California Apparel News

After 17 years as president and chief executive officer of Buhler Quality Yarns, Werner Bieri is retiring. He will continue to consult for the Jefferson, Ga.–based yarn spinner, and Martin Kägi, a member of the board of directors for Hermann Bühler AG, the Swiss parent company of Buhler Yarns, will step in as interim chief executive until Bieri’s replacement can be found. Bieri has been with Bühler since 1984 and opened the U.S. spinning mill in 1996.

California Apparel News Executive Editor Alison A. Nieder recently caught up with Bieri to talk about his time at Buhler and his perspective on the coming year for apparel and textile makers.

Why did Bühler open the U.S. subsidiary?

Our market share of yarn was growing in the U.S. in the ’90s quite a bit. We purchased Supima cotton from the U.S. and brought it over [to Switzerland] and spun it and then exported the yarn back to the U.S., paying a 12 percent duty. It just didn’t make sense anymore with the volumes the way they developed at that time.

How is the business today?

The business model has changed. Around 2000, our big weaving customers—the big sheeting guys like Fieldcrest Cannon, Springs Industries, Westpoint Stevens—they all disappeared. We had to change our business model from supplying the weaving industry in the U.S. to supplying the knitters. Today, probably 99 percent goes into the knitting. While we started out with home textiles, it’s now knitting and, in a large part, fashion-related. Plus, we started to export. Today we are up to 50 percent domestic—out of which 90 percent of those 50 are in LA and the fashion market. The export is mainly Central and South America, going into knitting and ladies’ and men’s socks. We introduced the MicroModal from Lenzing in 2006. Before, we exclusively did Supima. We are making 100 percent MicroModal yarn and a blend 50/50 Supima blended with MicroModal.

Are you supplying any weavers?

Yes, but very, very limited. We have one larger contact [with a weaver] ongoing for towels. The other stuff is in a trial basis. There is interest, but it isn’t yet substantial business on an ongoing basis.

Talk to me about the interest in Made in America and how you’ve seen that change in recent years.

There is a lot of talk about it. This towel program, for us, is a big order, but it’s one order. That comes from a particular retailer that wants to have something on the shelf which is Made in America completely. There is a lack of capacity to make [Made in America] happen in a big way. They are smaller programs. And at the end of the day, it’s still price in spinning and also in textiles. Yes, [there is interest in] Made in America, but the price needs to be right.

Walmart made a pledge to buy $50 billion of Made in America products.

Over 10 years. And it includes toys and soap and whatever they sell. There is a lot of talk about it. People are getting excited about it. If it happens it will happen slowly.

Any suggestions for the industry? Any predictions?

Predictions? Pfff! Predictions are usually wrong.

We were all surprised by the [rising] cotton prices because we have a stocks-to-use ratio which is the highest since the second World War of almost 70 percent. But—there’s a big “but”—over 50 percent of the stocks are not on the world market. They are sitting in China. China has a stocks-to-use ratio of about 120 percent. That makes the available-stocks-to-use ratio much lower.

We were surprised by the rising cotton prices, but when you analyze the stocks-to-use ratio, it makes some sense. Plus, all the countries will have a lower crop this coming fall.

I don’t think we can expect cotton prices to go down. I think they will stay elevated. The tendency is, longer term, to go up. I think we have to be careful not to lower our cotton yarn prices because we’re going to be caught with pricey raw material. It’s a margin squeeze. I think it’s important to have the right message for customers and brands and retailers that higher prices are here to stay. I think the industry has to be very careful in making sure the business remains profitable.

Are customers trying to lock in prices, or are they waiting and seeing?

We have some which lock in prices. But most of them are not in the mood of locking in longer term. They’re afraid they’ll get locked into higher prices. For the year, my prediction [is] that orders [will be] smaller than they used to be—but they [will be] more frequent. Once you get an order, it usually ships pretty quick. There is no long-term business in that sense. l