F
or years we heard “If it ain’t broke, don’t fix it” from managers and, in fact, from most
people working in textile manufacturing. This attitude might seem all right when things are going
well and there is not much to worry about. Costs are in line, revenues are increasing, margins are
good. Not much to worry about, and it’s easy to get comfortable.
But with plants closing and business almost at a standstill, one wonders, “What went wrong?”
or “Why are things like they are?” Could it be that the old “If it ain’t broke, don’t fix it”
mentality contributed to the present state of business in the global marketplace?
Too Comfortable?
Hindsight is always much better than foresight, so one can probably say that it did contribute,
somewhat, to where the industry is today. When comfortable, it is easy to accept the “If it ain’t
broke, don’t fix it” philosophy. Keep trucking along, doing as always, don’t change it. But this
attitude is very dangerous.
Not only is it dangerous for spinners, knitters and weavers, it is dangerous in other
industries as well — steel, automotive, machinery, computers and, more recently, airport security.
It is dangerous because if you are comfortable, operate at the same level or stay where you are for
very long, losing is a near certainty. Competitors are smart. They will catch up. They may get
ahead, and catching up or regaining market share will be difficult.
So, if it ain’t broke, maybe you should break it and work like heck to make it better.
Cotton Prices Move Lower
Demand for U.S. cotton continues to be weak. Quotations for the base grade in the seven
designated markets averaged 32.71 cents per pound. A cotton supplier said, “Cotton prices will
continue to move a little lower. I expect this even though supply might be lower than earlier
estimates. Demand is soft. Many mills are trying to delay shipments of 2000 crop cotton, and a few
mills have cancelled some shipments. This really causes me a problem. On the other hand, a few
mills have fixed some cotton at 33 to 34 cents. So someone thinks that cotton prices are near the
bottom.”
Horizontal Integration Helps Shippers
It seems that many companies are moving from vertical integration (doing everything — yarn
manufacturing through product formation) to a more horizontal organization (doing only certain
things — spinning or weaving or knitting, etc.). During the past several months, the Yarn Market
has observed more and more of this change in company structure.
A weaver responded, “We are doing pretty well, better than most in our business. A couple of
keys are that our inventory is under control and we have very little debt.” When asked about
purchasing yarn, he said, “We look at cost. If it is more cost-effective to buy yarn, we will buy
yarn. We used to be vertically integrated, and today we are buying a lot of yarn and making less
in-house.”
Another weaver recently said, “Our business is going very well. We’re in several markets, and
our customers are doing okay. We recently purchased a plant that complements our business. Plans
are to bring this plant up to ‘state-of-the-art.’ Our investment strategies will determine the most
cost-effective way to do this. We’ll take a look at everything — opening room, card room, spinning
room, weave room, etc.
These areas and all options will be considered — including buying yarn. The goal is to make
money. Thus, the investment strategy directs you to put your money in areas that contribute most to
the bottom line. And that may lead us to buying yarn.”
A spinner said, “I’m glad this is happening.” I would be too. But spinners, beware, you had
better break it and fix it to improve it because your customers are doing and will continue to do
what is necessary to lower costs — including shopping offshore.
Feedback Welcomed
The Yarn Market welcomes your input. Call (864) 656-5962 or e-mail editor@textileindustries.com.
Your input is valued, and it will be addressed.
November 2001
