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Sourcers dodge hurdles, pick up the pace

The past 12 months have thrown one monkey wrench after another into the global supply network — the fall 2002 dock strike at West Coast ports, the spring 2003 SARS crisis in China, the weakened value of the U.S. dollar, and most recently, the demands to fulfill nearly $1 billion in wholesale business that had previously been done by Pillowtex.

HTT interviewed players on both sides of the sourcing process to determine how the events have impacted their thinking, and what the fallout may portend for the future.

Trident India

P.K. Markanday, managing director

"The Pillowtex break up will have a major impact on the global home textiles industry. Bath towel manufacturers across the globe will have to fill up the production gap, and it is a big gap.

"Some of the relocated business has already come to us. We are in touch with at least three more large retailers for big volumes for the next year. The biggest problem today is to meet the requirement for urgent shipments from the retailers."

Ehrlich, Gress & Co.

Scott Gress, U.S. rep, Kohinoor

"The decline of the dollar has unquestionably taken a toll on the margins of foreign suppliers at a time when margins are all too slim to begin with. Countries that have historically depended on their currency devaluing against the dollar now have a new cost matrix to consider. Countries that are intrinsically uncompetitive have been temporarily competitive based solely on their currencies' relationship with the dollar."

Bardwil Linens

Nancy Kristoff, president, sales and marketing

"I did not see a negative impact on the company with the SARS scare. In fact [some of our staff] were overseas during the height of it and got a tremendous amount of work accomplished as a result of no one else being overseas. Although most stores banned travel during the first half of the year, I think most are allowing travel once again."

Town and Country Living

David Beyda, chairman

"Our people didn't travel overseas during the SARS scare. We have offices there, and we recently opened one in Shanghai, so that helped us manage. We also managed to avert most of the issues related to the dock strikes."

Elrene Home Fashions

Mark Siegel, president and ceo

"Our import business is up 3.5 million. So far, all of our overseas commitments are on schedule. However, we are working earlier on all of our new product to give our vendors more time to execute properly. That's the only area where we felt SARS affected our business."

Avonhome

George Kouri Jr., president

"I just returned for the first time from China since my last trip in late January. I think the SARS situation for now is calmed down quite a bit. [But] the weak U.S. dollar and political instability are certainly a concern."

Welspun

Rajesh Mandewewala, executive director

"The weakening of the U.S. dollar has certainly had far-reaching impact on global trade, including home textiles. The price realization for countries exporting to the U.S. dipped in local currencies. Costs have not proportionately reduced. This has resulted into squeezed margins for exporters into the USA."

Haywin Home Fashions

Gregg Haft, president

"Political volatility in sourcing countries, a weak U.S. dollar and a shaky domestic economy have all made things very difficult this year and last. We've all been in a wait-and-see mode lately and are hopeful that fourth quarter will be a lot better than the rest of the year has been."

CHF Industries

Frank Foley, president

"This is just business. There is no more risk, down side or competitive disadvantage that is associated with international trade than there is with doing business here in the U.S.

"SARS was an inconvenience; the weak U.S. dollar has also been an inconvenience. All of it has made travel a lot more expensive, but they've had a minimal impact on global sourcing.

"The shaky U.S. economy has been a wonderful opportunity for companies looking to grow and expand their product lines because a lot of business is up for grabs. The greatest challenge the home textiles industry faces is the erosion of the retail and supplier base and the consequence this all has on the consumer."

Hollander Home Fashions

Sandy McNeil, svp, fashion bedding

"The dock strike caused some delays, but nothing I would say was extreme. We had a few patterns delayed, but our retailers were very understanding, with few exceptions. Everyone was in the same position. One of the positive results of retailers direct sourcing is that we now share the same challenges, which I think ultimately will cause the retailers to rethink their philosophy."

Divatex

Avi Gross, president

"I think China is more problematic than all of the other issues. They have an unbelievable economy. As things get privatized there and the demand keeps growing, prices will go up, and China will be exporting less to the U.S. because they will need to keep more and more of their products at home.

"Political volatility has been adding about 20 days to the shipping time because fewer people are traveling and turnaround times have gotten delayed. People have been adding a bigger cushion to their traveling time."

U.S.-based importers*
Sheets $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
Source: HTT Research
1. Springs, Fort Mill, SC $110 $90 22.2%
Softness in the first half of 2002 caused Springs' import volume to decrease that year. Despite a soft first half of 2003, Springs picked up share.
2. Divatex, New York, NY $75 $56 33.9%
The company has experienced growth in the last two years and has opened a new office in Pakistan in 2002, to add to its roster of overseas offices in Israel, Portugal, Turkey and India.
3. WestPoint Stevens, WestPoint, GA $51 $55 -7.2%
Cash-strapped and now in chapter 11, WestPoint Stevens still lacks the financial resources to form joint ventures abroad. At the same time, with its streamlined plants, WestPoint Stevens remains the low-cost U.S. sheet provider.
4. American Pacific, San Francisco $28.2 $30 -6%
In line with weak retail sales throughout 2003, American Pacific's sheet imports followed a drop in top-line sales.
5. Haywin Home Fashions, New York, NY $17.5 $17.5 0%
The company has staffed up in terms of global distribution by adding eight factories to its supply base in the Far East since 2002. Haywin also currently produces large volume of its product in Mexico.


Exporters to U.S.
Sheets $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
Source: HTT Research
1. Bombay Dyeing, Mumbai, India $39.9 $37 8%
Like other Indian companies of its size and diversity, Bombay Dyeing has been searching for new growth venues for its key home textiles categories, such as sheets, in a challenging economic and competitive environment.
2. Nishat Mills, Karachi, Pakistan $34.7 $33 5%
Nishat Mills remains one of Pakistan's largest enterprises and leading exporters.
3. Coteminas, Sao Paulo, Brazil $30 $18 65%
Brazilian manufacturer Coteminas has been busy broadening its U.S. presence across the board, but most notably with alliances with Springs Industries.
4. Pac-Fung, Hong Kong $20.3 $15 35%
Pac-Fung is already ahead of the pack in leading other firms from China into the global marketplace. It's established close relationships with a number of U.S. suppliers and retailers.
5. Kucukcalik, Istanbul, Turkey $13.1 $11 19%
Kucukcalik continues to see huge potential in its export business in home textiles, at the same time pushing other segments, such as apparel.


U.S.-based importers*
Bath towels (does not include kitchen towels, dish cloths, or beach) $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
Source: HTT Research
1. Springs Ind., Fort Mill, SC $125 $85 47%
Springs' longterm strategic alliance with Brazilian towel manufacturer Coteminas allowed the mill to further expand its imported offerings with new constructions, designs and programs for multiple levels of retail. Springs also expanded relationships with other overseas vendors worldwide for bath towel production.
2. J.R. United, Miami, FL $58 $49.5 17%
The company's sister company International Terry Products purchased defunct Davidson Cotton's embroidery and embellishment factory in Mexico, allowing it to expand product offerings and step up price points. Also, J.R. United gained Izod and Umbra license programs and entered a new retail tier — specialty and department stores.
3. Terrisol Corp., New York, NY $32.6 $32.3 0.9%
Terrisol, the U.S. subsidiary of Brazilian-based Karsten, has spent the past six months undergoing a restructuring effort to expand its U.S. marketing and sales operations and has appointed a new marketing manager and a chief marketing officer. Company also expanded programs to include more upscale bath towel offerings and a juvenile bath towel collection.
4. Espalma/Cobra Trading, New York, NY $22 $22 0%
Lost some business with some department stores but offset it with gains of business with new retail partners, primarily catalogs and specialty chains. Also, the company expanded exclusive programs for specific retail partners.


Exporters to U.S.
Bath towels (does not include kitchen towels, dish cloths, or beach) $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
Source: HTT Research
1. Abhishek Industries (Trident), Mumbai, India $48.7 $28.2 63%
Expansion of its terry towel business while simultaneously increasing its global business is a core value in the company's business plan. This year it's adding another 100 looms toward that end. Just as important, it's emphasizing the need to add capacity for quick response, short runs, product uniformity and sharper pricing.
2. Welspun India, Mumbai, India $39.0* $33.7 16%
After several tough years during which Welspun USA broke off into a separate division, Welspun India is poised to resume a more aggressive growth posture.
3. Bombay Dyeing, Mumbai, India $18.6 $16 16%
Fighting back from several market share losing years, Bombay Dyeing last year may have turned the corner to growth once again. Towels remain an important category.
4. Afroze Textile Inds, Karachi, Pakistan $13.8 $13 6%
Afroze's export strategy remains centered on establishing alliances permitting it to remain focused on its core competencies.
5. Anyang Qinglong Towel Co. Ltd., Anyang, Henan, China $12 $9 34%
Supported by a sizable infrastructure, Qinglong Towel has attracted a number of key U.S. customers, including Wal-Mart, according to the company. The U.S. is its primary export market.


U.S.-based importers
Comforter shells $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
Source: HTT Research
1. Pacific Coast Feather, San Francisco $38 $35 8.6%
Rapidly building its own internal sales over the past several years, Pacific Coast Feather has started to pick up business from the former Pillowtex.
2. American Pacific $32 $34 -5.9%
American Pacific aggressively sources abroad, after opening offices in China, Pakistan, India, Hong Kong, Turkey and Mexico. But top-line sales were off this year in lock step with a broad-based slowdown at retail.
3. WestPoint Stevens, WestPoint, GA $24 $23 4.3%
WestPoint stepped up its sourcing as it expanded its own proprietary basic bedding business and then layers on the Ralph Lauren licensed business.
4. Hollander Home Fashions, New York $23 $21 9.5%
Depending on the quality involved, comforter shells can easily exceed more than 20 percent of the cost of a down comforter, according to Leo Hollander, chairman, of a company which adds Pillowtex sales to its own this year.
5. Down Lite International, Loveland, OH $15 $15 0.0%
Down Lite continues to build its core product line, this year adding a new Biltmore Estate license to its line-up of top-tier products.


Exporters to U.S.
Comforter shells $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
Source: HTT Research
1. Pak-Fung Feather Co Ltd, Hong Kong $56.3 $45 25%
Pak-Fung continues to show the way toward the global market, already positioned nicely with major U.S. retailers and large suppliers.
2. Bombay Dyeing, Mumbai, India $13.2 $12 10%
Once carried by economic and political forces outside its control, Bombay Dyeing continues to show itself as a leader in this category.
3. Nishat Mills, Karachi, Pakistan $12.3 $11 17%
Nishat continues to see unending opportunity in the emerging marketplace, at the same time aggressively preparing for the insurgence of the Chinese.
4. Nanjing Meihua Feather & Down, Nanjing, China $4.5 $3.7 20%
Meihua is telling a quality, reliability and customer service story with sharpened focus, along with a continually broadening product base.
5. Towellers Ltd., Karachi, Pakistan $2.8 $1.7 65%
Towellers' continuing plan focuses around establishing strategic alliances with U.S. suppliers, offering its cost effective manufacturing in exchange for market savvy and the entrée U.S. firms can bring.


U.S.-based importers
Window treatments (finished goods only) $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
Source: HTT Research
1. CHF Ind., New York, NY $135 $102 32%
CHF attributed its growth to its continuing effort to develop better, more unique product. In addition, its new Peri window hardware line has started to ship. Though the company imports from 10 countries, it has seen more growth in China.
2. Springs Ind., Fort Mill, SC $113 $125 -9.6 %
Now that more than a year has passed since Springs acquired Burlington, virtually its entire window business is made in Mexico and China. Much of the fabric is woven in the U.S., however, before it is sent and finished in Mexico.
3. S. Lichtenberg, New York, NY $97 $97 n/a
While goods coming in from China and Turkey used to be neck to neck for the company, China is now the lead sourcing country. France is also a sourcing country, and it's also seen a slight increase in goods because of an expanding product line.
4. Regal, New York, NY $45 $40 13%
This home fashions business, which began about 17 years ago, has been a quiet player in the window import industry. The company imports from China, Turkey, Columbia and Portugal. It's finding that China is a growing area of business.
5. Croscill, New York, NY $34 $32 6%
Croscill recently hired two people to handle its global sourcing - David Halley and Stephen Abramowitz — part of a growing emphasis at the company.


Exporters to U.S.
Window treatments (finished goods only) $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
Source: HTT Research
1. Ulusoy Tekstil, Istanbul, Turkey $10.4 $8.5 22%
Turkish companies like Ulusoy still largely influence the window treatments market. For Ulusoy, U.S. sales are still a small part of its total export business.
2. Shaoxing Bolan Home Textiles, Shaoxing, China $9 $5.8 55%
Since its founding in 1997, Bolan has quietly targeted the U.S. as a key export destination, while developing into a $20 million company. Along the way it's won the attention of at least one key customer — Wal-Mart.
3. Kucukcalik, Bursa, Turkey $8.5 $6.8 26%
Window treatments are a core business for this company, which operates four factories producing home textiles and apparel.
4. Chenab Group Ltd., Faiselabad, Pakistan $5.8 $5 15%
Chenab's senior management has consistently been one of the leading proponents of government policies to encourage greater exports and its own business reflects that philosophy. The company's product lines and interests are diverse.
5. Shaoxing Heng Feng Curtain Factory, Shaoxing, China $5.4 $3 80%
Laying claim as one of the largest manufacturers in China, Heng Feng continues to actively expand its global presence.


U.S.-based importers
Table linens $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
Source: HTT Research
1. Town and Country Living, New York, NY $85 $72 18%
With its seasonal and private label businesses continuing to grow, especially its major brands like Ralph Lauren and Martha Stewart among others, the company opened a new office in Shanghai to make room for additional imports.
2. Elrene Home Fashions, New York, NY $60.5 $57 6%
Looking to grow its table linens offerings as well as enter into new coordinating product categories, Elrene expanded its relationships with its overseas vendor partners and forged some new partnerships. The company's Bronx-based distribution facility grew by 50 percent to 150,000 square feet to accommodate the growth.
3. Bardwil Linens, New York, NY $45 $45 0%
After focusing for decades strictly on table linens, coordinating kitchen textiles was added. Building on the success of its Lenox program, Bardwil Linens added Lenox Inc.'s more casual brand, Dansk, to its line with coordinating kitchen textiles and table linens.
4. Avonhome, Braintree, MA $40 $40 0%
Avonhome forged a partnership with a major factory in China that has enabled the company to expand its product offerings to include kitchen textiles, decorative pillows and window treatments that coordinate with its table linens.
5. W-C Designs, Anaheim, CA $28 $28 0%
WC-Designs retained its overseas partnerships with its vendors. Also, through the continued success of its upscale brands, including Waterford and Wedgwood, WC-Designs' retained its core retail customer base of department stores.


Exporters to U.S.
Table linens $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
Source: HTT Research
1. Handfab India, Panipat, India $17.4 $14 24%
Handfab remains single-minded about its sharp product focus and on-time delivery but its retail customers probably win it the most respect, at least from competitors. The operation counts Wal-Mart, JCPenney, Pier 1 and Calvin Klein Home among its steadies.
2. Nishat Mills, Karachi, Pakistan $11.6 $9.5 22%
Nishat is a diversified giant with well over half of its production destined for export markets.
3. Coteminas, Sao Paulo, Brazil $9.6 $6.2 54%
Coteminas keeps getting bigger, largely through continuing alliances with stateside suppliers, particularly Springs. That partnership with Springs last year is undoubtedly resulting in gains not yet reflected here.
4. Kucukcalik, Istanbul, Turkey $9.5 $8 19%
Kucukcalik currently operates four plants producing home textiles goods and is one of the largest mills in Turkey. Table is a core competency.
5. Bombay Dyeing, Mumbai, India $9.0 $7.8 16%
A key source in the global marketplace, the company's size presents no small challenge to continuing growth.


U.S.-based importers*
Bed-in-a-bag $millions

Name, HQ 2003 import vol. 2002 import vol. % Chg.
* Includes U.S. divisions of foreign companies Source: HTT Research
1. Springs, Fort Mill, SC $100 $74 35.1%
Springs continued to aggressively take market share from Dan River, its primary competitor in this category.
2. Haywin Home Fashions, New York, NY $32.5 $32.5 0%
Efforts at Haywin have been staffed up in terms of global distribution. The company has added eight factories to its supply base in the Far East since 2002.
3. CHF Industries, New York, NY $20 $2 900%
Although the company launched its bed-in-a-bag program just last year, it has seen tremendous growth in the category since then and has been producing many of its bed-in-a-bags in Canada and Mexico for quicker turnaround time.
4. Revman Industries, New York, NY $15 $15 0%
The company's bed-in-a-bag business remained a strong performer despite a persistently difficult retail environment.
5. Hollander Home Fashions, Boca Raton, FL $10 $5 100%
Hollander has been sourcing product from China and Pakistan for two years, which has allowed it to upgrade product specs without raising prices.


Exporters to U.S.
Bed-in-a-bag $millions

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
1. Menderes Tekstil, Izmir, Turkey $18 $11 64%
Menderes is a manufacturer of a broad variety of home textiles, but the focus is on bedding where exports produce about $45 million annually.
2. Coteminas, Sao Paulo, Brazil $15 $9.1 65%
While Coteminas expands its U.S. presence through more and deeper alliances, it's also been investing in infrastructure, modernizing three of its plants. And while its overall home textiles volume increased a very respectable 54.2 percent in 2002, its home textiles exports to the U.S. have grown more than two-and-a-half times.
3. Nishat Mills, Karachi, Pakistan $7.4 $6.7 10%
While clearly seeing its future in global trade, Nishat's senior executives have been leading proponents of stronger national and international export policies as a means to countering the competitive threat posed by China.
4. Kucukcalik, Istanbul, Turkey $7 $5.9 19%
The U.S. generates about one-third of Kucukcalik's overall business, which is focused mainly on windows. However, bedding is growing at a double-digit pace.
5. Barkah Textile & Printing Mills, Karachi, Pakistan $1 $1 4%
This smaller manufacturer has been seriously testing U.S. waters.


U.S.-based importers*
Greige goods $millions (USD)

Name, HQ 2003 import vol. 2002 import vol. % Chg.
* Includes U.S. divisions of foreign companies Source: HTT Research
1. Springs, Fort Mill, SC $45 $50 -10%
The lower amount of greige goods reflect in part the company's increased importing of finished goods, including bed and bath.
2. WestPoint, WestPoint, GA $31 $34 -8.8%
WestPoint's double digit decline in sales during the first half of the year put downward pressure on greige goods.
3. Dan River, Danville, VA $20 $20 N/A
Though it intends to grow this portion of the business, for now it remains a small importer because it can manufacture its own greige goods cheaper here. It does source from such countries as Pakistan, Thailand, Canada and Italy, for example, when it is looking for a certain type of construction.
4. Richloom, New York, NY $15 $15 N/A
This company has been importing the same amount of greige goods for decorative fabrics for years.
5. Kaufmann, New York, NY $10 $8 25%
This company has been increasing its imported greige goods for decorative fabrics over the years. Its biggest import country is Pakistan, though it sources from all over the world.


Exporters to U.S.
Greige goods $millions (USD)

Name, HQ 2003 export to U.S. 2002 export to U.S. % Chg.
1. Kohinoor Weaving Mills, Karachi, Pakistan $68 38.9 75%
Overall, Kohinoor is the tenth largest exporter from Pakistan, according to that government's records. Its business is heavily steeped in greige product, much of which comes to the U.S.
2. Bangkok Weaving Mills, Bangkok, Thailand $47 $40.9 15%
Bangkok Weaving goes out of its way to maintain a low profile but by most accounts is a powerhouse supplier to U.S. firms. The company has fought back from the backlash of 9/11 and has been investing heavily in its future, just last year building a new finishing facility.
3. Nishat Mills, Karachi, Pakistan $33.6 $27.5 22%
Pakistan's largest textile exporter, due to many diversified segments, Nishat recently opened a finishing facility and continues to emphasize the added value of its vertical integration.
4. Sapphire Textile Mills, Lahore, Pakistan $20.3 $19.9 1.8%
Somewhat smaller but no less growth-oriented, Sapphire has recently been re-investing in affiliated companies. That investment, aside from preparing the group for stronger competition, will also assist in building the technology base as the firms move toward 2005.
5. Syncotex, Karachi, Pakistan $8 $7.8 3%
Syncotex started out as a greige producer in 1977 but quickly expanded into finished goods across a broadly diversified product line. As its business developed it also became one of its own best customers for the greige product.


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