Vol I - Edition III

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MONTREAL -- Gildan Activewear will begin making apparel bearing its own label, a new direction from its traditional role of producing generic T-shirts for printers and wholesalers.

While the U.S. accounts for about 85 percent of Gildan’s sales, the new products will initially hit Canadian stores next year and will include T-shirts, sweatshirts, underwear and cotton socks, according to company president Glenn Chamandy. His goal is to triple annual sales to $1.5 billion by 2010 which would see Gildan’s workforce grow to 30,000 from 9,000, mostly in Honduras and the Dominican Republic.

Only 900 workers remain in Canada after the company closed two yarn-spinning plants in Quebec and Ontario at the end of March, affecting 285 employees and shifting production to Clarkton, N.C. The move is expected to save $4 million annually. The new U.S. plant is leased and operated by Gildan’s yarn-spinning joint venture with Frontier Spinning Mills. Gildan plans to use its low-cost manufacturing facilities to support its retail strategy of offering a better quality garment and better packaging at a better price, Chamandy said.

The company’s branded T-shirts will retail for less than $10 and a pack of six pairs of socks will sell for $6 or $7. Gildan has $425 million in capital expenditures planned between now and 2009 to expand its existing operations which will boost annual capacity to 100 million dozen T-shirts within five years from the current 32 million dozen.

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textile Import Safeguards Moving Forward

The textile industry’s efforts to limit Chinese imports by imposing new temporary import quotas received a boost when Bush administration trade officials agreed to consider quotas on seven product categories, and a federal court lifted an injunction on requests for seven more.

The interagency Committee for the Implementation of Textile Agreements (CITA) on April 27 agreed to consider a request from a textile coalition to start a safeguard action to limit imports of Chinese non-knit men’s and boys’ cotton and man-made fiber shirts ( Category 340/640), cotton and man-made fiber sweaters ( Category 345/645/646), cotton and man-made fiber brassieres (Category 349/649), cotton and man-made fiber dressing gowns (Category 350/650), man-made fiber knit shirts and blouses (Category 638/639), man-made fiber trousers (Category 647/648) and some synthetic filament fiber fabric (Category620). CITA will conduct a 30-day review during which interested parties may submit comments on the requests. After that, CITA will make a determination within 60 days as to whether the imports are disrupting the US market and if an affirmative decision is reached, it will seek consultations with the Chinese government on limiting the imports. As of the date consultations are sought, a quota will be put in placed to limit imports from China of those textile and apparel products that are determined to be disrupting markets.

In a related development, a US Court of Appeals overturned an injunction against seven product categories where the US government self-initiated an action that could result in new quotas on cotton shirts (Category 338/339), man-made fiber shirts (Categories 638/639), non-knit shirts (340/640), cotton and man-made fiber trousers (Categories 347/348), cotton and man-made fiber underwear (Categories 352/652), combed cotton yarn (Category 301) and man-made fiber trousers (Category 647/648). In the case of these products, the action was based on a threat of marker disruption rather than a demonstration of actual market disruption. Because the action was self-initiated by the US government, CITA could rule immediately on market disruption and seek consultations with China. In lifting the injunction, the court said the government had made a strong case that is likely to succeed on its merits.

The US Association of Importers of Textiles and Apparel (USAITA), the American Apparel and Footwear Association and the National Retail Federation are strongly opposed to the self-initiated action. While expressing disappointment over the court’s action, Laura E. Jones, USAITA’s executive director, said, “We have accomplished much already, demonstrating to the government that the importing and retailing community will stand up for its rights and will speak our when the administration tries to change the rules to suit political whims.” She said she believes in the end the importers will prevail and they will have a “real opportunity” to participate in the rule-making process.

Although the Chinese government agreed to the use of the safeguard mechanism as part of its accession agreement to the World Trade Organization, Chinese government trade officials are strongly opposed to the use of safeguards at this time, contending that such actions run counter to the principles of free trade.

By James A. Morrissey, Washington Correspondent