New year's challenges
December 8, 2003,
OK, it is beginning.
As we reported last week, it seems that demand for cotton is exceeding supply, and as a result prices look like they may be skyrocketing for 2004 — with fabric folks talking about 30-plus percentage increases and home textiles suppliers talking about how off-shore producers are refusing to fulfill orders on previously agreed to prices. But then these steep price increase demands may be just a temporary thing. How this all works in a deflationary environment is something nobody yet has been able to figure out.
Now domestic suppliers are beginning to grapple with the pros and cons of off-shore supply, quality issues and the other stuff that is entering into the picture.
Off-shore supply definitely is not going away. But what is happening is that those suppliers are going to be forced to comply with U.S. regs when it comes to specific issues. Talking with fabric guys here vis a vis what seems to be inevitable regarding flammability regs, the universal belief is that the suppliers off-shore will be liable for performance. The big question is how to make them understand that this country means business, and that there are no exceptions.
Among the issues is what retail companies from one end of the price and quality spectrum to the other like Wal-Mart and Federated will accept as performance, and how these regs will be policed. If stuff comes in ostensibly in compliance and proves otherwise, who's to blame?
Similarly, domestic suppliers have the challenge of making sure that their off-shore suppliers are in compliance.
And this impacts not just suppliers in Asia where there still is a dramatic learning curve vis a vis American standards, but Europeans as well.
As for the quality issue, the mantra is "don't let it leave if it ain't right." Once on this side of the big pond, it stays here.
This will be an on-going challenge for the next year.