Posted December 27, 2017
By Devin Steele (DSteele@eTextileCommunications.com)
MEMPHIS – At the annual Executive Conference of SPESA, the Sewn Products Equipment & Suppliers of the Americas, here last month, Chairman Sam Simpson came bearing positive news for the sewn products industry.
First, he noted that this year could be summarized by some as “uncertain, changing and challenging, leading toward an environment not necessarily conducive to investment and entrepreneurship.”
“However, the global sewn products industry, specifically the apparel industry, seems to have a different outlook,” Simpson said in his “State of the Sewn Products Industry” report. “Brands and retailers are changing their sourcing patterns as consumers’ behavior changes, stimulated by new technology. We now see a movement from the focus on price to a focus on quality, sustainability and speed to market, making local manufacturing and near-shoring/new-shoring attractive.”
In the Americas, he explained, on-shore manufacturing and “made-in-America” initiatives continue to be the focus of the U.S. government and the industry as a whole. Investments in automation and technology continue to build as apparel brands and manufacturers place more importance on maintaining transparency and control over production, he added. And there is a fever pitch to improve, expand and foster the sewn products industry in this hemisphere, he pointed out.
U.S. textile and apparel shipments continued to grow as consumer expenditures on clothing and footwear increased, and as textile and clothing imports declined, he also noted.
“The clothing industry in the Americas has a keen focus on enhancing productivity, flexibility and innovation,” said Simpson, who recently retired from Gerber Technology after a 47-year career but remains a senior advisor to the industry supplier. “Fashion, quality, response and price requirements of U.S. consumers are being met by manufacturers in the Americas. How, you may ask? The key to this transition has been the change in attitude from asking ‘if it can be done’ to believing that ‘it will be done.’ This transition is being accomplished through the will to change and in the increased investment in automation and technology.”
And for two days, SPESA members and guests heard experts, many of them leading the way in maintaining and strengthening the sewn products industry in the Americas, bolster that argument during their visit to the city known as Home of the Blues and Birthplace of Rock ‘n’ Roll.
“Unlike the title of B.B. King’s #1 blues hit, ‘The Thrill Is Gone,’ I say ‘The Thrill Is On!,’ ” Simpson said, in closing his remarks and kicking off the event.
SPESA is an industry association for suppliers to the sewn products industry that includes apparel, upholstered furniture, home textiles, transportation interiors, leather goods, footwear, and industrial textiles. Along with business and networking sessions at The Peabody Hotel, attendees were able to take organized tours of Graceland and The Rock ‘n’ Soul Museum.
Year in review
In reviewing an eventful year for SPESA, Simpson noted that the association held three regional meetings early in the year, in New York City, Atlanta and Miami. And in May, SPESA management traveled to Frankfurt, Germany to the Texprocess (Frankfurt) exposition, once again taking part in technology sessions covering such topics as digitalization and automation.
In June, he reported, the seventh edition of SPESA’s Advancements in Manufacturing Technologies Conference took place in Chicago, where 80 leaders in industry met to learn more about how technology can enable and sustain manufacturing in the Americas.
SPESA management also toured China in September to visit leading technology providers to the sewn products industry in that country and hear heir plans for the future, Simpson said. Then association members and leadership took part in the largest sewn products trade expo in the world, CISMA in Shanghai, China, sharing industry perspectives and outlooks with leading technology providers worldwide, he added.
And, most recently, SPESA took part in the International Apparel Federation’s 33rd World Fashion Convention in Brazil, representing the Americas in a week of sharing experiences and visions for the global apparel industry, he said.
“It has been a very full year, and we look toward 2018 with the same level of enthusiasm and activity in supporting our members in the pursuit of maintaining and strengthening the sewn products industry in the Americas,” Simpson said.
During the business session, the Nominating Committee elected the following to SPESA’s Board of Directors for three-year terms: Daniella Ambrogi, Lectra; Melvyn Blore, Pegasus Corp. of America; Nina McCormack, DAP, Inc.; Mel Berzack, Sewn Products Equipment Co.; Ed Gribbin, Alvanon, Inc.; and John Stern, Methods Workshop.
Also during the event, SPESA and Messe Frankfurt, Inc. signed an agreement to extend the contract to co-produce Texprocess Americas, as previously reported. The new agreement extends the agreement through 2032. Texprocess Americas (formerly SPESA EXPO) is the largest North American trade fair for the equipment and technology for the development, sourcing and production of sewn products.
The fourth edition of Texprocess Americas will take place May 22-24, 2018 at the Georgia World Congress Center in Atlanta, and once again be co-located with Techtextil North America, making it the largest technical textile, nonwoven, machinery, sewn products, technology and equipment trade show in the Americas.
Near the end of the meeting, SPESA President Benton Gardner said, “the state of SPESA is strong. “We’ve had a great year, and we’re very positive about 2018. The spirit and the enthusiasm that has been shown are absolutely remarkable. Texprocess Americas is on its way to being a sellout, and I’m proud to say that SPESA members make up 93 percent of exhibitors at the show.”
She added: “Thomas Jefferson said, ‘if we do all the things we’re capable of, we’re going to astound ourselves.’ And I think we’re going to astound ourselves.”
She also reminded members that she and her husband, Dave, will retire at the end of 2018, and new executive leadership is being considered.
Dr. Mike Fralix, president and CEO of [TC]2 and the “technology evangelist” of Software Automation, moderated proceedings, as per usual.
Executive Conference in Memphis
‘The Thrill Is On!’
SPESA chairman Simpson explains reasons for optimism in sewn products industry
Auggie Tantillo, president & CEO of the National Council of Textile Organizations
Steve Lamar, EVP of the American Apparel & Footwear Association
Manuel Molano, deputy general director of the Méxican Institute for Competitiveness
Auggie Tantillo, president & CEO of the National Council of Textile Organizations
Trade, NAFTA from varying perspectives
He went on to delve into NAFTA numbers and negotiations and some of the language of the deal that should be massaged in order to better serve the U.S. textile industry. NAFTA’s trade origin exceptions that should be looked at closely include a number of exceptions to the yarn-forward rule; four TPLs (tariff preference levels) on various apparel items, made-ups, fabrics and yarns; and single transformation for apparel made from non-NAFTA yarns and fabrics on certain items.
Three other speakers provided trade and NAFTA updates from their perspectives, including Steve Lamar, executive vice president of the American Apparel & Footwear Association (AAFA).
He asked what would a renegotiated “NAFTA 2.0” look like and what should happen?
“First, do no harm,” Lamar said. “And it should be kept trilateral with the existing three countries, but we should think of ways to bring in other parts of the hemisphere. We also should make it seamless and make NAFTA work better.’”
Meanwhile, Bob Kirke, executive director of the Canadian Apparel Federation and the Canadian Textile Industry Association, offered another view on NAFTA, noting that he thinks the deal is here to stay “regardless of what Donald Trump says.”
But he added: I don’t know what’s going to happen, yet I can assure you that people in Canada are waking up to the fact that we might not have NAFTA. And I can’t imagine NAFTA without a TPL and I can’t image our industry without NAFTA, but everything is on the table right now.”
“Attitudes toward trade are different in Canada than the U.S.,” he said later. “We do not fear trade. We also didn’t have the scale disruption in people’s lives that you had here.”
In his country’s view, NAFTA means primarily Canada and the U.S., he said.
“You (the U.S.) export $1.3 billion more to Canada than you import,” Kirke said. “So what’s the problem with NAFTA, since it’s working very well for you? You have good energy sources and good headwinds.”
Kirke also took exception to Tantillo’s view of TPLs, a mechanism each participating country uses as needed, he said.
“If you eliminate the TPLs – these flexibilities that are built into NAFTA – that production will leave North America,” he said. “Production will go to the Far East. It will not stay here. The TPL allows the use of fabrics and yarns that aren’t available here. If it’s available here, we find it, and we find it in fairly large quantities.”
Providing another point of view was Manuel Molano, deputy general director of the Méxican Institute for Competitiveness, who noted that since NAFTA was enacted, Mexico’s trade to the world has doubled.
“So it is very important to Mexico,” he said. “American innovation, Canadian financial freedom and Mexican freedom to trade are a winning combination.”
Molano added that Mexico will continue to trade with the U.S. despite the political rhetoric and a possible exit of the U.S. from NAFTA. Asked later if he thought the U.S. would pull out of the deal, he answered, “I think there’s a 50-50 chance, which is huge.”
Auggie Tantillo, president & CEO of the National Council of Textile Organizations (NCTO), extolled the virtues of the U.S. textile industry for 2016 with a snapshot that showed 565,000 people employed in the industry; U.S. textile and apparel shipments totaling $74.4 billion; and that the U.S. is the fourth largest exporter of textile-related products in the world, accounting for $26.3 billion.
He then delved into the economy, pointing out warning signs that should be considered. “If you open up the hood of this economy, there is a lot of rust,” he said.
Tantillo pointed out that last year, GDP was heavily weighted toward consumption, with personal consumption amounting to $12.8 trillion (or 69 percent) of total GDP and government spending amounting to $3.3 trillion (16 percent) of total GDP.
“If you add those two numbers together, 85 percent of our total GDP is based on consumption, as opposed to what should be a more significant and greater aspect of our economy, which is production – described under GDP as ‘business investment,’ ” he said.
And that consumption percentage has grown by about 10 to 12 percent over the last 40 or so years, he added.
“So we have shifted our economy in a very demonstrative way, from one that is producing wealth to a consumption-based economy,” Tantillo said. “And that’s fine as long as someone is creating wealth or lending you wealth in order to continue that type of activity. As we see that shift within our GDP, we also recognize that it has some real wide consequences for the structure of our workforce.
“Over that 40-year period, since 1980, manufacturing jobs are down 36 percent, and government/public sector jobs are at 39 percent,” he continued. “So we started to see this fundamental shift in our GDP, which has a spillover effect to our workforce – fewer manufacturing and wealth-creating jobs being replaced by more government jobs and more service sector jobs. And if you pull the layers of the onion back, you’ll see we are taking jobs out of our society that provide healthcare, oftentimes provide pension benefits and oftentimes paying twice the minimum wage and replacing them with jobs that are hovering around minimum wage and oftentimes not supplying that social safety net through healthcare and pension benefits.”
Other “rust spots” are wages, which are stagnant for many employees, and a record household debt level ($12.7 trillion), he added.
“These are some of the reasons that I believe voters went to the poll one year ago and said, ‘enough! We are not necessarily taking part in the great, global, world-leading U.S. economy. And we want some answers and we want some changes,’ ” Tantillo said. “To a great degree, the U.S. voted for change one year ago.”
He added that “our chronic trade deficit” ($502 billion in 2016 and $10.5 trillion since 1980) continues to undermine the U.S. economy.
“I would say Donald Trump has asked some tough questions,” Tantillo said. “He basically said, ‘we’re not going to keep our economy on automatic pilot. We’re going to see if there are some solutions that are creating some of these systemic problems in our U.S. economy.’ And he has asked for formal reviews on numerous subjects.”
Those issues have led the Trump Administration to begin reviewing the overall causes of the U.S. trade deficit, the U.S.-China and U.S.-Japan trade relationships and the NAFTA and KORUS trade pacts, he added.
“NCTO has participated in every one of these reviews,” he said. “We have submitted comments and met with them directly.”
He added that the NCTO supports a renegotiation with NAFTA but not a total elimination of the deal.
Texprocess Americas contract extended
In announcing the agreement to extend the contract to co-produce Texprocess Americas to 2032, leaders of SPESA and Messe Frankfurt explained the history of and synergies between the organizations.
“Messe Frankfurt is not here by accident,” said Dave Gardner, managing director of SPESA. “We organized the SPESA Expo, which replaced the old Bobbin show. We had a show in Miami in 2004, 2007 and 2010 and we were looking for a partner at that time. We felt strongly that Messe Frankfurt could help us grow – and it has, so it was the right decision for us.”
Michael Jänecke, director of Brand Management for Germany-based Messe Frankfurt GmbH, noted that his group is the world’s largest organizer of textile trade shows. Dennis Smith, president and CEP of Messe Frankfurt North America, added that as Messe Frankfurt began buying shows in the U.S. and Canada, it expanded its team and now has 40 employees in its Atlanta office.
“The key to our success in the U.S. is connecting with the local industry, trying to add value and make sure we provide a high level of quality service,” Smith said. “The team we have working on Texprocess Americas is fantastic.”
Prior to the contract extension announcement, Gardner led a Q&A session with Jänecke and Smith. During the session, they explained how trade shows remain relevant, how exhibitors and attendees can prepare for shows and what to expect at next year’s Texprocess America.
“We’re focusing on industry digitalization,” Smith said. “We’re focusing on educating the industry and trying to attract new people and existing people to the industry. And we’re focusing on made in Americas.”
Asked to share some of the changes he sees in the traditional trade show model, Smith answered, “You have to be relevant and, you have to be reflective of where the industry is and where the industry is going. You must maintain a level of satisfaction to obtain a level of exhibitors and attendees, and keep that ecosystem vibrant.
“Technologies that help companies market themselves better are becoming key, improving the personalized experience and incorporating technology into trade shows,” he continued.
And despite social media, virtual communication tools and other digital mechanisms, trade shows are in not in danger of extinction, Jänecke added later.
“You can talk about Facebook, LinkedIn or whatever, but we are humans and we like to interact and touch textile materials,” he said. “We will see more digitalization in the future. But in the end we need someplace to hold a trade show because people will come.”
Later, he said: “America is a growing market, and America is also a key market for NAFTA.”
Michael Jänecke, director, brand management at Messe Frankfurt GmbH, signs contract to extend the partnership. (L-R) Dennis Smith, president and CEP, Messe Frankfurt, Inc., North America; Jänecke; Benton Gardner, SPESA president; Frank Henderson of Henderson Sewing Machine Co. and past SPESA chairman; and Sam Simpson, SPESA chairman, Gerber Technology.
Photo by Devin Steele
Moderator Dr. Mike Fralix introduced Ben Cooper, founder and managing director of IOClothes, as a “disrupter,” and the speaker proceeded to passionately provide a glimpse into the future of the textile and apparel sector as it converges with electronics/technology. First, he explained the focus of IOClothes (i.e. the Internet of Clothes).
“We help bridge the gap between technology and the apparel/footwear and technology world,” he said. “That’s not just solely about wearable technology and smart textiles, though that is a major thrust of what we focus on. It is about being able to create robust strategies on how to actually integrate into what this future might look like by fusing digital pathways and connecting our digital existences that we all have to these analog products.”
Discussing the major differences between the evolution of tech and the apparel/footwear industry, Cooper said we’re on the cusp of something big as those two areas come together. “There has never been a better time to be in the industry than right now,” he said.
With the Internet of Clothes, you can use technology – but it isn’t technology, he added.
“Are you talking about wearable technology? Yeah, a little bit,” he said. “But it’s much bigger than that. The Internet of Clothes is not a technology. It’s not a widget, it’s not a wire, it’s not a battery. It is a business strategy.”
He explained that this business strategy uses data to: improve business processes; better understand customer needs; better understand the environment; and optimize operations.
The Internet of Clothes is driven by the Internet of Things (IoT), he pointed out. He noted that $267 billion will be invested in B2B spend on technologies, apps and solutions by 2020, and 50 percent of IOT spending will be driven by discreet manufacturing, transportation, logistics and utilities.
“Do you know what this tells me? This foundation is being built right now,” he said. “This is what we need to happen – we need all the non-sexy things that may be kind of easier to understand to be laid down. What does this mean? Power management systems, connectivity, nodes, data management systems, data analytics, algorithms. All of this stuff needs to be put in place for us to springboard into the future, which is happening now.”
In trying to measure the size of the opportunity, he said that in the U.S. there are 198.5 smartphones, or roughly 76 percent penetration of the market, and that segment possesses about 14.2 billion articles of clothing.
“Look at that scale,” he said. “This smartphone is a big deal, but I’d say we’re a little bit bigger deal. This is just clothing! There are oceans of opportunities. We’re not fighting with each other for the business. We’re fighting to figure out quickly enough to grab your piece of the pie, because it’s out there waiting for you. Our industry has so much potential.
“But before we go down that path, we all have to do a little bit of soul searching,” he continued. “What problem does our business solve? What’s our purpose? Why are we relevant? Because we’ve been around for awhile? No. Hope is not a strategy.”
He went on to explain that disruption is change, noting that Uber, AirBNB, Kindle, Spotify and Amazon are successful entities that did not or barely existed just 10 years ago.
“It was once common to sit on the S&P 500 for about 60 years,” Cooper said. “That is not a reality anymore. Being an incumbent gives you no advantage. I would argue it gives you a disadvantage. It makes you complacent. You have to earn your keep in this new economy. Nothing is given to us. We must earn it. We must innovate. We must cannibalize our own business for the sake of survival. It’s a requirement.”
The global wearables market grew by about 17 percent this year, with 310 million devices worth $30.5 billion sold, he said. That trend opens many doors of opportunities, he added.
“There is an appetite, a demand,” he said. “People are willing to use their hard-earned money on a shot that this might satisfy some of their needs. That is worth paying attention to.”
Cooper went on to provide examples of companies that are disrupting the smart textiles sector.
“How will you future-proof your business?” he concluded. “The opportunities are tremendous and the tools are out there. We just have to put the pieces together.”
A disruptive look into the future
"Being an incumbent gives you no advantage. I would argue it gives you a disadvantage. It makes you complacent. You have to earn your keep in this new economy."
Ben Cooper
Founder and managing
director,
IOClothes
Dr. David Hinks, dean of N.C. State’s College of Textiles
Steven Frumkin, dean of the Baker School of Business and Technology at FIT
Dr. Sundaresan Jayaraman, professor at Georgia Tech
Dr. David Hinks, dean of N.C. State’s College of Textiles
On the docket was a panel of educators, moderated by Mel Berzack of Sewn Products Equipment Co. Speakers included Dr. David Hinks, dean of N.C. State’s College of Textiles; Steven Frumkin, dean of the Baker School of Business and Technology at the Fashion Institute of Technology (FIT) in New York; and Dr. Sundaresan Jayaraman, professor at Georgia Tech’s Scheller College of Business and School of Materials Science and Engineering.
Hinks provided an overview of N.C. State, noting that it is ranked 16th in the U.S. for graduate employability and No. 8 in return on investment nationally for degrees in science technologies. He also gave an overview of the College of Textiles’ 118-year legacy, which has remained viable and has flourished in large measure due to the support of industry through the North Carolina Textile Foundation.
In addition, Hinks touched on the challenge of improving the image of the textile industry, which he said is critical to attracting top students into all areas of the textile enterprise. The College is doing its part to help rebrand perceptions of the industry, and is working with high schools and partnering with community colleges to raise awareness and attract talent, something research universities haven’t typically done, he added.
Frumkin explained how FIT is engaging students and faculty through such projects as the FIT Natural Dye Garden and its work in the area of smart textiles.
He also highlighted FIT’s AlgiKnit project, a winner in National Geographic’s Chasing Genius Award this year. The initiative, he said, aims to offer an alternative circular economy approach rooted in ecological intelligence, natural dye practices and biomaterials innovation. Its goal is to bring sustainable bio-based textile alternatives into the 21st Century footwear and apparel industries, he said.
Jayaraman discussed the Era of Digitalization, with social changes and disruptive technologies ushering in a new world of opportunities for the textile and apparel industry.
Social changes we’re seeing include decreasing birth rates in advanced countries; independent living; increased environmental consciousness; and a ubiquitous social media environment, he said. And textiles and apparel will continue to change and become winners in these paradigm shifts when coupled with a number of disruptors such as the Internet of Things, Cloud technology, robotics and automation, 3D printing and advanced materials, he added.
Educators discuss shaping the future
Dr. Mary Kelly, CEO at Productive Leader, an internationally known economist and leadership expert
Keynoter Dr. Mary Kelly engages James Hoerig (R) of Computer Generated Solutions as CGS's Paul Magel looks on.
Warren Payne, legal professional and senior advisor at Mayer Brown LLP
Dr. Mary Kelly, CEO at Productive Leader, an internationally known economist and leadership expert
Dr. Mary Kelly, CEO at Productive Leader, an internationally known economist and leadership expert specializing in the fields of leadership, productivity, communication and business profit growth, keynoted the conference. The author of 10 books, she is a graduate of the United States Naval Academy and spent more than 20 years on active duty in intelligence and logistics. She retired from the Navy as a commander and has master's degrees in history and economics and a Ph.D. in economics.
In her engaging, hour-long presentation that included audience participation, she summarized key points in her most recent book, “Master Your World: 10 Dog-Inspired Leadership Lessons to Improve Productivity, Profits and Communication.” Among well-explained takeaways: Reward good behavior; don’t reward bad behavior; provide the right tools; don’t jerk the leash; and serve with the right spirit.
Another speaker, Marcelo Taú, a principal at Boston Consulting Group (BCG), presented “A Policy Roadmap to Renew U.S. Manufacturing.” He covered a study by Walmart, in collaboration with BCG, conducted to identify current barriers to increase manufacturing activities in the U.S. and policies to help overcome these challenges.
Several macro trends have contributed to increasing U.S. manufacturing competitiveness, not just in textiles but across many sectors, he said. They include low domestic energy costs; a need for responsiveness to customers; a desire to reduce supply chain costs and risks; and increasing levels of automation.
And U.S. manufacturing has been growing, he added.
“Experts predict that 3.5 million new manufacturing jobs will be created over the next decade,” he said.
Opportunities do exist, with a U.S. retail spend of about $1.8 trillion and the made-in-America movement gaining steam, Taú said. A manufacturing cost analysis shows a $250+ billion reshoring opportunity in the next 5 to 10 years, he noted. That was determined by developing a model to try to determine the cost of producing in the U.S. vs. Asia, he added.
A BCG survey of almost 100 manufacturers of different sizes revealed a number of challenges, he explained. Among them are a lack of available workforce; coordination and finance, meaning that key inputs for suppliers/assemblers are not available domestically; the complexity of regulation; and tax and trade issues.
Also, Warren Payne, legal professional and senior advisor at Mayer Brown LLP, had to cancel his scheduled appearance late, but did send a 10-minute video. He highlighted tax reform and policy highlights of the Tax Cuts and Jobs Act, which of course has since passed Congress and was signed recently into law by President Trump.
Lessons in leadership