Stolen Style: Learning Series: The Piracy Paradox

Stolen Style: Learning Series: The Piracy Paradox: "So, if you’ve kept up with the Monday Learning Series, we’ve mentioned The Piracy Paradox a lot in passing, but never gone into much dept..."

The Reality of the IMBALANCE of Trade

President Obama has asked the U.S. industry to "win the future" and to do so with “innovation and by doubling exports within the next five years”. The current data makes it seem that things look good. U.S. exports are up about twenty percent so far in 2011. The problem is that the exports are being drowned out by a renewed flood of imports. As a result, the U.S. trade deficit is rising back toward the four percent of GDP level that is considered unsustainable, and portends even lower economic growth potential.

With the goal of ‘doubling’ exports, and spurred on by additional funding for development of high-speed trains, wind turbines, batteries, and solar panels, American factories are supposed to be looking toward increased production of vast high-tech products in the near future to “spur a U.S. economic renaissance that would produce good middle class jobs”.

Hi-Tech manufacturing requires an educated, trained workforce, at every level. …so why is ‘manufacturing’ relegated to the ‘hi-tech’ industries as defined by the larger companies in the industrial complex? Manufacturing is ANY kind of work that requires mastery of real things. The demands of eye-hand coordination can be intellectually demanding - with maintenance and repair work also fostering individual responsibility.

Many inventions are the result of a reflective moment when an individual worker made an assumption based on the skills acquired while on the job. Experience in production leads to innovation!

In a recent interview about companies who move their production to China, Applied Materials Executive Vice President Mark Pinto emphasized that “the critical factor in the trend is not R&D or innovation per se, but the availability of production facilities. Manufacturing also requires innovation.”

As stated by Clyde Prestowitz, President of the Economic Strategy Institute, “Innovation isn't the mana from heaven - It doesn't arise from some unique American gene. Rather than innovation leading to production, it is production that leads to innovation.”

The reason for this imbalance of exports vs. imports is not that America lacks innovation. No country has been more innovative in the past one hundred years than the United States. The reason America is increasingly losing out and lagging behind is that it lacks production - and that lack of production capability is now also leading to a decline in innovative capability.

Consider this: There is NO industrial training in most of the major US city’s schools with an alarming 38% (average) drop-out rate. These young people are willing and able to learn how to ‘make something’!

The truth is that an export-doubling target is meaningless unless all manufacturing is considered worthwhile and supported by the academic community within their curriculums, and by the removal federal, state, and local government restrictions and barriers for those entrepreneurs willing to invest in small manufacturing facilities, and train entry level employees. Investments in modern production facilities require the availability of an experienced workforce.

An experienced workforce would result in a renewed effort for modern production facilities. We do need to focus more on domestic production that can competitively substitute for imports by using our competitive advantage of ‘innovation’……that is the ONLY thing that will lead to more exports.

LET’S TELL THE WORLD HOW GOOD WE ARE AT MAKING THINGS BETTER!

A letter to the next generation of designers, style-followers, producers and sellers….

The fashion industry is on your doorstep!
Fashion is NOT an elective, it is a necessity. Today we know that ‘style’ levels the playing field across socio-economic boundaries, and bridges the ethnic gaps. Even in these difficult times, fashion continues to transform and affect dreams….whether seen on the runways, on celebrities, or on the trend-setter in the neighborhood.

To thrive, Los Angeles needs a world class education system that embraces ALL students. Teach history, geography and math, along with the technology - all with a focus on fashion - and we will keep students interested in school, and help them focus on goals.

Those of us already in the business of apparel and textiles have been forced to adjust our business strategies to adapt to some of the most challenging economic times on record. Few industries have felt the effects of the recession as acutely as the design-to-manufacture-to-retail process, all due to lowered retail inventories, a ‘discount mind-set’, and the continuing credit crunch. Clearly, the ability to change quickly and successfully is more critical than ever.

BUT, we are ever optimistic….THE NEXT BIG THING IS OUT THERE! There are hidden corners of opportunity, while we find new ways to be creative. From textiles to services suppliers to apparel manufacturing, the entrepreneurs in this industry are capable of changing quickly and successfully. The best of the best are taking advantage of market and industry shifts; not merely responding to the current fashion trends.

Historically, we reinvent ourselves here in the California industry, and radically change our business models as each opportunity comes along; with the entire global industry watching and following. New designers make their mark, brands come into the fashion spotlight and are then ‘discovered’ by the mergers & acquisition (M&A) hunters. This market is so dynamic; acquisitions are being made for the people, not the assets

By expanding our reach, we have become impossible to ignore.

CFA Seminar at LA Textile Show: 'Make it in L.A.' - March 29th, 2011

The CFA and the Los Angeles International Textile Show - Make it in Los Angeles!!!

Bringing Manufacturing BACK to the Industry cluster
..the Opportunities….the Process….Who to Call…

Featuring:
William Golant, The Project Cafe
David Perry, The DSP Group
Brian Weitman, STC-QST
Randy Youngblood, Apparel Resources Inc.

Moderator:
Ilse Metchek - California Fashion Association
Please click the link below for more information:

http://myemail.constantcontact.com/CFA-Seminar-at-LA-Textile-Show---Make-it-in-L-A-----March-29th--2011.html?soid=1101870870988&aid=b79FOkpbNeE

Academy Awards Alert! Why You Might Be a Fashion Criminal

Impressions of MAGIC

Show floors visited: MAGIC, PROJECT, Workroom, Off-Price, Platform, Pool

Attitude of the exhibitors toward the 'traffic' depended upon the expectations of the exhibitor. Most of the newer 'hot' contemporary companies thought the show's traffic was positive because they were seeing more retailers and press people. The retailers in this space were looking for something new and reaching out to view the lines they may not have shopped before. The show, however, was disappointing for the long-time exhibitors expecting to 'write' orders based on past experiences, and who did not make appointments.

There was a cautious approach by the vendors at every level due to price increases of source materials. The specialty store retailers are realizing they will have to charge higher prices for the merchandise that will be coming in from their current vendors. This is another driver for the retailers 'shopping' frame of mind: The retailers are getting ahead of the curve by seeking alternatives, and are sampling new down-market vendors. This is the case unless they have established a 'must have' brand within the store or the department.

Even the higher priced lines (not quite 'luxury') know that the consumer has price on his/her mind. The vendors who are accustomed to higher margins for their fashion merchandise are caught in the middle of the re-thinking that is going on.

The cautious approach was echoed by retailers buying much closer to need. There was much more activity in the booths where bright colors and summer-y styles were being shown, than where transitional and fall merchandise in dark colors were in view.

Another impression is that the retailer is cautious as to the individual or company with whom they are dealing. With no specific trend as the most important one right now, retailers are selecting the vendor with the best reputation and track record for on-time delivery and service within their buying plan strategies. Conversely, when a new speck on the horizon (the return of 'preppy') is talked about, the knowledgeable retailers go back to those brands synonymous with that look (i.e.: Pendleton, Timberland, etc.)

As Roth Capital Partners' Senior Research Analyst Liz Pierce writes, "The obvious question being will price increases lead to demand destruction and if so, who in the supply chain will bear the brunt of the increase? At this point we think it is too early to tell, but we did hear that more and more retailers have accepted the reality of the situation and have started to raise prices, especially on newer and non-basic items."

The Off-Price show also showed the effect of the current economy. There was a clear lack of 'newer' merchandise available, whereas in recent years there was copy-cat availability throughout. Perhaps because there is nothing 'hot' to copy. On the other hand, it could be that vendors of all stripes and sizes are controlling inventory, mindful of the costs of over-cutting.

Ilse Metchek
CFA President

The TALA Cotton Report

(courtesy of the Textile Association of Los Angeles)
Cotton Report:
The Issue - “We are consuming more cotton than we are producing worldwide.”
The issue of supply and demand is causing turmoil in pricing for mills, vendors and retailers, according to Kim Glas, U.S. Deputy Assistant Commerce Secretary for Textiles and Apparel.. The market for cotton is booming but cotton supply hasn’t increased.
Factors causing the surge in cotton prices:
 Poor weather conditions in China, with damaged crops – China is the world’s top producer of cotton
 The Indian government implemented a short term ban in April (which was lifted on May 25th) on raw cotton exports in a bid to lower domestic cotton prices, following shortages in the country because of unusually high exports. India is the No. 2 cotton producer
 Factories in Asia that closed because of the recession
 World consumption for cotton is forecast (for 2010 -2011) to exceed production for the fifth straight year; the first time this has happened in 50 years.
 According to the U.S. Department of Agriculture, shrinking cotton inventories will drive availability to the lowest level in 16 years,
 Cotton mills in Pakistan might shut. Pakistan relies on Indian imports for domestic demand, and Pakistan is the world’s fourth-biggest cotton producer. However, an increase of approximately 27% has been recorded in prices of Indian cotton and, because of the increase in import prices, Pakistani importers might cancel their orders. On May 12th, Pakistan’s Ministry of Textiles imposed a 15% regulatory duty on the country’s yarn shipments. Exports of cotton from Pakistan are limited to a maximum quantity of 32000 tons.
Cotton prices in China are nearing their historical peak, squeezing garment manufacturers just as they head into the important summer buying season. “The peak of the buying season is in two months time. If the crop has not improved, we may see another 20% hike,” said Willy Lin, chairman of the Hong Kong Knitwear Exporters & Manufacturers Association.
“The increase in cotton goods will begin to trickle down to consumers for holiday selling,” said Jonathan Greller, senior vice president and general merchandise manager of men’s, children’s and intimate apparel at Lord & Taylor. “For spring 2011, we are seeing 5% to 10% increases in retail prices for like programs.”

Cotton is about 35% of world fiber use and is produced in 80 countries worldwide. However, U.S., China and India together provide two-thirds of the world’s volume.
The U.S. cotton industry generates more than $25 billion in products annually, according to the Economic Research Service of the USDA.
The USDA (US Department of Agriculture) estimates that world cotton output would reach 113.9 million bales in 2011 compared with 102.9 million bales in 2010. At the same time, global consumption would be increasing to 119.1 million bales in 2011, from about 115.9 million in 2010.
There are reports that some foreign suppliers are hoarding cotton stocks with the intention of selling to the highest bidder, which will add to confusion in the marketplace over the correct price of cotton per pound .
Mills, manufacturers and retailers are certainly concerned about this situation. The price of cotton is fluctuating substantially. With cotton prices so volatile, the businesses along the pipeline will have to absorb the increases….with greatest effect on the manufacturers.
Additionally, due to consumer interest in “green” products and the expansion of organic cotton programs by retailers and brand managers, the Organic Exchange predicts the global organic cotton market will grow to about $5.1 billion in 2010 and $6 billion in 2011. The organic cotton market has increased by an average of 40 % annually since 2001. Production of organic cotton in 2008-09 grew 20%, and currently, twenty-two countries now grow organic cotton.

Source: Women’s Wear Daily
Fibre2fashion.com
Just-style.com