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American Apparel is preparing to file for its second bankruptcy in as many years. The situation is a result of capping a tumultuous stretch that includes tumbling sales and a split with Dov Charney. The filing would be done in the next few weeks. The move could help set the stage for sale of the Los Angeles-based company by letting it exit leases and close down part of the retail operation. Yet the plan isn’t final and could change as the holiday season approaches.
It may be recalled that the clothing maker came out of bankruptcy last February when former bond holders - led by Monarch Alternative Capital took over the company. A turnaround plan to return to American Apparel’s roots and focus on basic items like T-shirts and skirts didn’t improve results enough. The company has also hired restructuring firm Berkeley Research Group for guidance, it is learnt.
Earlier this year, American Apparel hired investment bank Houlihan Lokey to consider a sale after receiving interest. The potential buyers are mainly interested in the company’s wholesale unit and the brand. That leaves its roughly 200 retail stores in a state of fix.
"YKK, world’s largest zipper manufacturer is bullish about expansion in India. The Japan-based zip manufacturer already has a strong presence in Southeast Asia in countries like Taiwan, Bangladesh, Pakistan, Indonesia, India and Singapore. Although the brand has a strong market in Europe however, the US market has not met expectations."
YKK, world’s largest zipper manufacturer is bullish about expansion in India. The Japan-based zip manufacturer already has a strong presence in Southeast Asia in countries like Taiwan, Bangladesh, Pakistan, Indonesia, India and Singapore. Although the brand has a strong market in Europe however, the US market has not met expectations.
India on its mind, YKK looks at expanding base
With the market for denim and casual wear growing in India, YKK is witnessing a steady year on year growth. From garments to luggage, the brand is targeting every segment of customer. The brand has been offering high quality zippers, machines, and architectural products to Indian market. Apart from zippers, YKK also offers high quality buttons, hooks, loops, buckles. “We are in the high segment however, we have a wide portfolio to target customers across various verticals. In India, we are growing over 25 percent every year,” says Mohit Verma, Regional Head North, Sales and Marketing.
Elaborating on its strategy for market expansion Verma says “We approach both buyers and vendors. We interact about lead times, availability, services. This way we can be closer to customers. The jeans market is growing in India and we have received a good response from jeanswear manufacturers. And we can spread the word about our presence in India. People are fed up of using other products that are faulty. If they use our products the rejection rate is zero or negligible. So we have to manage both price and volumes. But lowering the price won’t affect the quality of the product.”
The brand already has a strong presence in India. Mumbai and Ahmedabad being the hub of denim wear manufacturing, both are core markets for YKK, while in North, markets like Karol Bagh, Tank Road, Gandhi Nagar have been major contributor to sales. “We plan to have a diversified product range to match various price points. We want our product to be used by the biggest of domestic or export brands and the smallest of tailors. In exports too we are growing” adds Verma. Mumbai continues to be an interesting market for the brand inspite of the city’s own set of challenges which include scarcity of land and higher wages. “Mumbai has become the denim capital of India. There are many firms doing mass production of denim. What’s produced in Mumbai is really good even though it may not be a certified factory or a buyer nominated factory. And YKK has a big share in this. The share of the western India has grown in the domestic market,” Verma opines.
The brand’s growing presence in India is supported by a massive backend infrastructure in Bawal. YKK has an equipped infrastructure covering almost 70 acres of land. It also has a strong dealers and distributor network with 14 offices all over India. “We are in places like Kochi, Jaipur, Ludhiana, Ahmedabad and soon planning to have warehouses in Mumbai, Ludhiana, Kolkata,” Verma informs. As a market, India has a huge domestic volume and YKK’s overall business records higher domestic quantities than exports.But in Japan YKK dominates the market.
The brand’s global production line reflects innovation and advanced technology. YKK Japan has a product portfolio that includes fire retardant zippers, water repellent zippers, and specific zippers for scuba diving suits and for suits that astronauts wear. Other than acquiring a larger market share YKK intends to focus more on introducing newer, innovative product in India. “We have a product for trousers called ‘CINC and EZFC, which was developed after studying the market for two years. This is at a price point where even the common tailor and the biggest brand in India can afford. Perhaps our biggest strength is we make products based on customer demand. We are planning to increase the product range. YKK India has a strong R&D department which fulfills the demand of customized Logo sliders, finishes and rubber sliders. According to the fabric base, we have to develop a product that looks like metal. We are increasing our production capacity for regular products. We will do within India what we are now importing,”explains Verma.
Counterfeit pose a major challenge
Unlike in Japan, the highly unorganised market in India poses a major challenge on its way. “In India, we have a lot of competitors from both brands and unorganized segment. There are foreign zipper brands in India as well. There are counterfeits in Ahmedabad and Mumbai which pose problems after washing. Counterfeits and imports from China are a challenge. Counterfeits may come from China or local manufacturers and maybe they are selling more than the original YKK brand. There are still many brands using fake YKK products. We are taking legal action against them,” says Verma.
Apart from legal course of action to stop the fraud , the brand is relying heavily on educating vendors about YKK’s quality and innovation. The brand is aggressively expanding its vendor network and organising training programs to impart knowledge about their USP. YKK also engages in CSR activities from literacy to women’s empowerment and green issues. “YKK has a strong pan India presence while many of our competitors are regional. In volume and value, they are far behind us” sums up Verma. Indeed YKK has set a benchmark of its own which is tough for others to reach.
Gandhinagar, is gearing up for the Indian Textile Sourcing (ITS) exhibition scheduled to take place there from February 16 to 18, 2017. With an exhibition area spreading over three halls, the organisers are expecting more than 350 exhibitors from all over India and overseas for the grand gala.
The exhibition anticipates the participation of 13,000 buyers in all, comprising 10,000 domestic and 3,000 international visitors. Overseas visitors are expected from the USA, EU, China, Korea, Bangladesh, Vietnam, Thailand, Sri Lanka, Egypt, Turkey, Middle East and Latin America The event would display the entire range of textile raw materials with distinctive supply chain for cotton, polyester etc. It is projected to be the largest textile sourcing event in South Asia that would cover textile raw materials to finished products.
The exhibition is envisaging a good response from the entire value chain of both fashion and retail. It will play the role of a facilitator to generate high volumes of business, enquiries and partnerships. This in turn will stimulate sourcing and discovery of new supply chain partners. The organisers of the exhibition are looking forward to participation from leading suppliers, brands, buyers and media.
At its recent annual general meeting in Liverpool, the International Cotton Association (ICA) has brought in a new leadership team to office. The new team includes Jürg Reinhart (chairman, Paul Reinhart AG, Switzerland) who will take on the role of ICA President. He will be supported by Salman Ispahani (Managing Director, Pahartali Textiles) who would function as the first vice president and Bill Ballenden (GM, Louis Dreyfus Company Suisse) who will officiate as second vice president.
New entrants to the Board are: Manish Chawla (Global material manager, H&M), Minghong Chen (GM, Chinatex Cotton Import and Export Corporation); Jerry Marshall (President, Yiyang Company); Alan McClay (CEO, Better Cotton Initiative0 among others. Accepting the role of the president Jürg delivered a powerful speech that touched on the ICA’s remarkable history and sent a message of engagement and collaboration to strengthen contract sanctity and to support sustainable and safe trading practices.
A record 230 thought leaders, farmers, textile and fashion industry executives gathered for the Fifth Annual Organic Cotton Round Table (OCRT) in Hamburg, Germany on October 6 and emerged with clear initiatives focused on Seeds and Soils, Business Models, and Consumer Engagement as material ways to move the organic sector forward.
“As the pressures we face get bigger and bigger, businesses from all over the world have to rethink their supply chain, changing towards transparency, fair distribution, fair prices and fair treatment. Otherwise, they will not be able to remain competitive in future,” said Helmy Abouleish, CEO of SEKEM (founded in 1977 by the Egyptian pharmacologist and social entrepreneur Dr Ibrahim Abouleish in order to bring about cultural renewal in Egypt on a sustainable basis).
Liesl Truscott, Director of Fiber & Materials Strategy at Textile Exchange, organizers of the OCRT observed that organic agriculture with its principles of health, ecology, fairness and care not only remind us of what really matters but also shines a light on how to get there. Leo Johnson, Partner in PwC’s Sustainability & Climate Change team, introduced the concept of ‘massive small’ - mobilising people’s latent creativity, harnessing the collective power of many small ideas and actions. In his keynote, Leo explored progressive economics in an age of climate change and the links between progressive economics and the principles underpinning organic agriculture.
US-based Patagonia, is always ready to push the boundaries of storytelling. Rachel Cantu, the company’s VP Global Supply Chain, spoke of organic regenerative agriculture which for a clothing brand is very cool. He informed members that conventional agriculture deprives soil of nutrients, requires more water and generates a quarter of greenhouse gas emissions globally. Organic regenerative farming makes for healthy soil, a healthy planet and healthy people.
Pakistan government’s delay in announcing the proposed incentive package for the five zero-rated export sectors is hurting the basic textile sector more than others. Though the package has been finalised and is ready, but it is being delayed just because it has to be announced by the Prime Minister who cannot find time due to the ongoing political turmoil in the country. The industry feels exports must be given the same kind of importance that is being given to China Pakistan Economic Corridor (CPEC) related projects. They say these projects are almost on target despite strikes, agitation or sporadic terrorist hits in the country.
The package has much to offer all exporting sectors. The government has acceded to the demand of exporters to provide duty drawback of local taxes and levies they pay on buying inputs from the local market. It has fixed a drawback of four per cent on export of yarn and grey fabric, five per cent on export of processed fabric and six per cent on export of clothing. Half of this drawback will be provided in cash while the rest 50 per cent would be in the form of vouchers that could be cashed on import of textile machinery.
Earlier the industry had requested these vouchers should be adjusted against government taxes but it was turned down. The drawback rate for non-textile sectors will probably be five per cent. This step will improve the competitiveness of all five zero-rated exporting sectors.
Another concession granted is allowing refund of packing material purchased from registered suppliers. This facility was earlier denied when the five sectors were declared zero-rated last year. This will promote the domestic packaging industry and discourage packaging imports.
Nearly two years before the current safety assessment draws to a close, Bangladesh-based RMG manufacturers are eager to work out a strategy for the continuation of safe workplaces. The safety inspection by Accord, a platform of European buyers and Alliance, another platform of North-American buyers, will cease in June 2018. The two started inspection process in mid-2014 to improve electrical, fire and structural safety in the RMG sector in Bangladesh.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will table the issue at its next board meeting on October 29. The board is expected to discuss how it can maintain safety standard in the apparel industry through the adoption of an internally acceptable mechanism.
There was widespread public outcry over safety after the Rana Plaza factory disaster killed more than 1,135 workers and injured over 2,500 people on April 24, 2013. The next year, the Accord on Fire and Building safety and Alliance for Bangladesh Worker Safety took a five-year initiative to improve fire, electrical and building safety standard in RMG factories from which their members source products.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) vice-president Mahmud Hasan Khan Babu said that after the expiry of inspection procedure by Accord and Alliance, it should be sustainable and there should be regular monitoring. The Association will have to have a nationally and internationally acceptable mechanism that will look into the safety assessment after the inspection follow-up and make sure that the factory is monitored as per the set parameter, Babu noted.
The American Association of Textile Chemicals and Colorists (AATCC) has partnered Speciality Graphic Imaging Association (SGIA) to offer a unique educational conference ‘Digital Textile Printing: The Future is Now’. It would be held at the Sheraton Imperial Hotel in Durham, NC, USA on December 6 and 7. The program will culminate with a session focusing on case studies and business models.
Award winning textile designer Alexander Julian will share his digital journey, beginning with his first explorations of digital textile printing in 1990. While he relates his story, attendees will have the opportunity to see and hear how technology has enabled his business and vision.
Gart Davis, Spoonflower’s CEO, will share his vision for digital manufacturing. Davis will discuss how forces alive in our current market can be harnessed to deliver a more collaborative, environmentally sustainable and diverse textile industry from the web to high-end fashion houses. Based on his experiences as co-founder of Lulu.com and Spoonflower.com, two businesses driven by creative communities and digital manufacturing, Davis will explore how the combination of creative communities, imaging technologies, and on-demand manufacturing are taking shape, as well as some of the challenges. He will share a few examples of the wins and reversals from efforts at Spoonflower and its sister brands, Sprout Patterns and Roostery.
Additional sessions will focus on cutting edge technology, product performance, research snapshot, and designing for digital. The two-day event will deliver unprecedented content to conference registrants who will leave with a wealth of understanding and inspiration to take back to their respective jobs.
The 75th plenary meeting of International Cotton Advisory Committee (ICAC) is scheduled in Islamabad from October 30 to November 4. This was disclosed by Professor Iqrar Ahmad Khan, Vice Chancellor, University of Agricultural Faisalabad (UAF). He said that since the real economic strength of Pakistan was textile, hence the ICAC would have to play a major role in international cotton production ranking and strategy.
Talking on ICAC meet, he said its participants would also visit Faisalabad to personally witness the achievements of the textile sector in Faisalabad which was earning $6 billion for the country. Commenting on the development, Khan said that predominantly Pakistan is an agricultural country. Last year, after the country’s cotton crop collapsed due to various reasons the industry had to suffer a colossal loss of up to Rs 5 billion
Graced by Union Textile Minister, Smriti Irani and Kavita Gupta, Textile Commissioner, ‘Texprocil Export Award’ celebrated excellence of textile companies in yarns, fabrics and textiles. In her speech, Irani indicated that made-ups and home textile sector may be covered under another special package similar to Rs 6000 crores special package announced for garment sector.
She further stated that Prime Minister Narendra Modi has a vision of doubling the income of farmers by 2022. "We are happy the farm yield has already increased and the country hopes to become a leading producer of cotton,” she said. Irani, later distributed the awards for excellence in exports of yarns, fabrics and home textiles. Leading textile companies like Welspun Global Brands, Vardhman Textiles, Trident, Alok Industries, Arvind, Loyal Textiles, GTN Textiles, Premier Mills, Paramount Textiles, SEL Group, Lahoti Overseas among others, were some of the recipients.
R K Dalmia, Chairman, Texprocil in his opening remarks congratulated all award winners for facing the challenges of slow global demand and intense price pressures to emerge leaders in their respective line of businesses during the year 2015-16. He said that as per a recent WTO forecast, global trade volumes would rise only by 1.7 per cent this year. This would be the slowest increase since the 2008 financial crisis and the first time in 15 years that global trade has grown more slowly than world GDP, he added.
Dalmia complimented the government on the announcement of special package of Rs 6000 crores for the apparel sector which he said was bearing fruit as the September export figures for apparel showed a growth of 12 per cent compared to a downward trend for most other sectors.
The chairman stressed that this special package also needed to be extended to the made-ups and home textile sector as these sectors are equally, if not more labour intensive much like the apparel sector. He also said that it will act as a pull factor for increased consumption of fiber, yarns and fabric produced domestically. Besides complimenting the government on GST to be introduced from April 2017, Dalmia also emphasized that raw materials, especially cotton should be available at international prices or lower.
FTA negotiations
Dalmia stressed, another critical area where the government needs to move with vigour is to expedite the negotiation of Free Trade Agreements with EU, Australia and Canada. In countries like Turkey and China, high discriminatory tariff was posing a challenge in market access into those countries. The chairman pointed out that cotton textiles of HS Chapter 52 was the single largest contributor accounting for almost 20 per cent of our exports to China and if duties were reduced they had the potential to reduce India’s trade deficit with that country.
Dalmia opined the spinning sector was going through rough times and is looking up to the government for help and support. Inclusion of cotton yarn in the MEIS and extending the interest equalization scheme to merchant exporters will go a long way in reducing stress levels in spinning sector as well as increasing exports. The reimbursements of State and Central levies along with labour reforms will strengthen the textile and apparel sector by improving its cost competitiveness in the global market.
Considering that the textile sector is a low margin industry, introduction of such packages can lead to an exponential leap in export performance. This can be seen from the fact that in September 2016 export of garments showed a 12 per cent growth despite a downward trend for most other sectors.
Every year the Texprocil recognises the role played by exporters by giving out awards in different categories. This year the Council gave away 73 awards in 32 different categories, including the coveted gold trophy for the highest global exports. Texprocil’s awards are recognised world over by textile importers and hence exporters attach high importance to these awards. For 2015-16, the Council members exported $ 10.95 billion worth of cotton textiles and the Council has targeted $14 billion worth of exports for the current financial year i.e. 2016-17.
