Posted January 17, 2018

 

By Devin Steele (DSteele@eTextileCommunications.com)

 

In our 2017 Review, selected leaders of the textile and apparel industry and its supply chain offered their business assessments of last year. Here, through questionnaires sent to these leaders, they offer their expectations of 2018 as the year kicks off.

 

Following is a summary of responses from those companies that participated in the survey. Note that some participated only on the condition of anonymity, either for proprietary reasons, the fact their companies are publically traded or they are part of an employee-owned company.

 

Manufacturers

 

Michael Lavroff, president of Jason Mills LLC, Milltown, N.J., said that his company’s target for 2018 is a 7 percent to 10 percent growth in revenue. The company is heavily investing in inventory now for sales already booked for a large portion of this year, he said. He cited optimism in the U.S. economy, coupled with the company’s internal marketing strategy, as reasons for this outlook.

 

Asked for his thoughts on the prospects for U.S. manufacturing, particularly textiles and apparel, he said his simple answer is “bullish.”

 

“But nothing is simple or binary,” Lavroff said. “The cacophony of noise coming from D.C. tends to drown out the prospects of the tax cut. But – and I’m not an economist – businesses paying less in taxes should continue to grow the economy.

 

“As far as the supply chain and reshoring, Jason Mills has always knit and finished our goods in the U.S. – no exceptions – so, yes, in general the more reshoring the greater potential for supply chain cost reduction, and equally if not more important, the prospects of businesses that previously sourced their materials in Asia to seek suppliers such as Jason Mills in the U.S.”

 

He added that optimism comes from U.S. economic growth through favorable tax scenarios, coupled with regulation reduction. And concerns come from continued international instability, i.e., North Korea, he added. “All of the above can be negated by conflict,” Lavroff said.

 

Champion Thread President Matt Poovey, who expects a strong 2018, said that moving forward the company will continue to focus on innovation and expanding its positioning in the value chain.

 

“We have several CAPEX projects scheduled for 2018 that will further enhance our ability to service our customers' needs and continue to diversify our product mix into new markets,” he said.

 

Poovey, who was recently elected president of the pro-U.S.-manufacturing association SEAMS, said he believes the prospects for American manufacturing are strong in 2018.

 

“Many of our key customers have presented strong forecasts to us for the upcoming year,” he said. “Those companies that have positioned themselves strategically in the value chain should do well.”

 

As most manufacturers, as well as suppliers, Poovey added that he has concerns about the shortage of available skilled labor that is necessary for industry growth. Additionally, he said he is watching closely the NAFTA renegotiations and potential impacts for the textile and apparel industry.

 

Meanwhile, the head of a yarn spinner in the Carolinas, who asked that his name not be used, said his company has projected a 7 percent increase in sales due to “the fruition of our R&D efforts in developing new products, creating new business for us.”

 

He cautioned, however, that the company is concerned about a continued deterioration of margin, especially related to non-technical yarns. “There seems to be a lot of capacity in the open-end markets, which is depressing pricing,” he said.

 

In today’s newly fertilized U.S. manufacturing environment and improving economy, he added that he anticipates business continuing to grow over the next several years. “We remain optimistic with new opportunities to sell yarn that helps us move away from commodity markets,” he said.

 

Another manufacturer of yarns and woven fabrics, who asked not be identified, said that 2017 was flat, but he is expecting things to pick up this year.

 

“We are seeing government money for infrastructure projects picking up and military spending beginning to improve,” he said. “But for commodity products, I don't see improving prospects for textiles. For products that have a higher level of supply chain involvement, I do think there are some increased production opportunities.”

 

He added that improving economic conditions and a more manufacturing-friendly tone in Washington give rise to increased optimism.

 

At Palmetto Synthetics, Kingstree, S.C., President David Poston said he expects 2018 to be about the same or slightly higher in volume and revenue compared to 2017.

 

“The automotive business should be relatively steady if projections hold true,” he said. “Domestic fiber sales to yarn spinners should increase due to the anti-dumping regulations. However, we have seen no increase in orders due to anti-dumping yet. Our next order due to anti-dumping will be our first.”

Conditions remain tough in yarn spinning in general, Poston added, “but hopefully the worst is behind us.”

 

“For a domestic fiber producer, reshoring certainly does not hurt our prospects,” he said. “There are, however, very cheap imported fibers that are sold below our cost – sometimes below our raw material cost. We see automotive products being less of a specialty product and mostly commodity driven.”

 

Suppliers

 

Al Thomas III, president of Frankl & Thomas, Greenville, S.C., said he sees renewed optimism from across the board with its customers in 2018.

 

“People are pleased with the new administration and the tax cuts that will free up a lot of cash to pay employees more and to purchase new equipment,” he said. “The removal of many rules and regulations will allow businesses to operate without so much red tape. We are increasing inventory to enable us to continue to supply our customers’ needs on a timely basis. Competition is keen and suppliers must have goods available as they are needed.”

 

Thomas added that a “renaissance” in short staple ring spinning is occurring, with new plants being opened in the U.S. Additionally, there is a big increase in open-end production, but many customers are finding it difficult to hire skilled people who are willing to work, he added.

 

Regarding the general state of manufacturing, he said: “The United States is able to produce large quantities of high-quality yarns and fabrics at attractive prices. We still cannot compete globally with low-cost Asian apparel producers, so I cannot see the apparel industry making a big comeback in the next five years.”

 

Another company that represents several European OEMs in the U.S., who wished to remain anonymous, said that 2017 was an excellent year – much better than the previous two years.

 

“And I think 2018 will even be better for all the obvious reasons: That the economy and consumer and business optimism is higher now than it was in 2017. This should loosen up some pent-up demand for capital equipment.”

 

Navis TubeTex, a Lexington, N.C.-based supplier of textile finishing equipment, anticipates a much better 2018, and already its order books are “quite full,” said President & CEO Will Motchar.

 

“Our biggest challenge this year is to ramp up our production capacity to handle the orders,” he said. “That process is in place and we feel confident we can continue to take the new orders that continue to come in.”

 

He added: “Our backlog is the biggest factor. We already have firm orders that will give us a better year than 2017. Also, there are many projects that we continue to work on with customers that look like will become orders in the first or second quarter of this year.”

 

Motchar also said he believes this year will be strong for the global economy and, in effect, the U.S. manufacturing landscape.

 

“I think many of the factories that are still here are feeling confident to spend capital expenditures on new equipment,” he said. “In terms of reshoring, I think we will continue to see that happen in certain segments such as technical textiles and specialty products, but probably not for basic apparel and home furnishings. Many of the existing factories are running at full capacity. The new tax law allowing for full expense of capital expenditures should also add a boost to equipment purchases.”

 

Robert McCurdy, president of GTI Graphic Technology, Inc. (GTI) said he anticipates a growth year in 2018, thanks to its diverse market coverage.

 

“One of the nice parts of our business is that in addition to textiles we are active in the printing and graphics, paint and coating, automotive, food and any other industry in which color is important to the final product,” he said. “This enables us to focus on the industries where growth is occurring. We feel that in 2018 our focus on the textile market will stay strong.”

 

The biggest drivers of that growth, he added, are the overall economy, the competitive environment, new technologies and the ability of its products to meet and exceed published quality standards.

“I also believe that the level of service that we provide helps us grow,” McCurdy said. “We are 100 percent dedicated to the lighting business. Our product offering is large – from desktops to color harmony rooms, we can offer a solution – and we provide personal service. We also offer a low cost of ownership with lower re-lamp cost, longer lamp life, lower annual recertification costs and conventional non-dedicated power requirements.”

 

Based in Newburgh, N.Y., GTI has a strong presence and excellent reputation in the U.S. market, he said, and that will only complement the reshoring movement, he added.

 

“I believe that the more reshoring that takes place and as more small apparel/textile companies open, the more opportunities there will be for our business to grow,” McCurdy said. “At the same time we support the internal market with our strong network of dealers, OEM partners and an office in Germany. We look for this activity to grow as well.”

 

Tony Hooimeijer, president of Greensboro, N.C.-based capital equipment supplier Karl Mayer North America, said he expects positive results in 2018 after a good year last year, with many orders on hand providing that boost of confidence.

 

“The trends from 2017 continue,” he said. “But moreover, our warp preparation business in the weaving industry shows interesting growth. It looked that that replacement in this market has been quite hesitant, or more focused on equipment such as looms. But now more replacement in the preparation area is happening as well. In technical textiles, interest of overseas companies to set up shop here is continuing.

 

“In terms of preparation, there is not much we need to do,” he continued. “Being part of a large, international group, we can always draw on resources from our network. However, we have been growing our workforce locally the last few years too. A major focus especially has been adding technicians. Finding suitable candidates has not been easy, and then having a long learning curve since our machinery is so specialized. We have been doing well, though, with especially noteworthy success working with a veterans placement firm.”

 

Elaborating on the labor front, Hooimeijer reiterated that one big challenge Karl Mayer and many of its customers battle is finding employees with good practical technical skills.

 

“We see some interesting initiatives in apprentice programs,” he said. “Those programs need a lot of attention, locally and nationally to ensure competitiveness of the industry. At the same time, it is a challenge for machine manufacturers to make machines smarter and this is one of our main innovation drivers.”

 

With “the stars being aligned for the U.S. textile industry,” flat-knitting machine supplier Shima Seiki USA, Monroe Township, N.J., is cautiously optimistic, according to Vice President Matt Llewellyn.

 

“We see a continuance of the solid growth of 2017,” he said. “We’ve expanded our staff significantly in 2017 to accommodate our growth and anticipate growth in 2018 with increased technical and customer support.”

 

He added: “The U.S. economy is seeing solid growth. Consumer confidence has returned.  Recent tax changes have made the market favorable for reshoring business in America. For the U.S. flat knit market, this is all good news. Manufacturers of knitwear, medical and industrial products are benefiting from a good market and competitive tax structures. In addition, we see new products being made implementing 3D knitwear, reducing labor and offering value-add to their product.”

 

Llewellyn also pointed out that he sees now more than ever collaboration between textile suppliers and manufacturers. This is being done through seminars, trade shows and especially through universities collaborating to offer students a complete study of the industry, from engineering through technical/design expertise, he noted.

 

Bill Moody of circular knitting machine manufacturer Vanguard Pai Lung, Monroe, N.C., said he expects the company’s business to “explode” this year, with continued growth in export machine sales. Growth should come primarily from products manufactured in the Far East today, he said.

 

“And I personally feel we will have major growth in the U.S.,” he said. “With our Wildfire Division, we have been working with brands for a few years now. They would all like to get production on this side of the world because of the lead times required and continuing cost increases. We are seeing Far East companies coming to the U.S. and a couple of older facilities purchased in the U.S. by Americans that will be revitalized.”

 

Moody added that he is hearing that Far East companies are opening operations in the U.S. for several reasons: The Trump Administration’s policies, taxes, energy costs, property costs, transportation costs and quicker delivery savings.

 

“Now that the new tax plan is in effect, it makes all the sense in the world to match the demand with local supply,” he said. “Companies manufacturing in the U.S. can take advantage of 100 percent depreciation expensing in the first year, lower individual and corporate tax savings as well as all the reasons above.”

 

Zimmer Austria Incorporated (USA), Spartanburg, S.C., provides equipment for North America in textile and carpet printing, digital printing and coating and finishing, and the growth of digital textile printing is reason for optimism, according to Roland JP Zimmer, vice president of North American sales.

 

“The almost extinct traditional textile commission printing companies have finally accepted the digital printing technology as a feasible alternative to rotary screen printing and are beginning to invest in this new technology,” he said. “We expect to continue to see that in 2018, together with completely new company start-ups entering, that commission printing space as well as new and established brands on the apparel and home furnishing side to move into digital textile printing.”

 

“Reshoring” is definitely taking place at a faster pace than what has been seen in the past, Zimmer added.

 

“The idea of bringing printing production closer to the consumer is made possible by new technologies and especially the numerous efforts that we see in the development of digital textile printing with pigment inks,” he said.

 

On the coating and finishing side, the company sees the trend towards digital functionalization to continue this year, with several brand owners investing in prototype machinery and chemistry to explore what this new technology can actually provide with new value-added properties, he noted.

 

Conventional coating is flat, but machinery that has been in service for decades now is beginning to need replacement, and some new investments are expected in 2018 in that market sector, Zimmer added.

 

Indications from customers of chemical supplier Seydel-Woolley & Co., Inc., Pendergrass, Ga., are that business in 2018 will remain similar to 2017, which was flat, according to Steve Adams Sr., president.

 

“But we are trying to establish new business units to grow our business in 2018,” he said.

 

With the focus on improved trade policies, some growth could be experienced in its business if and when its customers see an increase in orders, he added. “No one is building inventory right now; therefore, our business is still dependent on new orders in 2018.”

 

Indications are that the first quarter will be flat and business should pick up by midyear, depending on order patterns, he continued. The economy is improving, he acknowledged, but there is currently a lag in business for textiles, he added.

 

“We are cautiously optimistic that 2018 will be a better year for textiles in general, but apparel production still suffers due to customer orders,” Adams said. “The automotive industry continues to be show signs of improvement and new housing starts should help the growth of industrial fabrics. Nonwovens continue to show strength and should improve in 2018.”

 

Global activity looks solid in the new year, according to the head of a U.S.-based supplier with operations in several countries. Current factors that could affect the landscape include volatility in raw materials and wage inflation driven by reduced availability of labor, he said. “As a result, we are redoubling productivity increase initiatives and plan for further investments in automation,” he said.

 

He added that he sees reasons for optimism going forward.

 

“The reduction in the corporate tax rate is a positive,” he said. “Wage inflation may help drive demand. Walmart’s made-in-America” initiative may help domestic manufacturing. We are seeing increased foreign investments in U.S. textiles/apparel coinciding with rising costs in Asia.”

 

Projections for 2018 are positive for sales growth due to global shifts, policy changes and evolving disruptive technologies, and how manufacturers will adapt to digital disruption will continue to change businesses, according to Frank Henderson, president of Henderson Sewing Machine Co., Andalusia, Ala.

 

“Virtually every consumer products company is talking about innovation and digitalization, and Henderson Sewing Machine has the staff and ability to be creative,” he said. “Many things have changed over the last five decades, but our core values of customer-centered solutions, innovation, creativity, passion for our industry and hard work continue to allow Henderson Sewing to achieve new heights. The most important factors are focus, integrity and staying ahead of the curve.”

Henderson posited that improved economic growth in 2017 has led to positive prospects for U.S. manufacturing in the textile and sewn products industries. Innovative new manufacturing technologies are leading to less inventory, faster speed to markets, nearness to markets, smaller production lots and customized consumer products, he added. “Innovators will be winners,” he said.

 

He cautioned that the textile and sewn products industries face tremendous challenges, especially related to hiring and retention, education and training, employee skillsets, the move toward automation and the potential mindset for people to rely on the status quo.

 

“No one changed the world by remaining the same,” Henderson said. “However, tremendous challenges can lead to tumultuous changes: New manufacturing technologies, flexible automation producing near-to markets, speed to market, smaller lots, new people with new skillsets. Optimism, creativity and innovation are the path that leads to achievement.”

 

Martin Gopman, owner of Universal Sewing Machine Co., and Unicraft Corp., said he anticipates a better 2018 than last year.

 

“We started this year with a large backlog of sewing machine tables (mostly for Central America),” he said. “We added new manufacturing equipment in our factory this year, in effect doubling production of tables. We have a larger than usual number of outstanding quotations for sewing machines and for cutting tables.

 

He attributed his optimistic outlook to two factors: Reshoring, which has been slow but growing, and political uncertainty regarding the prospects of free trade, which favors domestic production.

 

“I think the prospects for U.S. textile/apparel manufacturing this year are as good, and probably better than last year,” Gopman said. “The only caveat is that the economy and the stock market may become overheated, and any unforeseen “black swan event,” such as an interest rate increase or political upheaval, may cause a disruption in the economy.”

 

One U.S.-based capital equipment supplier who asked that his name not be used indicated that, because lead times in machinery are always three months or more, he already knows this year will be stronger than last year – and last year good, he said.

 

“2018 is a year where the more complex projects will be delivered: Those that required plant modifications and deeper investment analysis,” he said. “Much of our business is export but we are very encouraged with all the modernization and upgrading we see here in the U.S. We sense that the ‘bottom’ was 2016 and trends toward reshoring of spinning and weaving will reach dyeing and finishing.”

 

With that, he added, reshoring will come with a huge amount of re-configuration driven by technologies that can deliver reduced lead times. Factories will be very automated, and use different machinery. “Don’t expect 1985 levels of jobs,” he said. “Tech products/ high fashion and other high-value goods will be back here first.”

 

Additionally, he said he sees no reason that home furnishings could miss being the first traditional mass market production to be truly reshored. The U.S. has cheap power, capital, cotton supply and adequate water for final processing, he noted, and automation of the needlework with sheets and towels are here now, he noted.

 

At worst, Jim Blalock of American Suessen Corp., a supplier of spinning equipment, sees this year as being the same as 2017, which was relatively flat.

 

“Most maintenance projects for this year have already been approved and are set in motion,” said Blalock, company president. “Of course, you can never really see what might happen in six months. The next third and fourth quarters are never as clear as the two immediately in front.”

 

He added that the reshoring movement helps boost customer confidence to invest in major maintenance programs. “Style/blend changes involving more polyester require new machines set-ups and the increased consumption of polyester wears out components at a faster rate than cotton,” he said.

 

Harry Simmons, owner of Industrial Lab Equipment (ILE), Charlotte, N.C., said he expects 2018 to continue to see improvements, both internationally and domestically.

 

“But it is difficult to prepare for expansion due to the difficulty in hiring qualified staff and the poor quality of the American work ethic,” he said. “Drug use and poor parental training must change.”

 

The Internet has changed the way business is done, and not always for the better, he added. “Inexperienced purchasing departments are buying cheap or fancy-looking items online without consideration for quality or future service on equipment,” he said.

 

Though some foreign companies are moving manufacturing to the U.S., Simmons said he is seeing little domestic expansion. He noted that everyone – manufacturers, suppliers and consumers – need to join the made-in-America push in order for U.S. manufacturing to truly experience a renaissance.

 

“The American consumer has little interest in where an item is made,” he said. “The new federal tax plan will help but without support for domestic manufacturers and the countless tax advantages and grants given to foreign companies to build in the U.S., we will continue to see this nation’s wealth moving overseas. Fashion trends are following and supporting the lowering of our nation’s morality and, thus, less apparel. Quality advertising and support from Hollywood and television must support American made.”

 

A European-based capital equipment supplier, with a U.S. office in the Carolinas, said he expects a higher level of activity after a flat 2017, but “we do not need to make specific adjustments to accommodate that,” said the head of the U.S. branch.

 

“Nothing has changed from the years before,” he added. “The textile industry is at a level today that is stable, with few ups and downs. If there will be new projects, we will be pleasantly surprised.”