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Given the current state of the textile industry, Mike Watson, Senior Director, Fiber Quality Research at Cotton Incorporated, regularly finds himself in the middle of a figurative “tug of war.”
On one side are the cotton growers who, given the low prices their crops fetch on the world market, struggle to make a decent profit. On the other side, the yarn spinners, textile mills and apparel manufacturers operate in an increasingly competitive environment in which they need to produce high quality products while operating on razor thin margins.
“The only people profiting in the present fiber/textile/apparel chain are the consumers, who are getting tremendous value at retail,” Watson laments. “Adding to these difficulties are the competing concerns of farmers and mills.”
In a nutshell, textile manufacturers complain about cotton fiber quality, which, according to USDA data, has clearly been decreasing in the past several years in terms of fiber length, micronaire and strength. At the same time, cotton growers have their own concerns that Watson often explains to cotton buyers all over the world.
“The most important thing for farmers is planting a variety that they are confident they can manage,” he says. “This, in fact, is a back door way of saying they will plant genetically modified varieties – insect control and herbicide tolerance are the key issues.”
“The number two challenge is obviously yield, because that's what they get paid off of,” Watson adds.
“And number three, which is possibly the most controversial, is what we call 'discount avoidance.' The reality is that there are few, if any, premiums for cotton,” Watson relates. “The production strategy of most producers is how to avoid discounts. They're not worried about not getting a premium, because if they get one, it's fleeting. The farmer is usually thinking, 'What can I do so they don't hammer me on my price structure.' The premium and discount structure is computed from actual spot market prices, not created by bureaucratic smoke and mirrors,” Watson emphasizes.
“The implication is that you may end with a lot of cotton that is not the optimum fiber that's desired by the spinners and mills,” he observes.
Consider the dilemma faced by cotton producers in the mid-south and southeast. “As long as the staple length is classified as 34/32nds of an inch, they are happy,” Watson says. “They get a small increase in price for 35/32nds, but they get hammered if it's 33/32nds. So they want to be at 34.” The quality implications further down the manufacturing chain are obvious.
Given that Watson is at the center of this ongoing quandary, he seems surprisingly unruffled. The influence of Eastern philosophies on his thinking is apparent through his measured temperament and unwavering focus. Indeed, his office has become a respite of calm, with its Japanese art and water feature that softly gurgles in the background. Many of Watson's colleagues at Cotton Incorporated look forward to visiting him, for both his quiet, cheerful wisdom and the soothing ambiance of his office. Watson comments, “My wife, Meredith, is an interior designer who gave me a lot of advice on how to arrange an office to be focused and effective.” The couple has also collaborated on at least two other important projects, namely their two sons, who are both about to complete their undergraduate studies.
The journey that took Watson from his childhood life on the farm to feng shui decorating was not very long – in the geographic sense, anyway – as he grew up outside of Raleigh in the proverbial shadow of the textile industry. After graduating from North Carolina State in 1973 with a B.S. in Engineering, Watson's career started with managing a textile testing laboratory for Burlington Industries. “It was quite an education for someone trained in industrial engineering with very little textile background,” Watson remarks. While he has worked in many areas of textiles and research since then, a testing laboratory has rarely not been part of his responsibilities.
In his current job, Watson not only supervises all the research undertaken by the Fiber Quality group at Cotton Incorporated – from improvements in cotton grading technology to textile and apparel performance testing – he also shares what he has learned from both sides of the fiber quality issue with the industry. These activities serve the ultimate mission of Cotton Incorporated: To increase the consumption and profitability of cotton.
“I've been going around giving the full lecture to the southeastern mills in the U.S., and to the folks in Mexico, Indonesia, Japan, basically everywhere U.S. cotton is used,” he reports. “I ask them to put themselves in the position of the U.S. cotton producer: This is how the U.S. cotton producer thinks. This is his rational economic strategy. These are business people, just like you, and here's how they work. And until you and your colleagues collectively change your signal through the pricing structure for raw cotton, this is the cotton that we're going to produce for you since this is what you tell us to make.”
Watson is emphatic that a solution can be reached if both sides come together. “The main thing we do is measure cotton quality, but our overreaching concern is cotton value – value to the producer in terms of a crop he can raise with minimum input and no discounts, and value to textile mills so they get a fiber that meets their needs.”
A balancing act well suited to Watson's skills and personality.
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