Moderator: Eric Schneider - Fabrics & Furnishings International 

Jan Jessup - Director of Merchandising: Calico 

Bob McKinnon - Keystone Weaving Mills, Inc. 

Claudine Simone - Henredon Furniture 

Rocco Simone - Sunbury Textile Mills 

Darren Fradin - Rockland Mills, Inc. 

Eric Schneider: For about a dozen years the Chinese have dominated the textile industry and buyers have gone to China in droves. We see evidence of that changing. 

I’d like to introduce our panel. Darren Fradin has had extensive experience in the fabrics industry with Anju Woodridge and Covington and was also involved in the early stages of product development in China. He also worked at Sunbury Mills and is currently Vice President of sales and marketing for Rockland Mills, MD. Baltimore, 

Next, Rocco Simone, spent the bulk of his years at Sunbury, where he became a principal, V.P. sales and marketing and most recently specialist of product development. He started his career with 3M in 1968. 

Apparently somebody in the family was listening because Claudine Simone, his daughter, became Director of Merchandising for Henredon Industries, the top end furniture maker after spending time at Sunbury and Kravet Fabrics Corp. 

Bob McKinnon spent twenty three years as President of Valdese Weavers Inc., taking it from $4 million in sales to over $100 million in sales and eventually became CEO of CFI industries which owned Century Furniture and Valdese at that time. Now he’s a consultant trying to do a repeat with Keystone Mills. 

Jan Jessup has spent her whole career in merchandising and purchasing in fabrics and home furnishings. She did such a good job at Calico, the custom fabric specialist retail chain that she’s now Director of Merchandising. She’s responsible for purchasing product. 

What is Henredon doing in respect to U.S. suppliers? 

Claudine: About eight years ago, there was this big kick to go to China and Henredon was put in that mix as well. Luckily from my experience at Kravet as Purchasing Manager, I had dealt with China on a direct basis and not through converters. I realized that we had a 16 week lead time with Chinese goods and a great price point; but there’s a lot more to product than price point. While everybody said, ‘okay turn your line over to China and substitute everything, I talked to our team and said let’s hold back on this because it’s going to end up coming back to the U.S. You really need a mix of product and price point, but ultimately the matter of price point, delivery, consistency, customer service, quality and innovation, is really here in the USA and not in China. 

Eric: Rocco, during the last recession when everybody was closing up their mills, Sunbury went out and got serious about this business. What are some of the things you did to make sure that you’re viable as a supplier? 

Rocco: Basically what we have to do is realize that if you’re a commodity manufacturer you don’t belong in the United States any more. So you have to look at the better end of the market and that’s one of the things we did. We also concentrated not only on our regular product but also with our contract product; definitely with Sunbrella®. It has really been very fruitful since then. 

Why is the USA becoming more important today–our economic recovery is one reason. The USA Housing comeback and housing starts; our superior quality and timely delivery–as Claudine has said, and we’re closing the gap as well. The disparity between pricing in the USA and China is closing. 

The cost of labor for the Chinese worker has increased from 15 to 20 percent over the last four years. The yen has also taken a sharp rise. Those two factors along with the upper end American consumer and even the upper end Chinese consumer are both looking for made in America. I believe we have to look at generations and use it as a marking tool. Generation-wise, 25-35--that’s not Sunbury’s target audience. Your generation X, your 35-50 age group, that’s where you have more disposable income. Quality matters to this age group. It’s also my age group- -the Baby Boomers. We connect the dots. We know that if you buy in the USA it means jobs in the USA. It also means that our 401K is going to go up because if there are more jobs there will be more stocks and if there’s more stocks being bought then the stocks go up. 

If we wait for government intervention here’s what’s going to happen: you’re never going to see legislation from our government to impact our industry so you have to do it yourself. There’s a quote by Henry Ford, which says, ‘any man who thinks he can be happy and prosperous by letting the government take care of him, better take a closer look at the American idiot.’ 

Eric: Jan, you recently became Director of Merchandising with Calico and you always had a history buying American product. Has that changed any going forward? 

Jan: I think that the last five years have proven to the American customer, our customer, how important it is to have a healthy manufacturing industry in the USA. I think that’s been a lesson taught the hard way to many people who may have had a cavalier attitude about that previously. I think it’s especially important to have a healthy American textile industry because for us, Calico is really all about relationships and it’s not only the relationships with customers that we establish and nurture but it’s also the relationships with vendors that are so critical. That has always been extremely important to me and the way that vendors will do back flips to make things happen for us when it’s necessary. 

We often have fabric traumas where we will suddenly have a whole catalog’s worth of fabrics for photo shoots and things that are planned that are happening in three weeks and suddenly some fabric has not come through that we had counted on. Then we have vendors in this room who have delivered things to us in a week, in ten days, and who have made it possible for us to do what needs to be done. We couldn’t have gotten product like that from a mill 10,000 miles away. So that’s something we really appreciate and count on and I’d also like to give a shout out to a lot of the textile sales representatives because they are the ones who run interference at the mill and are able to finesse their systems and make things possible that seem impossible. 

Eric: Darren, Roc-lon® is one of the few branded products in our industry. What is your experience in exporting to the rest of the world? 

Darren: We sell to over 90 countries around the world right now including China. In fact, our business in China is one of the strongest growing markets that we have. I think no matter what country you’re in, it all boils down to service, quality and consistency. It’s the same thing here. By service I mean that if a customer reaches out to us and says ‘Hey look, we’d like you to make a presentation at our sales meeting. We’d like some marketing materials. We have a problem.’ We’re on an airplane and we’re out there the next day. By quality, I’m not just talking about manufacturing a product that’s free from defects, it’s also the quality of the components that go into that product. You won’t find that a lot in off shore manufacturers. Talking about China specifically, the first time I ever went there was in 1997. I was walking in Shanghai and there was an Yves Saint Laurent shop and right in front of the shop was a guy with a blanket selling knock off Saint Laurent shirts. I said to my agent, why doesn’t the shop owner come out and beat that guy with a stick? My agent said: because the people that want something that’s a real quality item are going to walk right into that store and buy the real thing. 

They’re going to leave the tag and the label hanging on the shirt so that when they’re walking down the street people will see it. The guy in front of that store is basically doing free advertising for them. People who recognize quality, if you have a brand name out there and you produce a quality item–people are going to recognize that and come back. That’s pretty much where consistency comes in as well. You get to be 182 years old in this business like Rockland by having consistency. Month after month, order after order, your customers have to know that they’re getting the same quality product as the last order and anybody in this room that’s done business with China knows that’s a big problem. 

Bob: Let me tell you what’s up here and what’s in the heart. I went to China first in 1982, and it was lots of bicycles. I went again in 1985 and saw bicycles again but this time they had lawn mower engines on them. They were running around and there were still millions of them, and then motor bikes, then old U.S. cars and now BMW’s and Mercedes. So things have changed a lot in China and the economy there is creating a country that is the most capitalistic communist country in the world. Once somebody enjoys the fruits of their labor; they’re going to require more. 

The wage rates in China and other Asian countries are going up significantly. They are developing a middle class like they have not had in the past. That is having an impact on the pricing of goods coming back. You go back to the early 90’s and the price of a barrel of oil was twenty dollars. Today the price of oil is about $95. 

Thus, the cost of manufacturing there, the cost of getting goods here has gone up significantly. In the meantime, I won’t even talk about government because I have told Mr. Obama what I think about that in a one on one meeting with him. 

Rocco, you’re right, government is not going to make a difference. What is going to make a difference is us. You look at the success stories over the last 30 or 40 years and not to toot my own horn but to toot the horn of Sunbury. Sunbury has done a marvelous job in working its way through this maze of problems and everything that has occurred. Now, I’m involved with Keystone. This is really a treat and provides an inspiration to me. There are opportunities out there. But what we are trying to do is not rely upon government. You can’t just say that American quality is better; you can’t just say all the good things and then go about your business the way you normally do. But you have to provide the customer with what they want when they want it; how they want it, and most importantly, you have to exceed their expectations. I promise you that when you exceed a customer’s expectations, you’re going to be in line to get that business the next time they’re out there. I think those are things that we try to do; no excuses. 

I tell Sloan Caplan, (the president of Keystone) you have to develop a culture in your business that is going to meet and exceed the expectations of the people that we’re trying to sell to. 

We had these guys up at the mill this past April. I think they walked in but they were amply pleased and surprised that there was a domestic source that was willing to turn and do the things they needed. That’s what it takes. You’ve got to be on your game, every day, all the time. You’ve got to be excited about what you’re doing. 

If you’re a commodity producer, if you’re producing $2.95-$3.95 goods, you’re in trouble. But I have to tell you, about two months ago Rueben Lentz, (Keystone agent) and I were calling an account in New York and we had a conversation with the buyer and she said well, can you do this? I said no, I can’t do that because it was a down woven fabric that just wasn’t for us. I didn’t stop there. I said, what else do you have? 

You’ve got to always ask for the order too; you’ve got to be aggressive about going after it. If you don’t ask for it a lot of times they’re not going to tell you. So what did Rueben and I walk away with? We walked away with two opportunities with a third one to follow. We’ve got two bits of business coming from that right now. We’ve got another piece of business that we’re working on and I am not down where the Chinese are but I’m within 30 to 50 cents of where they are. 

Sloan got tired of me preaching to him about we’ve got to do better on the yarn price; we’ve got to do better on the productivity; our efficiency has got to be better. You’ve got to earn your way into your customer. In the early days, when I was chairman of ITMA’s upholstery fabric board working with representatives of Sunbury, Craftex and Burlington, we were working against two things. One, we’ve got to get rid of these Chinese and two, we’ve got to fight this flame retardancy thing. We see where both of these issues are today. We thought that by simply imposing our thoughts and our wishes on people by saying that it’s made in America, they would have to buy from us. You have to earn your way into the game. If you don’t earn your way into the game, you’re not going to stay very long. 

Claudine : What Jan touched on I think is really important too. 

One, relationships but two, you have to supplement your line. I mean that’s a no brainer. There’s a certain price point that the U.S. domestically just can’t hit–probably $5.50 and under because all the vendors have been fantastic at trying to get quality at a lower price point. It is truly about what Jan said, about relationships and delivery now more than ever. Hendredon, Calico–I’m sure because of the economy, we aren’t able to stock a lot of yardage now. 

You need suppliers that can give you four to six week delivery or a quick turnaround. I think that’s why a lot of people are realizing why they went to China and now have a lot of problems. We all have g r e a t converters that we deal with because we need to get some product from China. Even Henredon needs that $5.50 and below product to be competitive. 

Then you also have to have your silks and you have to have a wide variety that domestically we just can’t get. I think that people thought ‘Oh well I can just go overseas and not build those relationships.’ It’s still about the sales rep that comes in that door and you can say ‘come in any time and show me anything that you have.’ If that rep isn’t any good then that door isn’t open. So I think that it’s about the relationship and then definitely price point, quality and consistency. At the drop of the hat it’s important for suppliers to come and turnaround. We were just at Classical Elements (trim supplier) and went there within a day and they just had a huge set-up laid out for us where we could sit there for hours and pick out trims and help with color direction and you just can’t have those relationships with overseas vendors. 

I think people got away from relationships. You’ve got great US Mills like Keystone, American Silk, Valdese, Sunbury, Cone- -these are all the people that we buy from, Glen Raven, JB Martin, Jacquards Inc. LA Mills, Marlatex, and a new mill called Oriole coming up now that has some fantastic product. I think a lot of it is making your own little niche. Some mills overlap. With Keystone, the product is just unbelievable. Whenever someone walks in I say I think they are growing cotton in their backyard because I do not know where they get the price point from! 

Keystone has its own unique look. When you look at it the first time you fall in love with it. So I think there’s a lot of innovation happening here that’s not happening overseas and that’s really what it’s all about; every season coming out with something new–a new yarn, or a new look. I think the mills that are successful today are the people that have been doing that for a long time and not copying other people. The people that are successful and still in business today have their own little niche of quality and yarns and the ability to do custom at the drop of a hat. I notice that Valdese and Sunbury think about a lot of things before they come out with anything new. They research it. They go around to Calico and Henredon and say do you think this velvet is a good quality? That’s really what you have to do now before just throwing something up against the wall to see if it’s successful. 

We as buyers are excited to work with you all because of relationships so I think we should use that both ways. 

As I said, I don’t want to alienate any vendor because Henredon buys from a lot of people. You have fantastic converters for that lower price point. We have great converters that we deal with all the time like Regal and Merrimac. I think it’s important to have a well rounded line. You need to have a wide variety of products. You can’t get velvet from JB Martin because they can’t supply the whole world. 

Bob: The word I was searching for when I was talking was entitlement. I think we sat on this little plateau and felt that because we are in America and it’s made in America we were entitled to business and that’s not the case at all as we all know. I think fashion and an ability to turn are very important. 

Jan: I would just add that we’re always looking for great design, original design, things that are not me too product because there’s plenty of that on the market already. So that’s where I think American mills and converters with design studios in this country have an advantage. They can draw on the students coming out of the great America based design schools. 

That’s your gold mine; that’s your competitive edge over many other foreign mills because even some of the better European mills make things that sell really well in Germany but they’re not really colored or styled well to sell in the USA. So I would encourage you to invest and to really take advantage of that edge because that is what makes the difference. I think the difference between products which sell well in the USA and products which are designed offshore but don’t sell well in the USA has to do with the quality of the design. 

Eric: I heard some complaints about the Chinese exhibitors at Showtime. Does anybody care to comment on that? Am I the only one who has that impression? 

In the Audience: 

Gil Tavares, Vice President of Sales for Regal Fabrics: It’s been a concern to all of us especially if you take into accounts all of the effort, time and money we spend in maintaining these showrooms. You come down to Showtime and there are 44 exhibitors from China. It’s true what Bob and Rocco said; if you wait for the government to act you are going to end up extinct. it’s just a sad and unfortunate situation we are facing and I’m not sure how any of the other folks here feel but I’m glad you brought it up Eric. 

Jason Carr, President of Softline: I feel that it’s disgusting that they have Chinese factories here to compete with us and hurt jobs in America. Why would you have our suppliers next door to us selling and educating our customer hurting our markets. I can appreciate quality and relationships but the fact is we don’t have healthy enough markets to survive. 

We need your leverage as professionals in the industry to tell the Showtime Board: why don’t you go out and get people in the home accessory business to come in. We don’t need the Chinese textile factories here. Why would you create competition here for the little men like us that are trying to survive? We need to survive here, why we don’t take back America but don’t hurt us all and push our margins down. 

Claudine: That’s a great point, because that’s where the relationship comes in. Because for Henredon we work hard with furniture brands with Culp and Regal and we didn’t even walk down that isle and you’ve got to have morals and ethics. It’s not even a thought to go down that hallway because we already do business with all of you and you do a fantastic job. You put a lot of hard work into quality and consistency and you also look out for us. I think that’s where the relationship comes in as well. 

Darren: We talk a lot about the sense of entitlement. We’re U.S. based manufacturers and we think that everybody should buy from us because we’re U.S. based. But it does go a little bit beyond that. When I was talking about the quality of your components I would venture to say that every one of us in here is wearing a textile that contains formaldehyde. In the U.S. the government regulates formaldehyde so if you produce with more than 1,000 parts per million you have to have a sign in your factory that says ‘We are using chemicals that are known to cause cancer.’ In our factory, we produce well under that threshold. But a few years ago we decided to bring in about 18-20 of our competitors’ products that were used off shore. We tested them all and the only one that came in under that threshold was Rockland goods. We were the only U.S. manufacturer on that list and we were the only one that came in under that threshold. We had one that came in at twelve times higher than the limit that would require regulation in this country. So part of it is our responsibility to educate the customer and the end user as to why you should buy in the U.S. We’re regulated; every component that goes into our products that we make in the USA has to pass a test that our government has said. You go beyond this level and you’re going to have to set a warning or it’s going to be a dangerous product. How many stories have we heard about poison dog food or poison baby food coming from China or corrosive dry wall or toys with lead paint in it, the happy meal toys. Every month there’s a different story about why some of the offshore products dangerous. We don’t fall into that category, so are we a little bit more expensive? Yes, but in the long run there’s a secondary price to pay and I don’t think anyone’s safety is worth it. We have to educate the users as to why buying in the U.S.A. is better, not just a moral obligation but why it’s a better thing to do period. 

Bob: Maybe I can add a little hope here, the new term is ‘reshoring,’ meaning that it’s going from here to there. A study that I read about recently and I wish I could quote the name of the source but I have it and I can give it to you if you want it. This survey said that by the end of 2015 the playing field will be relatively level compared to where it has been over the last many, many years and that has to do with all the things that have been talked about today... Cost of transporting, the increase in wages in China and all the other things. China has to come to grips with some environmental issues that our industry has been faced with for many many years and other social issues regarding their people and they have to begin to learn to pay the piper and all of that is going to help level the playing field. 

Give me a level playing field and we will kick anyone’s butt and not because we are entitled but because that is just the way we are.