Ash City: Eye on Asia
Garry Hurvitz, president and CEO of Ash City Usa, released the July 2011 edition of his "Eye on Asia" newsletter. Below is a reprinting of the letter in full.
If ever a quote summarized a trip, this would be the one I would share to describe my latest trip overseas this past June. As you know from reading these updates in the past, I have traditionally put my thoughts to paper while on the plane as it gives me hours of uninterrupted time to reflect on everything that I have seen or learned. This trip however, was different… not just a little different, a lot different!
I left for Asia prepared to tackle the traditional issues that I have been writing about over the past year, only to discover an interesting mix of new “trends” developing at an extremely rapid pace. I have been encouraged over the past 60 to 90 days to see that there might be a light at the end of this long and distant tunnel. Many of these new trends will benefit our recovering industry, but the burning question is how long it will take them come into play. Here are a few of the more recent trends:
The Textile Production Cycle & Price Time Lines: Understanding the concept of this model will be key to your success as we move through the “old” issues and transition into the new ones. Many of your customers will be asking you why cotton apparel is not coming down in price when the markets are now beginning to show decreases in the cost of raw cotton. To answer this question effectively you should take the time to understand the textile production cycle and the relationship it has to pricing.
Example: Cotton prices continue to fall on the Futures Market for the December 2011 and March 2012 bookings, which leads me to believe that raw material costs on Cotton could come down as much as 35 percent over the next year. The issue is when that price comes into effect, as these lower priced crops of cotton won’t be available for delivery to the mills until December 2011, after which production would only commence in May 2012. From the factories, the finished garments must then be shipped to North America for distribution in September 2012. That means your stock inventory manufactured with the lower priced cotton could take up to nine months before it even hits a supplier’s shelves.