Steve Warner is the publisher of BeaverLake6 Report. He has been involved in the technical textiles industry for 40 years, serving more than 20 years as the president of the Industrial Fabrics Association International (IFAI). During the IFAI tenure, he expanded the organization to be a global trade association, opening offices in Paris, Toronto, Shanghai, Auckland, Osaka, and Mexico City. He served on the boards of other industry professional societies such as the International Geosynthetics Society, on technical subcommittees such as ASTM's D13 on Textiles, and as the US ISO representative for flame-resistant fabrics.
Mr. Warner is an industry consultant on end-market applications for technical textiles, a frequent speaker at industry events, conducts market reports, and writes for other publications involved in the technical textiles industry.
Posted January 25, 2017
Back on March 24, 2016, I was one of the first to predict the Trans-Pacific Partnership (TPP) agreement was a dead deal. In fact, I said that I wouldn’t be surprised if Donald Trump became President that the agreement is shredded on day one of his new administration. Well, I was off by three days. Yesterday, President Trump signed an Executive Order, officially withdrawing the United States from the TPP agreement.
Three things become more clear in my mind:
1. The US domestic textile industry leadership wasted a lot of time trying to “circle the wagons” to protect the industry from imports rather than put the energy into building individual relationships with other countries to promote exports.
2. The Chinese and other Asian countries have invested heavily in building manufacturing plants in the US in anticipation of getting business because of the adamant insistence of including a “yarn forward rule of origin” requirement in TPP. Ironically, while the US domestic textile-related associations have moaned about foreign-government subsidiaries of Chinese plants in China, it was the US governments – Federal, state and local – which provided tax-incentive subsidies that made it attractive for these Chinese foreign-based companies to build in the US.
3. Vietnam is now an unpredictable wild card player in the global textile industry. The country was gearing up to be a major player benefitting from the TPP, in particular, the “yarn foreign” requirement meant a lot of new textile plants being built in Vietnam from not only the US but also from China. What’s going to happen now with all that investment?
Ok, leaders of the National Council of Textile Organizations: You’ve got your annual meeting coming up in March. What is going to be the game plan for the post-TTP period? Do we continue to hang on to protectionist initiatives or do we come up with a coordinated plan to export US products? Are you just a de facto lobbying organization for a handful of textile industry giants or do you truly want to represent the welfare of the entire domestic industry? Do you continue to fight every fabricator seeking duty relief that needs a break to stay competitive or do you become the mediator that works out conflicts between fabric producers and their customers?
You want to be considered the organized representative of the US domestic textile industry. Show us the leadership in the post-TPP era.
Seriously? Today the University of Georgia (UGA) and Clemson University organized with the Advanced Functional Fabrics of America (AFFOA) – the new public-private innovation institute partnership -- an AFFOA Industry Day event in Athens, Ga. It was held almost 200 miles away from Charlotte, N.C. and the IFAI Expo. According to the website promotion, the event targeted an audience of academics, military and industry partners "for a day of learning, sharing and connecting – all focused on identifying AFFOA projects that target the greatest market needs and deliver the highest impact."
"We're joining with companies large and small, universities and startup incubators from around the U.S. to drive a manufacturing-based revolution by transforming traditional fibers, yarns and fabrics into highly sophisticated systems and devices for both consumer and defense applications," said Gajanan Bhat, the UGA Athletic Association Professor of Fibers and Textiles within the FACS textiles, merchandising and interiors department.
AFFOA, Clemson and the University of Georgia don't seem to have a clue what is going on with our industry. The IFAI Expo has thousands of technical textile participants, more than 400 exhibits of our industry's products, and more than a dozen terrific educational tracks that include advanced textiles and geosynthetics.
I'm just baffled by this lack of awareness by the AFFOA and the universities in their decision-making process to hold the event while one of the largest trade shows for the technical textiles industry in the US is taking place.
Domestic PFD Manufacturer's Application for FTZ Additional Production Authority Riles Textile Industry Trade Associations
Posted August 3, 2016
There is a nasty fight taking place these past few months behind the closed doors of Room 48019 at the Herbert C. Hoover Building in Washington, D.C. The room is the office of the Foreign-Trade Zones Board. The fight pits domestic technical textile industry suppliers and a coalition of textile trade associations against a fairly large domestic end-product cut-and-sew manufacturer.
The issue that is causing the ruckus is whether to grant The Coleman Company, the last substantial US maker of personal flotation devices (PFDs), additional Production Authority the company has requested at their Foreign-Trade Zones (FTZ) manufacturing facility located in Sauk Rapids, Minnesota.
Now you would think textile trade associations like the National Council of Textile Organizations (NCTO) and the Industrial Fabrics Association International (IFAI) would be working to support the expansion of a large domestic end-product fabricator that could provide hundreds of new jobs. Not so.
Opposing Coleman’s Production Authority request are textile producers Milliken and Highland Industries, and those just-mentioned industry trade associations in which those companies have substantial monetary investments and operational sway. IFAI is working through its United States Industrial Fabrics Institute (USIFI) division on this issue.
The crux of the issue is whether the Foreign-Trade Zones Board will grant a petition by Coleman to remove a restriction in a previous FTZ grant of authority that precludes inverted tariff benefits on foreign textile materials used in the production of PFDs. Coleman currently imports the material it needs under the request but wants to obtain it at a lesser import duty rate. The domestic producers say the materials Coleman wants can be made in the US, just at a more expensive price than Coleman wants to pay.
The disagreement really turned vicious in rebuttal letters after a Foreign-Trade Zones Board meeting that took place February 24, 2016. Representatives of both sides provided testimony that attacked claims of their opponents. Coleman, in particular, hit back very hard on statements made by the NCTO and USIFI trade associations. As for the textile producers, it implies Milliken and Highland are merely jilted suppliers who could not or would not produce material at a price needed by Coleman.
What’s at Stake? Precedent and Threats of Job Loss
The opposition effort led by NCTO is based on the dreaded dooms-day prediction of establishing a “precedent.” NCTO throws a broad-side volley of reasons not to allow the additional Production Authority. Augustine Tantillo, president of NCTO, arguing 1) that granting the authority contradicts the intent of current and future (TPP and T-TIP) trade agreements and overall trade policy and 2) the products can and are being made in the US and even are being supplied for Coleman’s military PFD business.
Let’s be honest about why Foreign-Trade Zones exist. They are meant to circumvent trade agreements and tariffs and sometimes to rectify unforeseen results of a trade agreement. They are used by a variety of industries, most notably the automotive industry, to get around high tariffs, providing more jobs and profitability to the companies operating in the FTZ.
Really, folks, this Coleman case is all about price for both sides. Mr. Tantillo is right: Manufacturers can make the material. It’s not rocket science stuff. Coleman just doesn’t feel it can pay the higher price demanded from domestic producers and it feels forced to ask for additional Production Authority to stay competitive with foreign manufacturers making PFDs.
What Mr. Tantillo fears is establishing “precedent.” In the meeting held February 24, 2016, Mr. Tantillo said “... I can tell you that there will be people on this side of the table [fabric suppliers] who are going to have customers come to them and say, we're now going to import this under a reduced duty through the FTZ process and you're out.” Once you open the door to “price” and not just availability, it will be hard to refuse others asking for the same considerations.
Inverted Tariffs and Coleman’s Situation
An inverted tariff on US component items or raw materials has a higher duty rate than the finished product. This puts a US manufacturer sometimes at a cost disadvantage to an importer. In Coleman’s case, the company imports from China and Cambodia the nylon and polyester used in the manufacture of PFDs and flotation cushions at an import duty rate of 14.9%. PFDs manufactured outside can come into the US with a duty rate of 4.5%. Further, if the Trans-Pacific Partnership (TPP) agreement is passed and implemented, Vietnam, already an emerging manufacturer of PFDs, will be able to export to the US at no duty rate. Thus, Coleman claims additional Production Authority for the material is needed to remain competitive in manufacturing in the US.
Coleman claims it meets the three threshold criteria for granting additional Production Authority:
Textile trade agreement expert David Trumbull, president of Agathon Associates and frequent contributor to BeaverLake6 Report, spoke at the February meeting in support of denying Coleman’s request. He argued that the three threshold test is not to determine whether to grant authority but whether the FTZ Board may consider the request at all.
Why Not Source Domestically?
The Coleman facility in Sauk Rapids produces the children-size Puddle Jumper PFD. It sells for about $15 and is sold in the highly competitive consumer “big-box” stores where a 20 cent savings can make the difference. Last year, it made more than 2.5 million of these PFDs.
Coleman claims it is unable to find a domestic supplier which can provide the nylon and polyester fabrics at a competitive cost and is seeking to drop the duty rate on the imported materials to the personal flotation devices (4.5% and 7.0%) and flotation cushions (6.0%) for the foreign status inputs noted below to allow it to be more competitive against the imported PFDs.
Further, if the petition is granted, it will not result in the loss of any textile positions or business since Coleman is not currently using domestic sources for its fabrics, except when it has to supply Berry Amendment compliant PFDs for the military.
Coleman says 60% of the overall components of the finished PFD, including foam and sewing thread, are already sourced in the US. The polyester and nylon materials represent only 16% of the finished product. It has invested more than $2 million in the Sauk Rapids facility and employs over 350 workers.
If the petition is approved, Coleman says it will invest at least an additional $2 million in the manufacturing capacity expansion in Sauk Rapids that will lead to a direct gain of at least 40 additional employees. Further, as production starts to increase, the US companies which make the other component parts will benefit. Coleman feels it can add an extra 200 to 250 jobs and double its output of PFDs in Sauk Rapids by 2020.
The flip side threat is that if Coleman’s petition is denied, the company says it may be forced for competitive reasons to manufacturer all of its PFDs outside the US in more friendly environments such as Vietnam and Cambodia. Thus, a denial of their petition not only prevents a potential plant expansion and more jobs; it also puts the Sauk Rapids manufacturing facility itself and more than 350 current jobs at risk. In addition, the move out of the country would be a loss of business for its US suppliers of the 60% of component parts already sourced in the U.S. and other suppliers of other products used in the manufacturing process such as sewing and seaming equipment.
The Opposition to the Additional Production Authority
It is the view of the organizations and the individual companies opposing the Production Authority that the Coleman request does not meet the threshold standard and its approval would have negative repercussions for the domestic suppliers of nylon and polyester, as well as for their fiber and yarn suppliers. Domestic suppliers say they can and are willing to produce the needed material, and, in some cases, already do for other PFD manufacturers both domestic and foreign. Further, they already provide the same material to Coleman for their military-produced PFDs. And, finally, it’s argued that Coleman itself has said it is profitable and its market growing even with the current tariffs, so where’s the harm?
The Trade Associations’ Responses
Frankly, it is disheartening to see our industry trade associations going against an end-product manufacturer in the US. It appears that once again the NCTO is pushing its long-established containment and protectionist approach for the domestic industry. There’s nothing forward-thinking for resolving Coleman's problem, only a “circle-the-wagons.” In this situation, NCTO is looking out for its own member interests and not the interests of its customers. Understandable. I don’t agree with their position but understand their fear.
[At this point I want to give full disclosure if you are a viewer who doesn’t know my background. I was president of IFAI for more than 20 years, and prior to that position, I was the organization’s Operations Manager which oversaw the organization and management of divisions. In my work there, I organized the Personal Flotation Devices Division in the 1980s. The PFD division later left IFAI to be more aligned with consumer boating groups.]
The IFAI position needs clarity. In the Coleman request situation, the position of USIFI/IFAI is at best a confusing result of an industry trade association trying to represent different levels of the industry, with each level of the value chain having its own agenda.
In its rebuttal March 28, 2016 letter to the Foreign-Trade Zones Board, some of Coleman’s harshest criticism is aimed at USIFI. Jeffrey Schmitt, Coleman’s Senior Vice President of Operations, said USIFI is being hypocritical and lacking in credibility because at the same time the organization was opposing the Production Authority, the division’s parent organization IFAI was publishing in the Specialty Fabrics Review magazine a very complimentary article about Coleman’s re-shoring efforts in developing the Sauk Rapids facility and included a sidebar piece which allowed Coleman a platform to explain its expanded production authority request.
It’s a tricky road to navigate for IFAI when it tries to represent the interests of both the end product fabricators as well as the domestic technical textile suppliers.
Board Ruling and Final Thoughts
The FTZ Board is expected to announce its decision on the additional Production Authority sometime this month. I think our industry loses if the Coleman request is not granted.
As I have said in other writings, protectionist positions are not the future for the US textile industry; especially not the technical textiles industry. Companies – and their industry trade associations – need to become more agile and their positions on issues more flexible. It should not have come to a point where Coleman (rightly or wrongly) felt it had to seek additional Production Authority to ensure continued growth and survival in a very competitive market. Coleman should have been able to work out an accommodation with domestic suppliers. The trade associations should have taken the role of intermediaries, not leaders of the opposition.
In my research for this column, I read hundreds of pages of government, industry and trade association documents. I also spoke with key leaders trying to understand their positions. A special thanks is due to David Trumbull at Agathon Associates for providing technical assistance on Foreign Trade Zones and this particular Coleman situation.
Posted March 24, 2016
OK, I am going to say what the National Council of Textile Organizations (NCTO) is reluctant to concede: There is not a chance in the world for the Trans-Pacific Partnership (TPP) agreement to pass in the US Congress next year. It is a dead deal.
There is still a lot of wasted energy by NCTO in justifying support for a trade agreement that is going nowhere.
Trade is a critical issue in this election year. The presidential candidates – and I assume the Congressional candidates – have picked up on this feeling. Former Secretary of State Hillary Clinton, the likely Democrat presidential candidate, once a proponent of the deal, is now on record against it. Her Democrat opponent Senator Bernie Sanders has long opposed the deal. Businessman Donald Trump and Senator Ted Cruz, the leading Republican presidential candidates, are so adamantly against it that I would not be surprised it is shredded on day one of the new administration, whoever occupies the office.
Remember, thanks to the passage of the Trade Adjustment Authority (TPA) that was supported by NCTO, the TPP cannot be modified. It has to pass as it is in the present form. It’s just as well, There is no middle ground in Washington these days. You are either for something or against it. The voter mood is very evident in this trade agreement. Voters are fearful of our past agreements with lost US manufacturing jobs. A Senator or Representative has to be very careful how they plan to vote because the numerous political debates have shown that future opponents have very long memories of what a candidate vote for or voted against.
Influential Congressional leaders like conservative Republican Senator Jeff Sessions, and liberal Democrat House Representative Louise Slaughter think the TPP is a mistake. Senate Majority Leader Mitch McConnell says it won’t even be considered prior to the November elections. Even House Speaker Paul Ryan, a trade advocate, doesn’t see a future for the agreement in the current political climate. It is not a positive environment for TPP passage in Congress.
Who is leading the charge to pass this agreement? I don’t know. President Barack Obama appears to me to be all alone as he champions his legacy trade agreement.
So, my conclusion is that all this angst about trading an endorsement of the TPA in exchange for ensuring an inclusion of a yarn forward rule of origin in TPP was wasted energy.
Worse, it revealed the weakness of the American textile industry as an influencing body when the current administration said the only way to gain inclusion of the “yarn forward” rule of origin was for NCTO to publicly come out in favor of the agreement.
Perhaps I am naïve on Washington-power play but to me what should have happened is that NCTO turn the tables on the US trade negotiators. NCTO should have shown leadership by saying “We’re not sure about TPP because our industry doesn’t like the secrecy of the negotiations, the lack of public knowledge about what is in the agreement that affects our industry, and the fact the agreement cannot be changed once it is presented. Therefore, we are withholding our endorsement. However, we insist that whatever agreement comes forward includes yarn forward and, if it does not, we promise to fight this agreement with tooth-and-nail if it is presented to Congress without a yarn forward rule of origin.” This is leadership.
Now we are in a fix. It is absurd to even suggest that our negotiators can eventually go back to all eleven other participating nations and say we want a few changes to make it more palatable to the American voters. At best, we perhaps can negotiate with a few of the countries for a more specific trade deal. We played our hand and it came up short and the consequences are going to hurt the US domestic textile industry.
It has become China’s turn. We poked the bear. The progress of TPP and the fact they were almost outmaneuvered has wakened the Chinese leaders to the fact they need to work more diligently on protecting their trade. In textiles, the Chinese government has what appears to be a three-point approach:
First, prior to TPP, China was not that interested in promoting regional trade agreements. The China-led Regional Comprehensive Economic Partnership (RCEP) involving all of the ten ASEAN nations, plus Japan, Australia, New Zealand and India, had languished for years, going nowhere. As the prospect of a Washington-led TPP agreement became a very real possibility, one directly aimed at stopping the China-sphere of trade influence in the region, China realized it had to get its Asian Pacific trade partnership agreement going or be outmaneuvered.
Second, in anticipation at the time of a likely TPP passage, the Chinese textile industry hedged its bet and Chinese-owned companies opened mills in the U.S. And the crazy thing is that the various levels of the US government gave them economic development money and tax breaks to fund the projects. These companies will still be in the US even after the TPP agreement effort fails. We just created more competition for our domestic suppliers. I know TPP was not the only factor for the Chinese start-ups in the US but it was an significant consideration.
And, third, we have Vietnam. This country has emerged as the focal point of all our TPP efforts in textiles. China and many other Asian nations have made huge investments in Vietnam to build their fiber and yarn output. We pushed China to speed development in TPP countries.
It is easy to have a rant like this with 20/20 hindsight, so I have to give a little slack to NCTO and the domestic textile industry leaders who have worked so hard for TPP. As I said in an earlier TPP editorial, NCTO works hard on the industry’s behalf on so many issues. In my opinion, NCTO was just wrong on this issue and now the organization needs to show us how we are going to deal with the aftermath of a failed agreement.
Now is the time for true leadership to emerge in the US textile industry. What can we learned from this failed effort? Will the industry leaders be so reckless as to ride this dead horse into the ground or do they have the forward-thinking ability to get ahead of the failed effort, show true leadership for the entire industry rather than just a selected few, and give us all an understandable strategic domestic textile growth plan?
Don’t put us in a position of going hat-in-hand to government trade negotiators ever again.
Posted Janaury 17, 2016
In 2015, I posted more than 425 items of interest for our industry on the BeaverLake6 Report website. In reviewing it all last week, it got me to thinking about putting together a list of influential events, news and trends that I observed during the past year. I have focused primarily on the US marketplace but each of “the things that mattered” to me has global implications.
So, here go my thoughts in no particular order of importance. Let me know if you agree or if I have missed some:
1. Trade Agreements – the passage of Trade Promotion Authority (TPA) and the completion in the negotiations for the Trans-Pacific Partnership (TPP) agreement. Twelve nations, seven years of negotiations, and an agreement now before the US Congress is quite an achievement for the Obama administration. The potential of making this into US law would have been poor if not for the passage last June of the Trade Promotion Authority act that permits the “fast-tracking” of the agreement once the negotiations were finalized. “Fast-tracking” means no changes.
As I said throughout the past year, I don’t think the final TPP agreement can affect the technical textiles industry too much; it is more for the apparel industry, particularly a few dominant yarn and fabric producers. I don’t anticipate the TPP agreement will come up for a vote in Congress in 2016, an election year for our voter-conscious lawmakers who want to avoid controversial issues. We will have to wait for 2017.
The true worry, though, is that TPA will allow a potential disaster if the now being negotiated Transatlantic Trade and Investment Partnership (T-TIP) agreement includes the elimination of the Berry Amendment that protects military products. This is a stated objective of the European Union in its negotiating stance. Can’t happen, you say? Ha. Where does the textile industry stand in the matter of give-and-take negotiations when compared with the pharmaceutical, the agriculture, and the automotive industries?
2. The Takata Airbag Fiasco – How else do you put it? It’s an embarrassing public relations cesspool. More than 20 million vehicles in the recall. Damning emails unveiled from Takata engineers on the possible manipulation of safety test data. Carmaker after carmaker announcing they are switching suppliers. It’s been a death by a thousand cuts this past year. I started 2015 fully confident Takata could weather the situation; now, I don’t know.
Let’s be clear, though: The actual Takata problem doesn’t have anything to do with technical textiles. It’s a propellant problem. Unfortunately, the trouble is encapsulated in the phrase “airbag system.” The message being sent to the public day-after-day is that airbags can be dangerous.
Perhaps more critical for our industry is that a Takata exit could cause a serious shortage of airbags for the automotive industry. Takata is the number 2 manufacturer of airbags and there are only four other significant players in the world.
3. Passage of the Surface Transportation Reauthorization and Reform Act of 2015 – What a historic achievement! More than $325 billion allocated to rebuild the US crumbling roads and bridges. The Act had the inclusion of the specific recognition of geosynthetic materials and other innovative technologies.
The icing on the cake? Somewhat baffling to me but the Act included the reauthorization of funding for the Export-Import Bank of the United States (Ex-Im). I don’t quite understand why it is in a transportation bill but I will take it because the Ex-Im is a critical lender for many businesses making or using domestically produced technical textiles who are seeking financial loans to export their products.
4. The DuPont-Dow Merger – The announcement came in December and so has little impact in 2015 but technically it happened in 2015 and I have included it so I can say “I told you so” when we look back at 2016. The merger could have a tremendous impact in 2016. Once merged, the new “DupDow” behemoth intends to then break up into three distinct companies by the end of 2016. The critical issue that matters to us is where the Kevlar®, Nomex® and other ground-breaking DuPont fibers will be heading under this breakup and reorganization.
5. Trade Show Successes – There were three 2015 events that had a significant impact for the technical textiles industry. The Techtextil show in Frankfurt attracted more than 28,000 visitors and almost 1,400 exhibitors. It is easily the dominant show for makers of technical textiles and related products. The most significant new aspect was the increase in the showing of technical fabric making equipment. Equally impressive in the Techtextil success was its European location, a region that has seen a very blah economic recovery for the technical textiles industry.
There were a lot of questions going into both the IFAI Expo 2015 in Anaheim, Calif., and ITMA in Milan. The doubts were answered. Both events saw impressive participation increases. The IFAI Expo had a significant jump in attendance after three years of visitor decline. ITMA was a record-setting show, the best in years. ITMA saw an increased emphasis on technical textile equipment. It answered the question of the need for a textile machinery show located in Europe.
All these events demonstrate that if you put together a critical mass of exhibitors and have focused marketing, you will attract the visitors.
6. Passage of the US Defense Act for Fiscal Year 2016 -- Whew. We were looking at additional sequestering for the military which could have been devastating for our dwindling military contractors. While the needs of the military for shelters, clothing, and other textile items continues to decline, the military product segments remains one of the largest for our industry. I read through the Congressional committee’s supporting report that accompanied the Act and found three specific mentions of technical textiles: 1) The emergence of antimicrobial fabrics for medical tactical shelters and the protection from the adverse effects of electromagnetic interference for tactical shelters; 2) An exploration of the potential of utilizing non-halogenated flame retardants in military uniforms; and, 3) The acknowledgement of a consolidation of manufacturers making ballistic vests and the need of the military to encourage more competition.
7. The Decrease in Fuel Costs – It bodes both good news and bad for the technical textiles industry with the price of oil dropping throughout the last half of the year. The good news is it becomes less expensive to make technical textiles. The bad news is that one of the new emerging markets for FR protective clothing has been the oil and gas industry and with the fuel prices so low, the energy companies have cut back on their work force, reducing the need for protective clothing.
8. Government Creation of New Innovative Manufacturing Institutes – Last March, the Obama administration announced its intent to create the Revolutionary Fiber and Textiles Institute for Manufacturing Innovation (RFT-IMI), joining a series of already announced and yet-to-be planned centers for research for particular market segments. The Department of Defense will provide oversight and funding of $75 million over a five-year period. State governments and companies in the industry are expected to provide an additional $75 million. The RFT-IMI is expected to address both military and commercial needs and it applies to the entire supply chain from design to end product. The institute is intended to accelerate innovation by investing in manufacturing technologies with broad technical applications. Two proposed groups have submitted applications for managing the RFT-IMI. The government was supposed to announce which one was selected in December but as of this writing nothing has been revealed.
Not to be forgotten: Other Innovative Manufacturing Institutes are being developed for the composites and wearable products that will be of interest to our industry.
9. The Development of Smart Textiles – In this case, I am looking more forward to 2016 because I think we are right at the cusp of seeing this industry really take off with medical, protective and sports applications. In 2015 there was a lot of predictive talk, a lot of experimenting but all-in-all few commercial successes. The problem which remains to be solved if smart textiles are ever to move into the apparel industry is the ability to wash the product and, in the case of electronic textiles, the source of energy to power its smart textile properties is developed or harnessed from current technologies.
10. International expansion of the Airbag Market – Forget about Takata. Let’s talk about the opportunities. Mexico’s hottest selling car for the last two years is the Chevrolet Aveo. It has no airbags. Mexico is the world’s 4th largest automotive manufacturing country. It’s under increased pressure by automotive safety groups to produce more safe cars. Brazil and India are now beginning to make airbags mandatory in the cars sold in their countries. These are huge markets. It won’t be that long before airbags will be required in most countries.
11. Moving Away from Traditional Fabric Tents to Hard-Shell Shelters – Yes, it pains me to say this because the fabric tent is probably the first finished product ever made from technical textiles. But lately I am starting to see it being replaced in certain circumstances both for military and refugee shelters. IKEA has led the way with its rigid wall flat pack shelter for refugees. This type of shelters is perfect when used in situations intended for any length of time. They are twice as expensive but their durability results in rapid payback and the rigid modular structures can come with greater thermal protection and more amenities such as pre-wired plumbing and electrical. There will always be a market for fabric tents but the market could be a little smaller as new non-textile materials are being used in applications.
[Publisher note: A reader response to this column follows at the end.]
Posted August 4, 2015
I don’t get the logic behind the National Council of Textile Organizations' (NCTO) support of the Trans-Pacific Partnership (TPP) agreement. In my opinion, NCTO’s primary desire for supporting TPP is the textile economic containment of China. This approach will fail with TPP and may end up putting the US domestic industry at future risk with other trade agreements.
I’ve covered the Trans-Pacific Partnership since the very first day I began publishing BeaverLake6 Report in July 2012. Prior to that, I was with the Industrial Fabrics Association for 35 years and saw the development and impact of many trade agreements which affected our industry. Since 2012 I’ve read countless articles and interviewed about a dozen industry leaders about this agreement, including Auggie Tantillo, the president of NCTO. In this one instance, I've come to the conclusion that NCTO is simply wrong to be going “all in” in support of Trade Promotion Authority and the Trans-Pacific Partnership agreement.
Forget the hype that the reason the US is seeking the TPP agreement for the creation of jobs and wealth in the US through increased exports. The expansion of US textile exports is only a secondary desired outcome. TPP is a defensive move by the US and by NCTO in regards to the textile industry. The agreement, even with "yarn forward" cannot contain China, it will not result in any meaningful benefit for the technical textiles industry, and it sets up the domestic industry for risk in future agreements.
I am assuming and it seems pretty logical that in exchange for its public support, NCTO got an assurance from US negotiators that the “yarn forward” rule of origin will be included in the agreement. What does “yarn forward” mean? It basically stops China from making yarns and fabrics and then shipping them to the participating TPP countries like Vietnam where they can be made into finished products that are exported to the US.
I don’t think this is our fight. The value chain for the textile industry is complex with multiple levels and what is an advantage to one level may be to the detriment of another level. The NCTO targeted TPP benefactors are the domestic cotton, fiber and yarn suppliers for the apparel industry. I have yet to see any examples of where this agreement benefits the technical textile industry and products made from technical textiles such as geosynthetics, protective gear, truck covers or medical products.
Let’s assume, though, those in the domestic technical textiles industry will be greatly affected by TPP –good or bad. My question is why couldn’t NCTO demand that any agreement include “yarn forward” without committing to supporting the overall agreement itself? NCTO could have said something like “We don’t know about the value of this agreement because of the secrecy surrounding it but if it does go through it had better have a ‘yarn forward’ inclusion or we will fight this tooth and nail.” NCTO’s endorsement of TPP has taken away any negotiating leverage the industry may have had in the final agreement.
The Motto of this Agreement is “Trust Us’
OK, I am really a cynic on this issue but remember the infamous quote by then House leader Nancy Pelosi as she led the fight for passage of the Health Care Reform Act? “But we have to pass the [health care] bill so that you can find out what’s in it…” Do you trust the government leadership to make the right informed decisions if the agreement is being crafted in secrecy?
The Breitbart News, a political website, posted an article on the US leadership’s knowledge about the recently passed Trade Promotion Authority (TPA). This was the crucial piece of legislation that will allow “fast-track” for the Trans-Pacific Partnership agreement once it is done and sent before Congress. Only two of the 15 Republican Presidential candidates admitted they had read the TPP agreement before voting on the TPA legislation. Senator Lindsey Graham of South Carolina, who has always been a friend to the textile industry, refused to answer the question. I would assume this means he hasn’t read it. On the other political side, former Secretary of State Hillary Clinton, once an ardent supporter of the agreement, now says she will have to read it before she says she would support its passage.
Presidential candidate Carly Fiorina, former CEO of Hewlett Packard, has recently had her own Pelosi-esque moment when asked in May if she supports TPP: “…I think the devil’s in the detail, and we better understand what those details are before we just assume it’s a good deal.” Um..ok…how do we do that if our leaders aren’t even reading it?
So, who has read this super-secret document that’s kept in a secure reading room? We don’t know because neither the public nor the press is allowed to see the log-keeping record of who is looking at it. Can you or I look at it? Nope. It’s only for those who need to know. What the heck?
US Textile Manufacturers Have Been the Sacrificial Lambs in the Past Agreements
This agreement is more than textiles; a lot more. It will be the world’s largest trade agreement, involving up to 40% or the world’s economy amounting to two trillion dollars in trade. How will we stand in an up-and-down vote if the agreement’s other sections on intellectual property rights, agriculture, pharmaceutical or automotive are pretty good deals for those industries? Will Congress vote TPP down just because it’s detrimental for our industry? Nope.
The point in this part of my tirade is that NCTO did not have to endorse TPP or TPA to get ‘yarn forward” rules into the agreement. By supporting TPA, it’s backed our industry into a corner.
Down the Road Risks
Let’s look further down the road at the risk of TPA. What happens if the US negotiators on the Transatlantic Trade and Investment Partnership (T-TIP) agreement realize that the only way to get the T-TIP agreement is to do away with the Berry amendment> The Berry amendment requires US-sourced military products made from textiles. The Europeans adamantly want this elimination. If this concession happens, our only option to oppose the devastating give-away is to defeat an up-or-down vote in Congress because we now have TPA in place.
Can it happen? The domestic textile industry has been sacrificed many times in past agreements as part of the “greater good.” The last time TPA had to be passed quickly, it was shortly before the vote on NAFTA. How did that work out for the US textile industry? NAFTA resulted in the loss of nearly 700,000 manufacturing jobs. It has been estimated that a result of the Korea Free Trade Agreement the US has lost 70,000 manufacturing jobs.
Containment Will Not Work
In my opinion, regardless of motive, NCTO hopes to contain China’s export textiles capabilities through TPP will not work. The US already has good free trade agreements with six of the eleven other TPP countries. It’s pretty obvious that where the US is trying to contain China in this agreement is Vietnam and Malaysia, two very low labor cost countries in the TPP. However, Malaysia and Vietnam are exactly the type of destinies for many Chinese companies already leaving China, seeking lower labor and energy costs.
In Vietnam, in anticipation of the agreement, China and other non-TPP countries have accelerated their investments in fiber and yarn manufacturing operations because of TPP. The Polytex Far Eastern Co. from Taiwan invested more than $274 million in a project producing yarn in Vietnam. Hyosung Vietnam Limited Company has invested nearly $660 million in a facility producing and processing yarn. The Vietnamese Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has announced that in the first seven months of 2015 Vietnam attracted nearly $9 billion in foreign direct investment, primarily to the textiles sector.
To add an absurdity to this “containment” approach through TPP was the New York Times article on August 2 reporting China is opening US fiber and yarn spinning operations in anticipation of increased fiber and yarn demand by the other countries in the TPP agreement. The US has cheap energy and relatively inexpensive labor. According to the International Textile Manufacturers Federation, yarn production costs in China are now 30% higher than in the United States.
North Carolina and South Carolina are now home to at least 20 Chinese manufacturers, including Keer America, a textile spinning operation, and Sun Fiber, a producer of polyester fibers. Ironically, Keer is getting at least $20 million in state and local government subsidies to build its 230,000 square-foot plant. More jobs for Americans? Some. The plants, though, are highly automated and the Chinese companies are hiring just a fraction of the workers that operations like this used to take.
TPP Forcing Others to Look Elsewhere
What about those left out of TPP? The US aggressive development of TPP has been countered with China’s own proposed free trade pact – the Free Trade Area of Asia and the Pacific (FTAAP). First proposed by China in 2004, it was an idea that languished for a decade. But the idea has increasingly gained traction as the US has aggressively pushed the organization of the Trans-Pacific Partnership. The countries not involved are feeling the need to partner up so as not to be left out. China has stepped in to provide the economic leadership of this rival trade coalition. The Asia-Pacific Economic Cooperation (APEC) has agreed to examine the long-term prospect of a Free Trade Area of the Asia-Pacific (FTAAP). In 2010, leaders of the Asia-Pacific Economic Cooperation (APEC) issued a directive with the intention to take steps toward realization of the FTAAP, as a major instrument to further APEC’s regional economic integration agenda.
What to Do?
This is a complex issue and a column even of this length does not do justice to all the issues. I didn’t cover the impact of “short supply” exceptions in TPP and the consideration of cotton prices.
The horses are out of the barn with the passage of TPA. The best the US can hope for is TPP does protect the domestic industry. The technical textiles industry really doesn’t have much of a say on it now. Let’s hope, too, the members of Congress actually read the document, and, if it is bad for the industry, have the courage to vote it down.
Protectionist positions are not the future for the US textile industry; especially not the technical textiles industry. Our industry has become multi-national. The US industry, through NTCO, should base our stance on partnerships, innovative ideas, and a relentless drive to open new consumer and business markets for our products. Let’s end this “poor me” defensive attitude.
My argument in favor of the trade agreement is as follows: What is really being addressed has only ancillary relationship to the points raised in the newsletter regarding supply chain issues and the other details related to protection. The big issue has to do with the history of where China is in the world, how they are expanding and consolidating their role in the world, and their continued insecurity over territorial threats to the (as they fear) unsteady unification of the cantons that have created today's China. Whether it's the creation of new land masses on what are currently atolls, claiming new territorial waters, or desperate islands, China still suffers from the insecurities to unification and acts accordingly. So TPP offers an alternative political and trade counter balance to the expansionist political and protective economic efforts at the basis of China's current strategy in the world, and therefore becomes imperative to the political security and economic potentials of the countries involved (i.e. "trans" Pacific), from Asia to Latin America. The agreement includes Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, and this, rather than issues such as "yarn forward", is the macro reality that TPP is addressing, and will hopefully be enacted by Congress and, again hopefully, wisdom somehow prevails.
Fontana, Calif., USA
Posted August 4, 2015
Posted July 18, 2015
Welcome to my new column page. In this section, I am going to offer my opinions and observations about the issues impacting the technical textiles industry including trade deals, product launches and failures, new initiatives and the trends.
I'll probably ruffle some feathers when my opinions don't follow the industry "party line." I won't be doing it for the sake of sensationalizing a story. I will give an opposing view on an issue if it needs to be articulated. Sometimes it's difficult for those within or covering the industry to be honestly critical on what's taking place. They have business relationships they have to protect. I don't. If it's a bad show, I am going to tell you it's a bad show. The same honesty about a bad product or a bad trade policy, I'm going to give my opinion.
I am sure the people at Takata are already wishing I would just go away because I keep posting about their airbag problems. With this column I intend to cast a critical eye at trade association stances, government trade policies and the value of an event. I don't understand, for example, why we are having in 2016 two of the most important North American trade shows -- Techtextil North America and IDEA -- taking place on the same exact dates. How valuable are these high-priced market research report solicitations that are flooding my email box covering aramid fibers, smart textiles, airbags, etc.? Here's another topic: Why is the National Council of Textile Organizations supporting the secretive Trans-Pacific Partnership agreement? In my opinion it's a long-term losing effort for the US industry.
I'll try with this column not to be too cranky all the time. There are plenty of enlightening stories that deserve more than a simple 3-4 sentence posting. Together, we will explore them. We need to learn more about the new US Revolutionary Fibers and Textiles Institute for Manufacturing Industry. I will talk with emerging leaders in China and South Asia. I will use the column to highlight new products being developed that will benefit those facing catastrophic disasters like earthquakes and floods.
More on all this in future columns. Stay tuned.
We begin a new year.
The beginning of this column also coincides with the anniversary date of launching BeaverLake6 Report. The website first went up on July 17, 2012. That day we recorded 10 visits. But over time, you found the website. In just the last 12 months, the site has had more than 72,000 visits and 129,000 page impressions. Last week there was a record 406 visitors at the site one day. Now, as BeaverLake6 Report enters its 4th year, my advice for those of you unhappy with your current job: Don't waste time. Find something you love and enjoy doing with passion. I have with BL6. I have a clear vision of what this website is all about. My hope is that you see and share this vision.
What do our readers think of the website?
On June 24 BL6 conducted a website satisfaction survey, sending out an invitation to participate to more than 1,800 industry contacts. The survey was open for one week and there was a special filter that allowed only one survey participation for an ISP address.
The survey results confirmed two things for me; 1) Readers are highly loyal visitors and 2) Readers find value in what we are doing, with more than 71% saying they were "highly satisfied" with the delivery of news regarding technical textiles.
In the survey comment section, one of the readers summed up what BL6 aspires to be: "It is one of my key resources for staying abreast of developments in the industry...concise and precise."
I have set up a special page for you to view the results of the entire survey. Click here to visit the page.
Thanks for your support. Look for the "real" start of the column in the next week. And yes, in case you are wondering, that's Beaver Lake in the background of the picture.
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Contact us by clicking here and reserve this prime ad location.
Click here to view the complete technical textiles events calendar that includes show information links.
The Office of the U.S. Trade Representative (USTR) has released President Trump's 2017 Trade Policy Agenda. The document, officially called 2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on the Trade Agreements Program, outlines the new Administration’s four trade priorities:
BeaverLake6 Report has created a special page within this website and placed the first chapter of the 336-page document which summarizes the policy. Click here to read it. Posted March 2, 2017
The INDEX™17 nonwovens exposition taking place in Geneva, Switzerland, April 4-7, 2017 will have an extensive series of conference tracks featuring the leading authorities in 5 areas:
• Geosynthetics/Sustainable Products
• Air Filtration
• Personal Care
• Automotive Interiors
BeaverLake6 Report has created a special page and posted descriptions of the these topics as well as the speaker list. Click here to view. Posted March 7, 2017
BeaverLake6 Report is very pleased to continue its series of reports on specific market segments within the technical textiles industry with a special "state-of-the-industry" look at the nonwovens industry. The report is authored by Dave Rousse, president of INDA, the international nonwovens association. Mr. Rousse looks at market drivers and new emerging markets. Click here to read the article.
Back on March 24, 2016, I was one of the first to predict the Trans-Pacific Partnership (TPP) agreement was a dead deal. In fact, I said that I wouldn’t be surprised that, if Donald Trump became President, the agreement is shredded on day one of his new administration. Well, I was off by three days. Yesterday, President Trump signed an Executive Order, officially withdrawing the United States from the TPP agreement. Now the question is can the National Council of Textile Organizations put together a comprehensive plan for the domestic textile industry in a post-TPP era? Click here to read the rest. Posted January 25, 2017
New FR Cellulose Fiber Developed in China
China accounts for more than half of the world's fiber processing capacity but still is following hehind some other countries in many high-tech breakthroughs in the technical textile applications. This new article, presented exclusively for the BeaverLake6 Report website by China Textile magazine, offers a look at the new flame-resistant and anti-bacterial fiber developed by Beijing SOL Flame-Retardant Fiber Limited. Click here to read the article. Posted January 18, 2017
There are literally dozens of market reports for the many market sections and subsections within the technical textiles industry. In 2017, BeaverLake6 Report will be introducing a few of these reports to our viewers. The first report being features is The Future of Spcialty Geosynthetics to 2021. It was developed by Smithers Apex, a market research firm based in the United Kingdom.
In exchange for the promotion, Smithers Apex agreed to write an exclusive expanded executive summary of the market report for our readers. Click here to view the market summary. Posted January 9, 2017
Small business owner and BeaverLake6 Report columnist Bud Weisbart writes about the business uncertainty which may come with the political uncertainty following the election of businessman Donald Trump as President of the United States. Click here to read his new column.
2016 China Textile Innovation Conference, as an annual summit of industry innovation, was held in Beijing on December 12th, 2016. The conference, themed on “New Opportunity, New Advantages, New Vitality” – Stepping Towards a Textile Power, comprehensively summarized the industry innovation achievements and explored the new advantages in development in order to grasp the strategic opportunity of the new round of industrial changes. BeaverLake6 Report is pleased to present a report on the conference via our partnership with China Textile magazine. Please click here. Posted December 21, 2016
Coleman Escalates FTZ Dispute with the Textile Industry. In a letter to Mr. Gene Dodaro, Controller General of the US General Accountability Office, five US senators and one congressman have requested the GAO to investigate how the Foreign-Trade Zones Board evaluates applications, ensuring a fair and transparent manner, as required by law. In conducting an examination.
In an August 22 letter, the Congressional leaders ask that Mr. Dodaro assess the process for reviewing applications that involve the import of textile products for use in a manufacturing process. Further, they asked the GAO to assess the FTZ Board's procedures for determining whether an application meets the tests for "threshold factors" and "economic factors" described in the Foreign-Trade Zones Act's implementing regulations.
While the letter does not specifically state the Coleman situation, all of the senators and congressman are from states with Coleman operations in the Midwest. A ruling was expected in August on the Coleman request for additional Production Authority allowing them to bring in textiles at a lower duty rate. [See the complete BeaverLake6 Report editorial for background information by clicking here.]
This call for a GAO investigation may delay the decison on Coleman's request for additional Production Authority for up to a year. Our thanks to industry trade expert David Trumbull for alerting us to this letter and his excellent coverage on his Textiles and Trade website which has more details. Posted September 29, 2016
The global sports footwear market is witnessing positive growth, mainly driven by the consumer demand for customized performance and comfort in sports footwear. Read the latest column about the research and trends by Jon Klein, Business Development Leader at PrimaLoft® Aerogel insulation. Click here.
Domestic PFD Manufacturer's Application for FTZ Additional Production Authority Riles Textile Industry Trade Associations. There is a nasty fight taking place these past few months behind the closed doors of Room 48019 at the Herbert C. Hoover Building in Washington, D.C. The room is the office of the Foreign-Trade Zones Board. The fight pits domestic technical textile industry suppliers and a coalition of textile-trade associations against a fairly large domestic end-product cut-and-sew manufacturer. Click here to read the story.
BeaverLake6 Report is pleased to present "Fiber Composites Growth, Part 2", a new contribution from our partnership with China Textile magazine. The authors are China Textile's Zhao Hong, Editor-in-Chief, and Flora Zhao, the Director of the Editorial Department. Mr. Zhao is also the Director of International Trade Office of the China National Textile and Apparel Council, (CNTAC) and Vice President of the China Knitting Industry Association (CKIA). In Part 2, the focus of the article is on international trade and the development of fiber-reinforced composites. Click here to read. Posted July 12, 2016
I am pleased to announce BeaverLake6 Report has added a new column called "Jon Klein's Outlook." Jon Klein is the Business Development Leader at PrimaLoft® Aerogel insulation. With over 20 years in the industry, Mr. Klein has extensive experience in the textiles, apparel and footwear industry. Mr. Klein is a frequent contributor of short articles on LinkedIn, the world's largest business network, writing about the various market segments of the technical textiles. This column covers his LinkedIn postings. Please click here to go to his column.
Steve Warner, Publisher
June 27, 2016
One essential document BeaverLake6 Report recommends if you are going to be exporting your products is the 2016 Technical Textiles Top Markets Report, produced by the U.S. Department of Commerce's International Trade Administration (ITA).
The 59-page 2016 edition is now available online and forecasts global demand for U.S. technical textile products to increase 4% annually through 2017, from $8.6bn in 2015 to $9.3bn in 2017. Innovation and new technology coupled with trade relationships developed under existing and future free trade agreements will drive this increase in demand.
Top Markets Report examines historical data from 2008 through 2015 plus forecasts demand for 2016 and 2017, and ranks 70 markets for overall technical textile exports. This study of the U.S. technical textiles market is intended to provide an analysis of the competitive landscape, including developing trends and key regions where U.S. producers could find new and continued opportunities for their products.
Click here to go to the website to view the report. Posted May 25, 2016
We are pleased to present a new contribution in the China Textile section of the website. This article starts a multi-part series Fiber Composites Growth (2016-2020). The authors are Zhao Hong, Editor-in-Chief, and Flora Zhao, the Director of the Editorial Department of China Textile magazine. In addition to his role at China Textile, Mr. Zhao is also the Director of International Trade Office of the China National Textile and Apparel Council, a national confederation of all textile-related industries, and the Vice President of the China Knitting Industry Association. Click here to read the article. Posted May 16, 2016
Steve Warner, Publisher
Industry Market Report Available. What impact has the sale of decline of military products purchases have on government shelter fabricators? What is the outlook on textiles going into the automotive industry? What are three issues that can negatively impact the growth of the protective clothing market segment?
You can find the answers to all these questions in the 2016 State of the U.S. Technical Textiles Industry report published in Textile World magazine. Part One of the report is in the March/April issue and Part Two will be in the May/June issue.
Click here to go to the report on the Textile World website.
OK, I am going to say what the National Council of Textile Organizations is reluctant to concede: There is not a chance in the world for the Trans-Pacific Partnership (TPP) agreement to pass in the US Congress next year. It is a dead deal. There is still a lot of wasted energy in justifying support for a trade agreement that is going nowhere. Click here to read the rest.
Posted March 24, 2016
In 2015, I posted more than 425 items of interest for our industry on the BeaverLake6 Report website. In reviewing it all last week, it got me to thinking about putting together a list of influential events, news and trends that I observed during the past year. I have focused primarily on the US marketplace but each of “the things that mattered” to me has global implications.
So, here go my thoughts in no particular order of importance. Let me know if you agree or if I have missed some. Click here to read the list.
Posted January 17, 2016
We are pleased to now offer a special Sponsored page for the JEC Group. JEC is the largest composites industry organization in the world with a network of 250,000 professionals. JEC represents, promotes and expands composites markets by providing global or local networking and information services
With their new Sponsored page on BeaverLake6 Report, JEC will be featuring their three major events -- JEC Asia 2016, JEC World 2016 and JEC Americas 2016. Click here to go immediately to the JEC home page. Make sure to come back often to these pages for the most up-to-date information on the events.
Posted August 4, 2015
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