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Fabric suppliers facing uncertainties

By Susan M. Andrews -- Furniture Today, December 25, 2005

High Point — A year has passed since the elimination of textile quotas, and the domestic textile lobby has been successful in restricting some Chinese imports, but trade for most furniture companies has continued as before, since upholstery is a small segment and most fabrics come into this country as cut-and-sew kits, considered furniture parts and therefore not subject to quotas.

More important for domestic fabric producers are complications linked to the hurricanes that hit the Gulf Coast in 2005, which forced fabric sources to add surcharges to cover increased production and transportation costs. Many of those price hikes are likely to become permanent, because textile producers had been absorbing cost increases for some time to fend off Chinese imports.

"Due to the cost of oil and the overall supply situation, manufacturers must push the increase of raw materials forward in the supply chain," said Michael Apperson, president and CEO of American Fibers and Yarns, a major supplier of filament yarn to fabric producers. "No step in the supply chain can absorb this magnitude of material cost increases and survive."

Overall, American fabric vendors are reasonably confident about 2006, despite the challenges, particularly those with a mix of domestic and overseas sourcing. The optimism, however, is contingent on stabilization of yarn prices and availability in the early part of 2006.

Those vendors with a platform in China, or with well-developed relationships there, are banking on value being the overriding concern of furniture manufacturers, who are contending with rising raw material costs on everything from steel to foam.

One example is Peachtree Fabrics, which sources fabrics from all over the world, including China. CEO Steve Dutson said, "Because we can serve the industry in two ways — first, through our distribution directly to U.S. manufacturers from our Atlanta facility and, second, from our facility in Beijing for those manufacturers who want to produce in China — we foresee healthy continued growth.

"The unknown will be the Chinese manufacturers themselves and their future distribution plans," he continued. "As with anything in China, the relationships are key. For us, we are comfortable that we are with the right business partners."

Major fabric source Culp Inc. also has a significant platform in China, blending its domestically produced goods with Chinese-made product. "The last quarter of 2005 has been very challenging because of the foam situation and price increases due to the hurricanes," said Chairman and CEO Rob Culp. "Our furniture customers have had huge increases in foam pricing and we have had huge increases in yarn prices, (which) certainly has not made for an easy business climate.

"As far as 2006 goes," he continued, "we are cautiously optimistic, and that optimism is based on reasonable, stable and predictable yarn prices and availability."

Those American fabric vendors not dealing with Chinese goods are convinced their ability to offer dependable quality and styling, and their proximity to the market, will keep them in the game, especially as some customers lose patience with quality and delivery issues related to Chinese imports.

"The influence of China is certainly felt by us and other importers," said Craig DeLeo, CEO of DeLeo Textiles. "However, I strongly believe that proper service and styling will still give us a fair share.

"The larger volume-oriented accounts will certainly gravitate to the less-expensive fabric options, (but) our business thrives on the medium to high-end accounts that thrive on a warehousing supplier," he said.

Apperson, of American Fibers and Yarns, sounded a similar note: "Companies will still look to China for large runs of upholstered furniture, but will also find it essential to be able to produce the identical fabric and furniture domestically for quick turnaround."

Some vendors selling Chinese imports are dealing with quality and delivery issues by warehousing imported goods. That works for leathers, suedes, plains and traditional patterns in traditional colors, but it has the potential to create a bland, homogenized look.

Some fatigue is bound to set in for consumers with leather and suede, which is being accelerated by the cheapening of those products. Where's the sex appeal, after all, of a leather club chair and ottoman if you see a half dozen in the neighborhood discount store?

Still, suede fabrics are moving to constructions with more interest. "Microdeniers are still very popular," Culp said, "and we do not see them losing market share, although we do see them moving (to) more surface appeal versus the plain suedes that have been so popular.

"We are also seeing a slight uptick in our jacquards, as well as the chenille and velvet business," he said. "It appears that retailers have so many of these microdenier suedes on the floor that, as frames come up for replacement, more textural fabrics have a chance to go on these frames."

DeLeo said, "Body cloths are always important and will be the volume products sold. However, I sense more textured products and designs will be more widely used, especially among higher-end users."

Apperson also believes that "microsuedes are reaching their peak, and we're seeing more style and textures."

Technology continues to be a powerful instrument against creeping sameness, with more and more companies offering performance fabrics. Resistance to soil, stains and fading, easy cleanability and over-the-top durability are attainable properties in all sorts of interior residential fabrics now, and furniture manufacturers recognize that value as well.

"The trend in performance fabrics is ongoing, with an emphasis on the fabrics being bleach-cleanable," said Apperson. "There's also a big move (to use) performance fabrics for indoor/outdoor and sunrooms."

The color, styling and design of performance fabrics improves almost daily, and the fabrics consumers crave are available with an ever-growing list of performance properties they are willing to pay for.

On the whole, 2006 won't be a cakewalk for the fabric segment, but growth is a reasonable expectation for those that respond to trends and invest in service.

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