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Radici Refocuses

American market penetration spurs Somet/Vamatex/Savio merger.

Better BusinessBy Jim Phillips, Executive Editor Radici Refocuses  American market penetration spurs Somet/Vamatex/Savio merger. Consolidations continue to be the wave of the future in the textile industry, as more and more companies concentrate resources to decrease costs and provide maximum benefit to customers.Such mergers and reorganizations are not limited to textile manufacturers, but are becoming more and more common among machinery manufacturers as well. Rieter, it was revealed at press time for TI, is in talks with Suessen. Sulzer is for sale and, by the time this article is published, may have found a new owner. In February, the Italy-based Radici Group announced that it was consolidating three of its flagship companies Somet, Savio and Vamatex under a single umbrella in the North American market. The new company is to be called Promatech. TI visited the companys U.S. headquarters in Spartanburg, S.C., and spoke with the three individuals who will be responsible for the new directions of the combined company in the American marketplace: Danilo Arizzi, chairman; Harold Hoke, CEO; and Nikolaos Perackis, commercial director. Rino Morani continues as commercial director in Italy. 

(left to right): Danilo Arizzi, Nikolaos Perackis and Harold Hoke hope to guide Promatech to a greater American market share. Consolidation Will Increase Chances For SuccessBefore, these entities were separate, even though the ownership was the same, Arizzi said. As long as things were excellent, it seemed that should be the way to do it. But now the world has changed, and you cant continue with old ideas. The future is going to be a challenge. The number of textile manufacturers in the United States is continuing to decrease. We think that, by joining these companies and combining resources, we create a much better opportunity for success.A primary reason we are doing this is for research and development. We previously had two groups doing essentially the same thing developing technologies that increase the productivity of our customers.As well, Arizzi said, the consolidation enables the company to better position itself in the replacement-parts business. Because there is, at times, excess capacity in the market, we were not realizing some of the economies necessary in this segment. With consolidation, we increase both our efficiency and our leverage in containing costs for our customers. As a result, we have improved our service to our customers.The consolidation applies to the weaving products offered by Vamatex and Somet. Overlapping products will be consolidated, and efforts will be directed toward gaining more name recognition in the American marketplace. The inclusion of Savio, as a producer of spinning, winding and twisting machinery, will enable the company to provide more of a systems approach to its marketing efforts. Brand Names Will RemainSomet, Vamatex and Savio will remain as brand names for the new company in order to maintain the brand equity that has been built over the years, Arizzi said. There is a history behind these names a reputation and a value for these brand names that we want to maintain.The company, in its various incarnations, has made tremendous progress in developing markets for its flagship product lines. The Vamatex Leonardo series has garnered a substantial share of the rapier market (See In The Loop, ATI, February 2001), while Somets Mythos, introduced in 2000, represents a foray into the high-performance air-jet arena. 
We anticipate that the consolidation of resources under the Promatech name will accelerate our already active development program, said Perackis. This will enable us to add one plus one and equal two-point-something, he said. This is our goal.Added Hoke: If you look at the worldwide market for looms, its about 50/50 for air-jets and rapiers, he said. Of the 50 percent of rapiers, Somet and Vamatex account for over half of that market. This goes to show that there is a lot of synergy there that there are a lot of points in which Somet and Vamatex dont compete. Each company has specific niches that they do very, very well in. While there is some overlapping, there are a lot more areas in which they do not overlap. Its a very nice merger. It spreads our market capabilities out through the whole line.Promatech sold more than 5,000 rapier machines in 2000. Somet sold almost 1,000 of its Mythos model in the products inaugural year.The production of high-technology rapier machines by Somet and Vamatex is more than the combined production of all other manufacturers in high-technology rapier machines, Arizzi said.But, despite the worldwide success of the products, both Vamatex and Somet suffer from name-recognition problems in the North American market. This is part of what the Radici Group hopes to address through the creation of Promatech.In the United States, we are perceived as a small company, Hoke said. Some of our competitors who are perceived as bigger than we are Dornier, for example are actually much smaller. But, the average rapier user in the United States would think just the opposite. In Mexico and south of the border, Vamatex and Somet are considered the leaders. Diversification, Innovation Must ContinueHoke is a big believer that U.S. manufacturers must continue to diversify and innovate in order to compete successfully in a global market. The creation of Promatech will help them to do just that, he said.I was with a customer just recently who talked about spinning and weaving yarns that, 10 years ago, he didnt even know would exist crazy combinations of fibers, counts and plies and so on. Combinations of woven fabrics and styles, pick densities and new applications. What weve found is, in the past, the United States has purchased machines with the leading criterion being flexibility. In reality, they didnt innovate; they ran the same fabrics they had been running for years on these flexible machines. Its like the American market planned for flexibility, but never reached it and then sacrificed 10- to 20-percent productivity to attain nothing. So instead of buying Somet and Vamatex, where the productivity is so high and can run 90 to 95 percent of the yarns capable of being run on a rapier, they would make a buying decision to sacrifice the productivity of the 95 percent for the 5 percent. For the first time, you are seeing Americans think about that about what the productivity increase could mean. They can move in a small number of looms of other types to handle the 5 percent that we cant.Once that transition takes place, Hoke predicts Promatech will become a dominant player in the United States, just like we are in the rest of the world.Hoke said demand last year for Promatechs looms in the United States exceeded expectations. I was thinking that there would be about 1,000 or 1,100 looms sold, but it turned out to be about 1,450. About 20 percent of that was the rapier business. With the introduction of Mythos and our established rapier presence, I think this puts us in very good shape for the future. April 2001