TC2 - Newsletter

At this year's Material World, attendees were treated to a visual delight of fabrics that are right on target for 2006/2007. On September 28-30 at the Jacob K. Javits Convention Center in New York City, fashion-forward fabrics generated considerable excitement.

Three leading trend and color forecasters shared predictions for 2006/2007. Dana Poor of Cotton Incorporated, Tod Schulman of Pantone and Emmanuelle Linard of Trend Union each had a different take on what to expect in the upcoming seasons, but overlaps were apparent:

• Simple tweedy fabric structures such as twills and herringbones will be prevalent.

Review by Dr. Mike Fralix, President, [TC]²

About 240 people, including the panel of speakers, gathered in San Pedro Sula, Honduras on September 19 and 20 to participate in a Central American Forum for Textiles and Apparel. [TC]² worked with AHM, the Honduran Apparel Association, and SPESA to develop the program and manage the two-day event. As the moderator, I had the pleasure, as well as the responsibility, of meeting with all of the speakers, including the President of Honduras, Ricardo Maduro.

I first heard the President speak at the CCAA meeting last December in Miami. He spoke from notes, without a prepared text to read. I remember being so impressed with the changes he had implemented during his term in office that I thought he would make an appropriate keynote speaker at a time when CAFTA will bring a lot of change to the region.

One of the highlights of El Foro for me was to have the opportunity to spend about ten minutes privately with President Maduro prior to his address to the audience. During that time I shared with him the reason we had selected him to open the event and we talked about the way in which he had dealt with such issues as job creation, education, poverty and crime. But most importantly, we discussed protocol.

Protocol required that the President speak in Spanish when addressing an audience within the country of Honduras. After listening to me talk about what we wanted to accomplish, he asked me if I wanted him to speak in English. I responded that I had heard that it was protocol for him to speak in Spanish. His response was that he was not concerned about protocol, but what would be most effective for the audience. Since I had wanted to engage in an open dialogue about the issues relating to Honduras, the region, and the need for change, I felt the audience would benefit more if the presentation was in English. He agreed, and from his prepared notes which were written in Spanish, he delivered an outstanding presentation, in English, to the audience of El Foro.

Following the President was a combination of panels and individual speakers, each focused on a different perspective – all ultimately relating to the apparel and sewn products industry and doing business in the Caribbean and Central America. Each panel and each speaker left its mark on the audience. And, rather than report on exactly what each speaker said, I thought it would be more appropriate to share one or more significant, and sometimes humorous, items that occurred during the two days.

It began with Jon Fee, who led off with the Trade Perspectives panel, and will be remembered for the little dance he did to show us the complex nature in which quotas are figured for certain categories of garments. The calculation included some reference to dividing by the number of cousins that were married to your aunt's grandmother's children, adding the age of your dog, etc. Natalie Hanson shared the difficulties of developing the appropriate trade strategy when there are still so many “demented customers” roaming about. Steve Lamar shared with the audience that some legislators did not like CAFTA because it rhymed with NAFTA. Afta which, we continued our search for other words that rhymed with NAFTA and CAFTA.

At lunch on the first day, Kevin Burke gave an outstanding overview of the worldwide trade issues and the need for action to begin now so that Central America and the surrounding region can take advantage of CAFTA implementation. He also very appropriately credited the staff at AAFA and representatives from each of the countries that helped with the passage of CAFTA.

The first afternoon panel was made up of representatives of the five countries in Central America and the Dominican Republic. Each shared from his perspective changes that are already being made and programs that are being implemented. They truly had a regional feel to them; not just programs that were being developed for one country, or even one company for that matter.

This session was lead by Francisco Escobar of El Salvador. Francisco taught us that if you do not tell the audience everything, then they will always have questions. Among the many things he shared about El Salvador, he told us of the competitiveness roundtable that had been formed and about a merchandising program for graduate students that had been developed with the assistance of FIDM, FIT and NCSU.

Tony Malouf from Guatemala reinforced the importance of forming strategic alliances that could capitalize on the various strengths within the individual countries in the region. His vision was not of becoming a leading country; rather, how to become a leading region in the world.

Juan Carlos Pereira of Nicaragua aptly demonstrated to the audience that you do not have to be born in the apparel industry to understand its importance to trade with the United States. He also pointed out that Nicaragua is uniquely positioned to take advantage of the CAFTA legislation. Nicaragua has received a $175 million challenge grant most of which will be used to develop infrastructure in the country.

Jose Berliavsky from Costa Rica brought a chuckle to the audience when he commented that he had absolutely no clue why the President of Costa Rica had not passed CAFTA at this point. He was sure that there are reasons, but could not figure them out.

Arturo Peguero from the Dominican Republic shared their plans for implementing a training center for product development. He said that it would be open to providing services to the other countries in the region.

Jesus Canahuati closed the panel by reminding the audience of the many opportunities that exist in the region and how important attitude is. By the time he finished, the audience could sense that for the first time the region was pulling together.

The final panel of the opening day was titled the Brand Perspective. It was lead off by Jim Kupfer of Jockey. He told us that Jockey began 130 years ago by making socks for lumberjacks. Today the Jockey brand is doing well, and in his words, “we don't need any more brands.” He was followed by Bill D'Arienzo of WDA Marketing Solutions who personally touched almost everyone in the audience as he walked in and out of the aisles and telling us that not only do we need more brands, we can brand the unbrandable. He helped us understand how sometimes we brand things and other times things become brands.

The second day of El Foro was kicked off by not one, but two presidents. Fred Jackson, the president of American and Efird, and Keith Crisco, the president of Asheboro Elastics presented the Textile/Supplier Perspective. Fred shared A&E's success in building a global supply chain through a combination of owned operations and joint ventures. Keith demonstrated how important small companies can be, and the role he played in the passage of the CAFTA legislation. Since he clearly has ties to the White House, I asked him if he could get me a ride on the President's plane, since riding on Air Force One is one of my goals!

The next panel was called the AFTA CAFTA Perspective. AFTA CAFTA was a term coined by Dave Gardner of SPESA just after the legislation was passed by the House of Representatives. This panel was led by Chandri Navarro-Bowman, a partner in Hogan and Hartson. This is the same law firm that Supreme Court Chief Justice John Roberts once worked with. Both Chandri and Jon Fee are partners in their respective law firms and the audience was conditioned by the time Chandri spoke to think of the word “lawyer” when they hear the term “partner.” Landon Loomis of CCAA rounded out the AFTA CAFTA perspective by detailing the strategic issues affecting the region. He reminded the audience that a number of the problems affecting the region are internal and not controlled by the United States or other external forces.

The morning was complete when Jim Leonard, Deputy Assistant Secretary of Commerce, shared the U.S. Government Perspective on trade issues and the work he has been doing to negotiate with China regarding safeguards and imports. He will be remembered for reminding the audience that doing all the right things does not guarantee success, but doing nothing guarantees failure.

The afternoon was kicked off by Paul Richards of Li & Fung. He came all the way from Hong Kong to be with us and he single-handedly led the Sourcing Perspective. He delivered a powerful checklist of what companies in the region need to do if they truly wish to be competitive. He reinforced the importance of Central America and the Caribbean to the U.S. marketplace but told them that it would not be handed to them if they did not commit themselves to providing a full service integrated supply chain and took full advantage of its close proximity to the United States.

Paul Richards was followed by John Mayer of Demand Solutions and me who provided a Technology Perspective for the region. My focus was on some of the more recent developments in sewing and supply chain technologies while John Mayer outlined a realistic approach to the subject of collaboration. It was also good to hear that not all software failures are the fault of the customer. Sometimes an application is sold that is not appropriate for the client at the time.

The final session was titled the Training Perspective and was delivered by Dr. Colin McLernon, a Canadian veterinarian who spent a career building fish farms until he was called upon to build a different kind of farm. He shared the work he is doing to establish a polytechnic institute for Central America that will be measured by the number of jobs that are filled by its graduates. Clearly, he hit the mark because every other country representative had identified a shortage of competent qualified middle management people as a real problem in the region. What I will remember most about his work reminded me of an old saying, “If you can teach people how to grow fish, you can teach them how to run an apparel factory.”

Following Colin's talk, Henry Fransen of the Honduran Apparel Association presented a very positive outlook for Honduras and discussed some of the investments that are being made to benefit the industry in the region. This includes a 500 acre industrial park, new textile mills, a U.S. Customs pre-clearance facility, and the construction of a dry canal between Honduras and El Salvador.

We have received many positive comments about the program, the speakers, the content, and the venue. We have also been asked to consider doing it again next year. Not to speak for AHM or SPESA, I think the consensus is that if we can make it an event for the entire region, we will strongly consider it.

Seating still available. Learn how Zara has succeeded in the fast fashion market with 20% annual net sales increases. [TC]² and the UK's Industry Forum have joined forces to produce this leading edge seminar to be held at Fashion Institute of Technology in the Katie Murphy Amphitheater. GIDC is a sponsor of the event with a panel of New York designers and manufacturers to talk about design to store. Join the over 100 individuals who have already registered to attend. Click here for more information.

Camisas Finas de Hidalgo is a shirt manufacturing plant located in the city of Pachuca, State of Hidalgo, Mexico. The company was founded by a Lebanese immigrant, Don Jose Maauad, who gave origin to Grupo Empresarial Maauad, in 1949. This factory has been dedicated to assist the domestic market since its foundation in 1995, a year in which two events changed the direction of the apparel industry in Mexico; first, a free trade agreement had been signed within North America and second, an economic crisis with a terrible devaluation. Consequently, it was necessary to present two new ways to make future decisions. The first one consisted of reducing the plant to a third of its original size of 120 employees and the second, which was the elected, to look for new markets.

By the end of 1995, Camisas Finas de Hidalgo was exporting 100% of its production for the Arrow brand in the USA, had manufactured shirts for the Pendleton brand for an 8 year period and engaged in full package production for Miller International. A new company – Norteamericana de Confecciones - was begun to produce boxer shorts on contract for Robinson Manufacturing Co. located in Dayton, TN. This business relationship continues today. Also,in 1997, another plant opened for manufacturing boxer shorts in a nearby location. Also in that year,an additional new plant opened to produce industrial uniforms for Workrite Uniforms, a company located in Oxnard, CA.

In 2000, the company included more than 1000 employees in four manufacturing facilities and a cutting room. All the plants were certified mainly by their clients under quality systems and social compliance conditions.

Always concerned to achieve the maximum efficiency in its operations as a contractor’s business is based on its efficiency, the group has been recognized for having the best sewing equipment as well as developing its staff’s skill sets. Camisas Finas de Hidalgo has been recognized as the first Center of Evaluation of Labor Competition in the country for positions in the Apparel Industry. It has also hired consulting, educational and training services from [TC]² allowing the organization to implement lean manufacturing cells starting in September 2003.

Currently, Camisas Finas de Hidalgo has 750 employees and is facing competition with Far East countries due to the difference in labor costs. In order to face this challenge, the company is concentrating on offering quick response to its clients. The proximity to the USA market is a great advantage for a company that has to respond in an immediate way to consumer changes,can produce smaller lots, and meet flexibility demands. The Lean Manufacturing concept has been indispensable in obtaining these objectives.

An additional strategic action Camisas Finas de Hidalgo has implemented is integrating design changes prior to production of the finished product. The success of this practice was put in place by entering into a joint venture with Mauricio Olvera, owner and designer of the well-known brand GRYPHO, a collection for the young sector in Street Wear styles.

[TC]² assisted in implementing a Modular Manufacturing team to produce men’s dress shirts. The goal of the project was to reduce lead times, increase quality, and support ongoing full package initiatives. As a result of this project, throughput time was reduced by 80% while re-work was reduced by 30%. The team has been so successful that they now produce all of the samples that are needed to support full package.

David Maauad, Owner, Camisas Finas de Hidalgo, and third generation of family integrated into the business, has stated "With [TC]²'s support, we have increased productivity per person by 50% and reduced the time to produce a garment from five days to less than one day. We have also eliminated 100% final inspection while sustaining 0% defects found during the final audit process. The impact on the sewing team members has also been dramatic as we have experienced 0% turnover in the affected areas. Most impressive of all, the team members are taking on much of the daily decision making traditionally conducted by a supervisor."

Article submitted by Lourdes Perez Marquez, [TC]²’s Consultant for Latin America, and Will Duncan, Director of Contract Services for
[TC]².

Operating 715 women's specialty stores, including stores in 47 states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico – Chico's FAS, Inc. sells exclusively designed private-label women's clothing and related accessories.

Established in 1983, Chico's began as a small store on Sanibel Island, Florida. Marvin and Helene Gralnick were selling Mexican folk art and cotton sweaters. Now, the company operates under the Chico's, White House¦Black Market, and Soma by Chico's names. In total, the company owns 447 Chico's front-line stores, 28 Chico's outlet stores, 182 White House|Black Market front-line stores, 5 White House|Black Market outlet stores and 10 Soma by Chico's stores; franchisees own and operate 13 Chico's stores.

A truly unique retail environment, Chico's provides a most amazing personal service experience for its affluent customer base (women 35-55, $75K+ household income). When you walk into any Chico's store, you can depend upon the sales staff to coordinate, accessorize, and help build a wardrobe that suits individual needs. All products are designed and developed by the exclusive Chico's Product Development Team in their Fort Myers, Florida Headquarters. This enables Chico's to provide fresh new styles every week. Whether shopping online, by phone or in one of the stores, finding something new every time you visit the Chico's brand is actually possible.

With so many characteristics incorporated into each and every product designed and made, comfort is on top of their list. In the Chico's brand, pants and skirts come with elastic waists and jackets are unconstructed and not tailored. The idea is to make their customers look great but most of all, feel great. With their new Unique Sizing, sizing starts at a Size 0 or Extra Small and ends with a Size 3 or Large. These sizes are comparable to the standard 4/6, 8/10, 10/12, 14/16 woman's sizing, but with versatility not found the same elsewhere. Clothing is made to wear how a woman prefers it to fit, allowing a woman to move up a size, for example, if she prefers a little more room.

At White House|Black Market unique garments and accessories feature shades of the timeless colors of white and black. Targeting affluent, modern, consumers aged 25-45, with household incomes exceeding $75,000 per year, White House|Black Market is known for its legendary service and unyielding commitment to satisfy their valued customers just like Chico's has always been. In September of 2003, White House|Black Market became a fully owned subsidiary of Chico's FAS, Inc. and remains an independent division; they continue to provide great fashion and extraordinary service that customers are accustomed to.

Soma by Chico's, the company's third store concept, was launched in the fall of 2004. It offers great fitting, styled right intimate apparel for the Chico's target consumer – women aged 35-55 with household incomes exceeding $75,000 per year. Currently expanding beyond the ten original test stores, Soma is planned to be in 35 locations by the end of 2006.

Another key to the success of Chico's FAS, Inc. is the Passport Club, a unique loyalty program that rewards customers for a long term relationship with the Chico's brand. Soma customers are also eligible for Passport Club membership. Recently the company developed the Black Book, a loyalty program exclusive to White House|Black Market. Other marketing vehicles employed by the company are monthly catalogs, direct mail offers, and national advertising on television and in print. Plus, the company affords customers the opportunity to purchase its unique products on the internet at www.chicos.com and www.whiteandblack.com.

In 2005, the company announced acquisition of a minority interest in Lucy, a small but rapidly growing specialty store retailer headquartered in Portland, Oregon. Lucy offers contemporary, comfortable, and fashion-right activewear for modern, active women in its eighteen stores and on its website: www.lucy.com.

Currently, all distribution is handled through the company's distribution center in Winder, Georgia. Using “pick to light “ material handling equipment, the turnaround time from receipt in the DC to arrival at the nearest stores averages 24 to 48 hours and two days to a week for the other stores. There is a steady flow of merchandise to the stores using common carriers. In 2004, 50% of Chico's merchandise came from China, 26% from the US, 13% from India and 5% from Turkey. White House|Black Market merchandise was sourced 47% in the US, 47% from China and the rest from Canada, India and the Dominican Republic.

“We are delighted to be a new retail member of [TC]²,” said Chuck Nesbit, Executive Vice President and Chief Operating Officer. “Our employees are already taking advantage of the numerous educational opportunities and the Size USA information. Plus, membership helps us stay on top of technology developments having the potential to improve the efficiency and effectiveness of our business model.”

Hurricane Katrina Relief
To learn more about how our industry is responding and ways your company can be of assistance, visit www.apparelandfootwear.org.

In the article entitled “Animal Hair Fiber and Yarn Innovations,” published in last week’s newsletter, it was stated that there is only one custom wool spinner in North America. It has been brought to our attention that we are fortunate to have more than one custom wool spinner in North America.

[TC]²
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Cary , NC 27511
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