To Boost Fabric Sales
Plains Cotton Cooperative Association (PCCA) recently announced it is significantly expanding its denim product line and customer base in order to utilize full production capacity at its textile mills, boost fabric sales, and increase financial returns to the cooperative’s farmer-members.
The major departure from past fabric merchandising efforts, ironically, comes at a time when the cooperative’s Textile Division is reaping record net margins. The decision to expand the denim product line also is unique because poor market conditions and stiff competition from imported textiles and apparel products are forcing other U.S. textile manufacturers to constrict or downsize.
“Although the short-term looks very good for our Textile Division, we must reposition this Company to be competitive and responsive to long-term denim market changes,” PCCA President and CEO Van May told the cooperative’s delegates at their April meeting in Lubbock.
To facilitate the changes, PCCA is adding to its core fabrics by developing and marketing a collection encompassing lightweight, mid-weight, and heavyweight fabrics which includes a mix of basics and value-added styles. The full product line will be marketed to Levi Strauss & Co. (LS&CO.) as well as selected new customers. PCCA’s American Cotton Growers (ACG) Denim Mill has manufactured heavyweight denim since 1976 essentially for LS&CO. only.
“Our top priority will be to maintain Levi Strauss & Co. as a major denim customer,” May adds. “The 23-year history of our commitment to customer service and the production of top quality denim fabric should help ensure our relationship continues. However, expanding the number of our business partnerships in today’s market will help ensure future growth.” The opportunity for expanded denim marketing is partially a result of PCCA’s acquisition of Mission Valley Fabrics (MVF) in May of 1998.
“The timing was right last year for PCCA to move into a broader arena of fabric merchandising while maintaining our primary focus on basic denim production,” May continues. “We knew each organization would bring a unique set of strengths that would complement the combined operation very well. Furthermore, we are now in a position to maximize the synergies between PCCA’s two textile operations by integrating their core fabrics into a full product line for our denim customers.” To support the projected growth with new target customers, PCCA has purchased a second dye range for the ACG mill.
“The additional capacity provided by this second dye range should send a clear signal to our potential new customers that PCCA is committed to this expansion effort,” May explains. The new dye range addition also will provide flexibility in producing a variety of colors and indigo shades to meet the ever-changing needs of the fashion denim market.
Other factors supporting the expansion include: well established field to fabric vertical integration; a reputation for quality fabrics, strong partnerships and customer service; thorough knowledge of the manufacturing processes; and close proximity to cutting and sewing operations in Mexico.
PCCA also has expanded and reorganized its textile sales force into a regional structure. The cooperative’s Mission Valley Fabrics Division now has responsibility for sales and marketing of ACG indigo denim as well as MVF yarn- dyed woven fabrics.
With the addition of the second dye range, PCCA has invested approximately $36 million since 1993 to ensure the best denim quality and to increase production capacity and efficiency at the ACG mill. Since May 1998, a major renovation of MVF’s dye house also has been completed.
In the past five crop years, 1993 through 1997, PCCA has distributed a total of $169.7 million in cash, or added value, to its members. The cooperative’s Textile Division has contributed a significant portion of the cash distribution during that five-year period.
“Our mission is to add significant value to the cotton marketed for our members by being the supplier of choice to our business partners in terms of quality, service, and value,” May notes. “The total cash distributed to our farmer-members in recent years is proof that we are accomplishing our objectives. With this latest expansion effort, we intend to become the preferred supplier to a variety of selected new customers, and that will mean even greater returns for the farmers who own this cooperative,” he concludes.