Paul Forman
Coats, one of the world’s leading industrial thread and consumer textile corporations with a history of 250 years and a network of over 70 manufacturing facilities worldwide, continues to consider Vietnam as one of top three investment destinations for the group. The Saigon Times Daily had an interview with Paul Forman, Group Chief Executive of Coats plc., and with Bill Watson, Managing Director of Coats Phong Phu on the occasion of the 25th birthday of the company’s business in Vietnam. Excerpts follow.
The Saigon Times Daily: As one of the first foreign companies investing in Vietnam, how has Coats viewed challenges and advantages in the country?
– Paul Forman: It is important that in Vietnam we are not Coats but Coats Phong Phu. We have been fortunate in forging partnership with Phong Phu since the start.
Coats has been the very best of the world in making threads, and have diversified customers. Phong Phu has been a really helpful partner in helping us to understand how to do business in Vietnam as well as to manage many things such as labor, relations with workers, and governmental issues, etc.
So actually, when many other foreign companies found difficulties in starting their business in Vietnam about 25 years ago, we were different owing to partnership with Phong Phu Corporation.
How do you rate the Vietnamese market as well as the role of Coats Phong Phu in Coats’ global network?
– Paul Forman: In terms of size, quality, sophistication, Coats Phong Phu is as good as anything we have in the world. It even goes ten times faster than the whole Coats in the world. We do investments every year in the people program, and I think the company will go further in developing the people.
In the last 25 years, Coats Phong Phu is one of the fastest growing businesses in terms of sales and good profit contributor to the global Coats. It is one of the top three businesses in Asia in terms of sales and output, as well as the most successful joint venture of Coats in the world.
The market is growing strongly and we expect it will continue to grow stronger, with the growth rate expected to continue at 10-20% in the next few years as the country is close to a number of free trade agreements (FTAs), such as the Trans-Pacific Partnership agreement. The TPP is expected to help increase remarkably Vietnam’s exports of clothes and footwear. In addition, Vietnam’s domestic demand will also be growing.
Almost all of the threads Coats Phong Phu produces in Vietnam stay within the country, and a little is exported to Cambodia. Up to 90% of that is used in producing shoes and clothes going outside Vietnam, and 10% for domestic consumption. We believe that proportion for domestic consumption will grow more when Vietnam has a growing demand for high-quality products.
Does Coats have any plans to expand its operation as well as production capacity in Vietnam to take advantage of the future FTAs, such as TPP with the yarn-forward rule of origin?
– Paul Forman: Because Vietnam has been growing a lot, we have been investing very significantly to increase capacity to keep up with the increasing demand of threads. But also, we have been investing significantly in people program and environmental treatment to make sure we are a responsible manufacturer. For example, we shifted from fossil fuel to biomass. We are also one of a small number of companies in the industry buying health insurances for employees and their family members. It means that we have invested to make it grow but also be a responsible business.
Vietnam has been and will continue to be one of the top three countries in terms of investment for the next years as I can see. The other two investment destinations in the top three are Bangladesh and North America.
Last month, in Bangladesh, Coats celebrated the 25th anniversary of a successful joint venture with AK Khan Group. Bangladesh is a fast growing market like Vietnam. We believe that Vietnam and Bangladesh continue to be high-growth markets for us, so we continue to invest in both.
We produce not only sewing threads for clothes and shoes, but also engineered yarns and cable fillers for fibre optic and telecoms applications such as cable. We also produce yarn and thread products for use in medical surgeries. The main production base for those is in North America.
– Bill Watson: Also, we are launching Coats Global Services to provide the sewn products industries with expert insights, technical guidance and practical solutions to build efficiencies across the supply chain. The services are introduced because of the global demand of managing production costs when labor cost is increasing about 10% per year.
In Vietnam, we also invest and launch the Coats Global Services that will focus on enabling manufacturers and brands to make changes to their operations through a range of productivity improvement tools and processes including lean manufacturing and shop floor training.
This is a very important point of the growth in which Coats is not just supplying more threads for shoes and clothes. It is about expanding a whole range of products that we have to provide for garment manufacturing industry.
For the first 25 years in Vietnam, we have focused on producing threads for fast-growing garment industry and what we are doing now is changing portfolio. So we will do more than traditional businesses.
It means that Coats is also aiming to provide its products for many other industries in Vietnam. Could you name some potential industries?
– Paul Forman: We see they are probably automobile, motorbike, tea bags as a consumer product, cable, and indoor furniture. In the world, our range of technical thread is used for a variety of end uses from bedding to highly technical automotive airbags.
Source The Saigon Times Daily
