We Should Have Been Spinning Steel
James L. Lemons, Ph.D., Technical Editor
The only way to profit from such a fickle environment is to be flexible enough to react more quickly than the competition. As one spinner said, “We have concentrated on developing systems that allow us to deal with small lot sizes and multiple SKUs.” Another spinner pointed to the fact that “ we can pass additional costs to the customer for specialty yarns provided we can turn on a dime.”
Other spinners are concentrating on more traditional approaches to improving profitability, focusing on production costs and raw materials. Labor and energy costs will always be key components in capital budgeting decisions. However, many spinners are now considering “the degree of automation that is profitable, yet still allows some flexibility in product mix.” Other spinners are concentrating on ways to reduce raw material costs. One spinner indicated that “we are trying to more closely match the quality of raw materials to our customers’ specifications — you don’t get a premium for giving more than they paid for.”
Keys To Profitability
In today’s market, quality is a given. However, many spinners are trying to leverage up on their long-term relationships with their customers and their solid commitment to quality. Often, spinners have definable advantages in technology and quality systems that help to build mutual trust. A vice president of manufacturing said, “We know our customers can always find a better price — but we feel that we have competitive advantage due to our commitment to our customers and our consistent ability to meet their needs.”
Most spinners realize they cannot attempt to develop systems that allow for maximum flexibility and at the same time improve productivity. Nor can a spinner concentrate on dramatically improving product quality while simultaneously reducing total costs. Each of these keys to profitability must be examined in terms of how it will afford a spinner a competitive advantage. There is no set formula for success — ultimately, each company must come to terms with which combination of strategies collectively has the biggest impact on the bottom line. As one spinner said, “We are constantly dealing with conflicting goals — it’s a matter of finding out what works and committing to that course of action.”
A World Trade Organization appeals panel has rejected the US appeal of an earlier ruling concerning the implementation of 30-percent duties on imported steel, imposed as part of the steel safeguards that were implemented in March 2002. If the United States does not remove the safeguard duties, the European Union has indicated it would impose tariffs of 8 to 30 percent on US imports, including textile products. President Bush insists the safeguards are necessary to allow our domestic steel producers an opportunity to adjust to increased pressure from cheap foreign imports. Does this sound familiar?
The textile industry has been pleading with Bush to implement the China safeguards for more than two years. It took the Department of Commerce until June 2003 to publish guidelines to apply for safeguards. Petitions were filed in July, only to face a five-month review by the Committee for the Implementation of Textile Agreements. After intense pressure from the textile/fiber coalition, 139 US representatives and 26 senators urged Bush to take action. Finally, the decision was reached in November to implement safeguards regarding the importation of knit fabrics, brassieres and dressing gowns.
There is growing disappointment with the administration seemingly being out of touch with the key issues affecting the textile industry, while thousands of jobs are lost each month. One textile executive said, “All we get is more rhetoric and another wasted trip to China,” referring to recent visits by Secretary of Commerce Donald Evans and US Trade Representative Robert B. Zoellick. Another spinner said, “Our only problem is that we should have been spinning steel.”
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