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Business & Financial
Clarence D. Rogers, Ph.D., Technical Editor

Volume Continues Upward, Margins Tight

Clarence D. Rogers, Ph.D., Technical Editor

T hat seems to be a common theme among most respondents — volume continues to increase, but margins are very tight. “Things are going pretty darn good right now,” said a spinner. “Margins are tough, but that is to be expected. It seems that whenever you have gone through a trough or low in the economic cycle, volume comes back before margins. So I would expect margins to be on the way back, soon. When? I don’t know, but the sooner the better for some of us.”

Another spinner responded, “We are busier than we have been in over a year. But you must remember that we are a different company. We have fewer plants and fewer people; a lot of things have changed. But we are working flat out. Margins are tight. We are trying to cover increases in raw materials cost, so we are getting closer to our asking price.”

Margins are back for some. A yarn buyer said, “I have heard that margins are tight for spinners, but I know that business is very good for some. In fact, it has become so good that two spinners turned down orders during the past couple of weeks. Prices for some of the yarns that I am buying were up 4 to 6 percent in the past few weeks.”

Retailers
We have heard much about the Wal-Mart/KMart mentality in recent months — the way they search the globe looking for the best possible price. Textile manufacturers are quick to say that retailers and their global sourcing is part of the reason for what has happened to the textile industry. These retailers have no loyalty to or for American-made products. And we all agree this is probably true.

This searching the globe for the best possible price is not unique to Wal-Mart and KMart types. It is also a strategy for the privately owned local retailers around the country. A visit was recently made to a favorite retailer that has been in business for many decades.

While shopping and browsing, Yarn Market studied a large number of garment tags. Results of this survey were somewhat surprising. In the menswear area, the line for one of golf’s favorite players was featured.

These beautiful golf shirts ranged in price from $70 to $100. Would you like to guess the country of origin on the label? Well, if you guessed Indonesia, India, the Philippines, Korea or Malaysia you would be right. Put them back!!!

From the Internet — an article about American Airlines indicates the company is getting new uniforms. So, it is only natural to ask, where were these uniforms made? After several calls to various American Airlines offices, Yarn Market found they were “Made in the USA.” Sounds like something positive for American Airlines. Maybe this is an opportunity for the textile industry to support one of its customers — fly American.

Raw Material Prices Moving Up
Quotation for the base quality of cotton (color 41, leaf 4, staple 34, micronaire 3.5 to 3.6 and 4.3 to 4.9, strength 26.5 to 28.4, uniformity 81) in the seven designated markets averaged 33.64 cents per pound — up from the 29.43 cents per pound reported last month, and down from 49.19 reported for the corresponding week a year ago.

Polyester prices moved up to 55 cents per pound (1.5 denier) —up from the 53 cents reported last month and down from the 60 cents reported for the corresponding week last year. Most indications are that fiber demands are increasing. Mills are beginning to show more interest in the 2002 cotton crop, so prices may continue to edge up.

Yarn Price Comparison
Recently, while surfing the Internet, Yarn Market found an article from Pakistan. Listed in a table were prices for carded and combed 100-percent cotton ring-spun (RS) yarns f.o.b. Karachi. A comparison of these prices with U.S. prices shown on the facing page is very interesting.

For 10/1-carded RS 100-percent cotton yarn, the Karachi price is 37 cents per pound less, $0.73 as compared to $1.10. For 24/1 and 30/1 carded RS 100-percent cotton yarns, the Karachi prices are 48 and 50 cents per pound less, respectively. For combed RS 100-percent cotton yarns, the differences are similar.

Shipping would add 5 to 10 cents per pound depending on the size of orders. Why is there such a difference? Cheap labor is one reason.

July 2002

Related Files:
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