Rising Costs a Concern For Bath Textiles Suppliers
December 11, 2010,
NEW YORK - The bath segment of the home textiles industry grappling with a double whammy.
Cotton price hikes are said to have reached a 15-year high as Pakistan reels from devastating floods and China tries to overcome a drought that together have plagued key global cotton sources. And a rubber shortage similarly prompted by heavy rains and floods in the rubber- growing regions of Thailand and Indonesia is poised to impact bath rug suppliers and manufacturers who rely on the rubber component of latex for the non-skid rug backing of their rug products.
Cobra by Espalma
He said that as a result, "there is no question" rug prices are going up, too. "The cost of making rugs and the cost of selling them is going up."
Like his competitors, Maples expects "tremendous resistance" from retailers to price increases. But, he warned, "It has to happen because this is too much. The manufacturers just cannot absorb this much."
Mohawk Home's Bart Hill, general manager, shares Maples' concerns.
"The natural rubber component of our latex backing is at an all-time high, and I'm talking big time increases," he said.
While cotton comprises about 20% of Mohawk Home's bath rug business, "all of our bath rugs have latex. The backing piece has affected us more than the fiber piece. And that is what is really going to be impactful to us at the end of this year and next year."
Cotton, however, comprises the bulk of the business, if not all, for many other bath companies that produce towels, like Loftex, Revere Mills, Trident and Espalma by Cobra - all of whom offered HTT their respective concerns and estimations of how the cotton shortage and resulting skyrocketing prices for it will affect business.
Loftex USA is in a "wait-and-see" mode, struggling to aptly quote customers with the right price for product.
"The cost of cotton is the highest since I started in the business. We are on a wait-and-see at the moment as it is becoming increasingly hard to quote on new programs with this constantly rising target," said Gretchen Dale, coo.
Making the hurdle harder to overcome, she said, is that it is "compounded by many other factors as well," such as increased labor costs and rapidly escalating freight rates.
"There are no clear answers as to when all this will level out, but we have to be a lot smarter in how we spec and construct goods with this burden heavy on our heads," Dale continued. "I would love to tell you we have an answer, but we don't. It is more a wait-and-see at the moment."
John Vanden Berge, ceo of Des Plaines, Ill.-based Revere Mill International Group, also cited the disparity between daily price increases on cotton against lead times as a problem.
"Cotton prices continue to rise with the market changing every day, so you think about the lead times we work with," he said. "Between the time a customer decides to make a purchase and the time the order arrives, there are five to six months. If you think about when people were making their purchasing decisions six months ago and cotton prices today, it's ridiculous."
Joanne Krakowski, the New York-based U.S. sales and marketing manager of Abhishek Industries LTD.: The Trident Group, said her company is "working with our customers by apprising them on the situation so that through partnership we both arrive at a win-win situation."
Additionally, Trident's product development team is working on alternative product offerings "to the current products, and also are priced competitively," she said, and the company is reexamining at its supply chain "to find opportunities for improvement."
Revere Mills International Group has been successful "most of the time, in different situations" in raising its prices to retailers, and "I would think everyone would have to be," said Vanden Berge.
But what has been harder is developing a bath towel that uses different blended yarns to reduce the cotton content and ultimately keep the price down.
- GRETCHEN DALE, Loftex USA
Demand is the other concern bath towel companies need to consider, not only when competing against each other for cotton but especially when they have to fight for it against the apparel industry, Vanden Berge said.
"We need to remember that apparel manufacturers are also affected by this cotton increase," he said. "With jeans, t-shirts, [and] underwear, manufacturers have the ability, it appears, to turn to blended fabrics more easily than towel manufacturers like us because [blended fabrics] are accepted in the garment world. But at the same time, apparel requires the use of a lot more labor in the product, allowing apparel manufacturers to pay a little more for cotton. So guess where the cotton is going to go when it starts to become available?"
Espalma by Cobra's president and managing director, Kurt Hamburger, said "certain importers may have had a built up inventory and choose to sell that inventory at prices based upon their ownership." He called this "short-term solutions."
He added that some retailers "are hunting for these bargains now but they will be shortly exhausted."
Ultimately, Hamburger said bath suppliers must raise prices modestly. Should customers "rebel," he said, "we will do less volume but we will not go out of business by selling goods below cost."
Town and Country, which offers bath coordinate products in its mix, is also wrestling with higher raw material costs. Neil Mandell, chief merchandising officer, said the company still doesn't know "how receptive retailers are [to the price increases] because we are still in ordering process." But he does suspect retailers are looking at cutting back on orders in general - "they are not ordering as much as maybe they should have and instead are just covering themselves until hopefully the price of cotton comes down."