Oriental Weavers Adjusts To Slower Exports

Cairo, Egypt, March 20, 2009--Oriental Weavers fared relatively well over an 18-month period as the U.S. housing crisis spread and oil prices soared.

But its sales to America have since slipped, forcing it to look toward emerging markets in Asia and former Soviet republics, according to a story in the Los Angeles Times.

This comes as rising protectionist sentiments in Washington and Europe have added new pressure to the already strained international textile industry.

"The margins are shrinking. Everyone is worried," Farida Khamis, vice president for corporate finance at Oriental Weavers, told the Times. "Our fear is global spending will shrink more and more."

The newspaper reported that cheap labor and tax breaks have helped Oriental Weavers endure the downturn even as four of its main competitors, including companies in Turkey and Belgium, have gone bankrupt since January. Open markets and globalization are being squeezed by national interests, which can mean bad tidings for poor, labor-intensive nations such as Egypt, a major textile exporter for decades.

Oriental Weavers, a family-controlled company, watched exports drop to 60% of its total sales in 2008 from 67% in 2007. To compensate, it increased sales at home by targeting resorts and the upper-middle-class suburbs burgeoning outside Cairo; it recently announced price cuts of as much as 15% to improve its hand in the U.S.

"We have to keep on reinventing," Khamis said.

The recent decline in oil prices allowed Oriental Weavers to reduce its prices, but it nonetheless encounters obstacles in the U.S. as politicians and unions call for protectionism as a means to prevent the loss of tens of thousands of American jobs. The company, which has plants in the U.S. and China, is accustomed to looking for niches, including modestly priced nylon carpets that resemble Iranian silk.

"We've hedged and diversified," Khamis told the Times. "We don't want to have all our eggs in one basket."