Look to the Horizon
June 20, 2005,
A Macy's executive was only half joking last week when he said the division's direct sourcing folks are getting so flummoxed by on-again/off-again tariff and safeguard proposals that they're growing wistful for the days of quota.
Macy's isn't alone. Later this week, China's leading curtain manufacturers will convene with officials from the China Home Textiles Association — which is not an ad hoc industry coalition but a government agency — to hash out responses to a potential U.S. action to curtail curtain imports from the nation.
China's window treatment manufacturers weren't the only ones blind-sided by the recent safeguard petition submitted to the U.S. Commerce Department. The chief executive at one of the largest U.S. manufacturers of window curtains was equally surprised to hear the news. He wondered how the filers could have compiled data for their petition without consulting his company.
JCPenney's sourcing chief went on record back in January predicting a series of caps would be placed on imports from China by the end of summer, and has reiterated his position since then.
But it was Target President Gregg Steinhafel who probably hit the mark best. Asked last month when he expects the quota/tariff/safeguard situation to sort itself out, he said 2008 — “because then they can no longer do any of it by law.”
So what's an industry to do in the midst of such commotion? U.S. suppliers should be hard at work forging alliances with reliable, quality factories overseas, rooting out all unnecessary cost from their U.S. operations and making certain their own supply chains are as sound as possible. Overseas factory operators who are not from China should be working to boost quality, improve efficiencies and, of course, build a stronger U.S. customer base.
Ambitious Chinese manufacturers should look to the game plans executed by companies like Zorlu, Welspun and Coteminas — each of which managed to develop a sizeable U.S. business while still operating under quota restrictions.
The safeguard/quota/tariff kerfuffle, while inconveniencing to many, can only run another 30 months. There will be some bumps in the road, and nimble companies should look for opportunities to leverage them to their short-term advantage.
But it's important for everyone to keep an eye on the horizon. It's equally important to remember that just as there was no single “magic strategy” for running a successful business in the pre-import era, there will be no one strategy that is perfect in the global age.