Global Goes Local at Showtime
December 21, 2010,
The volatility of pricing, coupled with the availability of production, across all channels of distribution, has created a level of confusion not seen for sometime.
Orders from American customers - either at retail levels or jobber and furniture manufacturing levels - are being refused by suppliers. For those that try to go direct, they most often have less clout in negotiating pricing, availability and other elements.
In many instances, availability is the key point as suppliers have held on to inventories of cotton as well as other commodity products anticipating that pricing will soar even more than it has. The so-called shortage of cotton has led to a demand for polyester to create new blends for home goods as well as apparel. Rayon also has escalated.
Even for companies that produce outside of China, the fiber pricing has been a major - but not sole issue. For many fabric companies, there are challenges in terms of yarn availability and finishing, among other issues.
"It's a speculative environment," said Mike Shelton, president of Valdese. "We're seeing 25 to 30 percent increases in different aspects of the production. But one thing's for sure. We're absolutely not compromising quality."
For Jeff Thomases, ceo of Swavelle/Mill Creek "We see three to six months before prices come back to real levels." The company has negotiated face-to-face with its off-shore suppliers and sees increases at 5 to 10 percent in aggregate after factoring in other elements.
"We have to do things different and smarter," said Rocco Simone, senior vp at Sunbury. He noted that the company that produces only domestically is impacted by the availability of everything from fiber to finishing globally.
Tom Hilb, ceo of Heritage House, noted that pricing especially "is particularly difficult." The range for the company is 5 to 15 percent on all polyester product, and 15 to 30 percent on polyester/cotton with all cotton coming in at 50 to 60 percent more.
Labor costs, refusing orders to renegotiate prices and holding on to inventory at off-shore mills are major factors complicating the situation, said Jim Richman, ceo of Richloom.
For Victor, which is moving away from off-shore production, "we see our strategy as focusing on utilizing our yarn capabilities, and finishing as well as design and weaving," said Jack Eger, vp.