A seamless CEO
After borrowing several million dollars from Israel’s three largest banks — because they lost a lot of business post the U.S. economic downturn and primarily from their #1 client, Victoria’s Secret — they also hired Meridor and some other senior management and embarked on a serious cost-cutting and efficiency plan.
Here’s the gist of their goals for the next few quarters:
“Where Tefron failed [compared to competitor Delta Galil], explains Meridor, was in manufacturing and timely delivery, particularly because of its cut-and-sew departments. Most textile companies worldwide outsource their cut-and-sew work to cheaper shores, such as Bangladesh, India and China. Delta Galil has been outsourcing to Egypt for years. But Tefron had not completed that shift despite working with nearby neighbor Jordan on certain sewing segments, and that deficiency helped account for their recent losses….
For now, that means focusing on the cut-and-sew segments of the company, which is the area that “got hit” in Tefron’s downturn, says Meridor. The prices for cut-and-sew workers were too high in Israel and as a result, Tefron couldn’t offer any special deals to its clients. With 40% of the business in cut-and-sew garments, the company is now looking to Bangladesh, Egypt, India and China for that segment of the business. That transition is already taking place, but the big shift will be by 2012, says Meridor.
“In this business, there’s a lot of sewing and you have to know how to do offshore work,” offered Meridor. “Jordan does great work, as good as China or India. That, along with our duty free agreements gives us a break of 15% to 30%, and that helps us succeed.”
Despite the changes, the company has some prestigious new customers, including the National Football League, a development they have been working on for four years with Reebok, creating new uniforms that help contain the body but which don’t rip easily. Lululemon athletica and Patagonia continue to be strong, solid clients, according to Meridor, and Tefron will also be developing army uniforms in the U.S. and Europe.”
You can read the full story in WWD. And hopefully Tefron will be bringing me to Egypt over the next few months to see their operations over there. Stay tuned.