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Yarn Market
Jim Phillips, Contributing Editor

Mid-Year Surprisingly Busy For Some

Jim Phillips, Contributing Editor

S ome open-end specialty spinners are reporting surprisingly good business at mid-year. "It's been great," said one spinner of heathers. "We've been running well all year, better than expected."

Despite this, however, he holds no optimism for the second half of the year. "Quite honestly, I don't know why our business has been so good. It's not what we expected, and we don't really know where it's coming from. With retail flat, we really expected to be struggling a little. If I could point to three or four factors I think have generated our orders so far, I could be a little more positive about the prospects for the rest of the year. But for now, it's an unknown, so I am not expecting much."

Another spinner noted his ring-spun business has been struggling, but open-end has continued to run well. "We've been about where we expected to be so far this year. It's not booming, but it's been very solid. But the second half looks a little iffy at the moment. We're beginning to see less of a backlog on the specialty side of the business. On the commodities side of our business, orders have been slow in coming. And with increasing consumer concerns about the economy, we are not optimistic it will pick up."

Yet another spinner noted that a downward spiral in retail sales has not yet affected his business. "I guess we know it's coming. But we've been fortunate in being able to offer products that allow our customers to differentiate themselves somewhat. In retail today, everyone wants a unique product offering. Target wants to be different from Wal-Mart. Macy's wants to be different from Dillard's. Our apparel customers realize this and are trying to help retailers provide a hook that's unique. Our challenge is to be able to provide some exotic products at a price competitive with Asia. In many cases, they can produce yarn cheaper than we can buy the materials."

Added another spinner: "We've been able to keep busy by continuing to diversify our customer base. Many of our old-time customers no longer exist, so we've had to focus our efforts on finding new ones. We're fortunate in that we have been able to establish a very strong presence in Central America. There are some signs, though, that business is slowing. Some of that can be attributed to seasonal changes, and some of it might be because of inventory buildup in the pipeline.

The Political Factor

Part of the reason spinners are somewhat pessimistic about the last half of the year is the upcoming general election in November. "It's not unusual to see things slow down in the months before a presidential election, especially when a lame duck is in office," said one industry observer. "Consumers become concerned about the direction of the economy under a new administration and begin trying to protect their pocketbook. With housing prices falling drastically, unemployment rising and general uncertainty about the economy, consumers don't know whether a new president's policies will be a blessing or a curse. Often, the more heated things become - like the clashes between senators Clinton and Obama earlier this year - the more tentative people become. They begin holding on to those few discretionary dollars they have."

Added a North Carolina spinner: "I'm sure it has some effect. I know there is some caution out there among retailers. Plus, the impact of higher prices at the pump is affecting every aspect of our lives and is causing the cost of everything to go up. Consumers are scared, and I believe they are justified."

No Gloom And Doom Here

Not every spinner, however, is expecting the bottom to fall out by year's end. "We're selling everything we can make," said a well-known specialty spinner. "We expect business to continue to be strong through the rest of the year. "The keys for us are innovation, communication and delivery. We make a unique product, and we stay in touch with our customers so that we can anticipate and meet their needs. A critical part of our success is lead time. We know we have to get our product to our customer faster than anyone else can. If we fail, someone else can step in. It used to be we talked about quotes and turnarounds in weeks. Now we talk in days. If you are a yarn spinner in the United States, you have to be better than anyone else in the world, not to get the order, but just to be considered."

July/August 2008

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