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Yarn Market
Clarence D. Rogers, Technical Editor

The Challenge - Increase Sales

By Clarence D. Rogers, Technical Editor

C otton prices are down, and they will probably be moving lower before they rise,” was the response from a major supplier. “The reason for this is simply supply and demand. On the supply side, forecasters say that carryover from the new crop will add significantly to domestic and world carryovers. I have never seen as many spinners and weavers who are behind on taking delivery on their contract cotton. Some mills are three months behind. This tells me that sales are not out there.”

A polyester producer said, “No-one is buying our fiber. The picture for our customers is scary, too. Mills have cut back, stopped off or closed plants to reduce inventory and capacity. No one seems to be missing the lost volume by domestic mills. During these times, when domestic mills are making reductions, offshore competitors are coming in, taking away and grabbing market share. This tells us that whatever U.S. mills were selling must have been marginal at best.”

Customer concerns were also on the minds of spinners. One said, “Our main problem is that our customers are having difficult times. They are not selling. Many of them are closing for periods of time or going out of business entirely. We are continuing to work toward producing more specialty yarns and moving away from commodity-type yarns. Commodity yarns are priced low, and we are becoming less and less competitive in that market. In fact, our customers can buy these commodity yarns below our cost.” You can’t do business in these markets for very long.

A spinner said, “Yarn prices are going to get lower before they get higher. There is too much inventory and too much capacity. The Chinese can still lower prices because of
government subsidies. With the deep pockets of the government, they can actually take over a market. We can’t compete against those odds.”

A Reflection

"All is not well. I say so because I think there are problems that loom large on the horizon. The problems that we see are indeed significant - they are complex and they will require the very best that we have to offer, if we are indeed to have successful firms in the year 2000 or the 21st century." These are words from a speech given by a university president to a group of textile manufacturers 15 years ago.

He continued, "I believe that the largest economic event in the history of our world is about to unfold. Not here in the United States, but in the Pacific. The countries that lie in or are bordered by the Pacific will be center stage. Sounds exciting when you begin to ponder what could happen there economically. But the question for us in the textile industry is: Are we ready?"

This statement is rather interesting when we think about the real focus of his presentation. His talk focused with a sense of urgency on leadership, innovation, and creativity in the textile industry.

Today, we see that these Pacific countries have moved quickly from being considered localized, weak, nonexistent competitors to main-stream U.S.A., to center stage in the marketplace - aggressive competitors, using all of their weapons, and driven, along with their goverments, to gain more and more market share.

"China is shipping packaged denim into the United States for near our variable cost," said one weaver. In addition, China seems to have more goods in retail stores than ever before - microfiber, linen, rayon, silk, cotton, blends - and the list goes on. This makes 2005 a real challenge.

The Positive

“We’re running six days,” said a weaver. “I think the reason for this is the fact that we went through this strategic planning a few years back and made some difficult decisions. We run a lot of short lots with polyester yarn, acrylic yarns, cotton yarns and various fiber blends. We are constantly changing to give customers what they want. We are small, but it seems that small companies with a niche are doing okay.”

“We see the markets picking up across the board,” responded a spinner. “Labor Day sales, back-to-school sales, tax rebates, tax cuts and lower interest rates should help retailers, and this, in turn, should help us. The U.S. textile industry must take charge of business at home and do more offshore than ever before. Our challenge is to increase sales, and we know that won’t be easy.”

Markets will improve. When they do, will you be in the hunt?

September 2001

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