Sewing machine circus

What will the year 2011 bring us?

China produced in 2010 more than 2.7 million industrial sewing machines for export to mainly the Far East, India and Brasil. China is changing rapidly with monthly inflation rates of 4,25 % in January and an expected 7 to 8 % for February and March. Almost daily we receive new price increases from our suppliers.

More than 30% of the Chinese workers did not return to their job after the recent Chinese holidays and the workers who did show up at work demanded salary increases of more than 30%. This labour problem added to the currency situation of the Yuan and the US dollar and the increasing prices of oil and raw materials, will definitely have an effect on the prices of sewing machines in the coming months of between 8 and 15%. Ho Hsing, our most stable supplier, even increased their prices with 8 % starting April of this year.

The shortage of parts for production and spare parts supply is one of the largest problems in China. Sunstar has not been supplying parts for over six months to us and does not even reply to our mails.

This hurts our Global Parts business no doubt, but on the other hand it will also get weakly organised sewing machine producers off the market.

I have a long time friend who is the owner of a sewing machine factory in the Shanghai-area. Last year a hightech company offered him a huge price on his building. On top of the purchase price, the hightech company offered to take over his whole staff. My friend, being a real sewing machine man, with more oil (i.e. sewing machine oil) running through his veins than blood, declined the offer. Last February, his technical manager, who had been working for him for more than ten years, demanded a salary increase of 100%. If he would not be given this salary increase he would not show up at work after the Chinese holidays. My friend was shocked. In addition to the problem with his technical manager, 40% of his workforce did not return to work and his parts supplier announced an 18% price increase for parts. As you can image, the level of sewing machine oil in his veins decreased rapidly and he decided to reconsider the offer. He contacted the high tech company again, and they offered him straight away an additional 30% on top of their previous offer. His decision was easy and he sold for the 'offer you can't refuse'. Good for him, but it means one less supplier left in the market. One less good supplier I might add. Unfortunately. And he will not be the last one to surrender.

The positive side of this story is, that because of the salary-increases in the Far East, the shortage of workers and the high transport costs, I expect a lot of the textile and shoe production to return to Europe and the US. This provides good opportunities for our dealers in the coming years. All active dealers with a good service organisation will do well in the coming years.

Another positive point is that, with the prices of new machines increasing, IMCA, our used machine department, will increase their sales. We already get positive reactions from the market. And as our national soccer champion Johan Cruyff once said: 'Every disadvantage has its advantage'. He is right.

I look forward to welcoming you at our stand C80 in Hall 5.1 in Frankfurt during the Texprocess exhibition in Frankfurt from May 24-27, 2011.

I look forward to your comments and opinion. Please feel free to reply to this column.

Frans de Vlieger