Lichtenberg Buys More Than Half Its Curtain Lines Overseas
April 3, 2001
VP Says Lackadaisical R & D in the U.S.Industry Means Opening for Imports
New York — S. Lichtenberg has become a major importer of curtains from Turkey, China, France, and more recently, from India. The company is also looking at opportunities in Pakistan, said Carl Goldstein, senior vice president and outgoing director of HFPA.
"The U.S. home furnishings industry is an $18 billion industry," said Goldstein. "Yet, we realized many years ago that we had to look worldwide for new product sources. Our import program has grown dramatically in the last ten years to the point where it's 50 percent of our overall business."
U.S. mills, he said, have not kept pace with offshore mills in research and development of new fabrics, colors and finishes.
"A lack of research and development in the American home furnishings industry has left the door open to imports. When dark colors became important in the drapery business in the U.S.A., our domestic resources did not have the finishing facilities to deal with the dark colors. They said 'Just buy the light shades from us.' They just didn't get it!" On the other hand, offshore resources have been investing in machinery and equipment for years.
"Turkey made the first investments in the jacquard lace business. China will become even more important than it is today as it gets the capital to invest in new machinery. Turkey and Pakistan have invested their money in weaving, knitting and finishing while our own mills here have not kept pace."
But lower cost was as important as newer colors in drawing Lichtenberg overseas for its curtain fabrics.
"We bring in a lot of fabric from overseas today. We can't buy the fabric here any more," said Scott Lichtenberg, vice president and third generation member of the company. "Even if you pay duty and freight, it is still 20 percent less expensive to buy the goods overseas."
Both Lichtenberg and Goldstein cite labor rates as the reason goods are cheaper offshore. Low labor costs lured apparel makers overseas many years ago, and recently the American home furnishings industry has followed, said Goldstein.
"It has taken 15-20 more years for imports to develop in the US home furnishings industry versus the apparel business. The apparel industry went offshore because of labor. The average labor rate in the US is $14 an hour, compared with $3 an hour in Mexico. Some places pay only one dollar a day to their workers. We cannot compete with the labor costs overseas. There are products we can make as competitively as the offshore mills but these are not labor-intensive products," he said.
As a result of all this importing, the U.S. has gradually stopped producing its own goods, he continued, because exports have not been able to rise with imports.
"The USA is the largest consuming nation in the world, but no longer a nation of manufacturers. We have opened our doors to other nations for export but their doors are closed to American export."
Curtain and other home fashion retailers have demanded low prices from their suppliers like Lichtenberg, making it almost impossible to pay for the more expensively-produced American made products.
"Some retailers have pressed us until the point where our margins are too small for the volume those retailers represent," Goldstein said.
In order to compete for better pricing, many textile companies have been consolidating, but there is a general consolidation among retailers today as well as among manufacturers. The few large manufacturers that are left may serve only a few retailers with a few specific items—not deep, open lines, Goldstein pointed out.
The larger retailers have tried to cut their costs even more by importing finished goods themselves. This has spawned a new phenomenon in the U.S. textile community—import jobbers. But this group, which is appearing even as converters are disappearing, does not produce anything or even add any value to the textiles they import, said Goldstein.
"The US retailer is also importing more and more on a direct basis so we're competing with our own retail customers. The converter is also disappearing and we're seeing a whole new group—namely, jobbers with warehouses but no manufacturing capacity. They're bringing in containers and selling to the retailer. They don't do research and development or cut and sew," he said.
Although Lichtenberg now imports half of its fabric, about 70 percent of the cutting and sewing is still done domestically. The company would rather control the goods here because of multi color programs and because of the many SKUs involved, Goldstein explained.
"The retailer should look to domestic suppliers for quick ship programs, quality control and product development. If you import directly, you're tying up money in letters of credit and are at the mercy of nature--the boat on the water that is caught in the storm. It takes 120 days to get the goods in over water versus 30 days from a domestic cut and sew resource." "Importing is not as easy as it looks. It takes a long time. Often, you will not have the right inventory. You'll have to replace off color goods in the container. The quality is not good in the beginning. It takes time to reach higher standards with third world suppliers," he said.
New York — S. Lichtenberg has become a major importer of curtains from Turkey, China, France, and more recently, from India. The company is also looking at opportunities in Pakistan, said Carl Goldstein, senior vice president and outgoing director of HFPA.
"The U.S. home furnishings industry is an $18 billion industry," said Goldstein. "Yet, we realized many years ago that we had to look worldwide for new product sources. Our import program has grown dramatically in the last ten years to the point where it's 50 percent of our overall business."
U.S. mills, he said, have not kept pace with offshore mills in research and development of new fabrics, colors and finishes.
"A lack of research and development in the American home furnishings industry has left the door open to imports. When dark colors became important in the drapery business in the U.S.A., our domestic resources did not have the finishing facilities to deal with the dark colors. They said 'Just buy the light shades from us.' They just didn't get it!" On the other hand, offshore resources have been investing in machinery and equipment for years.
"Turkey made the first investments in the jacquard lace business. China will become even more important than it is today as it gets the capital to invest in new machinery. Turkey and Pakistan have invested their money in weaving, knitting and finishing while our own mills here have not kept pace."
But lower cost was as important as newer colors in drawing Lichtenberg overseas for its curtain fabrics.
"We bring in a lot of fabric from overseas today. We can't buy the fabric here any more," said Scott Lichtenberg, vice president and third generation member of the company. "Even if you pay duty and freight, it is still 20 percent less expensive to buy the goods overseas."
Both Lichtenberg and Goldstein cite labor rates as the reason goods are cheaper offshore. Low labor costs lured apparel makers overseas many years ago, and recently the American home furnishings industry has followed, said Goldstein.
"It has taken 15-20 more years for imports to develop in the US home furnishings industry versus the apparel business. The apparel industry went offshore because of labor. The average labor rate in the US is $14 an hour, compared with $3 an hour in Mexico. Some places pay only one dollar a day to their workers. We cannot compete with the labor costs overseas. There are products we can make as competitively as the offshore mills but these are not labor-intensive products," he said.
As a result of all this importing, the U.S. has gradually stopped producing its own goods, he continued, because exports have not been able to rise with imports.
"The USA is the largest consuming nation in the world, but no longer a nation of manufacturers. We have opened our doors to other nations for export but their doors are closed to American export."
Curtain and other home fashion retailers have demanded low prices from their suppliers like Lichtenberg, making it almost impossible to pay for the more expensively-produced American made products.
"Some retailers have pressed us until the point where our margins are too small for the volume those retailers represent," Goldstein said.
In order to compete for better pricing, many textile companies have been consolidating, but there is a general consolidation among retailers today as well as among manufacturers. The few large manufacturers that are left may serve only a few retailers with a few specific items—not deep, open lines, Goldstein pointed out.
The larger retailers have tried to cut their costs even more by importing finished goods themselves. This has spawned a new phenomenon in the U.S. textile community—import jobbers. But this group, which is appearing even as converters are disappearing, does not produce anything or even add any value to the textiles they import, said Goldstein.
"The US retailer is also importing more and more on a direct basis so we're competing with our own retail customers. The converter is also disappearing and we're seeing a whole new group—namely, jobbers with warehouses but no manufacturing capacity. They're bringing in containers and selling to the retailer. They don't do research and development or cut and sew," he said.
Although Lichtenberg now imports half of its fabric, about 70 percent of the cutting and sewing is still done domestically. The company would rather control the goods here because of multi color programs and because of the many SKUs involved, Goldstein explained.
"The retailer should look to domestic suppliers for quick ship programs, quality control and product development. If you import directly, you're tying up money in letters of credit and are at the mercy of nature--the boat on the water that is caught in the storm. It takes 120 days to get the goods in over water versus 30 days from a domestic cut and sew resource." "Importing is not as easy as it looks. It takes a long time. Often, you will not have the right inventory. You'll have to replace off color goods in the container. The quality is not good in the beginning. It takes time to reach higher standards with third world suppliers," he said.
