| |
Overview
Introduction
 On
March 22, 2002, North Carolina Governor Mike Easley hosted an emergency
summit to address rampant job losses and textile plant closings
in his and neighboring states. The summit, located in hard hit Gaston
county and attended by the governors of both South Carolina and
Georgia focused on ways to "stop the bleeding" and prevent
the long-term deterioration of the Southeastern textile industry.
Specifically, the three governors called upon lawmakers in Washington
to enact trade policies that would, at least to some degree, protect
American manufacturers. To quote Gov. Easley in a post-summit interview:
"If they [government officials] don't enforce the NAFTA agreement,
then we're going to continue to have the transshipment problems-that
is, Asia taking goods to Mexico and then they're coming into the
United States with a Mexican origin on them. If that continues,
we will not be able to compete (Easley, 2002)."
Governor Easley's concerns about his state's textile and apparel
industries are well-founded. For decades, these two interconnected
industries have made up a large portion
of North Carolina's traditional manufacturing backbone. However,
since the mid-1990s, these industrial sectors have been flagging
largely because of a series of free trade measures passed by the
United States. Because of a combination of plant closings, cost-cutting,
consolidation, and technological developments, in the period from
1997 to 2002 North Carolina lost 100,000 jobs in the textile industry
and 70,000 more in the apparel industry. Put differently, textile
employment as a percent of total manufacturing employment in North
Carolina has dropped from close to 20 percent to around 12 percent
and apparel employment has plummetted from about 12 percent to less
than 6 (see chart) (Conway et al.,
2003). Especially in certain areas, specifically the Carolinas Partnership
Region and Piedmont Triad Region, the effects of globalization and
free trade have been especially damaging and layoffs
have been incessant. Though Easley and others are searching for
ways to restore these two once-flourishing industries, with even
more tariffs and quotas being eliminated by the end of 2004, the
textile and apparel situation in North Carolina may get worse before
it gets better.
Background on Textile Industry
The textile industry involves the manufacturing of a wide variety
of cloths and materials. As time has progressed and machinery has
grown more sophisticated, there have been some remarkable innovations
in the textile world. Wilbur Ross, the New York steel tycoon who
a short time ago purchased bankrupt Burlington Industries and Cone
Mills in North Carolina, recently claimed that nanotechnology is
a promising innovation that will benefit his company and the textile
industry as a whole (Maurer, 2004). Nanotechnology makes possible
the production of water-repellant cottons and silk substitutes.
Also, as competition from overseas has increased, many textile firms
have altered corporate strategy and begun to focus less on production
and more on design and marketing. To quote a recent Charlotte
Observer article: "The shift toward marketing stems from
a growing realization among U.S. firms that American labor costs
are simply too high to sustain labor-intensive manufacturing (Mecia,
2002)." A traditional breakdown of textile mill products (with
relevant SIC codes) is as follows:
221 - Broadwoven Fabric, Cotton
222 - Broadwoven Fabric, Manmade
223 - Broadwoven Fabric, Wool
224 - Narrow Fabric Mills
225 - Knitting Mills
226 - Textile Finishing, Except Wool
227 - Carpets and Rugs
228 - Yarn and Tread Mills
229 - Miscellaneous
Within North Carolina, knitting mills are the most prevalent type
of factory, accounting for about 45% of all establishments and 44%
of total textile employment (NC Dept. of Commerce, 2000).
Background on Apparel Industry
Apparel production, aften called the sister industry of textiles,
involves the creation of clothing and other garments. As in the
textile industry, there are a wide variety of industrial breakdowns
within the apparel industry. Major SIC designations for apparel
production are as follows:
231 - Mens/ Boys, Suits and Coats
232 - Mens/ Boys, Furnishings
233 - Womens/ Misses Blouses
234 - Womens/ Misses Undergarments
235 - Hats/ Caps/ Millinery
236 - Girls/ Children Outerwear
238 - Miscellaneous Apparel and Accessories
239 - Misc. Fabricated Textile Products
Within the Tarheel State, Miscellaneous Fabricated Textile Products
and Mens/ Boys Furnishings are the two industrial sectors that employ
the most workers (NC Dept. of Commerce, 2000).
How North Carolina Fits in the U.S.
Despite scores of lost jobs over the past decade, the textile and
apparel industries in North Carolina are among the strongest in
the nation. In its textile sector, North Carolina employs more than
a quarter of all textile workers in the United States (see
chart) (U.S. Bureau of Labor Statistics, 2004). Though Georgia
and South Carolina also rely heavily on textile production, the
pie chart makes it clear that Governor Easley and North Carolina
workers have more invested in textiles than anyone else.
Because it is considerably smaller, the apparel industry is often
overshadowed by textiles in North Carolina. However, apparel remains
a major sector in the Tarheel State and certainly has a presence
on the national scale. In terms of employment, apparel accounts
for just under 6 percent of North Carolina's manufacturing jobs
compared to less than 3 percent nationally. Also, as of 1998, North
Carolina employed close to 6 percent of all apparel workers in the
United States (N.C. Dept. of Commerce, 2000).
Timeline of Important Dates in Textile and Apparel
Industries
- Early 1900s---> Textile and apparel production starts
to shift from plants and mills in the Northeast to the Southeast
where labor and raw materials are cheaper.
- 1962---> United States and other developed nations
enact the Long Term Arrangement Regarding International Trade
in Cotton Textiles (LTA). This arrangement let importing countries
impose quotas on cotton textiles on a countryby-country basis
and in some cases to impose unilateral quotas without penalty.
- 1994---> The Uruguay Round's Agreement on Textiles
and Clothing (ATC)
requires countries like the U.S. to phase out import restrictions
on textiles and apparel under MFA over the next ten years.
---> NAFTA goes into effect.
- 1999---> Burlington Industries lays off over 2000
workers in six North Carolina textile plants.
- 2003---> Kannapolis-based Pillowtex closes five North
Carolina plants and eliminates over 4,000 jobs. The Raleigh News
and Observer calls it "the
single biggest job loss ever in North Carolina (Martinez, 2003)."
- 2004---> U.S. Congress will be debating and voting
on CAFTA,
a trade agreement similar to NAFTA that includes Central American
countries like El Salvador, Nicaragua, Guatemala, Honduras and
Costa Rica.
---> New York financier Wilbur Ross decides to create new International
Textile Group by merging bankrupt Burlington Industries and
Cone Mills. The new textile giant is expected to have annual revenues
of $900 million (Lunan, 2004).
- 2005---> All textile and apparel quotas will be eliminated
for 148 WTO nations under ATC.
|
