Economic indicators continued to make small but steady gains in late 2009, and PCCA’s Textile and Apparel Division launched two expansion projects as the year ended to meet growing demand for denim jeans.
“Retail apparel inventories declined significantly late last year; a clear indication consumers were increasing their purchases,” said Denimatrix (DMX) President Carlos Arias. “Consequently, our customers began revising their purchases from us,” he added.
In recent months, DMX customers repeatedly asked Arias to increase production capacity to enable them to source more products from the Western Hemisphere. Current capacity at the Guatemala City facility with its 21 cut and sew lines is 120,000 units (jeans) per week. Based on improved retail sales and DMX customers’ requests, Arias presented a plan to PCCA’s Board of Directors in November to lease an additional 56,520 square feet of production space.
“This additional space will allow DMX to install five new sewing lines and relocate five existing sewing lines,” Arias explained. “When completed, our production capacity will be 150,000 units per week. Through Nov. 8, DMX had delivered 2.3 million units to its customers since production began in March 2009.”
In October, 54 percent of the denim fabric being used to make jeans at DMX was from American Cotton Growers (ACG), but Arias reported the percentage would continue to grow. That same month, the Textile and Apparel Division was profitable for the first time in several years.
“The synergies between ACG and DMX continue to exceed expectations,” said PCCA President and CEO Wally Darneille. “We still have challenges at ACG in today’s market environment, but we continue to make adjustments and are seeing some improvement,” he added. Reducing input costs is one way to improve the bottom line at the denim mill. In December, PCCA’s Board of Directors approved a plan to increase production of ring-spun and core-spun yarns, thereby reducing the need to purchase those yarns used to make high-fashion denim fabrics.
“This project will improve our flexibility and ability to respond to the market,” said Bryan Gregory, PCCA’s Vice President of Textile Manufacturing. “We will install two new ring spinning frames and one core spinning frame,” he added. Core-spun yarn contains spandex to make stretch denim fabrics.
“Everything should be operational by the end of March,” Gregory continued. “We project a payback of our investment in this equipment in about 11 months.”