15089 Fri, 08/22/2008 - 11:35am
NAUCALPAN, Mexico–In 2003, when Grupo Kaltex, the large Mexican textiles company, bought a controlling interest in Revman, it marked a new chapter for both companies: Revman had new owners and Kaltex had a substantial foothold in the U.S. market.
To mark Revman’s 20th anniversary, Kaltex chairman Rafael M. Kalach answered questions about why the original deal was done and how things have progressed in the five years since.
HFN: When you purchased your interest in Revman, it was the first time a Mexican company took a controlling interest in an American home textiles company. What were your expectations and concerns at the time, and how have those expectations been met?
Kalach: Revman was already a customer of Kaltex and when the opportunity to buy Revman developed, we didn’t hesitate to put in an offer for the company. We felt at the time, and even more so today, that Revman represented a great value and gave Kaltex excellent exposure to the important United States home textiles market.
HFN: As problems continue to arise with manufacturing in Asia, Mexico is becoming more attractive for the American market. Do you think that will continue and how has this situation helped Kaltex?
Kalach: I do think the advantages in the Asian markets have diminished quite rapidly in the last year and will continue to do so in the future. The exchange rates, reductions in government rebate programs, transportation and energy costs, infrastructure problems and, of course, the length of time it takes to ship product from the Far East to the United States are already working to Asia’s disadvantage.
On the other hand, Mexico is right next door to the U.S., providing shorter lead times and has the advantage of shipping product duty free, all of which makes Mexico much more competitive on a global scale than ever before.
We have already had many of our U.S. customers visit our facilities in Mexico and we are currently manufacturing some important private-label programs for major U.S. retailers.
HFN: There is much controversy over NAFTA (North American Free Trade Act), but certainly it has been an advantage for both Revman and Kaltex. Can you explain why NAFTA is good for the North American market and why it should not be repealed or changed?
Kalach: I know that NAFTA has become somewhat of a topic during the presidential primary campaigns and its relevance will probably continue to be discussed during the general election campaign. However, if one compares the impact on goods sold and employment in the U.S., it is clear that China has had a far more negative impact than our current NAFTA agreement. NAFTA has benefited both the U.S. and Mexico in creating jobs and providing economic benefits for both the Mexican and American consumer.
HFN: What are the opportunities for Revman products to be sold in Mexico?
Kalach: Currently we are selling our Tommy Hilfiger brand in Mexico to both Palacio (El Palacio de Hierro) and Liverpool department stores. We are already selling our Laura Ashley brand to Home & More, which, as you know, (an interest in) was recently acquired by Bed Bath & Beyond.
We have established Revman International Mexico as an important division of Revman International Inc., and will use them as our platform to sell products not only in Mexico, but also in both Central and South America.
We also plan to produce Revman-branded product in Mexico for distribution in Spain and eventually other European countries.
HFN: Do you foresee a bigger role for Kaltex in the U.S. market?
Kalach: Yes, we do. For many years, we have had a Kaltex America business established for our bottom weight apparel business. This division services many large customers such as V.F. Corp. and Levi. We will continue to look for opportunities in the U.S. marketplace.
HFN: Business has been very tough in the U.S. over the past year. When do you see things improving and what will cause that improvement?
Kalach: I think the foremost thing to get the U.S. economy back on track is for the U.S. to develop a sensible energy policy, which will bring down the cost of energy for the average consumer. Much of the American consumer’s disposable income is being eroded by higher energy costs.
Also the subprime mortgage situation will need to be straightened out before the American consumer’s confidence will be regained.
HFN: How often do you get to the U.S. and do you enjoy visiting, especially New York City?
Kalach: I love New York and enjoy being in the city. Having two important businesses located in New York, Kaltex American and Revman, gives me good reason to visit New York fairly frequently.