Georgia Tech Global Leaning Center Atlanta, Georgia

November 19, 2008

Watch the talk by Kurt Cavano -  Cavano.m4v  (this is a large file and may take several minutes to download)

Paula Rosenblum's talk (approximately 50 minute podcast - mp3 file)

American Cotton Growers

Jack Mathews

jack.mathews@pcca.com

Jack was very interactive in our forum. AAPN likes to say our members cross the entire supply chain “from the dirt to the shirt”. Jack is the ‘dirt’ with the cotton farming they do, but he also produces and exports denim so knows his retailer and consuer research. Jack helped pay for our dinner Tuesday evening, November 18 at Rathbun’s.

Buhler Quality Yarns

Werner Bieri

wbieri@buhleryarns.com

David Sasso

dsasso@buhleryarns.com

This is one of the best ‘yarn’ teams in the industry. They are creative, progressive and fearless when it comes to calling on brands and retailers. Werner was especially interactive with the economist, questioning everything, seeking clarity he could apply to his company. We thank Werner for paying for dinner at Rathbun’s on Wednesday evening.

Centric Software

James Horne

jhorne@centricsoftware.com

Having James in the meeting to define such technologies as PLM was extremely helpful. Also, like everyone else, he is just flat smart and his questions during the day helped us all understand what were actually very complex issues.

Contempora Fabrics

Carey Read

cread@contemporafabrics.com

We were extremely fortunate to have a CFO in the room, not just one but two, as we saw Carey interact with his peer from Tuscarora, Ervin Johnson. These are the kinds of key staff we seldom get to meet. Having them in an ‘economic’ forum was perfect.

Mike, I was very happy to have attended my first AAPN meeting yesterday.  I agree that you had a very powerful lineup of speakers with a very powerful message.  If I take any one thing from the meeting that specifically applies to our company, its that we need to take a closer look at every penny of overhead we have and wring out what is not absolutely necessary.  Contempora has done a great deal of cost cutting over the last six years.  But there is always more that can be done because, frankly, most of us aren't equipped to understand "worst case scenario".

Georgia Tech, Polymer, Textile & Fiber Engineering

Fred Cook

fred.cook@ptfe.gatech.edu

Dr. Cook is a long time personal friend, an expert in our industry and a source of tremendous insight and articles about the industry. It was an honor to have him there, even if it was briefly.

Gerson & Gerson

Barbara Zeins

Barbara.Zeins@gersonandgerson.com

Barbara was the real treasure in this meeting because she interfaces directly with 200 retail customers. If you want someone with their finger on the pulse of what is happening and the amazing brain power to work to figure it all out, its Barbara. Her originial idea to list ‘9 Big Fat Garment Lies’ is beginning to form into a strategy we will all use.

Grupo Bamex

Ruben Marcos

rmarcosk@gmail.com

Ruben is amazing. He is brilliant, thoughful, and a proven business executive. The articles he has sent us about the US economy show a high level sophisticated study of this event. Having a veteran of NAFTA and other chapters in regional trade like Ruben gives us confidence we can figure anything out as a new administration settles into DC.

Hamrick Mills

Jim Hopkins

jhopkins@hamrickmills.com

Jim is the marketing staff at Hamrick. We have watched Jim blossom as he has gained confidence about engaging brands and retailers directly. Few members from the fabric end of the chain have attended our meetings so consistently and applied what he has learned to better document the value of sourcing from his company than Jim.

Hogan & Hartson LLP

Chandri Navarro

cnavarro-bowman@hhlaw.com

Chandri is a proven veteran of legislation in our industry starting ‘way back when’ she was the chief economist for the AAMA in Washington. Her law career has been built on representing our industry’s movers and shakers in the infinite details of trade negotiations. She gave us terrific insight into what she expects from the new administration. It helps also that her style and presence is so charismatic.

IDEA Global

Mike Smith

mikesmith@ideallc.com

IDEA LLC

Henry Camp

henrycamp@ideallc.com

Tom DeMuth

tomdemuth@ideallc.com

These three gentlemen comprise the ‘think tank’ of inventory management that they are selling to the industry. Clearly, the major challenge we face in this economy is both to flush out the inventory sitting in retail now and replace it with much more sophisticated ‘pull’ technologies which will favor local sourcing. Their knowledge of ‘retail’ was priceless in this forum. We thank Henry Camp for helping pay for dinner Nov 18th.

Kaltex Apparel S.A. de C.V.

Julio Barea

jbarea@kaltexapp.com

Seeing Julio is always wonderful. He was a member when an executive at Russell and joined when he took over his new role in Mexico. In many ways, Julio helped define the industry in this hemisphere. Hearing him ask questions, you get the sense of how experienced he is and how tough he intends to be to lead his company forward.

R.L. Stowe Mills Inc

Marshall Johnson

mljohnson@rlstowe.com

Unbelieveably, Marshell drove 4 hours each way from North Carolina to attend the forum, and thank God he did. Few understand what is happenng in the yarn and fabric supply chain like Marshall. He was able to help us all understand the drop in inventories and the new relationships that will drive production.

RadiciSpandex Corp

Kim Hall

khall@radicispandex.com

Few know the consumer applications of their product like Kim Hall. The presentations she gives show the amazing uses for Spandex across the full range of fabrics. Because of the fashion and high margin applications of her work, having her in the meeting got us ‘out of basics’ when it came to discussing apparel.

Retail Systems Research

Paula Rosenblum

prosenblum@rsrresearch.com

Paula is brilliant and so experienced. When I saw the PowerPoint she sent me before the meeting, I knew it was a blockbuster and from experience I knew that no matter what it said, if you weren’t there to hear her present it, you’d get little use from it. Her presenta-tion style is absolutely direct with no hyperbole or doubt about what she means. Having her kick off this meeting was spot on perfect.

Riverside Mfg Co

Jerry Yates

jyates@riversideuniforms.com

Jerry is a veteran of this industry too, a world traveler from a very old company who has experienced every possible chapter of change as a manufacturer and adjusted to them. It was mission critical that we have factories in this meeting and Jerry was one of the best.

I was well pleased with what I took away from the forum in Atlanta yesterday.  The information was very timely and all of the speakers were high quality, together with their presentations.  I found it very interesting that, despite the varied backgrounds of the presenters, there was a lot of commonality among their comments. I also appreciated you sending out the Powerpoint presentations, together with the quotes and your personal notes for the attendees.  This made my summary to my peers here at Riverside an easy chore, thanks!

Rocedes Apparel S.A.

Joe Stephenson

jstephen@atlantic.net

Joe is a life force in AAPN. He’s the one who always calls to ask how we are doing, or to challenge us to think of implementing some idea he’s had, or to comment on something we broadcast. He takes ownership of his role as our president like few before him. It helps that he always picks up the tab, including Wendesday evening!

SPESA

Dave Gardner

dave@spesa.org

Dave was the perfect person to have. If the definition of a recovery is when company’s increase their capital spending in our industry, that spending goes to the members of SPESA. Dave’s many questions were from this vantage point – tell me what I can tell my members, which is the role of an association executive. This was a far better meeting with Dave in it.

SunTrust

Gregory Miller

Pamela Jenkins-Smith

Pamela.Jenkins-smith@SunTrust.com

Grant Fanning

Duran Ingram

Susan Small

SunTrust‘s Chief Economist, Gregory Miller, was our last speaker. We cut him off at about 2 hours. He is beyond brilliant and introduced us to concepts about the economy that explain more than most of us thought we could understand. He took any and all questions, always having one or more charts to back up his comments.

Textile World

Jim Borneman

jborneman@billian.com

Jim was recently promoted to President of Billian Publishing, an awesome promotion. He remains publisher of TextileWorld. His questions tend to be the best. He took photos of the meeting and I’m sure there will be an article resutling from it also. Having Jim so close by in Atlanta means we have instant access to one of the best minds on global fiber, yarn and textile realitiies.

Really interesting meeting and great pleasure to meet and speak with AAPN members. The doom and gloom are palpable from the economists – maybe less so from your members. That is not surprising — they represent some of the most creative in the industry. The cost-cut, hunker-down reaction proposed by Kurt’s presentation is understandable. We have made staff reductions and heavy cuts here — those are tough decisions that no one takes lightly. As SunTrust’s Greg Miller said, we are already in a recession – since Q4 2007. By that measure, hunkering and cutting is a bit late, but it will still happen because it is human nature not to want to make those decisions until you feel forced to do it.

   As a marketer, I see this as an opportunity. Yes, we need to contain costs and preserve cash. But this isn’t just a cost game – revenue matters. Targeting Q3 2009 for recovery gives an opportunity to position the company to be participating in the recovery before others know it is happening – we need to be there first. For Billian’s Data business, I will put sales under that much more pressure to generate revenue. We are increasing investment in sales and marketing to support sales. I don’t want to spend money, but our data division is key to our success. I think the returns, both short and long term, are a given and possibly even better than normal because the competitors will be pulling back. Our sales team needs to make more calls. For the data group, there are relationship sales but there also needs to be new business. In new business, it is like baseball, if batting averages are falling, you don’t reach for a smaller bat, you try to get more times at bat. And as a manager, you do everything you can to make that batter successful. I hate sports analogies – but in this case it is a good fit.

   Anyway, textiles will be tough, but 3 of your members that I spoke with have new investments in equipment – 2 done, 1 planning. As Miller said, investment in plant and equipment is a leading indicator of recovery. Each company will be bringing new products and more efficient/improved quality products to the market. The challenge won’t be cost cutting – they are lean as all get-out – the challenge will be educating the customer and generating sales.

   Thanks for a great meeting – you might consider that one quarterly!!

The CIT Group

Lewis Tabb

lewis.tabb@cit.com

There was no way Lewis’ talk was going to be exciting, except when he gave it. He followed Paula and Kurt and showed how what they both said dovetailed perfectly into his comments. When you have people in the meeting who are such veterans of finance all the way up and down the chain, you get the picture you need to make better plans and change assumptions you may have concerning credit and cash flow.

TradeCard

Kurt Cavano

kcavano@tradecard.com

As usual, Kurt stole the show. He has such a unique, personal, exciting and informative way of talking. You feel like you are in one of his staff meetings, part of the team, and that he wants to hear your comments and work on answers with you. He gave an exceptionally powerful talk, one every CEO and owner in the AAPN would be better of right now had they been here. As a CEO himself, Kurt backed up his recent major business decisions wwith charts and information that showed ‘why’.

Tuscarora Yarns

Ervin Johnson

ejohnson@tuscarorayarns.com

Ervin represented a yarn producer that, like Buhler, simply gets into doors at brands and retailers. Why? Differentiation. By making custom yarns, and knowing the supply chain so well, Tuscarora is a differentiator and an expert. Ervin was the CFO and his comments, and the relaxed way he felt a part of this room, were extremely important.

Walter Wilhelm Associates

Stephanie Williamson

swilliam@walterwilhelmassoc.com

Representing both the consulting and executive placement side of her company, Stephanie got a very long time to talk during introductions. I was just with her father, Walter, on recent projects in the Dominican Republic and also Guatemala. Stephanie’s company is important, they are a change agent. And like me, they know SO much that is secret from their customers, that they can not broadcast – but can apply to project after project.

Hosts:

American Apparel Producers’ Network

Sue C Strickland

sue@aapnetwork.net

Mike Todaro

miketodaro@mindspring.com

Notes Todaro took:

“the consumer remains empowered. They want someone to talk to them, otherwise they simply go online”

“retailers do cruel and unusual things. If they are measured on turns, they let inventory drop deliberately creating lots of holes on store shelves”

“The US can not be a sustainable economy and not make stuff. Production has got to come back. The paradox is supply is global but demand is local. Retailers realize they need to source locally but they are addicted to China.”

“Yes, retailers did used to send sales data to manufacturers who would replenish them. But now that they work with factories or middlemen, none of them have the systems to crunch this information and use it. You have to have systems because it is complicated to source globally.”

“the US has been overstored for years. there is no infinite market”

“GAP and Chico’s are two examples of stores that have outgrown the size of their target market. They can not shrink, go down in demographic or go higher to another one”.

“Retailers today can not even collaborate within their own enterprise much less with factories. In the old days, everyone in the retailer was on board. Even the janitor knew what the goals were. But today, every department – finance, logistics, sourcing, sales, merchandising, planning, product development – has a different measurement that does not support any other departments. No-one is measured or compensated on how they work together with others”.

“You can not win business from a retailer who’s biggest element on their cost worksheet is the size of markdown they are planning to have. The mission is to avoid the markdown in the first place by planning, partnering and ‘pulling’ inventory based on sales. Then, it doesn’t matter what the cost is, only your markup and that you sell it. And its worse if they are measured and paid on ‘turns’ - it simply means they will run out of inventory because it looks better”.

“the people in charge of recovering our economy are too young to have experienced the last one, they do not know what they are doing”.

“China, Japan and the Middle East are the ones who own our debt. Every man, woman and child in the US today owes them $18,000”.

“two of my biggest customers have asked me how they can do CMT with their factories. They are beginning to understand their supply chains and that the health of these suppliers is critical to the factories. The smart ones are worried about how they can help these supply chains before it is too late.”

“About 12% of our GDP disappeared when the value of housing collapsed. How do you replace that? Do you try to do 5% over 2 years? 10% next year? How do we recover from that?”

“you are in a death spiral if for any reason, you believe your own B.S. and don’t start cutting costs mercilessly right now?”

“there seems to be a real focus finally on cutting cycle times, on shrinking the time to get fresh inventory”

“(SunTrust) this is what we expected. We predicted this recession in late 2006. We are right on track. There is some good news, oil is less than $55 a barrel, but that’s it for the good news”

“Oil falls in price twice as fast as it peaks. It took us 345 days for oil to go from $60 to $145. It took 90 days to drop back to $60. With gas at $2.20 a gallon, that frees up an average of $1,200 for a family to spend on discretionary purchases”.

“apparel and housing prices seem to be creeping back up. We project the economy to go positive in the 3rd quarter of 2009, that retailers will build up inventories, that there will be pent up demand. It is always true that a strong economy builds excess inventory, so that has to adjust.”

“looking back over time, the economy grows 84% of the time and is in a recession 16% of the time. That’s where we are now. Eventually, as usual, greed will overcome fear”.