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Yarn Market
James L. Lemons, Ph.D., Technical Editor

Trouble With Plastic

James L. Lemons, Ph.D., Technical Editor

T he consumer has been the one bright spot in the shrinking economy. However, massive layoffs and dealing with bulging credit card debt are beginning to have their effect. Mills were producing against orders earlier this summer as a result of retailers replenishing inventories. Low interest rates helped to spur consumer spending on new cars and homes. However, it seems the consumer has been tapped out. Data released by the Department of Commerce indicate consumer spending has taken a downturn. Even Wal-Mart has lowered its sales forecasts for the next quarter.

As a spinner explained, “Our business just hit a wall.” Another sales executive said, “There is an awful lot of indecision. There is no clarity as to where our business is headed.” This retreat by the consumer has affected all segments of manufacturing, as reflected by the decline in the Purchasing Managers’ Index for the month of September.

Margins continue to be squeezed by retailers demanding deep price cuts that are ultimately passed on to the spinner. As one textile executive said, “The American consumer wants cheap stuff and they don’t care where it comes from.”

Several spinners reported they were not going to chase unprofitable business and planned to trim some capacity in this quarter. A return to profitability does not seem to be in the cards anytime soon for many spinners.

Report Receives Mixed Reviews
Secretary of Commerce Donald Evans just released a 20-page report to the Congressional Textile Caucus detailing what the Bush administration has been doing to help the industry. The report outlines efforts in a number of areas including trade agreements, market access and compliance.

Spinners gave this report very mixed reviews. The CEO of one company said, “They want a pat on the back for enforcing the rules.” Another spinner complained, “The export markets that have been closed to us are still closed.” Another contended, “This report is nothing but political — how many mills have closed since they started the working group?”

Others were more optimistic. A vice president of manufacturing indicated, “At least this is a beginning.” One executive said, “These commerce officials are meeting with us and listening to us — a big improvement from past administrations.” One executive said, “This is a work in progress — if we want to remain a priority, we’ve got to keep the pressure on them.” Good idea!

Politicians Invited To The Party
September and October have been busy months for textile trade and professional association meetings. A number of these associations have striven to remain nonpolitical in nature. However, a resounding theme at recent meetings includes inviting key politicians at the state and federal levels to attend as special guests or featured speakers.

The industry has long recognized that a central cause of job losses and plant closings has been international trade practices such as currency manipulation and transshipments. The message seems to be reaching members of the legislature and administration that are in a position to help the beleaguered industry.

For example, Grant Aldonas, undersecretary of commerce for international trade, was a speaker at the annual meeting of the American Yarn Spinners Association (AYSA). Aldonas told AYSA members the media has portrayed the textile industry as being practically dead. He said senior Bush administration officials were shocked to learn textiles are still the largest employer in manufacturing. Exposure to the leadership of the industry as a result of this type of meeting has helped Aldonas and his agency realize the importance of textiles to the economy. Several spinners in attendance said they were cautiously optimistic about the future support from the Bush administration as a result of the opportunity to meet with Aldonas.

Many spinners said special attention should be given to members of state legislative delegations at future textile association meetings. Textile-producing states are facing a severe budget crisis. As a result, their legislatures will be looking for additional or new sources of recurring revenue. These politicians must develop legislation to replenish depleted unemployment insurance funds through additional payroll taxes.

As one spinner put it, “For the industry to be heard, now is the time to invite politicians to the party!”

November 2002

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