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Articles Of Interest

Garment Smuggling Increasing
Page 1

Factory to Open 5000 Jobs
Page 1

50+ People
 Hurt in Riots
Page 1

Wal-Mart Reports Decline in Profit
Page 1

Lingerie Americas Show in New York
Page 2

ACC to Shut Down
Page 2

Buyers' Best Sellers
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Ask Andy
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McPete Sez
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Lingerie Americas Show Continued 
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Garments Without Guilt
Page 3

Ask Kevin
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Lingerie Americas Show Continued 
Page 4

New Garment Factory in Bangladesh
Page 4

Pantyhose to Reduce Cellulite
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Lingerie Americas Show Continued 
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September 1, 2006                                            Issue #176


             McPete -Sez, 
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Sri Lanka Trying to Negotiate
  Agreement With Canada
Sri Lanka is now trying to negotiate a bilateral agreement with Canada, after not having any luck with signing a deal with US. 
"We are trying to get a duty-free deal with Canada, which we feel is easier and faster than tackling the US," said Ashroff Omar, chairman of the Joint Apparel Association Forum (JAAF), said at an industry gathering.
The only preference window for Canada open to Sri Lanka at the moment is the Canadian GSP scheme but the scheme excludes garments. 
Canada provides duty-free access for clothing from Least Developed Countries and Sri Lanka is asking the Canadian government for the same treatment, on grounds of being a vulnerable economy. 
Sri Lanka’s garment exports are concentrated in the US and EU with the US buying over half of total export production. But market share in the US is threatened by China and the island is looking to diversify. 
Canada is currently a very small market for Sri Lankan clothing exports. Garment export earnings to Canada in 2005 came to around US$40m compared to over $1.64bn income from the US and over $990 m from the EU. 


Lesotho's Economic Growth
   Due to Textile Industry
Lesotho’s economic growth is set to hit 2% this year thanks to expansion in the country’s textile industry, according to the government.
The growth figure is set to top 2005’s rate of 1.2% after tax cuts breathed new life into the industry, Lesotho Finance Minister Timothy Thahane claimed.
Lesotho’s textile sector fell on hard times when global trade quotas were axed early last year, benefiting low-cost producers in Asia in particular.
But the industry was revived and thousands of jobs saved, Thahane said, when the government abolished tax on income earned by clothing companies from exports outside southern Africa. 

      Models present items by Shirley of Hollywood 
 at the Lingerie
Americas Fashion Show in New York, 
                                July 30 - August 1.  
                   Photographed by Arrow Images

See more pictures from the Lingerie Americas Fashion Show
          in the September 15th issue of McPete Sez!

   Garment Smuggling 
Increasing into Indonesia
Garment smuggling into Indonesia is on the rise because of lax law enforcement, according to a textile association leader.
Ernovian G Ismy, executive secretary of the Indonesian Textile Association, told Antara that smuggling from Asian countries including China, Singapore, South Korea and India has increased in the past few years.
"Our garment production and imports are low, while consumption remains high," he told Antara.
This leads to smuggling activity, he argued, which in turn makes it hard for small- and medium-sized businesses to compete. 
According to Ismy, the Indonesian government has been sluggish in tackling smuggling activity despite having the means to crack down on it. 
Import checks and strict port-to-port manifest regulations could help as well as more severe sentencing for smugglers, he added.

Australia's Import Tariffs
         Won't Be Cut
Import tariffs covering the clothing and automotive industries will not be cut as part of free-trade agreement negotiations with China, the Australian government has promised.
Industry Minister Ian MacFarlane said he will stick with the current tariffs, which expire in 2015. His pledge comes as Chinese negotiators are expected to push for the tariffs to be cut to ease the country’s export path to Australia.
"They’re not negotiable and it’s understood that those plans have given the industries a decade of certainty, and it would be unwise to interfere with those plans in terms of the Chinese FTA," said MacFarlane.
The FTA negotiations are still in their early stages, with agriculture, textiles and manufacturing likely to prove the most contentious areas. Australia’s clothing unions are lobbying the government not to cut tariffs, warning of the likely damage to the country’s industry.

20/24 Photographed by Scott Johnson

Textile Factory to Open 
   Up 5,000 Jobs in Iran

A joint-venture textile factory is to open up 5,000 jobs in Zanjan Province, northwest Iran.
The factory is a joint venture between Iranian, Japanese, Swiss and Turkish firms, according to Zanjan Governor-Generalship planning and financial affairs deputy, Gholamhossein Dizajnejad.
The plant, which is due to open within two years, will be set in 700,000 sq m of land in industrial town Zaker Bonab.
Initial investment will total IRR1,000 bn (US$112m), not including the purchase of equipment, the official was reported as saying. 70% of the factory's production will be exported.

Induyco Fights Accusations
Spanish textiles group Induyco said that it is completely transparent about its corporate practices and that its manufacturing activities are carried out under the law, both in Spain and abroad, where it sources roughly 85% of its production.
The revelation came as the company faced accusations from several not-for-profit organizations and Spanish trades unions that claimed it has refused to provide information about where and how it makes its clothes.
The claims have been made public under a campaign called 'What's behind Induyco's clothes?', which is part of a broader anti-sweatshop initiative called 'Ropa Limpia' ['Clean Clothes'], led by NGO Setem in Spain.
Responding to Setem's claims that it hasn't given enough information about its practices, Induyco's corporate social responsibility director Felipe Bragado said: "We have provided them with all the necessary information and we will provide them with more when we meet them again in September." 
Setem launched the initiative without notifying Induyco.
Induyco has given its corporate code of conduct to Setem, which shows it forces suppliers to meet European, International Labor Organization (ILO) and local laws.
"We give them six months to rectify any irregularity and if they don't, we stop working with them," Bragado noted. 
Setem also knows where Induyco makes its clothes, Bragado said, adding that the firm has suppliers in Portugal, Morocco, China, India, South Korea and Romania, and that it is considering hiring them in Bangladesh and Bulgaria. 
One source familiar with the situation said Setem might be looking for ways to pressure El Corte Ingles to improve its long criticized labor practices and that is why they launched this campaign. 
According to Bragado, Induyco met with NGO Intermon Oxfam, a member of Setem's Ropa Limpia team, to talk about its corporate practices in 2004.
Following that meeting, Induyco created a social responsibility department and introduced a code of conduct for suppliers. Before that, the company already ran a 'laboratory' to analyze imported garments for potentially hazardous materials to meet legislation/requirements from the EU, Eurotex and Ecotex, Bragado said.               

EU Still Trying to Impose
         Shoe Taxes
The European Commission is trying to persuade EU member states to back plans to add import taxes to leather shoes from China and Vietnam – despite the fact that 14 EU countries rejected the same proposals earlier this month.
The measures, which would add 16.5% to the import price of shoes from China and 10% to those from Vietnam, have also been strongly attacked by many European-based branded shoemakers such as Ecco and Timberland who outsource production to Asia. 
Retailers also argue the hefty increase in costs would hit customers and pile extra pressure on businesses already struggling to absorb inflation- busting increases in energy bills, rents, rates and wages.  The European Commission said in a statement that although the proposal was rejected by member states at “advisory” level they now need to cast a “legally binding vote.” 
Crucially, member states may be asked to explain the legal rationale for their votes – and those who reject the measures could in theory be challenged in court to legally defend their decision.
EU members now have until October 6 to decide whether to back the latest proposals. And unless a majority of member states vote in favor, shoes from China and Vietnam will be able to enter into the European Union free from anti-dumping duty.
Alisdair Gray, the British Retail Consortium’s Brussels director, says: “EU countries must stand firm and make sure that message gets through when they vote in September. 
“A 16.5% cost hike would have a serious impact on low income families and retailers already struggling with tight margins, but this is not just about shoe prices.
“This is about the image and future direction of the EU. Which does it believe in? Free trade and allowing consumers the full benefits of global markets, or protectionism and the vested interests of a small number of uncompetitive European producers?”
Horst Widmann, president of the Federation of the European Sporting Goods Industry (FESI), adds that most European governments “have understood that Europe should not sacrifice its competitiveness and the interest of consumers for the sake of shielding a handful of manufacturers from global competition.”
Trade commissioner Peter Mandelson is trying to balance the interests of nations such as Spain, France and Italy which have thriving shoe industries and therefore back the measures, with others such as Sweden and the UK who argue they will mean price rises for consumers.
But Widmann argues: “The problems faced by the few European producers who are calling for duties are caused by their failure to move up the value added chain and adapt to new competitive conditions, and not by alleged state subsidies to Asian producers. 
“The proposed anti-dumping duties, if adopted, will translate into higher prices for European consumers. Definitive measures are certainly not in the Community’s interest.”
In April the Commission added a 19.4% duty to the cost of leather shoes imported from China and 16.8% on those from Vietnam after ruling that they were being sold too cheaply. The duty was imposed for an initial period of six months.
A subsequent plan to introduce a quota system was rejected by a committee of the EU's member states. This would have allowed 140m pairs of shoes from China and 95m from Vietnam to be imported into the EU duty-free, with additional imports incurring duties of up to 29.5%. 
The EU says the extra charges could add EUR1.40 (US$1.79) to the average retail price of Chinese shoes – including children’s footwear – and could stay in place for up to five years. ‘Special Technology Athletic Footwear’ (STAF) is excluded from the anti-dumping measures.

Wal-Mart Reports Decline
            in Profit
Wal-Mart has reported its first decline in profit for a decade, with earnings hit by the sale of its German unit, high energy prices that put pressure on US sales and increased costs in the retailer’s home market. 
For the quarter ended July 31, Wal-Mart posted net income of US$2.08bn, down from $2.81bn for the comparable period of last year. The results include an $863m one-off charge for the sale of its German stores to Metro AG.
Wal-Mart exited Germany in July, having pulled out of South Korea in May, after raking up losses in each market. The company said that it withdrew to focus on more profitable overseas markets with greater potential for growth, such as China and South America. 
With the exclusion of the company’s German and South Korean operations, Wal-Mart's income from continuing operations was up 5% 
to $2.98bn, from $2.85bn a year ago.
In the US, Wal-Mart CEO Lee Scott said that sales disappointed with customers making fewer store visits to conserve gas and adopting a more conservative approach to spending. 
"In the United States, customers tell us they are most concerned about gas prices," Scott said. "This has been consistent every month this quarter."
Higher fuel and energy prices in the US also pushed up costs and dented margins, Scott continued. 
Sales at stores open a year or more increased by 1.5% in the US,
considerably lower than comparable store sale gains reported for the same quarter of last year, which jumped by 3.6%, and lower-still than the first quarter increase of 3.8%. 
Food sales grew faster than general merchandise putting pressure on margins because groceries are less profitable than non-food items.
Despite a challenging quarter Wal-Mart concluded that results were in line with expectations and reiterated its full-year guidance. 

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50+ People Hurt In Riot
At least 50 people were injured mid August as enraged garment workers held demonstrations in capital Dhaka.
Thousands of garment workers from local factories including Sunset, Eden and Kenya blockaded the at Khilkhet intersection in protest against inhuman treatment and to demand pay increases.
100 vehicles were damaged in the incident, which began at about 8.30am and caused havoc until about 1pm on August 15.
Policeman clubbed demonstrators and fired teargas shells in attempts to clear the riots, which onlookers said caused yet more frenzy among the protestors.
Bangladesh's garment industry is plagued by worker unrest over poor pay and working conditions.

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Gilden to Close Two US
    Distribution Centers
Gildan Activewear is to shut down two distribution centers belonging to recent acquisition Kentucky Derby Hosiery as part of a consolidation plan.
The apparel maker will close Kentucky Derby's distribution centers in Danville, Va., and Mt Airy, N.C., during the first half of 2007, but will invest US$7m on a newer facility.
The company said that all workers from the closed centers will be offered work at the new 400,000 sq ft base in Martinsville, Va.
The new facility is located about 15 miles from Gildan's distribution centre in Eden, N.C. 
Gildan expects to finish installment of equipment and management information systems by the end of the 2007 second quarter.
"The relocation and consolidation of the retail distribution centers will result in improved operating efficiencies and lower transportation costs, as well as faster customer response times," the company said.
The plan will also allow extra capability for future retail growth, the company added, as the company starts to gain a presence as a full product-line supplier of athletic socks, underwear and active wear for the mass-market retail channel.
As a result of the investment in the Martinsville facility to support the acceleration of Gildan's retail plans, the Eden distribution centre will be fully dedicated to providing the capacity required for Gildan's anticipated further growth in the wholesale distribution channel, the firm said. 
Gildan last month announced it would reduce operations and lay off workers at its textile facilities in Valleyfield near Montreal and Bombay, NY, as it increases production in Honduras and the Dominican Republic.

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