Imports Hurt Southeastern Textile Mills : Protectionist Mood Rises as Employment in Industry Shrinks

HILLSBORO, N.C. —  The red brick textile mill that sprawls across a weedy hillside on this town’s edge was always the largest local employer, but that doesn’t begin to describe its role.

For 91 years, the factory’s morning bell summoned a work force that included many whose parents and grandparents had mill jobs before them. Clubs and athletic teams were organized within its drafty walls, and it has for years provided the largest single contribution to the local United Way campaign.

When the Cone Mills plant was closed last year it hit the town of 3,000 “like a death in the family,” said Mayor Frank Sheffield. About 550 workers were thrown out of work, and the loss of their wages forced the closing of one supermarket and strained the local bank branch and other businesses. Overnight, the shutdown cut $8 million from the town’s $72-million tax base.

Hillsboro’s experience has been repeated in towns across the Southeastern textile belt recently as a surge of textile and apparel imports has overwhelmed a U.S. textile industry that has been declining for decades. Last year’s 32% surge in imports combined with the accelerating automation of the industry to close 63 plants and claim 54,000 textile jobs, dropping textile industry employment to its lowest point in three decades.

National Debate

The industry’s ills have also become the center of a national trade debate as textile makers have teamed with apparel industry allies to lobby for stricter limits on imports of fabric and clothing. With protectionist sentiment on the rise in Washington, many analysts say a tough bill backed by the industries has suddenly gained a real chance of enactment--a step that would open the way for other industries to press for similar protection.

“This textile issue seemed insignificant for months, but has recently gathered real steam,” said Gary Hufbauer, an analyst with the Institute for International Economics in Washington. “If Congress adopts anything like this, other industries will stretch out their hands to say, ‘They got protection--how about us?’ ”

Adoption of the bill might cause other developed nations to impose similar textile quotas, and trigger retaliatory steps from the less developed Asian nations that are the source of most of the exports, Hufbauer added.

Textile makers say import protection would buy them time to transform the domestic business into a more highly automated industry that can compete with producers from lower-wage countries by focusing on such high-margin, specialty products as high-fashion apparel fabrics and industrial textiles. Manufacturers are already scrambling to cope with the import invasion by seeking out such niches, and sharpening their marketing skills.

But a successful transformation of the industry would not solve problems that have long been brewing for the Southeastern region. While the region has successfully sought to attract new industries, many of the laid-off workers from this traditional industry are unskilled older persons who often live in remote country hamlets and are not easily absorbed into other jobs.

Textile and apparel imports have been rising for decades, in a trend that many consider inevitable. After all, the textile industry moved to rural areas of the Southeast from New England as manufacturers sought large pools of unskilled labor.

But the imports last year swelled into a flood from Taiwan, South Korea, Hong Kong, China and Japan. Combined textile and apparel imports reached a record 9.7 billion square yards.

The increase has given overseas makers one-third of the U.S. market for apparel and apparel fabrics, and about one-sixth of U.S. textile market overall, say industry officials. Apparel imports directly affect the textile business, since U.S. apparel makers buy 45% of U.S. textile firms’ products.

The import rise has been particularly sharp since the second half of last year. Industrywide profits fell to 2.3% of sales in the third quarter from 4% in the second.

By last March, textile factory production had fallen to 78% of capacity from 87% a year earlier.

“What we’re doing is nothing less than giving away this country’s industrial wealth,” says Roger Milliken, chairman of Milliken & Co., the largest private textile manufacturer, and a frequent industry spokesman. “We’re the only industrialized country that won’t protect its economy.”

Strength of Dollar

The industry says the immediate cause of the import surge was the 1981 renegotiation of bilateral trade agreements with Korea, Taiwan and Hong Kong, and the explosive growth of production in the People’s Republic of China, which last year became the No. 3 textile exporter to the United States, up from No. 5 in 1980.

Exacerbating the problem were the effects of the strong U.S. dollar, and trade-wise Asian entrepreneurs who can rapidly move factories from one country to the next to manufacture in nations that are not near their export limits, a practice called “island hopping.”

The industry’s answer is a bill that would roll back imports from the 20 highest-volume textile exporting nations levels to 1983 levels, and allocate some of their share to nations with smaller export volumes. The bill would cap future import growth, broaden import restraints to cover additional apparel and textile imports, and set up a new import-licensing system to strengthen enforcement.

Since March, the bill’s original backers from textile states have signed up 42 senators and 261 congressmen as co-sponsors. “A lot of congressmen have used the bill as a way to say they’re concerned about the general import situation,” said one congressional staff member.

Opposition has been vigorous from retailers, importers and consumer groups, which complain that the textile industry is already one of the most protected. They assert that by reducing imports as much as 20%, the bill would immediately drive up prices perhaps as much as 15% for some products, such as sweaters, where imports have gained a large market share.

“The textile industry has had 50 years of protection to get its act together,” said Doreen Brown, president of Consumers for World Trade. “How much more time do they deserve?”

A Good Chance

She said that the bill was first considered a tactic aimed at upcoming negotiations for renewal of the Multi Fiber Arrangement, the 11-year-old treaty that set a worldwide textile import system. But “now, no one should take its chance of passage lightly,” Brown said.

The critics also assert that, by limiting the exports that less developed nations are best able to produce, the measure would undercut the Administration’s call for free trade and its promise to aid the growth of poorer nations.

William A. Andres, executive-committee chairman of retailer Dayton Hudson Corp., says that by limiting future import growth the bill would “guarantee a growing market share to the domestic companies, no matter how they perform.”

Andres, who is also chairman of the Retail Industry Trade Action Coalition, asserts that most textile industry job losses are not due to imports but rather to the automation that is inevitable and desirable.

Textile makers do not dispute that automation is swiftly leaving behind the day of dust-choked mills where workers strained to operate clattering, wooden shuttle looms.

The industry’s capital spending has averaged $1.4 billion a year in the past decade, the industry says. Productivity gains averaging 5.2% a year over the same period outstripped those of all other industries but electronics, U.S. Commerce Department figures show.

Despite an aggressive buy-American campaign that the textile makers have directed at consumers, the Space Age machines that have accomplished this automation are largely imports. In 1979, for example, Burlington Industries, the largest U.S. textile maker, opened a fully automated synthetic fiber plant in Cordova, N.C., with Nissan water-jet looms, and the German texturing machines that give synthetic fibers a softer feel.

“We’d prefer to buy from an American supplier, but they just didn’t offer the equipment,” said Dale Ormsby, the plant manager. With its operations guided from a central computer room, the plant employs 680, or about half that number that would be needed to produce the same volume using Burlington’s old technology, Ormsby says.

With $3.2 billion in annual revenues, Burlington became the largest in the industry by mastering low-cost, high-volume production of commodity textiles. But the company, which saw earnings fall 30% last year, provides an example of the way its industry is moving to higher-margin specialty products.

Burlington is seeking to increase revenues from high-fashion products to 25% of sales from the current 10%. Already, it has scored hits with its home linen collections that are sold under the names of fashion designers Laura Ashley and Liz Claiborne.

Time Gap

The company is selling light-weight crinkled denim to Levi Strauss & Co. and H. D. Lee Co. as fabric for women’s jeans.

Textile makers are counting on their proximity to the American market as well as such fashion innovations to give them an edge. James C. Frye Jr., president and chief executive of Ti-Caro Industries in Gastonia, N.C., says U.S. makers can generally fill U.S. apparel firms’ orders in one-third to one-half the time needed by their Asian competitors.

The time advantage has become more important to apparel companies as the year has become divided into an increasing number of short fashion seasons, he said. “We used to worry just about the summer and the winter lines, now there are special men’s clothes for Father’s Day, women’s clothes for Mother’s Day, fashion lines for the winter cruise season,” he said.

But none of the new strategies are foolproof. Imports have recently gained share in home furnishings such as sheets, towels and bedspreads, once a safe market for domestic makers.

And U.S. manufacturers need the revenues from high-volume textile products to absorb overhead costs. “We can’t just be a boutique industry,” said James C. Leonard, Burlington’s manager of economic analyses.

The problems facing the industry’s work force are no less stubborn. In the Carolinas, Georgia, Alabama and southern Virginia, the contraction of the textile business comes as imports are hurting two other regional mainstays, the tobacco and furniture businesses.

With unemployment in some rural counties over 14%, North Carolina Gov. James G. Martin has backed away from the high-tech business development strategy of his predecessor, James B. Hunt Jr., and declared that the state must do more for its traditional industries.

The lot of jobless former textile workers is difficult even in the region’s prosperous sections. The Hillsboro plant, for example, is near the North Carolina Research Triangle Park and in a county with a 2.4% unemployment rate.

Yet a state survey late of workers who lost jobs at the mill found that 77% of those who had found other work were in positions that paid at least $1.50 an hour less than their mill wages, which averaged $6.50 an hour.

Town residents say many older workers, discouraged, simply left the work force and are relying on relatives to support them. Hillsboro Mayor Sheffield says the area has two economies--the new one embodied by the research park, and the traditional economy that has bound many to their hamlets for generations.

“A lot of these people seem almost invisible out there, but that doesn’t mean their suffering has been any less real,” he said.