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ROUND-UP OF TEXTILE MANUFACTURERS By JOSEPH R. SCHUH Are we about to repeat the industry textile shortage of 1973. 1974? Textile manufacturers say no industry members yes.  To determine what is really happening, I contacted five U.S. textile manufacturers (companies who cut and sew yard goods into finished flatwork or apparel) and three textile mills. All agreed that the textile rental industry is not experiencing a textile shortage. Rather, they said that deliveries are being delayed on some items because the merchandise is not in inventory. Costs of finished textile items have risen for deliveries of first-quarter 1979 production, and will probably go up again for the second-quarter 1979 production.
The biggest delivery delays are in 100 per cent cotton materials, specifically momie cloth and turkish toweling. Blends and 100 per cent synthetic fabrics are currently available, although shipping delays in blend merchandise are occurring primarily where the percentage of cotton is greatest, such as 50 per cent polyester/50 per cent cotton fabric used in aprons. One manufacturer said, "We see some delays in shipment of lower quality blended fabrics. The blended duck we use for aprons is on an allotment basis from the mills and we don't expect our allotments to be increased in the short term." Blame for the current delay in shipment of cotton textiles is partly caused by an unusual set of circumstances in worldwide economic conditions. One manufacturer said, "An enormous amount of imported textiles from foreign mills is being shipped to the United States. The textile rental industry has become highly dependent upon 100 per cent cotton imported merchandise because it has been lower in cost than domestically produced fabrics. "As the dollar has declined in value compared with other currencies, foreign mills have, as a result, delayed deliveries on fixed price contracts payable in U.S. dollars. They sell their textiles to other countries who pay them in stronger currencies. These same mills also change their production schedules. "Foreign textile mills will give us a contract on their production, but when the textile business strengthens, they put their looms on production of more expensive goods that return a higher profit per yard. Since the merchandise we order for textile rental companies is comparatively low priced, foreign mills honor our contracts but delay shipments to us in the United States in order to produce the more expensive goods." Another manufacturer expressed his concern about the dollar valuation in relationship to foreign money. He said, "We find a reluctance of some foreign mills to honor their commitments for low-price goods. They are selling loom production to other countries first and just delaying their shipments to the U.S. In a couple of cases in which we had to renew contracts, there were very, very big differences in price due to the softening of the dollar." WHAT ABOUT TERRY TOWELING I asked several mills why terry toweling was not readily available since more than half of this toweling used in the textile rental industry comes from domestic mills. One mill representative said, "The terry towel business in the United States is very strong. This is probably due to the big demand in the retail and institutional fields. Restaurant, hotel and motel, nursing home, hospital, and the retail housing markets have all been increasing their orders. Each of these areas has caused a heavier than usual demand for terry towels. Domestic mills are producing upgraded terry toweling for this segment of the economy since the profit level is higher in colored and specialty toweling than it is in white terry products." Asked why more looms were not being purchased to meet the demand, he said, "We are increasing our terry towel capacity by 25 per cent. However, bear in mind that when you order a loom you have a minimum of six months before delivery and then another three months before the loom is completely installed and operating. In other words, it takes at least nine months from the time we order a loom until it is producing at a 100 per cent rate." Another mill representative said, "We have some looms in mothballs. At this time, we can't justify putting them back into production just to meet a demand for low-end (less profitable) merchandise. If we were sure in our own minds that the present demand would continue over the long-range, we would put another loom back into production. "Our experience is that the textile business is very cyclical. It goes up and then it turns down. We see this shortage as short-range and we don't intend to get caught again with cancellations of orders." Asked why he felt his mill would get caught short, he replied, "It's historical. The textile rental industry always reacts out of panic. They see shortages appearing because demand exceeds supply and then they begin duplicating orders at various sources of supply. "As soon as we increase production to meet the demand, your industry starts receiving shipments from all of your sources. When that happens, orders are cancelled and shipments are refused. Then we are faced with over-production. When this happens, we adjust production, shut down looms, and lay off people. This really isn't fair to us or our employees." I asked another mill what could be done to resolve the current problem. The mill agent replied, "First the textile rental industry must understand that anyone in business is entitled to a fair return on investment. Your industry has always been the first to react to increased costs. They have to recognize that our costs are rising just as rapidly, if not more so, than theirs. "Wages have gone up; interest rates have risen; inflation has been spiraling; and liability insurance is out of sight. Raw material prices are going higher. The cotton crop in the United States is a short crop, and today we are paying more for cotton than we did a year ago. "We are impacted by all of these economic factors just as much as the textile rental industry. It is going to take a while for the situation to stabilize. Our price increases have really lagged behind the reality of the current economic conditions. You can't blame us for putting our looms on merchandise that will bring us a higher return when market demand is strong." BLENDS AND SYNTHETICS I asked one large manufacturer about shortages of industrial apparel. He said, "There are no shortages in the supply of fabrics. The reason we are experiencing some longer delivery lead time is that consumer demand is running strong. Normally, it takes four to six weeks to receive fabrics from the mills. That lead time has now been extended to eight to 11 weeks." He continued, "As far as we are concerned, demand is very strong and business is exceptionally good. We have to adjust our fabric orders with the mills to compensate for their extended delivery." Asked how this affected his delivery to the industrial uniform purchaser, he replied, "We have adjusted our mill orders and lead time to compensate for the delays. Right now, our inventory is low because this is the time of the year when uniform change-out reaches its peak. "We are still making deliveries, on items such as industrial shirts and pants, between three days to two weeks depending upon size and color availability." One manufacturer told how he would be impacted by a shortage of cotton. "We are not concerned about it," he said, "unless we go back to 100 per cent cotton permanent press. We are also not tied in with foreign mills because they have not been able to control quality. Industrial uniforms have to fit well, must be able to withstand wear and be able to be washed repeatedly. Imports just do not measure up to that standard." He added, "Most industrial uniform suppliers are happy to stay with domestics because of the risk of having bad shipments. We just have to pass on the higher costs." Another major manufacturer of industrial uniforms said, "We have no problems meeting deliveries. We are running at about 80 per cent production capacity and meeting all of our delivery lead times." Asked what the outlook for blend and 100 per cent synthetic fabrics were, one mill spokesman said, "Demand is very strong. We are not experiencing any problems in meeting our shipping dates. Synthetic fibers are readily available and we can get delivery of a carload of synthetic fibers tomorrow if needed. "This isn't true with cotton and we may experience some problems in the percentage mix for o blends. If things really get serious we may have to decrease the amount of cotton in blends and increase the synthetic fiber. In other words, we might have to raise the polyester/cotton mix from 50/50 to 65/35, 80/20 or maybe to 100 per cent synthetic." How would this affect LSAA members? He said, "Textile rental suppliers may have to change their marketing strategy. The fabrics we produce are acceptable to the customers of your industry. In the event that conditions cause more production of 80/20 blends or 100 per cent synthetic fabrics, then it will just take a better job of marketing by industrial launderers to their present customers. This shouldn't be too difficult since the fabrics have been proven in the marketplace." MARKET EFFECT Without exception every source contacted agreed that unit sales to the textile rental industry are up. This means that the textile rental industry is healthy and growing. "Unit sales of merchandise," said one manufacturer, "to the textile rental industry for use in restaurants, hotels, motels, hospitals, nursing homes and uniform accounts have increased greatly. Also, there hasn't been that type of increase in the retail market. In fact, sales of uniforms on the retail market have declined." He continued, "I have found that the textile rental industry has not properly prepared for this type of growth in their market. They allowed their average inventory of 50 days to decrease to 25 days. On top of this some of the large textile rental chains are putting on intensive sales campaigns. "A number of things are affecting the supply of merchandise. Companies have placed orders with us to fill three requirements simultaneously; orders to replace depleted inventories; orders for unexpected market growth; and, orders to fill the needs of successful sales contests. This has really placed a demand on the mills and manufacturers to. supply merchandise for which they were not prepared." All of the mills and manufacturers contacted are well aware of the delays in meeting the needs of the textile rental industry. All are taking steps to alleviate the situation. One mill spokesman said, "We are putting in a new loom and hope to increase our terry towel production 25 per cent by the end of the first-quarter 1979." A manufacturer said, "We've bought \ cloth from sources that we didn't do business with in the past. We manufacture napkins from the odd lots and widths we buy. It costs us more because more hemming and additional cutting is involved. Also, more loss in the width of the goods occurs. "But we're spending money doing all of these things to try and keep up our deliveries, and in most cases we have. If we have fallen down in a couple of areas it certainly is not from lack of effort." HOW TO HELP I asked these manufacturers and mills spokesmen what the textile rental industry could do to help in this situation and get deliveries. All sources replied, "Don't panic. Panic will adversely affect the situation." One manufacturer said, "My experience is that everybody is hollering rush, rush, rush. . . give me goods. They want to protect themselves by building up their inventory and all they are doing is aggravating the situation. "They don't understand," he continued, "that it is a matter of supply and demand. When demand exceeds supply, things are bound to get tight. When orders are duplicated, it really becomes serious since nobody is in a position to make deliveries. "Then, when the orders are shipped, you have the making of a factory shut-down because everyone received twice what they needed. Shipments are rejected and orders are cancelled. "I think that most major sources of merchandise probably can take care of their regular customers," he continued. "They can probably supply their customers' needs if they have a little flexibility. In other words, can the customer take a slightly different size of continuous towel? Can he use cabinet toweling with a green stripe instead of a blue? Although the short-term outlook is not as rosy as I would like to report it, the consensus of my sources was that the textile rental industry can help resolve the problem by practicing a few basic do's and don'ts. They are:
It is the opinion of the sources interviewed that if the textile rental industry practices the above procedures, no crisis will develop. The long-term effect is that production will be increased to meet any continuing demand.
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