From The Editor: Indicators Present A Mixed Picture

By Jim Borneman, Editor In Chief

Interesting trends abound in the U.S. textile industry and in the global economy. Overall manufacturing seems to be improving in the United States, while consumers continue to show
increasing interest in Made in USA products. Pockets of investment in textile plant and equipment continue to make the news.

The season for shows and exhibitions is in full swing and should prove a good indicator for the business climate both in the US and abroad.

For many, however, uncertainty is still a major factor that impedes growth and hiring. The low-growth economy has many looking for new niches and opportunities to enter — a sidestep from their long-term core businesses.

China is changing and in the news. Recently Xinhua News published a review of the East China Fair. It states, “The annual East China Fair, which concluded Tuesday [March 5], received 20,016 overseas customers, 5.3 percent less than last year.

“In terms of exports value, textile and clothing producers saw an even greater decline of 15.7 percent year on year.” ‘China’s trade situation faces very uncertain prospects this year,’ Gu Jun, deputy director of the Shanghai Municipal Commerce Commission, told Xinhua. ‘Many overseas clients were very
cautious and, therefore, purchased less.'”

The review continued, “Many exporters at the fair, a barometer of China’s trade situation, said orders from the United States and Europe slumped an average of 20 to 30 percent from last

There are also questions regarding the potential for a Chinese housing bubble. Construction is a significant part of the employment picture in China, and for Chinese who can afford it, one of very few investment options is to purchase an apartment. Whether a bubble will burst and what the
ramifications would be is anybody’s guess.

On the domestic side, Washington squabbles over spending, taxes and regulation don’t provide any confidence in a better business-government relationship. The effects and possible unintended consequences of the Affordable Care Act are still unknown.

On the financial side, continued quantitative easing and the potential distortions it causes in investment options bring into question the reality of U.S. financial markets. Are record highs
in the Dow Jones Industrial Average the result of a lack of viable investment options owing to quantitative easing, or are market highs a true reflection of value based on record corporate profits?

At this point, tangible investment in plant and equipment as well as merger and acquisition activity in the textile industry might qualify as safe plays.

There is money to be made in textiles. As Forbes recently reported: “Spanish billionaire Amancio Ortega was this year’s biggest winner on the Forbes Billionaires list, jumping two spots to become the 3rd-richest man in the world, with a net worth of $57 billion. His net worth rose more than any billionaire on our list: $19.5 billion, helping push his net worth to record heights. … The son of a railway worker, he founded Inditex [ZARA] with former wife Rosalia Mera, also a billionaire, making lingerie and dressing gowns in their living room.

March/April 2013