percentage point in the second quarter, can be expected to slow down. This would come as a welcome
development in light of the Federal Reserve’s concern about inflationary pressures. Nevertheless,
another rate hike is likely to occur in early July.

The producer price index for finished goods declined 0.3 percent in April, after rising by
1.0 percent in March and February. The decline was due to a sharp 4.1-percent drop in energy
prices, which rose 5.8 percent in March and 5.2 percent in February.

Consumer prices were flat in April after surging 0.7 percent in March and 0.5 percent in
February. The core inflation was up 0.2 percent.


Industrial Production Picks Up The Pace; Business Sales Surge


Industrial production has picked up speed in the last two months after slowing down in
February. Output grew 0.9 percent in April and gained 0.7 percent in March. This was the strongest
gain since August 1998.

Factory output also rose 0.8 percent with most industries registering gains. Utility output
rebounded 2.8 percent.

Housing starts bounced up 2.8 percent in April to an annual rate of 1.663 million, partially
offsetting the 11.2-percent drop in March.

Construction of single-family homes edged up 0.3 percent to 1.329 million. Multifamily units
rebounded 14.0 percent to 0.334 million after taking a 41.2-percent dive in March.

Housing construction was 6.5 percent stronger than last year, but the rise in interest rates
will bring new construction down.

The U.S. trade deficit widened in March to a record $30.18 billion, up from $28.71 billion
in February. Exports rose 2.9 percent led by capital goods and industrial supplies, while imports
rose 3.4 percent as oil prices surged.

Business sales surged 1.2 percent in March after rising 0.4 percent in February. Meanwhile,
inventories grew 0.3 percent. As a result, the inventories-to-sales ratio slipped to 1.31 from 1.32
before.


Greige Fabric Prices Rebound;  Finished Fabrics, Synthetic
Fibers Prices Advance


Results for textiles and apparel were mixed. Textile output edged up 0.1 percent in April
following a strong 1.2 percent gain in March. The operating rate for textiles mirrored the output
pattern, staying flat at 84.3 percent.

Sales by textile manufacturers took a 1.2-percent dive in March, while inventories rose 0.6
percent. Thus, the inventory-to-sales ratio climbed to 1.57 from 1.54 in February.

The industry’s payrolls slipped 0.1 percent in April. The volatile jobless rate for textile
mill workers came down to 5.4 percent from 6.0 percent in March.

Retail sales fell 0.2 percent in April after rising 0.5 percent in March. Furniture stores
took in 0.3 percent more than the month before. Apparel and accessory store sales turned down 0.9
percent in April after surging 1.6 percent in March.

Producer prices of textiles and apparel rebounded 0.2 percent in April to erase a
0.2-percent decline in March. Prices rebounded 1.6 percent for greige fabrics, advanced 0.8 percent
for finished fabrics and moved up 0.7 percent for synthetic fibers.

Prices were unchanged for processed yarns and threads, and for home furnishings.



June 2000

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