Gary Smith of The Lycra Company says price is a problem only when value is absent

In his first-ever European interview since taking over as CEO of The Lycra Company in November 2023, Gary Smith has discussed his vision and plans for the company with FashionNetwork.com. Besides talking about costs, innovation and sustainability, the former CEO of Polartec and president of Timberland’s Outdoor Group outlined his strategy for the company’s industrial structure, his views on therapeutic textiles, and the denim market’s current challenges.

FashionNetwork.com: From the vantage point of your experience in the textile and apparel sector, where does The Lycra Company currently sit within a fast-changing fabric industry? 

Gary Smith: All in all, joining The Lycra Company is a truly exciting opportunity. And for many reasons. It is a leading group in its field, one that has been active for 66 years and has continued to innovate. The Lycra Company is no longer just the producer of Spandex, it offers a wide range of fibres and materials. And with regards to Spandex, we continue to improve, enabling fabric manufacturers and their client brands to market products that make a difference. I’m extremely familiar with all the different types of materials in this industry, and they are the ingredients that open doors for brands, in terms of performance, hygiene, comfort and more.

FNW: You took office at a time when manufacturers and brands were increasingly under pressure in terms of costs and prices. How does this affect your business?

GS: First of all, price is a problem only when value is absent. As partners to apparel brands and fabric manufacturers, our job is to know how much value we can generate for them. If this value is merely fungible, meaning [our products] are just a commodity, then price would be the only basis for competition. But that is not what we are, although we do have convenience products within our range. At least half the products we commercialise, both by volume and by category, are highly differentiating products, which you will only find at The Lycra Company. And the other half of our range, which offers alternatives to what our competitors sell – you must always be respectful of your competitors – also promotes differentiation in terms of consistency, quality, and reliability. Sometimes, in terms of production proximity too, because we usually produce in regions where our clients are operating.

Ours is a compelling value proposition, which justifies the premium pricing we have always adopted. We are only a tiny part of the cost of manufacturing the final product. As long as we can justify the value we add to our clients’ products, I believe we can maintain the prices we set. I am quite confident about our position.

FNW: How did The Lycra Company’s change of ownership affect the group’s organisation and strategy?

GS: The Shandong Ruyi group had a vision, and it acquired some top labels, hoping to become a kind of Chinese LVMH. Their creditors have now taken control of the company. Having started working with them, it is clear they are not natural long-term owners. They are investors, not shareholders. But they have the best interests of The Lycra Company at heart, because that is how they will recoup their investment. I think they have turned out to be very good stewards, and I have a very healthy working relationship with them. And one of my tasks is to isolate our business from the ownership structure behind it. 

FNW: Where does sustainable development feature in your current strategy?

GS: There are two points to note. The first is that, regardless of the industry and of individual countries’ legislations, it’s important for a company to do what is right. It’s essential for industry professionals to be good citizens, regardless of competitive or statutory obligations.

The second point is that fashion, especially in Europe, has become the embodiment of the negative impact caused by consumption. Since we work in this sector, we have a duty to act. But I’m keen to underline that we took this path before [sustainability] became “trendy,” and not just to be able to release products that could earn us a few headlines. After six months in office, I can say with confidence that ethics and integrity have long been a feature of our organization. This translates into a constant desire to innovate and improve our range.

For example, we have always been committed to recycling, even when it meant cannibalising our own products. We invented Spandex, but also T400, which is a recyclable polyester alternative to Spandex. And I have now relaunched a nylon project with a similar approach. 

FNW: What are the current priorities in terms of your industrial structure? Are you planning to build new sites? Or to upgrade and expand existing ones?

GS: We have just announced we are extending our capacity in China, a country which accounts for most of the global apparel industry’s output, and where we are relatively under-represented. We are taking over a plant in Yinchuan, not far from the Mongolian border, a project initiated by someone else and then suspended. We will complete it through a joint-venture agreement. We will be able to manufacture our less advanced products at this new site, and increase capacity for our more sophisticated products at our existing sites. The challenge is always striking the right industrial balance between basic and cutting-edge products. Increasing our capacity is important, since local demand is high.

In terms of upgrading our manufacturing structure as a whole, it’s important to stay up-to-date, in order to preserve our investments as well as our strategy and our ability to be flexible. In our European sites, we are planning to switch from coal-based to gas-based energy, creating co-generation plants which will supply energy to the local districts where they operate.

Partnering with fabric manufacturers

FNW: You have recently partnered with Dairen, complementing the deal you made with Qore in 2022. Should we expect The Lycra Company to ink other strategic partnership deals?

GS: Yes, always. The partnership with Dairen is basically an extension of the one with Qore. The latter allows us to source butanediol (BDO), which Dairen can then transform into polytetramethylene ether glycol (PTMG), from which we produce Spandex. We’ll be shifting from pilot to large-scale production in the coming months.

You need diversity in your organisation, in your eco-system. If you have an insular mindset, you rarely get the best results. There are plenty of skilled people out there we can work with. For example, one of my goals is to find manufacturers that will help us innovate our polyester and nylon business. We have some fine polyester brands, like Thermolite and Coolmax, but it is hard to be innovative with this fibre. We are not fabric manufacturers, and I think we’ll benefit from having closer partnerships with weavers that have an appetite for innovation.

FNW: On which markets do you think the company should focus its efforts to expand?

GS: I think it’s important for us to expand our capabilities in producing what I might call therapeutic fibres for medical use. A few years ago, there was a lot of hype about wearable technology, which then subsided. But it is now possible to do many things with materials worn next to the skin, for example in post-operative recovery, compression therapy, or in curing vascular issues and skin diseases. All areas in which fibres can be a therapeutic aid. We have a medical socks and tights business in Europe, and I think we could expand it to other categories, and bring it to another level.

FNW: In terms of apparel, are you planning to be more active for example in lingerie, sportswear and denim?

GS: No sector is a more urgent priority than others, they all have their own challenges and opportunities. Take denim, for example. Trousers and skirts are always more affected by economic disruption. When people’s spending power is limited by inflation and geopolitical uncertainty, they stop buying clothes. And if they do actually spend any money, they will be more inclined to buy tops. Because they are like a flower’s petals.

Denim is currently faced with this, and with another challenge: oversize jeans are making a come-back. It’s now skinny vs baggy, stiff vs stretch. And we can’t have it both ways, since our products are mostly worn close to the skin. Then there are circumstances outside everyone’s control, like the earthquake in Turkey, which is still disrupting the country’s denim industry, [Turkey] being a major producer.
How should we deal with this? Well, at Kingpins Amsterdam, we launched our FitSense technology, which creates targeted adjustment areas in jeans, with the aim of supporting specific sections of the product rather than creating a generic stretch effect. And I have to say, we’ve had very good feedback on this solution.

FNW: Based on your experience with [apparel] brands and their suppliers, how do you think the relationship between The Lycra Company and client brands of Lycra, Coolmax and Thermolite is evolving?

GS: We call ours a push/pull model: we sell directly to fabric producers, and sometimes our value proposition to them doesn’t resonate or make sense to the end-consumer, so to speak. We give producers the ability to produce consistently high-quality, durable materials. And they are willing to pay for this, because it is important. But consumers aren’t usually aware of all this.

Our pull strategy comes into play when we sell directly to [apparel] brands, allowing them to add value to their products with specific features. Sometimes, these brands underline the fact they are using Lycra, sometimes they don’t. This isn’t a problem. We produce flour and brands make bread. Customers rarely ask their baker which flour they use. In an ideal world, when a customer congratulates the baker, the baker would say “it’s because I use Lycra flour.” But being an ‘ingredient’ brand requires respect, because our role is to help manufacturers make better products. We play only a small part in the process, and it’s important to stay humble about it.