US textile firms insist they have a future
Some things, it seems, just don't change much. Ellison McKissick Jr., president of the Alice Manufacturing Company, a small family-owned textile firm here, has in his office a framed copy of the program for a dinner meeting of the Southern Manufacturers Club held in Charlotte, N.C., in 1901.
The speaker at the meeting was Mr. McKissick's great-grandfather, Ellison A. Smythe, likewise a textile executive. His address was entitled ``The Question of the Hour: On the need of an Early & Peaceful Settlement of the Oriental Question, from the Standpoint of a Southern Manufacturer.''
The ``Oriental Question'' of the day, McKissick says, was how United States (specifically, Southern) farmers could be protected against the Chinese dumping of raw cotton on the US market. There's no clue from the program how the issue was decided, but presumably Mr. Smythe exercised diplomacy in his address: The program lists Wu Ting Fang, identified as ``the Chinese minister,'' as in attendance.
Eighty-four years later, imports from Asia still weigh heavy on the minds of US textile manufacturers.
The industry's prime concern right now is that the federal government is not enforcing the provisions of the multifiber arrangement (MFA). Executives are pushing for passage of the Textile and Apparel Trade Enforcement Act of 1985. Critics decry the bill as protectionist, but the industry defends it as merely requiring enforcement of an international agreement that is already in place.
``The US government hasn't enforced it,'' says McKissick, president of the American Textile Manufacturers Institute. The MFA is supposed to keep textile imports from growing faster than the market as a whole, he says.
According to recent congressional testimony, textile and apparel imports have grown 19 percent a year, while the market has grown 1 or 1.5 percent annually. In 1984, imports increased 32 percent over the year before.
Virtually unanimously, US textile executives deny being ``protectionist.'' But equally unanimously they feel that complete free trade (`a la the 19th-century ``comparative advantage'' argument of economist David Ricardo) will destroy them.
As the manager of one North Carolina textile plant puts it, ``We want fair competition.'' Free trade may be the ideal, but as it is now, he says, ``The US is the only guy playing the game.''
``You can't compete with a state economy,'' says McKissick. Foreign governments, the US textile industry complains, own factories, subsidize textile exports, and shut US goods out of their domestic markets.
David A. Wyss, senior vice-president of Data Resources Inc., a consulting firm in Lexington, Mass., sees a too-strong dollar as the source of much of the textile producers' woes. ``If the dollar were reasonable, they'd still be exporting. . . . The dollar is just at a level where little US manufacturing can compete.''
He concedes that the MFA is being ``widely violated'' but says it is the nature of such agreements to be circumvented, somehow or other. ``Almost anybody can do it cheaper than we can, particularly in the area of apparel. It's so easy -- all you need is a sewing machine.''
The US apparel industry argues for quotas in part on the grounds that consumers don't benefit from lower production costs overseas. Mr. Wyss is in partial agreement with them -- but he blames quotas for the problem. ``In general, savings tend to get passed on to the consumer. Profit margins tend to be higher on imports -- because of the quotas. . . . If the level of imports is restricted, the producer has no incentive to keep down costs.''
Of course, different countries have their own agendas when it comes to export industries. It can be worth it to some countries desperate for hard currency to export goods or commodities below production cost. And political leaders in countries teeming with the jobless may subsidize labor-intensive industries as a form of riot insurance.
But the domestic textile industry objects to being the shock absorber for the world economy. Jack Scheinkman, secretary-treasurer of the Amalgamated Clothing and Textile Workers Union, testified to a Senate subcommittee last month, ``Our workers . . . have been on the firing line of international trade for decades and have borne the brunt, more than those in any other industry, of the tremendous growth in international trade that the world has experienced since World War II.''
He went on to charge the executive branch with failing to call for negotiations, as required by presidential directive, in ``well over 100 cases'' of market disruption, and also criticized abusive practices such as third-country transshipments to circumvent quotas.
He further criticized foreign producers who are formulating new blends of cotton and other vegetable fibers ``solely for quota circumvention and not for market demand.''
Textile producers are often seen as the crybabies of the US industrial community -- clinging, in the face of all economic realties to the contrary, to the hope of preserving an industry that should be allowed to migrate to developing countries.
But textile executives insist that their industry does have a future in the United States. ``We've been spending $1 billion a year to be competitive,'' says Mr. McKissick. ``In olden times we were labor intensive -- but we've adjusted. Now we're capital intensive.''
Dame Hamby, dean of the school of textiles at North Carolina State University in Raleigh, N.C., thinks US textile and apparel producers are putting too much of the blame for their troubles on Asian producers' price advantages. ``Retail merchants tell me they're not interested only in price -- they're interested in value.''
US producers aren't as dedicated as foreign producers to ``new product development,'' he suggests. He also sees US producers as still stuck in ``the manufacturing syndrome: They build a plant to make something, and then they find someone to sell it for them.'' Instead, they need to be more market driven. ``They've got to listen to the fellow who puts the last dollar down.''
Domestic producers have tended to feel their geographic proximity to the market gives them a fashion edge. But overseas producers, with shorter turnaround time on orders, can beat them out. ``You can get management decisions faster in the East,'' Dean Hamby says.
He adds, ``Many of our items fall short on quality.'' In a recent survey he made of major department stores, he says, ``There was one item mentioned by every store -- ladies' blouses. They all said ladies' blouses from abroad have better quality.''
He expects the textile and apparel industries to continue in this country, albeit with more automation. Indeed, he sees the fact that apparel employment is still as high as it is as a sign of weakness, a lack of investment in new technology. (See chart previous page.)
The dean foresees high-tech, capital-intensive apparel factories of the future running 24 hours a day, seven days a week -- as they would need to in order to justify their cost.