Ross: Going Bananas

ilbur Ross, the man many in the textile industry initially loved, then hated, then loved,
said something the other day that, regardless of your view of his stance on trade policy, was
really noteworthy. Sure, he just consolidated two of the largest traditional names in
textiles – Burlington Industries and Cone Mills – forming a new umbrella company called
International Textile Group (ITG). He washed away more than $1 billion of debt, leaving the new
entity with $75 million in debt against more than $900 million in sales. But that is all in a day’s
work for Mr. Ross.

What is striking is his four-point plan for the new group. The plan includes upgrading
technology and design, achieving lowest-cost-producer status within the hemisphere, and developing
a post-2005 textile strategy. The other leg of the plan is branding. Ross stated, “If Chiquita can
brand a banana, we [ITG] can brand textiles.” This approach rings bells for many in the industry
who are frustrated with the overall lack of such programs from key textile manufacturers and others
throughout the supply chain.

What is odd is that branding has been successful in the past and continues to be so for those
willing to pursue a branding strategy through aggressive marketing. You don’t have to look far to
see how Cotton Incorporated has effectively used marketing strategies to increase US consumers’
preference level for the Seal of Cotton – let alone stir feelings of comfort – heck,
cotton is “The Fabric of Our Lives®.”

Prior to DuPont’s transition to DTI and later INVISTA®, aggressive fiber branding made
Lycra®, Dacron®, Cordura® and numerous other fibers household names. Without continued support, the
brand value of those names – throughout the supply chain – has faded. DAK Americas,
RadiciSpandex, Nylstar, Hyosung and a host of others have made strides to gain share-of-mind in the
gap left in the marketplace. Inter-industry branding campaigns position products, creating
awareness with manufacturers, and moving sales and services teams into “closing and support” rather
than education and awareness.

Does branding pay off? In a cost-focused environment, an investment in marketing that reduces
overall cost of sales really is a no-brainer. Branding inside the supply chain is certainly less
expensive than consumer campaigns. But in an industry that, rightly or wrongly, has focused on
manufacturing muscle, a commitment to marketing needs to be strong enough to weather the storm of
budget cuts. Without a serious commitment, marketing is often the first to go in difficult
times – the opposite of the result in truly brand-focused companies.

It is great news to see textile branding coming to the forefront. One wonders if the
industry’s current crisis would be as deep if members of the supply chain and consumers really had
a higher perceived value of the textile products they consume – let alone an established brand
preference that poses a challenge to the simple price play of a cheaper non-branded product.

Is it a Chiquita or just another banana? Only time will tell.

April 2004