World’s threads giant Coats upbeat on post-war Sri Lanka

World’s threads giant Coats this week expressed optimism in post-war rebound in Sri Lanka, an emerging market which it is has made a test bed for innovation in process and products encouraged by Industry leadership shown by several local textile and apparel companies.

Coats Global CEO Paul Forman who made his first visit to Sri Lanka early this week as part of a regional tour told the Daily FT that post-war the country has seen a pickup in sentiment (no s) as well as business growth which augurs well for the future.

“Post-war we have seen our thread business posting double digit growth, a trend which the rest of South Asia too has been reporting. This makes Coats very excited about Sri Lanka and the region whilst Asia overall is the key future growth market,” Forman said during an interview along with Lankan venture Coats Thread Exports Managing Director Giles Watkins on the sidelines of his three-day visit.

Taking over as Global CEO in early 2010, Forman has been visiting Asian markets to meet with Coats customers and other stakeholders. Prior to being in Colombo, he was in India. During his visit in Sri Lanka, Forman visited Coat’s Sri Lankan manufacturing facility near Horana, and met with most of its 500 employees including a breakout session with senior executives.

Coats operates in 71 countries with 73 factories and 94 other facilities globally. Its sales in 2010 amounted to $ 1.6 billion and it is the world leader in the manufacture and distribution of sewing and embroidery threads and consumer crafts products.  Coats is also the second largest manufacturer of zips in the world.

It is said that in three and a half hours, Coats makes enough thread to go the moon and back! Whilst one in five garments on the planet made using Coats’ products.

“My visit is to better understand the Sri Lankan and the industry dynamics post-war, meeting some of the progressive customers as well as share some insights to the Lankan team about Coats’ global direction,” Forman said. Coats business in Sri Lanka origins of which can be traced to 1981 (10 years later there was a merger of Tootal and Coats) is around US$ 30 million.

“From our customers perspective there is a positive and upbeat feeling in post-war Sri Lanka. This is excellent as I understand there was much damage during the conflict. Asia is driving global growth and post-war Sri Lanka can be the vanguard in South Asia. The end of war certainly enables Sri Lanka to start afresh. On our part Coats is well equipped in terms of capacity and competence to serve the envisaged high growth in Sri Lanka,” Forman emphasised.

Indeed Coats has identified Sri Lanka as a test bed to roll out a new initiative in the region innovating processes and products and services to empower its customers. Going beyond mere supply of threads, Coats via these new initiatives with clear deliverables is helping progressive customers to further improve efficiency, productivity to reduce lead times, working capital, management of waste, etc.

Whilst noting that Sri Lanka has a host of professional and progress textile and apparel companies especially in the intimate and active wear segments, Forman said process and product innovation are critical in an industry where margins are getting slimmer whilst input costs are rising.

He said that due to adverse weather conditions in producer countries and rise in consumption overall and some export curbs and tariff measures, cotton prices are on the rise. It was added that in UK, where Coats is headquartered, clothing sale prices have dipped annually for almost two decades but there was pressure for an upward revision in 2011.

Despite challenges Coats CEO remain optimistic of both the thread and apparel business. After food, the next basic need is clothing. It is estimated that – as living standards rise – global demand for apparel will continue to rise year on year over the next decade with the highest growth in Asia.

Coats itself has earmarked in the medium term around US$ 200 million investment in Research and Development, product innovation, capacity expansion with a considerable share of this being in South Asia.

Forman, who has wide experience in global manufacturing as well as strategy consultancy and M&A advisory services, said that Sri Lanka as a global player of apparel should continue to focus on improving quality and service than compete on cost.

“This focus indeed has kept other countries and companies including several in Sri Lanka ahead of the rest. Greater collaboration between management and labour to embrace change is also key,” said Forman, who prior to joining Coats was the Group Chief Executive of Low & Bonar PLC, a global performance materials group, quoted on the London Stock Exchange and prior to that MD at Unipart International, the leading European automotive aftermarket supplier.

Many countries have succeeded faster by creating better business environment rather than incentives and readily available flexible and quality labour pool will help in this context, Coats CEO added.

In tandem with helping industries, Coats is also supporting the consumer and crafts market in Sri Lanka. Its flagship brand for this segment is Anchor and Lankan operations Managing Director Giles Watkins said with the dawn of peace new markets have opened up in the North and East whilst higher economic growth post-war has improved prospects for crafts and consumer business.

Last week Coats opened a retail outlet at its Colombo 4 Head Office premises whilst this market is served via a host of retailers and distributors countrywide. “We also see good prospects in the Small and Medium sector which we are continuing to help with quality products and services,” Watkins added.

Coats industrial products go into 10 billion garments, 300 million pairs of shoes and a diverse range of items including luggage and bags, vehicles, furniture, mattresses and bedding, outdoor goods and tea bags.  Examples of Coats key industrial clients include Gap, Nike, Prada, Lee, The North Face and Decathlon.

Coats is also a global crafts leader with a range of internationally-recognised brands. The business covers a range of crafts including hand knitting, lifestyle fabrics, zips and embroidery.  Examples of the brands that Coats owns include Rowan, Patons, Red Heart and Opti.

Coats specialist teams can recommend the right thread type for any purpose which is critical as the type of thread has a direct impact on the ultimate quality of the product.  The company is also experts in constructing garments and technical staff can analyse any garment and make specific recommendations for seams and stitches.

With over 200,000 employees globally, Coats is also the leader in colour physics research.  It has developed a unique ColourStitchsystem which means it can guarantee colour consistency across a wide range of colours in both its sewing and embroidery threads.