By Shelley Denning
A Partnership Built on Quality
A glut of denim apparel in retail outlets has led to a downturn in the U.S. denim industry since late 1996. While several U.S. denim manufacturers have been forced to significantly reduce their production schedules, the impact on Plains Cotton Cooperative Association’s (PCCA) American Cotton Growers denim mill at Littlefield, TX, has not been as severe due to its unique and long- standing relationship with Levi Strauss & Co. (LS&CO.).
Through the first half of 1997, some U.S. mills have reduced their production schedules to five and six days per week and/or halted production entirely for one or two weeks at a time. Yet, the American Cotton Growers (ACG) mill essentially has maintained almost full production during the past six months.
“We shut down the week of Spring Break in March,” notes ACG Plant Manager Danny Davis, “not because orders from LS&CO. were down, but because shipments to cutting and sewing plants were backed up. This resulted in a buildup of inventory in our warehouse, but fortunately all the inventory was sold.” Davis adds the mill also will shut down the first 10 days in July, again to manage inventory.
“These cycles are not unusual in the denim industry,” Davis explains. “The market always rebounds, usually stronger than most analysts predict. When that happens, the Levi’s inventory we have on hand should move quickly, which will be a blessing for us and LS&CO.” Such ability and management is the basis upon which the ACG/LS&CO. relationship is built.
“We deliver what we say we will deliver, when we say we will deliver it,” Davis says. ACG currently produces 10 different styles for LS&CO. The type and quantity of each is decided by market forecasts, explains Jerry Jones, quality control manager at ACG. Of the styles in production, the traditional 02 heavyweight denim is the most popular; however the mill also makes economy 02 denim for shorts, and natural denim to be used in overdying.
There are five primary reasons why LS&CO. continues to do business with ACG, Jones says:
1) ACG maintains a high-quality product and service at a fair value; 2) the selection and blending processes provide the optimum basis for product production; 3) consistency of dying techniques produces denim with a uniform shade; 4) upgrades in the equipment provide the quality and diversity to produce a superior product line; 5) a dedicated and caring work force ensures that the job is done right.
The versatility and flexibility of the mill contribute to its strength in the marketplace. The recent mill expansion and subsequent replacement of outdated equipment has provided the opportunity for the creation and testing of new ideas for LS&CO., while enabling the mill to add value to PCCA members’ cotton.
“By experimenting with new styles, we are trying to improve our marketability and add value to the farmers’ cotton,” Jones says.
The long-standing partnership with LS&CO., and the recent mill expansion have proven to be profitable for ACG. The mill’s margins have averaged $18.5 million during the last five years; an average of $17.01 per bale.