Monday Nov 25, 2024
Monday Nov 25, 2024
Wednesday, 2 July 2014 00:00 - - {{hitsCtrl.values.hits}}
We are also going to visit our factory in Horana and our head office in Colombo, which everyone is looking forward to.
Q: Could you give us a snapshot of the global business of Coats?
Howes: Coats is a $ 1.7 billion sales business and has two divisions – the Industrial Division, which is about $ 1.2 billion, and the Crafts Division, which is about $ 500 million. The Sri Lankan business sits in our Industrial Division – it is not one of our biggest businesses but it is one of our best.
Coats is currently owned by Guinness Peat Group PLC (GPG) and is GPG’s sole operating business. GPG is listed in three countries: New Zealand, Australia and on the London Stock Exchange. Coats was established in the 1750s and has grown to become the world’s leading industrial thread and consumer textile crafts business. Having an unrivalled access to global markets and customers, Coats has an employee base of over 20,000 people in more than 70 countries across six continents.
One in every five garments on the planet is held together with Coats’ thread and the Industrial Division makes enough thread to reach to the moon and back every 3.5 hours, while our Crafts Division is the number one global player in the textile crafts market.
Q: How has the company’s performance for 2014 been so far?
Howes: The performance has been broadly on track with what we have been expecting. Sales growth has been about 5%, with industrial growing a bit faster than that and crafts growing more slowly. We have been growing at around 5% now for the past two to three years and we aim to keep growth to around that figure.
Q: Any particular reason for the decline in crafts?
Howes: The crafting business, and we are talking about crafts in Europe and North America, has two parts to it. There is a traditional textile crafts business and a fashion business. The fashion business fluctuates as fashions come and go and so we are seeing a bit of a downturn in this area, mainly in fashion hand knitting yarns.
Q: By when does Coats expect the crafts business to pick up??
Howes: We don’t expect to see any growth this year for crafts. The cycles come and go and we are hoping this will pick up over the next three years and the new trends start taking hold.
Q: How has the Sri Lankan market contributed to the overall sales growth?
Watkins: Last year we were certainly in line with the overall growth, if not may be even higher. We have grown year on year for the past five years. We (Sri Lanka) are one of the growth countries and our business is more than 90% industrial. What is more important about Sri Lanka is the fact that we trial a lot of our new services and products here. So we obviously get the revenue from that and the Group gets the benefits. Sri Lanka is big enough to matter and small enough to run a trial in a relatively controlled fashion.
Another reason as to why Sri Lanka is important is the sophistication of the customers. If you look at the textile sector and how the top garments manufacturers operate, their attitude towards areas such as ethical sourcing and speed of service is what makes Sri Lanka very advanced. So that makes it a great place for us to test our new services.
Coats at the Sri Lanka Design Festival 2013 won the ‘Game Changing through Inno-vation’ award for our ‘Coats Colour Express’ service. This was trialled about three years ago in Sri Lanka and it is now commercially used widely around the world as well as in Sri Lanka.
Q: What is your view on the local apparel industry and where do you think it stands in comparison to the region?
Watkins: It is relatively advanced and remains attractive because of the ethical standards that are upheld here. There is the speed at which local companies can deliver and the reliability. Sri Lanka competes on service and, because the service is so good, there is a value to that. Sri Lanka may be a bit more expensive than the surrounding countries, but others cannot deliver in the same way.
It is not just the apparel industry it is logistics as well. It is a lot quicker here to move products around and in and out of the country compared with some other places.
It is also peace of mind for a brand since Sri Lanka is serious about maintaining ethical standards. If you look at what has been happening around the world, in the recent past some brands have had bad publicity from sourcing in some countries where standards are still evolving.
Howes: The whole point about responsibility is very important for the Coats Group globally. Within our industry, the Coats brand is very strong. What goes with the brand is a sense of security that we are providing a very high quality product, manufactured in a responsible manner, at a good price.
There are also the brands we supply to, we help protect their reputation by maintaining high standards over a long period of time and because of this we have a lot more brands coming to us.
Q: What can the local apparel industry do better? Where is the room for improvement?
Watkins: The local apparel industry can certainly promote itself better outside Sri Lanka. There still are some countries that do not know how good it is.
The next area is in continuing to upscale its professional management. Apparel took hold in the 70s and started off mostly as family businesses, which are highly respected internationally where they are known. As these businesses grow their appetite for leadership and management development and operational excellence also grows – Sri Lankan business is very open and receptive in these areas.
Q: Can you tell us a about your new CSR initiative?
Watkins: The Council for Businesses in Britain has been running an English language training program for a number of years. It is a ‘train the trainers’ program. What Coats has done is identify two schools around our factory and supported three teachers through the training this year. Two teachers at Millewa Maha Vidyalaya have just completed their six month training under this program and are already teaching their students. We hope to expand the program later this year.
Q: Will the apparel sector see anything new from Coats in the near future?
Watkins: Definitely, we have new products coming out every couple of months. We launched the ‘Opti S Cutwork’ zips which is a new zip with a decorative lace tape that enhances the design and styling of fashion apparel. The lacework zips are particularly appropriate as delicate detail on fine fabrics used in lingerie, blouses or dresses.
As a specialist product we announced a unique enhancement to the ‘Ultrabloc’ S/SC range that protects delicate fibre optic cables against the damaging effects of sea and salt water. It is a water swellable yarn, ideal for dry blocking in fibre optic cables. It’s appropriate for use in any application that requires no mess processing and soft, uniform surfaces around the cables, such as inside and outside tube blocking, to produce completely dry cable designs.
Early last year we introduced ‘Insectiban’, the world’s first anti-bed bug sewing thread and zips. Coats developed the anti-bed bug chemical treatment for threads and zips based on naturally occurring, durable plant extracts and oils. The innovative treatment, developed in Coats laboratories in Turkey for threads and Germany for zips, is harmless to humans and pets, but fatal to bed bugs.
These are just a few, but I can say that we have done more product launches in the past 12 months than in the past 12 years. There is an R&D theme running in the business that wasn’t there three to five years ago. In terms of the local situation, one of the most important things we have launched is Coats Global Services. Our services business has a sourcing arm, an operational excellence arm that covers training and consulting services, and a colour arm, where we look at improving the management of colour to make it faster and consistently accurate.
Q: How is Coats helping its clients improve margins and win new growth areas?
Watkins: If you work with someone in productivity improvement and help them reduce waste that itself increases the margin. This we have done across the board. We have also worked often with the vendor and the brand to do training and also look at the new products that we have supplied. New product developments are targeted at an early stage and we do a lot of training.
One new service that has been widely adopted in Sri Lanka is the extension of Coats Colour Express, which is called StockMatch. Coats Colour StockMatch tool helps customers keep track of thread stock quantities in warehouses and provides a solution for faster thread sampling. Thread is currently ordered against each finished goods production run, taking into account style, size and colour. As thread has to match fabric, it is difficult to check thread stocks in the warehouse before making fresh orders. Therefore often a new order is placed when a close enough thread match may already exist in the warehouse. As a result this causes delays in prototype sampling as customers await a new order and exacerbates the excess stock issue.
Coats Colour StockMatch provides a solution to both thread problems. Using the electronic Capsure device which can be preloaded with the customer’s shade cards, the nearest thread match can now be conveniently and accurately identified from existing excess thread stocks. It is good for customers and good for the environment, so everyone wins.
– Pix by Daminda Harsha Perera
FT INFO
"Coats is a global leader and has an unrivalled access to global markets and customers, and are recognised as one of the top across many areas of operation. Almost one in five garments on the planet is held together with Coats’ thread and its products are sold in over 100 countries.
Coats has a long heritage and has been serving customers and playing a part in communities for more than 250 years. Its well known brands and company-wide understanding of customers and consumers mean its products and services meet current and future needs.
With a pioneering history and innovative culture, Coats ensures it will continue leading the way around the world, that is by providing complementary and value added products and services to the apparel and footwear industries by applying innovative techniques to develop technical products in new areas such as aramids, tracer threads and fibre optics and extending the crafts offer into both new markets and online."
FT PROFILE
"Coats Chief Financial Officer Richard Howes
Howes joined Coats as Chief Financial Officer in February 2012. Previously he held the same position at Topaz Energy and Marine, an oil field services company.
Howes also worked for FTSE 250 Company Geest PLC, an international food manufacturer, and was made CFO following its takeover by the Bakkavor Group. Richard qualified as a Chartered Accountant with Ernst & Young before joining Dresdner Kleinwort Benson’s Corporate Finance team.
His experience includes a broad range of financial and commercial responsibilities including debt and equity capital market transactions, M&A and as well as leading senior management functions.
Howes holds a BSc (Hons) in Geography from Loughborough University
Coats Thread Exports Managing Director Giles Watkins
Watkins worked for Shell for over 20 years in marketing, oil trading and general management leadership roles in multiple locations including Ho Chi Minh City, Paris, Beijing & Papua New Guinea. He was also Head of Learning & Development for Shell’s Global Lubricants business. He then worked for McKinsey & Co in Jakarta, primarily on leadership training programs with Indonesia’s largest State Owned Enterprise. Watkins joined Coats as Managing Director in Sri Lanka in December 2010.
Watkins holds a BSc honours degree from the University of Bristol. He is a Member of the Chartered Institute of Marketing (CIM) and a Fellow of the Institute of Sales & Marketing Management. He is currently studying for an Executive Masters at INSEAD."
