Vol I - Edition II

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PreGrayson Walker talks with Scott Tesser about the advantages of being agile in the apparel business.

Finding profit in the apparel industry has proven elusive for many suppliers, especially those with significant US operations. But then, not all companies are like Precision Custom Coatings LLC, founded in 1987 and based a short distance from New York City in Totowa, NJ. The company has grown to become a leading producer and supplier of non-woven and knitted fusible interlinings in the US.

Three-quarters of the company’s $98 million in revenue during 2004 was derived from the apparel market, with the other 25% from the fast-growing industrial products market, said Scott Tesser, company president and CEO. Tesser owns the company with Peter Longo, one of the founders who serves as chairman.

As a smaller company, PCC can be more nimble in responding to customer needs, developing and bringing new products to market much faster than larger rivals can.

The company’s 210,000-square-foot production facility contains the latest in state-of-the-art, high-speed machinery. Multiple non-woven and coating lines produce the highest quality non-woven and knitted fusible interlinings available. PCC also has a production facility in China, but one-half of the goods the company produces in the US are exported to China, said Tesser.

“We had a vision eight years ago to set up overseas production,” Tesser said. “I landed in Hong Kong and didn’t know where to start, but I knew it was what we had to do to remain competitive.”

PCC now employs 200 in Asia in addition to its 275 US-based employees. The company has 23 Asian offices to serve its 5,000 clients in that market. “Our business there is growing at a rapid rate,” Tesser said. “Customers want to do business with us because we can give them what they want.”

Shipping to China
The company’s reputation for high-quality interlinings has become world renowned, enabling PCC to expand into a network of more than 35 global distribution centers. Interlinings are specialty products used in such applications as the material inside shirt collars and the waistband of pants to provide support and durability. The company also manufactures lining products found inside suit jackets and similar products.

Today, many of the largest apparel manufacturers have come to depend on PCC to support their manufacturing facilities on a global basis with consistently high-quality products and technical support.

Clients include Liz Claiborne and Levi’s, customers that want a certain look for their garments wherever they are located, Tesser said. The company can compete on price because it employs double-wide technology in the non-woven manufacturing process, allowing PCC to turn out twice the product at one time.

Shipping piece-goods to a low-cost producer such as China might seem like a losing proposition, but PCC’s products are in demand. “The logistics side is the easiest part,” Tesser explained. “Containers arrive in the US full and leave for China empty. Because we ship the other way, freight companies love us.”

In fact, Tesser said it costs less to ship 200,000 yards (a 40-foot container) of goods to China than it does to ship the same product from Totowa to Manhattan.

The company will continue its strategy of producing more and more goods at its Chinese factory to help PCC compete in a global marketplace. And it will continue to ship products from the US to China. “It means that I have to inventory more product than I want because I always have product on the water,” Tesser said. “The bean counters don’t like it, but our objective is to have the product available when the customer needs it.”

That service is what sets PCC apart from its competitors. The company enjoys low overhead and the ability to turn out new products quickly and efficiently. Tesser describes himself and Longo as hands-on managers. “When Hong Kong calls me, even if it’s in the middle of the night here, I do the evaluation, make the decision, and that’s it,” Tesser said.

Speed to market
PCC is not just about apparel. The company also is a pivotal supplier in the industrial market, serving automotive, healthcare, home furnishings, footwear, luggage, food packaging, and protective clothing manufacturers.

Since beginning to focus on the $1 billion industrial non-woven market as part of its strategy to move some production offshore, PCC has garnered a $25 million market share for its good The company invests heavily in product development, both for the apparel and industrial markets. PCC is a vertical mill and obtained ISO 9001 certification in March 2001.
“We’re a small company in an industry with very large players,” Tesser said. “We can turn out projects in a month versus the one year other companies need just to make a decision. Speed to market is our advantage.”

PCC has taken a systematic approach to balancing its apparel and industrial non-woven businesses. Core products in the industrial line include headliner and hoodliner material for automotive applications and products used in filtration.

The company has also made inroads into the home cleaning market, developing and manufacturing for Church & Dwight the new Brillo Scrub ’n’ Toss home wipes that feature an abrasive side for cleaning and an absorbent side for wiping.

Being a niche player in an industry dominated by major players can appear daunting at times. “Cracking a new market is tough,” Tesser admitted. “Your products have to be different and better, and you have to prove to customers that they are different and better.”

PCC’s 2004 revenue represented a 15% increase over the previous year. The company has forecast another 15% revenue gain in 2005, an aggressive target in a tough market, but Tesser said the company is ready for the challenge.

“We have the ability to do many different things under one roof,” he said. “While we can’t be all things to all people, we offer quality niche products and superior customer service that keep our clients coming back.”