(Washington Post)
For
Jeff Johnson and the 686,800 other workers in the U.S. textile and apparel industry, cries of "Happy New Year" tonight may well ring hollow: As of midnight, rules that have protected U.S. mills from foreign
competition will expire, exposing an already troubled industry to the full force of globalization.
Wherever it leads -- whether to retooling plants to churn out high-tech fabrics or to widespread layoffs after
surging imports -- Johnson and others at the Oakdale Cotton Mills think their world is about to change.
"We're apprehensive," said Johnson, 44, who has spent 28 years at the same yarn and twine-making
firm where his father and grandfather worked, in a town where workers still inhabit the homes built by the company decades ago. "Not knowing is the big thing."
North Carolina's Piedmont Triad, an area
in the central part of the state that encompasses Greensboro, High Point and Winston-Salem, is no stranger to the dynamics of world trade. The area has been hurt by a 10-year slide that has cut the number of U.S.
textile jobs by more than half as production shifted overseas. In the process, such local anchors Cone Mills Corp. and Burlington Industries Inc. filed for bankruptcy protection.
Those still in business know the
new year will catapult them into an even more integrated world, and they are girding for battle in a variety of ways -- pouring money into new technologies and products, slashing costs, casting off unprofitable lines,
and lobbying Washington for temporary protections.
Allen Gant Jr., president and chief executive of Glen Raven Inc., predicted "tremendous change" with "a lot of displaced jobs," and he is
repositioning his North Carolina company to concentrate on high-value textiles, such as the nylon used in bulletproof vests. Meanwhile, he is shedding businesses he thinks are most vulnerable to foreign competition.
"We don't do T-shirts. We don't do 'commodity apparel,' " Gant said. "We've tried very hard to exit those areas where we think [severe competition from China] will take place, and I feel very sorry
for anyone who's in the way of that juggernaut."
The expiring quotas are causing concern around the globe. For the past three decades, the United States, Europe and Canada have maintained quotas limiting the
amount of textiles and clothing that individual countries can export to them. Established to shelter the domestic textile industry in developed countries, the quotas were doled out in a way that let textile and garment
plants in smaller countries such as Sri Lanka and Honduras prosper through guaranteed sales to the world's richest markets. Scrapping those quotas means that retailers and brand-name purveyors such as Wal-Mart, the Gap
and Liz Claiborne can buy as many pants, tops, sheets, towels and other such products as they like from whatever country they like.
Although free trade won't prevail entirely -- the United States continues to
impose tariffs averaging about 16 percent on imported clothing from most countries -- relaxing the rules is expected to benefit consumers by lowering prices. Another big winner will likely be China, whose low-cost,
super-efficient manufacturers are widely predicted to grab a huge portion of the worldwide textile and apparel trade, more than half by some estimates.
Much debate surrounds forecasts about how the U.S. industry
will fare under the new rules. Importers of apparel and some academic researchers argue that the U.S. industry's fears about a quota-free world are exaggerated, because China's gains will come at the expense of other
developing countries rather than U.S. producers. Moreover, it is far from clear how extensively and how rapidly orders will switch to China, because importers prefer to rely on a mix of suppliers and new trade barriers
may still disrupt the flow of goods.
Experts broadly agree, though, that the 275,000 jobs in U.S. garment factories are probably the most imperiled. Garment-making is relatively labor intensive and, except for
certain specialized, high-fashion operations, garment companies may find it hard to match the prices offered by manufacturers in countries with lower labor costs.
Less endangered, perhaps, are the textile plants
that rely more on machinery to produce fabric, yarn and other such inputs for clothing, home furnishings, furniture and automobiles. U.S. textile makers are competitive relative to overseas firms, but they still have
much to fear from the end of the quota system, executives assert. They depend to a large extent on orders from apparel factories in Latin America and the Caribbean, which themselves may be vulnerable to Chinese
competition.
"If China can drive out Guatemala, El Salvador, Costa Rica, Mexico -- then there's no hope for the [textile] mills that are left" in the United States, said John A. Emrich, chief executive
of Guilford Mills Inc., a Greensboro-based textile maker.
In the hope of preventing such an outcome, U.S. textile firms have asked the Bush administration in recent weeks to continue limiting imports of Chinese
fabric and clothing using a special mechanism called "safeguards" designed to halt imported goods from suddenly flooding a market. The industry has requested that safeguard limits be imposed in 2005 on imports
of Chinese trousers, underwear, shirts, blouses and a host of other products. Such limits apply only to China; under the terms of its entry into the World Trade Organization in 2001, Beijing agreed to allow safeguards
on its textile products through 2008.
Despite complaints and a court challenge from retailers who believe that safeguards would be a step back from free trade, the administration appears sympathetic to the
industry's requests and has agreed to consider imposing the new limits even before seeing what happens after the quotas disappear. A Chinese initiative to curtail its exports "voluntarily," by slapping taxes
on its shipments of textiles and apparel, is not likely to deter the U.S. government from imposing safeguards, according to industry officials. The taxes that Beijing has announced so far -- between 2.5 cents and 6
cents per item -- are considered too low to have much of an effect.
The moves can postpone a surge of Chinese imports, but they can't stop them. In four years the United States will no longer be allowed to use
special safeguards against Chinese textile shipments. In the meantime, other big textile producers such as India and Pakistan will have the opportunity to penetrate the U.S. market as much as they can.
Free-trade
advocates argue that lower-cost goods will put more money in consumers' pockets, generating spending power that will ultimately lead to the creation of new jobs. But some people working in textile mills see only a
threat to an industry that has long provided middle-class jobs for people without college educations.
"I've been through NAFTA, I've been through GATT, and they were supposed to give us the world, but it's
just taken everything out of here," said Jamestown Mayor Billy Ragsdale, referring to two major agreements that lowered trade barriers. Ragsdale's family established the Oakdale Cotton Mills in 1865, and he
continues to run it. The mill employs about 50 people, down from about 200 a few years ago.
Compared with harder-hit textile communities elsewhere, towns in the Piedmont region are relatively prosperous. The
unemployment rate is about 4.5 percent, thanks in part to an influx of businesses such as financial services and air cargo shipping. The bustling downtowns are surrounded by upscale shopping centers and malls. Many
residents -- including textile workers -- are unaware of the upcoming changes to the quota system.
Some of the area's laid-off textile workers have found new jobs paying the same as or better than their old
wages, but that has not been the case for all of them. And those who have been paying attention to the threat facing the industry harbor strong views about the need for action against imports. |
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