Working to stay healthy in an ailing economy.
By Susan Niemi
With news of the economy a daily presence, whether one opens investment statements or not, leaders in the U.S. specialty fabrics industry remain optimistic about the health of the industry.
The Review magazine talked to several industry leaders during IFAI Expo 2008 held in Charlotte, N.C., October 21-23.
“Even with the severity of the current global crisis, there are long-term opportunities for the specialty fabrics industry. These include innovative products targeted to specific end-users to reach consumers worldwide. Companies who recognize these opportunities have the ability for growth once the economic situation becomes more stable,” says Steve Ellington, president of Glen Raven Custom Fabrics LLC.
Jeff Dimos, executive vice president of Miller Weldmaster Corp., adds, “We like to remain optimistic and discount some of what is in the media; there is room for successful companies.” Frank Sinclair, president of Sinclair Equipment Co., echoes that comment: “Business is not as bad as we were told it would be.”
Stating that the economic volatility is having an impact on the industry, Pete McKernan, president of Herculite Products Inc. summarizes his perspective: “We believe the specialty fabrics industry in North America continues to provide vibrant leadership for innovative products and services.”
Economy impacts many aspects of industry
Companies are continuing to do business and moving ahead with their plans, but of course economic issues are influencing decisions. Sinclair says, “People are cautious and making deliberate moves as needed.”
David Clarke, group director of TenCate Geosynthetics, talks about the current economy with an eye on the future. “I am highly concerned over the impact of the economic crisis. I think we will see many underfinanced, smaller to mid-size companies in serious financial trouble. In my view, companies will need to be careful with capital spending and will seriously need to manage operating costs. This is a time to be very conservative.”
Along with economic issues, other factors facing the industry include: consolidations; increased competition; the cost of raw materials, labor and transportation; globalization and trade policies.
Globalization presents new opportunities
Globalization has been evolving rapidly and will continue to change the nature of business. We live in a world where consumers are the recipients of the greatest benefits (cheaper products) and producers tend to face the greatest challenges (more competition), according to “State of the Industry” from The Industrial Fabric Products Review, May 2006.
Industry leaders interviewed for this article stressed the importance of seeing the opportunities in globalization. With 95 percent of potential customers for American products living outside the United States, this reality is important, according to the Economic Development Administration of the U.S. Department of Commerce.
McKernan describes the expected and unexpected consequences of globlization: “To an extent, increased competition has increased choice; more importantly, it has forced everyone to clearly focus on their value proposition. In this environment, some have done well, some have not.”
“Those roaming the globe for ever-cheaper but rarely better alternatives,” McKernan continues, “are now facing a contracting credit market, extended lead times, exorbitant transportation costs, unreliable supply, substandard products, questionable business practices and recalls du jour. As a result, we are seeing a flight to quality—not just in product but in strategic partnerships.”
Succeeding at home and abroad
As businesses strive to succeed in a competitive global marketplace—in a difficult economy—a few themes stand out.
Joey Underwood, senior vice president of Technical Products Group and Safety Components Fabric Technologies Inc., speaks about the importance of companies trying to diversify and bring more value to their products. He says, “Everyone is trying to add value and diversify, so innovation and increased R&D is needed. It is difficult with less money, but it is the only long-term solution.” Underwood adds that companies need to expand their capacity to import and capability to export, and position themselves to supply overseas markets.
“The focus and spending should be towards innovation and differentiation,” says Clarke, “as successful companies will need to set themselves apart with products and service versus the lower-cost producers in Asia and the Middle East. The strong companies will emerge by managing very carefully over the coming two years.”
Ellington comments on the importance of communication with customers. “Consumers are seeking more understanding about products from the technical side. Companies need to communicate benefits.”
McKernan emphasizes quality: “Delivering high-quality products and services never goes out of style, and the implications of the total cost of ownership will continue to reward those focused on optimizing value for their customer.”
Clarke takes the global view of emerging markets. “In the medium-to-longer term, I think there are opportunities for fabrics that address global geopolitical themes,” he says. “The greatest potential will be in safety and protection, water management, and climate change. The innovative companies that can capitalize on these themes with value-added products will have an advantage over the basic textile producers.”
Other emerging markets will demand smart fabrics (high performance technical textiles) and green fabrics (biodegradable and recyclable products) that respond to sustainable initiatives.