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Yarn Market
Jim Phillips, Contributing Editor

Export Strategy Positions Spinners To Thrive

By Jim Phillips, Contributing Editor

T imes change, and with its passing some old friends succumb to its various challenges. In the textile industry, a companys viability is incumbent upon its willingness to adapt to market challenges.

For this month's Yarn Market, calls were made to some old spinning friends. Sadly, many of those companies are no longer in business. Its easy to point at the current trade situation as the cause for almost all demise within the industry, but this is not the case. Many companies fail because they are static too set in their ways to change or too slow to recognize and respond to changes in the market.

The good news is that those who have adapted to the changing needs of the global marketplace are weathering the storm and emerging as strong players. This month, TW talked to several spinners that have responded to the changing needs of what can at times be a rather fickle consumer market. The common thread that emerged from conversations is that those spinners with an aggressive export strategy are positioned to thrive. Those that do not have the resources or desire for geographic diversity seem to have a harder time.

Going Full Blast
"Were going flat out," said one South Carolina spinner. With both ring and open-end (OE) production going full blast, and prices remaining stable, this spinner sees no end in sight. "Orders look good and have ever since the last part of last year. We've been running full-tilt since Christmas."

Indeed, demand seems high for ring and OE cotton, and for cotton blends both aimed primarily at the apparel market.

"We're exporting a whole lot of product right now," said another ring spinner. "Were exporting mostly to Central America and can sell it just about as fast as we make it."

Said a low-country ring-spinner: "Exports make up a significant portion of our total business volume, and we expect demand for cotton to continue to be strong to the next quarter."

Prices seem relatively stable across the board. "We’re getting about in the mid-$0.80s for 18/1 open-end carded cotton," said one OE spinner. Ring spun carded cotton is going for about $1.68 for 24/1.

In value added, in addition to the current trend for recycled and organic fibers, consumers seem to be taking a particular interest in soft-hand cottons, which is providing a particular boon to properly equipped OE spinners.

Scraping By
"We're scraping by at the moment," said one specialty cotton spinner. "It is certainly not anything to write home about, but were not quite ready to close the doors yet. There just doesnt seem to be anything really exciting happening in our markets."

Projecting out the rest of the year, spinners with healthy production seem confident it would last through at least the third quarter. "Theres no end in sight," said one. "Were selling everything and we have no inventory."

One OE spinner observed that the T-shirt market for his company has been slower than anticipated, but this has been more than offset by an increase in the demand for other apparel yarns. "The nice thing about being relatively small and flexible is the ability to quickly respond and deliver what the customer wants," he said. "Normally, for example, we shut down the operation for a week at Christmastime. This past year, we were able to shut down part of our plant, but had our OE business running throughout the holidays. This schedule has continued right on through the year."

Of primary concern to several spinners was the increasing cost of energy. Just when it seemed some prices have begun to stabilize, theres been a significant increase in energy prices. " This might be bad news for us down the road, if things don’t get back to normal soon," said one spinner. "If we raise prices, we might lose some business. If we dont raise prices, we might see our small margins get even smaller."

Overall, the OE and ring spinners with strong export businesses are optimistic that 2007 will continue to be a strong year. As one spinner said, "You have to go where the customers are." For now, those customers are in Central America and the Caribbean.

May/June 2007

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