Thursday, April 03, 2008

Currency Issues Hitting India, Thailand Sourcing Operations

Currency Issues Hitting India, Thailand Sourcing Operations
(American Shipper – Eric Johnson)

An executive with apparel manufacturer Jockey said Wednesday that currency fluctuations have severely hampered diversified sourcing operations for the Kenosha, Wis.-based company.

Speaking at the Prime Source Forum in Hong Kong, Karen Grabus Smith, vice president of eastern hemisphere sourcing for Jockey, said that sourcing in India, Thailand and Colombia has been made particularly complex by the falling dollar and strengthening currency in those nations. “Currency fluctuation is a huge issue all over the world now,” she said.

Smith also said the currency issue has her and her staff questioning where money can be freed up in the supply chain to make these countries where appreciation has taken place still viable sourcing spots. “We’re looking at how far in our supply chain we go back to negotiate on price,” she said. “Do we go back to the yarn? To the fabric? It’s getting us and our partners to an equal playing field, meaning we both have to make money.”

Meanwhile, a sourcing executive with another apparel brand told American Shipper that currency problems were so bad in India the past year that it had to significantly scale back its expected growth in the country. Exporters have been hard hit in India and Thailand, with many put out of business and others needing government export subsidies to merely survive.

The cost problems also extend to China, speakers at the forum said. Factories have been regularly closing in Guangdong province (home to manufacturing powerhouses Guangzhou and Dongguan) as labor, power and real estate costs have escalated. Exacerbating the problem are the lowering of export rebates by the Chinese government, rebates that were intended two decades ago to stoke the country’s export capabilities.

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