Interview with Bruno Ameline, the President and Evelyne Cholet, the Secretary General of UCMTF.
Bruno Ameline, the President and Evelyne Cholet, the Secretary General of UCMTF (French Textile Machinery Manufacturers Association) report on the French textile machinery sector and analyze the main trends which shape the market environment and its future developments. In preparing this interview, Kohan Journal spoke with Bruno Ameline and Evelyne Cholet to get his perspective on the state of the French textile machinery.
Kohan Journal: How French textile machinery manufacturers are doing right now?
Bruno Ameline: Worldwide investments in textile machinery have been quite satisfactory in the last few years. As for our 35 member companies, they are doing quite well. They export most of their production for an annual total of more than Euros 1 billion (close to US$ 1.5 billion).
Evelyne Cholet: In 2006, our growth rate exceeded 6%. I expect that the 2007 data will show a new increase but probably at a lower rate. For 2008, we are quite optimistic as order backlogs are good and order intakes come in at a regular pace.
As our members are mainly specialty manufacturers, often world leaders in their sectors even though they are SMEs, their sales do not match the geographical segmentation of the general textile machinery sector. In particular, we are quite strong in Japan, Turkey, in European countries such as Belgium, Italy, Germany, the UK and Spain, in the US and in Morocco and Tunisia, but we are doing less business than other European manufacturing countries in such markets as China or India. In the various application sectors, France is particularly strong in weaving preparation, nonwovens, and has very vigorous manufacturers in specialized spinning, dyeing and finishing machinery.
Kohan Journal: How can French manufacturers consolidate their leadership on their markets?
While offering high tech machinery for high tech specialty markets, I strongly believe we have to customize our machines and offer tailor made solutions to our customers. We are not equipped to compete on mass production applications, like short fibers or filament spinning, for which price is the main factor. For these segments, production will continue to be transferred to low costs countries.
Our most important added value lies in working closely with our customers, in producing made to orders machines on short delivery time, in being flexible, and being prepared to face large swings in volume. This also means we must balance the traditional vertical integration organization of our production facilities with a more flexible approach. Most of us may need to outsource the production of most of our components, to find the best and least expensive subcontractors, to build a network of state of the art, cost effective and flexible suppliers, to design machines in modules in order to propose a large and diversified product offer without over complexifying production.
Kohan Journal: Do you feel competition from Chinese machinery manufacturers will intensify?
On the Chinese market, the position of Chinese machinery manufacturers is already quite strong and their market share is already important. As you know, imports benefit from tax exemptions for some categories of machines but when Chinese manufacturers can offer equivalent machines; these import tax exemptions risk to be cancelled. Importers then face an additional barrier to entry in spite, by the way, China being a member of ITWO. Chinese competition is also growing in such markets as India, Iran, Syria and even Turkey. It is a real threat because the best Chinese manufacturers are no longer followers (copiers) only; they invest in education, and R&D. Most large European manufacturers have located production in China but I think these will always suffer from a disadvantage vis-à-vis local companies.
The French approach is to be specialized manufacturers aiming at niche markets with a tailor made approach to address in depth customers’ needs and be their long term partners in the long run. This is a much more complex approach for Chinese to copy.
Kohan Journal: Is the exchange value of the Yuan an important factor?
Evelyne Cholet: The value of the Yuan is going up slowly in comparison to the US$, the problem being that the US$ has gone down much more compared to the Euro. Then, the European costs in Euros into still translate into higher Yuan values.
I feared that the high Euro would have negative effects on the machinery business but, there has not been so much impact so far. In fact, Chinese textile producers like all others are faced with price increases of synthetic fibers, which have an important effect on their costs, as raw materials represent 60 to 70 % of their production cost, compared to around 5%-10 % for the amortization of machinery. This means costs are going up in China as much as in other places and that the prices of final goods also have to increase there.
Kohan Journal: UCMTF is a member of Cematex, the owner of ITMA and ITMA Asia, how do you see the future of these shows and of the exhibitions in general?
Bruno Ameline: ITMA took place in Munich in October 2007. This show was a success, very well organized and more importantly, exhibitors met many customers who had investments projects and even signed important contracts. But -there are “buts”- most of the visitors came from Europe, Americas, India, Middle East and not so many from the Far East, including China. From what I see, it is more and more difficult to host real global fairs. This is why Cematex organizes the third ITMA Asia in 2008 in China. We cannot expect many innovations just one year after Munich but we are looking to meet in Shanghai the customers who have not been able to come to Munich.
Next ITMA in Europe will take place in Barcelona, which is an attractive location. But I do not believe the location itself is so important. What we have to work within Cematex is our long term strategy for ITMAs, and find an attractive concept to differentiate the European and Asian ITMAs.
Kohan Journal:Considering UCMTF’s members in sales to Asia, how do you evaluate your future market in this continent and in the Middle East and Central Asia specifically?
Evelyne Cholet: China and India have become major markets for textile machinery producers but, as we are looking for niche markets and specific applications, we are very sensitive to the needs of such countries as Iran.
In Iran, we already export more than 14 million Euros ( US$ 21 million) annually and therefore, if it is not a major market, it is one we try hard to understand the specific needs, give the best available service and build long term partnerships. Middle East and Central Asia have a long tradition in textile, we believe their products are well known and can find a market worldwide. Our goal is to be the technology partners of these textile producers.
Kohan Journal: What are UCMTF’s programs for an active participation in the ITMA Asia+CITME?
Evelyne Cholet: We are actively preparing the promotion of our associate companies for this major expo but, more important, these companies are actively working to present updated technologies at next ITMA Asia + CITME and organize themselves to be able to adapt their machinery to the specific needs of their customers, I should say of their partners.