July 12, 2004-- Home Textiles Today,
There appears to be more open-to-sell around these days than open-to-buy. And I'm not talking about products; I'm referring to home textiles companies.
We're seeing U.S. suppliers searching for investment from abroad, overseas manufacturers hustling for investment from U.S. vendors, and at least a couple of sizable foreign manufacturers shopping the American market for potential acquisitions. The state of business being what it is right now — with the growing thrust of retail direct policies spiking the level of anxiety — it's hard to imagine anyone who wouldn't entertain an offer.
If only there were offers to be had.
One can't help wondering if the recent Loftex deal doesn't signal the next evolution in the home textiles industry. Loftex Industries China, formerly known as the Shandong Binzhou Yagang Towel Co. Ltd., recently partnered with a new company called Loftex Industries USA, whose principals are U.S. home textiles industry veterans. The $140 million manufacturer is one of China's largest towel producers. It had originally planned to set up a U.S. division after 2005. The collapse of Pillowtex late last summer accelerated its timetable.
Will the next 24 to 36 months bring more of the same? Ironically, the challenge may be that retailers now hell-bent on boosting their direct sourcing could balk at running through an American operation to get to the parent factory on the other side of the globe.
However, overseas manufacturers that want to establish a steady business in the U.S. market will probably need a dedicated sales force on the ground here. Otherwise they will run the risk of being the cherry-pick factory-of-the-season for some retailer's foreign buying office. In addition, manufacturers in China (in particular) readily acknowledge their weakness in creating designs that suit the American market. (And if you think retailers can provide all the answers there, you should talk to the scores of suppliers who complain about developing programs that get pulled in-house and taken offshore after the first go-around in the stores.)
The old model of a showroom in New York and a factory in the Southeast has already given way to constellations of offices and warehouses in multiple countries. The trick, alas, will be getting the economics to work.
And that may ultimately be the factor that drives U.S. suppliers and ambitious overseas manufacturers into each other's arms. It's a complicated business keeping America's retail shelves stocked with $12 table runners, especially with pattern lifecycles shortening at the same time production cycles and supply lines are elongating.
The structure of the U.S. supplier industry has changed dramatically over the past five years. Once unassailable companies have collapsed into dust. However, suppliers who were fortunate enough not to have tied themselves to bricks and mortar have also discovered that they have little in the way of assets to sell.
Related Content By Author
New homes for Indo Count, Trident