Orders Becoming Smaller

he current economic uncertainty has made already nervous retailers even more
inventory-conscious and has resulted in a significant decrease in the volume of orders for

“Orders here are becoming very erratic and short,” said one Georgia specialty spinner. “They
will be quick delivery only. Retailers don’t seem to be interested in filling their stores right
now; they are buying as little as they can.”

Added another: “We’re still running flat out. But our orders are much smaller. Everything we
get is small and quick-turn.”

A North Carolina spinner said: “Uncertainty is something we’re all going to have to deal
with. No doubt, we see much uncertainty in retail. Our customers tell us that retailers are waiting
until absolutely the last minute to place orders. And when they are replenishing, if they sell 10,
they replace five. They have become very careful about managing their inventories – no one wants
anything going forward.

“Frankly, we’re having to take some risks in the credit market we would prefer not to take,
but in order to help keep our customers in business, we don’t have any choice but to do that,” he
added. “Many of our customers are not as strong right now as we would like for them to be. Some of
our customers that have been somewhat marginal have found it very difficult to get their bankers to
work with them. They are not giving any leeway.”

Several spinners expect an upturn in orders shortly after the holidays. Said one: “This year,
especially, I think you are going to see retailers drop their prices to the minimum to clear their
shelves. I anticipate that will result in a sharp increase in orders. But it is likely to be very

Infrastructure Question

One major spinner is increasingly concerned about the vanishing textile infrastructure in the
United States. “Our knitters are gone, our weavers are gone, the apparel manufacturers are gone,
particularly the cut-and-sew. For the few that are left here, they’re doing OK. But I’m hearing
from a lot of companies that were doing business in China who are no longer enamored with that way

of doing business. They might like to source a little closer to home, but they have capacity

Relating to China, one spinner in the upholstery market said he is hearing positive news
about the potential return of substantial upholstery fabric business to the Western Hemisphere. “We
hear over and over that some of the furniture people that have tried to buy fabric and kits in
China are not as happy with it now as they once were.”

Package-Dyed Yarns

It has been no secret that the US package-dyed yarns business has suffered for some time as a
result of overcapacity in the marketplace. “At some point, there had to be some rationalization of
capacity, and that has now happened,” noted one spinner, referring to the recent closings of
Spectrum Yarns, Burke Mills and Grover Industries. “While unfortunate, this may present some
opportunities for those of us who are still in business.”

Election Impact

Several spinners believe the US general election has added to the recent slowing of orders.
“Many companies have been taking a watch and wait approach to business in election years,” said one
spinner. “I believe, regardless of outcome, that there will be some confidence-building going on as
far as consumers are concerned, and they will go out and buy some things.”

Odds And Ends

Following are quotes from spinners in various industry segments:

“The knit outerwear trade has been extremely weak.”

“Our hosiery business continues to hold up fairly well, but a reason for that is that we
don’t deal in commodity socks. We target a price range that’s a little higher.”

“The industrial markets, for industrial upholstery, workstations, office furniture and the
like have been very soft.”

“Most of our orders have been in light counts. We’ve seen very little in heavy counts.”

“Fiber prices are not coming down as quickly as we think they should, especially on acrylic.
It looks to us like the chemical companies have kept the supply tight to keep their margins up.
That’s caused a lot of people to move out of acrylic into polyesters.”

November/December 2008