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Struggling teen apparel retailer Aeropostale Inc. filed for bankruptcy protection recently, succumbing to years of losses as shoppers moved on to fast-fashion retailers and online competitors. According to Aeropostale, it plans to finance its operations during its bankruptcy through a $160 million loan from Crystal Financial LLC combined with operating cash flow, as per the court filing. The company expects to emerge out of bankruptcy within six months with a resolution of its disputes with former shareholder Sycamore Partners, which had thrown a lifeline of $150 million to the retailer in 2014.
The mall-based retailer said it would close 113 US stores and all 41 stores in Canada. The difficult market for teen apparel has triggered bankruptcy filings by high-profile retailers such as American Apparel Inc, Quiksilver Inc and Sports Authority Inc in the past year.
Online retailers and fast-fashion retailers such as H&M, Forever 21 and Inditex's Zara have posed a threat to traditional apparel retailers, but American Eagle Outfitters Inc and Abercrombie & Fitch Co have managed to turn around their businesses by controlling inventories and responding faster to changing fashion trends. Aeropostale said in March it was exploring strategic alternatives, including a sale, citing a dispute with a vendor, MGF Sourcing US, an affiliate of Sycamore Partners.
In a significant development, the European Union (EU) has reduced retaliatory duties on some US-made jeans, but will still impose a rate on top of regular duties as part of an ongoing and long-running trade dispute between Washington and Brussels. From May 1 the EU retaliatory tariffs on a number of US-made products including women's and girls' jeans (HTS 6204.62.31) will fall from 1.5 per cent to 0.45 per cent.
This rate is levied on top of regular duties and comes in response to payments the US makes to domestic industries to distribute antidumping duties collected on foreign-made goods. The tariff hike was authorised against the US by the World Trade Organization (WTO) for being in violation of its international trade obligations for failing to fully comply with a ruling against the Continued Dumping and Subsidy Offset Act of 2000.
Known as the Byrd Amendment, this law allowed American companies who complained about unfairly traded goods to receive payment from the additional duties collected by the US.The law was found to be a violation of WTO rules and, despite a repeal in 2005, its distributions were allowed to continue for entries of goods made before 1 October 2007. As a result, the WTO allows other countries to raise tariffs on goods imported from the US up to a certain amount, which varies each year.
Australian Wool Innovation is focused on promoting wool fiber, which means wool suits and wool sweaters. AWI has offices in New York, London, Milan, New Delhi, Shanghai, Hong Kong, Tokyo, San Francisco, and Paris. The Hong Kong office, opened in April, and is the company’s research centre for product development and education. Offices in Milan and London will be the main hubs for company product marketing.
AWI will continue to partner with world’s leading fashion brands and retailers to promote wool as a luxury fiber for high quality performance garments and interior applications. At present, the company is working with various partners and funding around 130 projects across the world. It works closely with some of the most exclusive manufacturing brands in apparel, interiors, and sportswear and continues to administer the Woolmark brand with its licensee partners.
Wool has not traditionally been recognised as a fiber suitable for technical textiles. AWI works with partners through its subsidiary The Woolmark Company to develop new applications for wool as it has with Adidas in its new running shoes. AWI’s main objective is to achieve a stable and profitable wool industry, deliver the best natural fiber to the world, and the best return to its shareholders, the Australian farmers.
In a significant development, the General Brotherhood of American Apparel Workers (GBWAA), a union for garment workers at American Apparel’s southern California manufacturing facilities has called for a boycott of the brand’s merchandise, pointing to mass layoffs and reduced compensation and benefits that have intensified since new management in January 2015 began a process of post-bankruptcy restructuring throughout the corporation.
Currently, GBWAA is awaiting a certification election date from the National Labor Relations Board, and workers with the union say they are calling for the boycott because American Apparel consumers must know corporation is not the high-wage, sweatshop-free company once marketed itself to be, especially since Paula Schneider replaced American Apparel founder Dov Charney as chief executive officer of the corporation.
According to the Union president Stephanie Padilha dos Santos, if people are used to buying American Apparel and think that the company is great and that the whole concept of paying fair wages in industry was what made the company a huge success, then we invite you now to boycott the brand because it is no longer sweatshop-free.
Padilha alleges that the company has been outsourcing production to other ‘sweatshops’ around Los Angeles, while reducing the once relatively high wages earned by production workers at the company, which were the highest in the world, according to the company.
Meanwhile, in another round of layoffs, over 500 workers are reported to have been laid off this April as part of what Schneider has called a ‘redesign of production process.’
Chinese cotton stocks will fall to a five-year low as the huge reserves are being auctioned off. The sharp decline in Chinese imports, and falling domestic production, will help draw down stocks even as Chinese demand falls. A policy of government auctions, and import limitations, will shrink Chinese cotton stocks by seven per cent in 2015-16 and a further 10 per cent in 2016-17.
China’s huge stockpiles, accumulated through an abandoned price support scheme, have been hanging over world markets. The country says it will sell up to two million tons of cotton between May and August. Daily sales will be made of up to 30,000 tons, with prices based on international and domestic markets in the run up to the sales.
China, which up until this year was the world's top cotton buyer, is set to pare its imports to the minimum levels agreed with the World Trade Organisation. Import restrictions are expected to shrink Chinese buying by 40 per cent in 2015-17 with a further 13 per cent reduction in 2016-17. And production in China is expected to fall 10 per cent year on year thanks to high production costs. The fall-off in production and imports will outweigh falling Chinese demand.
For March 2016 Chinese spandex exports were up 23.8 per cent year on year and 41.9 per cent month on month. For the first three months of 2016, total exports surged by 16.7 per cent compared with the same period in 2015. There was a strong demand from traditional textile markets including Turkey and emerging textile markets such as southeastern and southern Asia. In March, demand from Turkey, Pakistan, and Vietnam increased significantly while that from South Korea was largely steady.
China has a surpluse of spandes. In recent years, spandex capacity expanded rapidly, which led to excess supply. Spandex prices plunged and many spandex plants eventually suffered losses. In face of greater competition in the domestic market, many spandex plants developed an export market to ease inventory pressure. So far some plants have already made some progress in the export market and their products have been accepted by more customers.
There is a good demand for Chinese spandex in overseas markets. In March 2016, nearly half of spandex exports were from multinational companies. But Chinese companies also did remarkably well. Huafon for instance exported about 510 tons of spandex, accounting for about 10 per cent of total exports.
Texcare will be held in Germany, June 11 to 15, 2016. This is the world’s leading trade fair for textile care. Over 310 exhibitors – 20 per cent more than in 2012 – will present their latest products and innovations. A good two thirds of companies (67 per cent) are coming from outside Germany. From Europe, there has been an increase in the number of exhibitors from Italy, the Netherlands and Turkey. Exhibiting for the first time are Iran, Lithuania, Pakistan, Thailand and the Ukraine.
Particularly strong growth has taken place in the fields of textiles and accessories as well as logistics, material flows and information technology. The number of companies showing textile products for hire services e.g. work wear, bed and table linen, clean-room textiles, mats, washroom hygiene, terry products and towel rolls has climbed by 50 per cent compared to 2012. The number of exhibitors in logistics, material flows and information technology product segments is up 34 per cent.
Texcare International will occupy 30 per cent more exhibition space this June than in 2012. Many national and international manufacturers have opted to increase the size of their exhibition stands this year in comparison to the last Texcare.
www.texcare.messefrankfurt.com/
As per a World Bank report, since Bangladesh lags behind Vietnam, Cambodia and Indonesia in competitiveness, a rise in Chinese apparel prices would offer more benefits to the Southeast Asian countries. The report said that a 10 per cent increase in Chinese apparel prices would raise the Southeast Asian countries’ export to the US by 37-51 per cent, while export of South Asian countries would grow by 13-25 per cent (depending on the country) due to barriers to importing manmade fiber and poor exporting logistics.
The report titled ‘Stitches to Riches? Apparel Employment, Trade and Economic Development in South Asia’ shows that the rank of Vietnam and Cambodia in terms of quality, lead time and social compliance are higher than the South Asian countries like Bangladesh and India. As per the report a 10 per cent increase in Chinese apparel prices in the US market would increase employment in Bangladesh by 4.22 per cent in the sector but for the EU market, apparel employment would drop by 0.74 percent for males and 0.77 percent for females.
Even though the wage structure in Bangladesh is the lowest, the worker’s productivity in Vietnam, Cambodia and Indonesian is higher than Bangladesh and India, the report said. The WB said Bangladesh has steadily increased its share of global apparel trade above the world average and greater than China, but lower than that of the Southeast Asian countries.
Vietnam’s apparel exports have shot up six per cent in the first four months of this year against the same period a year earlier. In 2015 Vietnam’s garment exports reached $27.5 billion. Based on the sector’s current growth, export turnover is expected to reach between $40 billion and $50 billion by 2020.
Now, the textile sector wants to attract investments including high-quality fiber production and dyeing projects in industrial parks or key economic zones. At present, the sector relies on importing high-quality fiber for manufacturing export products. The import cost for these was $15 billion in 2015.
Despite rising shipments, the industry is coping with a slew of challenges. Many small and medium enterprises have been mired in difficulties as they have found it hard to compete. While apparel exports from Myanmar and Laos enjoy special tariffs for exports to Europe and the US, Vietnamese firms have to wait until 2018 to make use of preferential tariffs to export products to these two major markets. That’s when the new free trade agreements with them will take effect.
In addition, apparel enterprises have become exhausted by so many inspections by customs, taxation, labor, environment and food safety authorities. There are three or four inspection teams a quarter. What also irks these enterprises is the rule on formaldehyde content in imported fabrics. They say this rule costs them time and money to observe and want it revised. There is a need for industrial parks to facilitate management and wastewater treatment.
Vietnam is targeting apparel exports worth $30 billion this year. The target is achievable but enterprises have to change their business methods to make the most of opportunities from the country’s international integration.
Garment exports from Tirupur, a major knitwear hub of the country, grew by 16.3 per cent to Rs 23,050 crores in 2015-16. Garment exports from here stood at Rs 20,730 crores in the previous fiscal. Apparel exports from the country rose eight per cent year-on-year to reach Rs 1.1 lakh crores in 2015-16, particularly due to increased orders from European Union (EU), the largest importer of Indian garments.
Exports from Tirupur are expected to sustain the growth in the current fiscal too following good demand from EU. Exporters feel this can be doubled if the Free Trade Agreement (FTA) is finalized since they have seen growth in Europe and are getting new buyers. Exports can jump to Rs 50,000 crores if the FTA with EU is in place, they say.
With China moving away from manufacturing to IT and the services sector, Tirupur's garment manufacturers are looking forward to a sustained improvement in business. The share of apparel in China’s textile exports has come down from around 15 per cent to 7 per cent in the last one year. This means there would be more opportunities for India.
The textile industry provides employment to over six lakh people in Tirupur. It is a global outsourcing hub for everything related to knitwear.
