Have Trim, will Travel

Keeping pace with the explosive growth of Latin Americas apparel industry has posed new challenges for trims and components suppliers. Bobbin checks in with four companies to discuss the strategies they are using to serve the region.

As apparel manufacturers continue their steady march to Mexico and other Latin American countries, suppliers of trims and components have been busy pondering an important question: Should we follow the needle by opening manufacturing facilities near customers or surround the needle by establishing warehousing and distribution centers close to manufacturing hubs?

Needless to say, like most decisions in today's global sewn products business, there are no easy answers. Here's how four different suppliers, QST Industries Inc., Mount Vernon Mills, Asheboro Elastics Corp. and Coast Pad and Trim Corp., are making ends meet in Latin America.

Follow the Needle

While some key apparel mills and thread producers have moved production south of U.S. soil, the trim segment that makes pockets and waistbands, etc., has remained primarily in the United States. One exception, however, is QST Industries Inc. Sid Pokorny, the New York, NY-based vice president of the 120-yearold firm, with headquarters in Chicago, IL, reports that the company opened a 220,000-square-foot manufacturing plant and finishing operation in Toluca, Mexico, last April that includes facilities to die cut and print pockets. Additionally, in September 1999 the supplier opened a 40,000-square-foot warehousing and manufacturing facility in Santiago, Dominican Republic, to make waistbands and die-cut pockets and other components.

The company is known for such products as Ban-Rol(r), a non-roll waistband interlining; [Q-Loop.sup.TM], an extruded resin tape that finishes the interior of heavy and lightweight denim and cotton belt loops; and [Quick-Stretch.sup.TM], a narrow elastic with 300 percent memory stretch. Pokomy, who asserts that QST (Quick Service Textiles) also is the largest supplier of pocketing in the Western Hemisphere, says the decision to build in Mexico was made "because that's where our major customers have gone. We supplied manufacturers in Mexico from warehouses for many years, and we wanted to serve them on a more efficient basis."

Better delivery is the key in today's quick-turn environment, the vice president observes, noting: "If you ship something out of the U.S., it has to get to the Texas border; it has to go through customs; and it's expensive to ship in smaller quantities."

NAFTA was a major influence in QST's decision to manufacture in Mexico and, according to the company, the new resources could result in a savings of more than 10 days in lead time, compared with shipping finished goods from the United States. As for the Dominican Republic, "We have customers who are encouraging us to be there," says Pokorny, who has confidence that the Caribbean Basin Initiative (CBI) countries will be granted some form of "parity" legislation to level the playing field with NAFTA.

Looking at the big picture, QST is actually following the needle and surrounding it. In addition to a large factory in Mocksville, NC, three facilities in Texas -- Dallas, El Paso and Forney -- and an operation in Los Angeles, CA, the company has a 15-yearold plant in Hong Kong, as well as a global sourcing and distribution presence in about 32 countries. The latter network encompasses Asia, Europe and Latin America, including Argentina, Colombia, Guatemala and El Salvador.

Focusing on industry changes, Pokorny points out that more customers want to purchase components delivered in specific quantities to designated plants, rather than buy piece goods and maintain huge inventories. Additionally, he comments, companies that are serving the markets within Latin America have "Americanized" their garments, which means that they now need local access to U.S-styled trim components. As a result, Pokorny believes that more trim makers will have to establish manufacturing sites in Mexico and Latin America -- "No question about it."

Surround the Needle

On the other hand, Roger Chastain, president and COO of 153-year-old Greenville, SC-based Mount Vernon Mills, isn't so sure about moving production south. The more than $800-million U.S. textile producer -- with 55 percent of its volume in apparel fabric, half of that in denim and the other half mostly in bottom weights -- entered the trim business in 1994 through the purchase of Brenham, TX-based Brentex. The company expanded again last September by acquiring another trim business from St. Louis, MO-based Western Textile Products. Now offering waistbands, pocketing, die cut products, shirt interlinings and belt loop linings, to name just a few of its products, Mount Vernon has become a leading vertical supplier in the components arena.

The first acquisition gave the mill plants in Brenham and Cuero, TX, which produce approximately 1.5 million yards of pocketing material per week and are equipped for convening and die cutting. The Western Textile Products deal also gave Mount Vernon converting capabilities in Memphis, TN, and Columbus, MS. Plans currently are under way to consolidate the Memphis converting equipment in Columbus, a move that will enable Mount Vernon to have two U.S. manufacturing and distribution points that duplicate its lines to some degree.

The Columbus operation is situated in the southeast to serve the Caribbean, while the Texas units are ideally suited for shipping to the Mexican market. In addition to the organization's U.S. logistical stance, the mill executive is a proponent of "surrounding the needle" with nearby distribution capability through several bonded warehouses in Mexico and the Caribbean that provide in-country accessibility. "Mexico is a big country. And if there are 15 distribution centers that we're utilizing, all we need is an import/export license," Chastain explains.

On shipping from the United States, he points out: "The operation in Texas is only 75 miles from the border. What is another one and one-half hour drive? Once the goods are loaded, it's just a little longer conveyor belt. [ldots] I haven't heard any complaints about the approach we're taking."

Fourteen-year-old Asheboro Elastics Corp. is on the same wavelength. Among the top three elastic companies in the United States, the $20-million supplier of knitted products opened a distribution center in Torreon, Mexico, two years ago and is now establishing another operation in Aguascalientes, Mexico. The firm also has similar facilities in Honduras and the Dominican Republic, in addition to U.S. centers in Asheboro, NC, Brownsville, TX, and Miami, FL.

In describing Asheboro's philosophy on serving offshore markets, president Keith Crisco emphasizes: "We have parallel growth everywhere, So if we build a plant in the Dominican Republic, that's nice for the Dominican market, but it doesn't help us very much in Mexico. We literally could have plants in nine locations now. [ldots] But it [makes more sense for the company to have] distribution centers close to the many U.S. firms that manufacture in those countries. It makes for quicker delivery and it's an investment closer to the source."

As he puts it: "We're distributing our goods right on the scene, and so far manufacturers seem to be pleased to have a U.S-made product delivered to their doors. It's less risky than getting something made (in Latin America] from an unknown source."

That said, Crisco relays that over time he believes trim makers will build more production facilities in the regions that are attracting apparel. However, he cautions: "Elastic and trim companies need to become educated, be careful, learn more and build distribution [in Latin America]. I feel that throwing a plant up in the middle of Mexico and then saying, 'We have a plant, what do we do?' is probably not the way to go."

Taking a stronger stance, Jim Eberhardt has no doubt that large U.S. trim companies eventually will move into Mexico, and that's not so good for his organization. Eberhardt, who is vice president of sales for 15-year-old, $6-million Coast Pad and Trim Corp., says: "The sad part is that the move will probably leave companies like Coast behind because we won't have the resources to act accordingly."

Nonetheless, Eberhardt, whose Vernon, CA-based firm produces molded shoulder pads, bra cups, stretch linings, interlinings and elastics, sees some bright spots on the horizon. For example, Coast works indirectly with several suppliers that have warehousing in Mexico and will deliver products to the company's customers.

Additionally, he notes that apparel manufacturers are now establishing cutting and sourcing operations in San Diego, CA, which feed sewing plants in Mexico. This arrangement allows Coast to service these companies from the United States. In making an analogy, the sales executive says: "There are a lot of Hong Kong companies that produce in China, but all the [front-end] activity happens in Hong Kong. It would be great if San Diego could be like Hong Kong and Mexico like China."

Also on a positive note, Eberhardt reminds that there is a large activewear market in the Los Angeles area, "where styles are changing so quickly that you just can't schedule [the production] in another country. It has to happen locally. This is the largest production center in the country, and some segments are growing, which is pretty amazing in today's climate."

However, he soberly acknowledges: "The bottom line is that in the long term the pie is shrinking, and it is being bitten on by Mexico and Asia, So it makes it very difficult for a company like ours to grow. But we will remain in business. There will always be something here. It's a matter of trying to find a way to be creative in this environment."

Jules A bend is a Bobbin contributing editor and editor in chief of Clarion Inc., a Howell, NJ-based international news gathering organization.

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