Here Comes More Business – And More Capacity
April 26, 2010,
As the clouds begin to part and we get a clearer picture of the horizon, some international manufacturers are feeling confident enough to begin investing in their infrastructures again.
Alok: Doubling towel capacity, growing bedding capacity and constructing “one of the largest weaving sheds under one roof.”
Al-Abid: Recently boosted capacity by 20%. Adding cut and sew as well as dyeing.
Trident India: A major expansion in towel production as well as expanding yarn facilities.
Crescent Textile Mills Ltd.: Sewing capacities being boosted 10% to 15%.
Towellers: Adding more capacity in bath.
Kam International: Recently added a new dyeing range, flat panel printing and enhanced cut and sew capacities.
Welspun: Not adding capacities per se, but recalibrating machines and processes to pump capacity release by 20% to 25% for sheets, towels and bath rugs.
In many instances ramping up not just for the U.S. market, although the direct-to-megaretailer model continues apace. Consumption in China and India continues to expand. Brazil is booming, and several manufacturers have set their sights on Latin America as a whole. Others are eyeing Australia, South Africa and Scandinavian countries. Russia, depending on who's doing the talking, offers solid opportunity or is still too much of a pain to bother with. Turkey gets a nod here and there, as does the Middle East.
All good. When supply goes in search of demand you have to find some more baskets for all those additional eggs your new chickens are pumping out.
One hopes there is enough business to be found in Brazil, India, Asia, Russia and elsewhere to absorb them. This is an industry with a seemingly endless ability to drive itself into a tree. We all saw how the mega-mill scenario played out in the United States. It would be shame to replicate it on a global scale.
It should be noted that not every mill I surveyed on this question is adding capacity. Many — about half — are standing pat and waiting for consumer demand to develop a stronger pulse. You could make a sound argument for either strategy: Prepare ahead of time for when it happens or, conversely, don't get too far ahead of the market.
Ultimately, the lesson is the same as it ever was: More is more.