Opinion about the global market for cotton, textiles and apparel.

  • The Fiber Business: Cotton vs. Synthetics

    I write about the business of cotton and other textile fibers including synthetics, wool and other natural fibers. Topics include fiber production, demand, interfiber competition and marketing trends.

  • The Textile Industry: Problems and Opportunities

    Learn about the textile industry. Global trade, manufacturing and marketing. I write extensively about my impressions of globalization and the impact of free trade on industry supply chains.

  • Consumer Products: Garments and Retail

    My opinion about the global garment and retail industries, along with discussions about consumer demand. I am particularly interested in consumer attitudes concerning fiber content, CSR practices and environmental initiatives.

Monday, July 13, 2015

An Open Letter To The Cotton Industry

Dear Cotton Industry,
So you're a cotton farmer -- what’s most important to you? Sure, you want to make money and, sure, you want to provide for your family – you understand that. But what are you doing to understand your customers? You may say it doesn’t matter, I can always ship into the loan, my coop will handle it, my local pool worries about customers.
Do you care about the market? What makes up your market? Your merchant or coop help to make up your market, certainly. But what about their customers, the textile mills? What affects their market and how does that market matter to you? You may say, I’m a farmer, not a textile mill. But a textile mill will say, he is your customer: You will pay attention or he’ll buy from someone else. There’s a lot of cotton out there. Why? Because the mills have to pay attention to their customers,
In the long run, those who best understand the needs of their customers will be the most successful. The loan program won’t be around forever. If you think it will, you’re kidding yourself. Also, if you think there’ll always be plenty of merchants around vying for your business you’re kidding yourself. You can never take your business for granted. Complacency breeds contempt. Put more succinctly, ignore your customer and your business will go elsewhere.
The textile industry has undergone enormous change in the past ten years. Global trade in textiles was once regulated by high tariffs and a complex system of import quotes. Not anymore. Textiles used to be produced predominantly in the U.S., Europe and Japan. Not anymore. Textile mills used to dictate fashion, everything from fabric construction to fiber content. Not anymore.
Choice is a key word in textiles today. So is variety. The ultimate customer, today’s consumer, demands choice and variety. Whereas in the old days textile mills could tell the consumer what to wear that power has gradually transferred to the consumer. It’s what the consumer wants to buy that matters most – not what the mills want to produce.
The same holds true for cotton. Today’s consumer is looking for something new, something different. Growing any old cotton to meet the loan is not what today’s consumer is looking for. Variety, a choice of fibers, that’s what today’s consumer is looking for. Quality is critical, but so is uniqueness.
The organic movement is an example of uniqueness. Retailers like to show they’re “green”, that they use organic cotton in their clothing in order to distinguish their products from someone else’s. Consumers love it, whether they live in the U.S. or Europe.
Today’s mill is looking for something new, something to distinguish its products from someone else’s. Commodity production is a dead end, the beginning of a self-fulfilling spiral of cost cutting and lowering of quality standards. There will always be a market for junk, but increasingly today’s consumer wants something more.
Mills, in turn, are impelled to respond -- they adapt. They either go down market and try to survive at the bottom of the supply chain or they move up market stressing quality and value. Increasingly mills are opting for the latter option by focusing on a wider variety of products, improving quality and providing better value.
Yet these changes are not without problems. Despite all the progress the cotton industry has made in marketing its products, the industry still has to compete with the synthetic fiber companies – which are terrific marketers as well. However, fiber companies are not limited by an industry-wide approach to selling its products. Virtually all fiber companies stress sales of branded products. This is an advantage as they can focus on attributes of their products to stand out from the competition. 
It’s harder with cotton. Other than some sustainable production initiatives, the cotton industry has chosen to market its products in a broad sense, but by doing so, this has only reinforced cotton’s image as a commodity product. Cotton is just cotton – a sentiment heard up and down the entire textile supply chain. What distinguishes cotton from synthetics? Devising an answer to that question remains the challenge for cotton.
Ironically, both sides of the fiber business – cotton and synthetics – are moving closer in that each side continues to borrow characteristics from the other. Synthetics look to replace petrochemicals with natural alternatives, while cotton looks to incorporate new technologies to help to produce a more versatile product.
On the synthetic side of the equation, work has been conducted to replace petrochemical inputs with natural alternatives. Examples include corn, soy and milk derivatives. Also, efforts have been made to change the age-old production of rayon to include new sources of cellulose from alternative forms of wood pulp. Most famously bamboo was marketed as some new product, but which was found to be nothing more than reworked rayon. The point is that the synthetic fiber companies have been and will continue to be aggressive in their research and use of alternative materials.
What about cotton? Seed companies have definitely upped their game in terms of quality and improving the characteristics of some varieties of cotton to be more attractive to spinners and textile mills around the world -- cotton that’s stronger with a longer staple and greater uniformity. Mills around the world demand quality in their cotton as better cotton translates into better textiles, but better cotton also translates into lower production costs saving mills time and real money.
For the cotton industry to prosper over the long run, development of new technologies will be essential. The market demands it and the cotton industry can deliver over time. Additionally, the cotton industry must focus on evermore-focused marketing and educational campaigns. The best technology in the world can wither on the vine without strong marketing. Remember Betamax tapes? 
I humbly suggest that the cotton industry needs to embrace new business models and not be fearful of changing its way of doing business just because that’s the way thing have been conducted for years. Downstream customers are demanding more of cotton growers and fiber companies. Synthetic fiber companies are actively working to meet the challenge of the ever-changing marketplace. It is imperative for cotton to meet the challenge as well. Remember wool? Today, wool is a relatively small percentage of the global consumption of all fibers. There was a time when that was not the case. Times changed, but the wool industry failed to adapt. Let’s not let that happen to cotton.
Finally, I recognize that fashion plays a central role in the use of fibers. For the moment, synthetics have gained market share; in the future, that may be different as cotton comes back into fashion vogue. 
Indeed now is the time for the cotton industry to adapt its approach to the needs of its customer base. Cotton may not be as fashionable as it once was, but prices are way down. Simple economics does play a role: if cotton prices remain low, demand will return. But as demand returns, I respectfully recommend that a new marketing message be adopted to propel cotton back into the minds of mills, brands, and consumers around the world. Prices won’t remain low forever, but customers need to be reminded of the benefits of cotton and the limitations of alternatives. 
Sincerely,
Robert P. Antoshak
Concerned Cotton Executive


Saturday, June 13, 2015

'The True Cost' of the Global Garment Business

It’s about time. Someone has finally produced a compelling documentary about the ills of the global garment industry. I’m speaking about “The True Cost,” a new documentary by director Andrew Morgan. His documentary does well at showing some of the seedy aspects of the global garment industry, as well as the downside of globalization. As I have worked in textile and apparel industry for more the 30 years, I can attest that Morgan’s documentary is an accurate portrayal of the global garment sourcing business today. To my experience: globalization is great, but only to a point. When excessive consumerism acts as a carrot for profit, abuses occur all under the name of “just doing business.” Morality seemingly takes a back seat.

After the end of the Multifiber Arrangement — the much-maligned government program of global quotas that regulated the international trade of textiles and apparel for more than two decades — the global garment trade took off. However, as the industry’s supply chain expanded and efficiencies improved new costs crept into the system. Some say these costs are hidden, but as “The True Cost” points out, most of these costs are hidden in plain sight. The industry suffers from a long history of worker abuses, measurable environmental damage, and over-consumption of garments throughout the world. Today’s garment industry is a balance between low-cost supply in the developing world and hyperactive consumption in the developed world.

Indeed, we live in a time of extreme change. Developing countries are growing rapidly while developed countries are turning into consumer societies. Looked at another way, Fast Fashion has succeeded in convincing consumers to buy what they really don’t need. How many t-shirts does a person need? How low do prices need to go? Is consumer demand insatiable?

Too much of a good thing can lead to problems. If you drink too much booze for too long, you may become an alcoholic. In turn, too much free trade, open markets, with weak regulation may result in hyperactive industries that over-produce, harm the environment, over-saturate consuming markets, and leave a trail of worker abuses. It’s not an attractive picture. Although “The True Cost” is a sound portrayal of many of the problems in the global garment industry today, I fear the film fails to offer compelling solutions to those problems. Let me explain.

Tuesday, April 21, 2015

How Organic Cotton Caught The Measles

There are times when I have to question some people's sensibilities. We've all heard about the recent measles outbreak in the United States. The debate over vaccinations and the vulnerabilities of the general public due to a relatively small portion of the population refusing to inoculate their children out of fear strikes an odd tone about our society, if not human nature. For some, gossipy, second-hand pseudo-facts about vaccinations -- based in the false, discredited, and retracted finding of some old medical study -- live on as established truth. Blame it on the Internet, or blame it on TV, for some people the threat of vaccinations is real. It reminds me of the resistance of some people to acknowledge global warming or the proclaimed wickedness of genetically modified crops.

Fear, however, is irrational. In many cases, skepticism may be prudent, but ignoring facts can be dangerous. In its worst form, fear may be equated to anti-science, and a closed mindedness, that perpetuates myths with results far worse than fears originally suggest. For a long time, I've heard explanations from some advocates that organic cotton is the only way to be sure the cotton consumed in apparel is grown cleanly and sustainably. That's untrue. The majority of conventional cotton grown today follows sustainable growing practices. There is vehemence on the part of some organic cotton supporters in their beliefs, a doubtlessness of their convictions. I don't fault them for their beliefs, but I do question their willingness to look at the data.

Let me clearly state that I am all in favor of sustainable production. We have to do more as an industry to protect our natural resources. For me, though, organic production does not hold the only answer. Even in a good year, organic cotton makes up less than two percent of the global production. Organic cotton yields are low. It takes a lot of effort to grow organic cotton, let alone conventional cotton. For a farmer's effort, forms of cotton other than organic can often provide a far better return in terms of volumes and quality. Despite rhetoric to the contrary, economic returns for organic farmers can be particularly small and the volumes produced could never meet the broader needs of the global textile supply chain. This, in turn, begs the question: if organic cotton can never meet the demand of the global textile industry can organic cotton ever be truly sustainable? Furthermore, does organic cotton have the means by which to balance both environmental and economic sustainability?

A Possible Future for the Global Textile Industry in 2025

Recently, I was invited by the AgMarketNetwork to participate in their monthly conference call on cotton. For those of you not familiar, the AgMarketNetwork is an online media service that covers the global market for cotton. It is owned and operated by Mr. Pat McClatchy, cotton trader and futures expert based in Memphis, TN. The service provides weekly and monthly podcasts of the observations and opinions of some of the top analysts in the cotton industry today.

The topic of my talk was "A Possible Future for the Global Textile Industry in 2025." I spoke as part of an esteemed panel of cotton experts including Mr. H.W. "Kipp" Butts (Informa Economics), Dr. John Robinson (Texas A&M University), Dr. O.A. Cleveland (Mississippi State University), and Mr. Jarral Neeper (Calcot). My talk focused on ten factors that will affect the global textile industry over the next ten years, including:

1. The Environment
2. Supply Chain Distribution
3. Communications
4. Conflicts
5. Hemispheric Sourcing
6. Technological Innovation
7. Demographics
8. The Limits of Globalization
9. Growing Economic Inequality
10. Energy Resources

To listen to the free podcast (about 40 minutes in length), please click here: April 2015 Monthly Cotton Market Update

Thursday, March 19, 2015

The State of the U.S. Textile Industry

During the most recent State of the Union address, President Obama claimed credit for an apparent turnaround in the American economy. Although not perfect by any means, the economy does seem to be improving. Indeed, unemployment is down, corporate profits are strong, and many people feel better about their prospects. Various industries are doing quite well. However, what he failed to note was the quiet revolution taking place in the domestic textile industry, which is a shame as the industry has become quite a success story.

You may remember the big, bad American textile industry the heavy-handed, anti-trade industry that tried three times to restrict imports via legislation, which fought to maintain quotas via the Multifiber Arrangement, and that struggled to reverse globalization of the textile and apparel business. It was a very large employer and a substantial contributor to the American economy. But it was also an industry whetted to arcane methods of production and management. For sure, the industry had its time, but that time passed quickly as new technology, sophisticated sourcing, and trade liberalization took hold in the 1980s. By the end of the 1990s, the industry was decimated by nimble, cost-effective suppliers in Asia and elsewhere. For many domestic mills, these were the dark days: employment plummeted and companies seemingly went out of business every day while vast swaths of the trade moved offshore. It was grim. 

What a contrast compared to the industry of today, an industry that is anything but a basket case. Certainly the business has changed, but for those portions of the industry that found ways of adapting to that change remain in business and enjoy renewed prosperity. It is a smaller industry, but a far more nimble and productive. Instead of pushing trade restrictive policies of the past, the new industry promotes trade within the framework of creative, government-supported initiatives such as the Central American Free Trade Agreement (CAFTA). As a result, investment has increased in the domestic industry; new mills are built, while existing capacity has been modernized. Concurrently, new management has embraced trade as a positive and has positioned domestic producers to take full advantage of opportunities. Todays industry is export-oriented, with strategies in place to profit from globalized production platforms and new technologies.

Tuesday, February 10, 2015

American Consumers and Their Discontents

Another holiday shopping season has come and gone; it wasnt too bad depending upon whom you ask.  After some difficult years at retail, many stores reported better sales. Consumer attitudes have improved too, along with a seemingly improving economy. Things may be looking up, but as with many things in economics the aggregate story is a composite of differing, often conflicting factors.

Lets begin with the economy; it has improved.  According to the U.S. government, top-line GDP grew nearly 3% in 2014. Even better, unemployment is down while consumer spending rose nicely.  All in all, its a pretty rosy story except when you look at the fine print.  Although overall GDP grew last year, for many Americans it didnt continuing a long string of economic. Top wage earners did well; everyone else, not so well. Indeed, retail apparel store sales rose by more than 2% last year, but the growth was primarily at high-end stores. Mass market and discounters didnt do nearly as well. Perhaps it is the result of an increasingly weaker American middle-class? Or is it the effect of online sales up more than 7% last year which continued to carve a growing share of consumer dollars?

Then theres consumer confidence: it looks good until we dig into the details. Some consumers feel better about their economic prospects.  After all, the job market has improved.  But what about the kinds of jobs that are being filled? Many are for hourly wage service jobs.  Also, there are new distractions in the marketplace, particularly for younger consumers. In many ways, gadgets have cannibalized garments. Todays young consumer struggles with a very tight budget; theres not a lot available for frivolous purchases. $150 for a pair of jeans? Nah, shell buy a new mobile phone instead. How does that affect retail sales? Specifically, what does that do to apparel sales?

So what are the American consumers discontents? When it comes to apparel purchases, fashion, fit, availability, and source of production always are important. But today, perhaps more than ever, price remains central to consumer purchasing decisions, as economic uncertainty, changing demographics, and tight budgets continue to weigh on consumers.

Monday, January 12, 2015

The Global Cotton Industry: A Look At Its Past With Insight Into Its Future

For many people, the term globalization only has significance as a label for business development over the past 25 years or so. In fact, globalization is nothing new and is typified by the cotton business. The rise of textiles, as the first rung of industrialization, the rise of textiles, particularly in 19th century Europe, would not have been possible without the globalized production of cotton in Africa, Asia, the Americas, and elsewhere. Cotton, so it seems, was an essential, if unassuming, raw material of not only textiles but world development as well.

Today cotton is so ubiquitous that it is hard to see it for what it is: one of mankinds great achievements, so declares Sven Beckert, a historian at Harvard University and winner of the prestigious Bancroft Prize, in Empire of Cotton: A Global History. Even so, as Dr. Beckert elaborates, cotton is as familiar as it is unknown," a prescient observation when we consider the current state of the cotton industry. If youve ever wondered why the cotton business behaves as it does, I recommend reading this insightful history. Deeply researched, highly analytical, and well written, Dr. Beckert successfully relates the importance of cotton to the evolution of global capitalism. Indeed, the authors case rests on his observation that although a mundane commodity, cotton was essential to the development of the global textile industry. In so doing, the cotton industry helped to create the global networks necessary for expansion of global trade. Moreover, cotton proved to be a far more versatile raw material than other natural alternatives -- such as flax, wool, or silk -- which not only suffered from small supplies but limited application in various textile products.

As Dr. Beckert points out, the mercantilist economies of the 18th or 19th centuries would not have been possible were it not for the availability of cotton to the burgeoning textile industries of Europe -- particularly in England, by far the most important producer of textiles into the 20th century. Far-flung supply chains, along with eager supplies of capital made the merchant community the vanguard of an increasingly globalized world. By the time of the industrial revolution in 19th Century Europe, cotton supply chains were already well established in the United States, Brazil, India, Africa and Asia. Indeed, with the advent of high-speed spinning and weaving in the 19th century, those supply chains were only deepened to meet the needs of European industry. Cotton, as a result, became the essential raw material for what became the single most important manufacturing sector in the 19th century, textiles.

Pulling no punches, Dr. Beckert describes capitalism as an exploitive force in the development of the global economy, but cotton was an essential thread intertwined with the growth of global capitalism. Without a ready supply of fibers, the industrialization in England and elsewhere in Europe would not have been possible. From the standpoint of economic development, this was a good thing. Yet such development came with the horrifically negative cost of slavery (to grow cotton) and labor exploitation (to produce textiles), negatives that, although disdainful, contributed mightily to the success of capitalism and, by way of that success, the introduction of much of the world to modernity.

However, due to its importance as a raw material, producers and manufacturers of cotton yarn and fabrics enjoyed a level of political influence seldom enjoyed by any industry throughout history. This influence, though, resulted in abuses in the political, economic, and social development of the world, ultimately resulting in the manipulation of political influence, economies of scale, and, inexcusably, the exploitation and enslavement of large numbers of peoples in the American South and elsewhere. Slave labor, in turn, helped to support the wheels of industry, which provided the markets and capital necessary to support the overall system of supply and demand. With the advent of the industrial revolution, exploitation of factory workers took on sinister levels second only to the slaves picking cotton in the fields. Nevertheless, these evils enabled a rapidly developing Europe to meet its potential as the industrial powerhouse of the world by advent of the 20th century.

Saturday, October 25, 2014

A Funny Thing Happened On The Way To Cotton's Demise: It Changed

There's been a lot of negative talk lately about cotton: how it's lost its mojo and fallen out favor with consumers. In todays market, cotton is challenged in significant ways as it has to compete with an oversupply of synthetic fibers, a fast evolving textile supply chain, and changing consumer attitudes toward natural fibers. Of course, cotton always has to contend with weather, insects, weeds, and other growing problems; farmers year in and year out face such production challenges. Even so, there's always the demand of the market that ultimately tells the story of the success or failure of a product. Over the past few years, it seems as though the textile supply chain and consumers prefer synthetics. Cotton has lost market share.

I've written several critical commentaries about the cotton business in various publications over the past few months. Much of my concern has centered on the lack of focus on the part of the industry to address inroads made by synthetics. Further, theres confusion in the market over cotton's message. The frankly fallacious campaign conducted by proponents of "green" production (at the expense of traditional growing practices) has only helped to undermine the benefits of cotton. However, I'd like to suggest that the opposite is beginning to happen: cotton has shown remarkable resilience in the face of an otherwise dour market.

Let me explain. For many years, U.S. exports of cotton struggled to find a consistent presence in the global market. Traditional U.S. cotton that is, cotton typically produced in the Southeast, short staple, of standard- or low-quality filled the needs of domestic open-end spinners. However, as that industry collapsed, sales to more competitive overseas mills fell as well. The first decade of this century was tough for many growers, as they not only lost much of their traditional customer base, but also lost much of the overseas market at the same time. Lack of demand for traditional U.S. cotton resulted in a series of smaller crops. Some farmers stayed with cotton, but many fled to other more profitable crops such as corn and soybeans. Despite the dismal market for cotton at the time, something unexpected happened: new varieties of cotton were developed to meet the demand of overseas mills.

The Global Market for Denim: Problems and Opportunities

The global denim business faces considerable pressures these days. The global recession of a few years ago has left a lasting impact on consumer spending. Expensive is out; cheap is in. Credit-fueled spending has given way to tight budgets as consumers continue to pay off their debts from the years leading up to the recession. As a result, sales of jeans in the United States, for example, have declined over the past several years, while the popularity of low-cost knitted athletic wear has gain considerable market share. There was once a time when the purchase of a pair of jeans for a young consumer became a prized possession. Today, that’s less the case, as smart phones and other gadgets compete with jeans for the attention of consumers. It is true that the extreme high end of the jeans market remains robust, but the mass market for denim around the world has stalled.

Another factor has also affected the denim market: synthetic fibers. In an effort to lower the cost of mass-market jeans production, many manufacturers have replaced cotton with some polyester. Stretch fibers have, of course, been a force in denim for many years. But since cotton prices soared to over $2/pound in 2011, both mills and apparel companies have scrambled to find more economically priced fibers for use in their denim. Of course, cotton prices have since moderated, but so has the price of polyester solidifying gains by synthetics.

So all of these factors add up to one thing: there’s an oversupply of denim worldwide. For sure, the jeans business is cyclical. Even so, skepticism plagues the market. Many retailers have told me that without question, denim has passed “the top of the cycle” right now. Due to anemic demand, and an increasing switch to blends, global denim prices are relatively weak. The overcapacity situation has further dampened price levels. It appears that demand will only fall over the next few years. Over that time, excess capacity will be shed around the globe. Yet, even though capacity will be reduced in aggregate around the world, some countries will actually step up construction of new mills.

In terms of trends, I foresee a continuing decline in aggregate denim capacity over the next few years as inefficient mills in Europe, North America and Asia are dismantled, while at the same time new capacity comes on-line in China, India, Turkey and Brazil. The growth in these countries and a smaller number of other producers, such as Vietnam, will in time grow to offset declines in less efficient capacity elsewhere. Indeed, the cyclical nature of the global denim business seems to indicate a cycle of approximately five years in length with capacity being added and deleted as fashion and other factors increase and decrease demand for basic denim.

Friday, August 29, 2014

The Weave of Time: Global Textiles in 2024

Welcome to Kingpins

At the recent Kingpins show in New York, I saw a bit of the future, along with some stark reminders of the past. For one thing, I saw the executive director of the BetterCotton Initiative share a cotton panel with the director of Bayer CropScience’s e3 Cotton program to discuss the lives of farmers in both the developing and developed world. Whereas just a few years ago such a panel discussion would have been impossible, at the Kingpins event I witnessed the future of cotton production: a blending of technology, sustainability, and desire to improve the lives of farmers throughout the world. As recently as five years ago, such a discussion — if it had even been possible to get the two groups together — would have deteriorated into who had the “greenest” products, fears over GMO, and tedious technical refutations. Today, it is clear that more constructive dialogue in cotton is more possible than ever before, setting the stage for future collaboration and initiatives. As a cotton person, I can attest that the Kingpins panel was an event to behold -- a positive development that holds great promise for the future.

And then there were reminders of a painful past. Visitors spoke of tight margins, flat domestic sales, and woeful corporate results from the most recent quarter. Exhibitors, in turn, worked feverishly to sell products made with technologies and business practices that have existed since the dawn of the Industrial Revolution: mass production, unit price programs, and product design. Or, to put it more succinctly: price, availability, and delivery. In fact, despite the challenges of today’s market, many buyers visiting Kingpins sought out only those manufacturers using the oldest equipment and techniques. Buyers today look for old in an effort to stand out in a crowded market of new. Contemporary innovations, such as sustainable production, were marketed by virtually all exhibitors, along with the promise of simpler supply chains, a return of U.S. production, and, above all, value for the purchasing dollar.

So, I participated in a show where I had a glimpse of the future, while being reminded of the past — a dichotomy for an industry struggling to exist in a rapidly changing world. For me, it’s ironic as I can see would-be cotton foes working to find common ground while buyers of today’s textiles are looking to turn back the clock to a simpler time, when production was crafted locally, and customers were visited by car or train, as opposed to 747 jet. Today’s market, although more interconnected thanks to technology and the Internet, is actually a far more impersonal place. Sellers and buyers just don’t spend the time with each other as they used to, before the advent of Skype, IM, and email. Today’s far-flung supply chains and quick-turn business practices developed in tandem with the Internet. Which gets me thinking about the future of textiles, the outlook for sourcing, product development and innovation. It also gets me thinking about the fate of today’s major producers of textiles — in particular, China. But I am not concerned with the far future, but rather just the next ten years. Let me explain.