California Apparel News

At least now we know. That was the sentiment expressed by California apparel- and textile-industry watchers after Iraqi president Saddam Hussein rejected President George W. Bush’s ultimatum to either go into exile or face retribution from the U.S. military.

The news brings an end to the uncertainty that has hung over most U.S. industries.

The apparel industry has been at the mercy of that uncertainty since Sept. 11, according to Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

“Now that’s disappeared, and Americans are just waiting to see how it all plays out,” he said.

Some industry sources said there is a certain level of relief now that the United States is moving forward with plans to invade Iraq.

“Things have been uncertain, and sometimes what you fear is far worse than reality and it’s kind of a relief for some people,” said Laura Worsinger, a financial analyst at GE Capital Corp. and Los Angeles-based law firm Buchalter, Nemer, Fields & Younger, which represents several Los Angeles-based financial institutions that serve as factors for the apparel industry. “It’s better to know that something is going to happen one way or another.”

Questions about whether the United States would go to war combined with an already shaky economy had been taking a toll on business in the apparel and textile industries.

Among those betting on improvements following a war are Azteca Productions, a Los Angeles-based brandedand private-label manufacturer, and the Garment Contractors Association of Southern California.

“The malaise of uncertainty has caused buyers to cut back on their orders, which has strongly affected manufacturers and contractors,” said Joe Rodriguez, executive director of the Garment Contractors Association of Southern California.

“A prolonged war would be very bad for the industry,” said Rodriguez. “I hope the war is a short one. That way, we can get on with the business at hand—facing up to the economy. Once the war is over, we can concentrate on making the economy better again.”

Paul Guez, chief executive officer of Azteca Productions, was optimistic that the economy would rebound after the crisis with Iraq is resolved. Following a war, the “apparel business will boom again” and optimism will return, he said.

Gap spokeswoman Claudia Hawkins said the San Francisco-based company does not anticipate that it will be directly impacted by the war in Iraq, but she said that may change depending on how long the conflict lasts.

Currently, the retail giant purchases apparel from about 1,000 vendors that operate more than 3,600 factories domestically and overseas. A good portion of the retailer’s production comes from the Middle East. The company plans to reevaluate the impact on its production and shipments in the Middle East later in the month, said Hawkins.

Hal Kaltman, president of the Textile Association of Los Angeles, said there may be a slowdown in shipping from importers near the Persian Gulf, including those in Turkey, which is a major supplier of greige goods, finished fabric and garments.

“I think the textile industry has the same perspective as the rest of the apparel industry, and that is once the uncertainty is gone, things will begin to loosen up a bit, and, in turn, local fabric makers will see a replenishment of orders,” Kaltman said.

Consumers less confident

California Retailers Association president Bill Dombrowski said retail business has been weakened by economic uncertainty.

“Up until now, consumers didn’t know what was going on with Iraq and whether or not we are going to war,” he said. “Wall Street is looking for certainty, and this type of uncertainty has been bad for many businesses. I’m hoping our [current political situation] gets resolved and we can get back to a normal economy.”

Economists reported retail sales fell by 1.6 percent last month as pre-war jitters and snowstorms slowed consumer spending. Analysts estimate that sales will continue to fall by 0.5 percent this month.

Consumers are likely to remain close to home where they can stay up-to-date on the latest news from the Persian Gulf, said Kyser.

“Anything you call a consumer discretionary item will suffer because the consumer will not be shopping at the mall or even go to the movies,” he said.

However, Kyser said retailers may demonstrate a small surge in spending following a resolution.

“If the consumer feels things are going as planned, they might go on a relief binge in which they will reward themselves for going through a rough time,” he said.