HIGHPOINT, North Carolina – The Chinese New Year and a pricing meltdown on supply chains overseas is forcing suppliers to return to American resources to meet customer demands, according to speakers at F&FI’s annual Breakfast at Showtime panel.

 The symposium, which was moderated by Eric Schneider, president and publisher of F&FI, was held at the historic String & Splinter Club and featured  Jim Ennis, president, J. Ennis Fabrics; Parks Neisler, vice president, Dicey Fabrics Corp; Cathy Smith, director of merchandising & design, De Leo Textiles; Allen Smith, brand sales manager, Unifi; and Steve Piersall, CEO, Huntington House Furniture.

Jim Ennis, Allen Smith, Cathy Smith, Parks Neisler and Steve Piersall

Panelists addressed the ways in which the fabric industry can meet the needs of the market; whether mills are offering turn-around times that are quick enough to meet the demands of the furniture suppliers; ways in which the industry can improve for the new fiscal year and whether the industry will be able to handle volumes and high-quantity orders once the surge in sales is evident.

 “Cotton was priced at about 51-cents per pound last year, and then it got up to $1.52 and now the futures are coming down but no one knows what is going on so I’m down here to see if it's short term or long term and to see whether we should expect to include surcharges because we have to lock in for the future,” said Piersall.  “There was only one time in my 37 years that I have had a surcharge and that's when foam went crazy three or four years ago. Everyone is working on short margins. We're just going to adjust to it and try not to have it affect on the retailer too much. But they're all concerned. They're just waiting to see what's going to happen.”

One of the most pressing issues facing all industries today is how to compete with a burgeoning Chinese market. Cathy addressed China’s impact on the price in the supply chain. 

“We have certainly been hit with price increases because of China,” said Cathy. “We offer cotton in our line but we're not dependant on it. But the price increases in cotton have affected all fibers. That said, we're finding that European-based, Turkish- based fabrics are a little more stable because they're not subject to the variations in the monetary system that otherwise exist between the U.S. and China.”

Ennis admits that although his company is prospering despite volatile global markets, the future of his company is dependant in part upon the increasingly influential role that China is taking in the Western world. J. Ennis Fabrics is a Canadian-based wholesale distributor that used Showtime as the launch pad for its North American converter brand, Vision Fabrics.

“We have lots of inventory and we're very financially stable,” said Ennis. “We're going to hold our pricing until February, when we see what happens after the Chinese New Year.”

In an effort to cut back on the rising cost of raw materials, an issue as omnipresent as the looming shadow cast by China, Neisler has led Dicey Fabric Corp. by extruding its own yarn.  

“Extruding our own yarn has certainly helped,” said Neisler. “But we've still had to deal with dramatic price increases in cotton this year. I think that 2011 will see less of an increase in cotton as compared to this year though.”

As the cost of cotton continues to skyrocket to more than a dollar more expensive per pound since last year, Allen explains that Unifi recognized early on that the economic downturn domestically is an opportunity to expand in emerging markets in South America.

Eric Schneider

“We grew about  ten percent in the past 18 months and even though we were in a recession, we looked at it as an opportunity to grow,” he said. “We saw that ‘X’ percentage of our business was located in that region so we put manufacturing facilities in El Salvador to help companies reestablish their presence with quick turn-around times. We are offering the same quality that they could get here in the States but they can also take advantage of cut-and-sew operations down there as well as other benefits exclusive to that region.”

The recession has certainly had its effect on the way companies are choosing business partners. Thorough due diligence is becoming an essential practice for any company looking to take on a level of risk in this climate.

“Every six months, we check the credit of everyone we're doing business with,” said Piersall. “We know what ours is and we always check the credit of our customers, but now we're checking the credit of our vendors because we want to know if they're ready to ramp up.”

Piersall’s Huntington House Furniture has seen a price increase of $1 - $3 from suppliers this year. He doesn’t know how the U.S. is going to compete with everyone trying to make, for example, the same body cloth from China.

“The consumer wants to buy that sofa where she can change the pillows later on,” said Piersall. “I don't see the neutrals and the solids going away.”

Piersall said his company is doing as much domestic business as possible in order to stimulate economic growth at home. A day after the breakfast, President Obama touched down in North Carolina to promote the purchasing of American products and services and urged Democrats and Republicans to put aside partisan differences in an effort to prepare the country for a period of heightened competition from such countries as China, Korea and India.

Some companies are already scaling back on the amount of sourcing being done overseas.

“We have moved back 15% of our sourcing to the USA from China," said Mike Dobin, principal of Valley Forge Fabrics, who also attended the breakfast.

“People are balancing the equation of how much inventory should be put in at this price point with the speculation of what the Chinese New Year will bring,” said Allen. “There's a lot of thought going into the supply chain now. Whether our decisions are positive or negative for the future, is anyone's guess.”