WASHINGTON — Investments are up, exports are rising — now the only missing element in the Made in USA push is more jobs.
Even as the industry undergoes a resurgence in activity not seen since the Nineties, employment in textiles and apparel continues to decline, albeit at a slower rate than in recent years. Increased productivity is one reason, while ongoing caution as to whether Made in USA’s momentum will be maintained is another.
“One of the things to keep in mind is that textiles is an area where there has been significant productivity improvements, so the number of workers it takes to do something continues to decline over time and…one of the reasons why, it’s not inconsistent for us to say there is more production going on within this country but employment is still declining,” said Scott Hoyt, senior director of consumer economics at Moody’s Analytics.
Hoyt said the government’s employment data is based on net change, noting that it is also possible that some textile mills are still closing as new investment and jobs are created, resulting in a net loss in the data. In the overall economy, Hoyt said all manufacturing has gained momentum.
“We have seen a pickup in manufacturing employment as part of the recovery,” Hoyt said. “Clearly, a decent chunk of that is autos and a lot of that has to do with demand. Autos are very expensive to ship, which is why the domestic auto industry has never gone away [and is improving].”
Hoyt said U.S. auto sales have rebounded significantly on a volume basis, rising to nearly 17 million units annually from a low point of 10.4 million units in 2009.
“Relative energy costs and labor costs have come down since the financial crisis,” he added. “They are still high and we are a wealthy nation that pays our workers a lot and that is not a bad thing. I think our competitive position has improved, particularly in areas where time to market is critical or transportation costs are an issue.”
The long demise and recent rebound of the U.S. textile industry has in many ways mirrored the decline and recovery in U.S. auto production.
Auggie Tantillo, president of the National Council of Textile Organizations, said the textile and apparel industry has seen new investment in plants and an increase in U.S. exports, representing the first positive developments in over a decade.
“From the really late Nineties all the way through the recession period of 2008 to 2009 and the first part of 2010, there were absolutely devastating numbers in the industry and a sizeable contraction,” said Tantillo. “The last couple or three years the industry has regained its footing and has stopped the strong downward trends and has seen a bit of a resurgence. Output was up for 2013 over 2012. Exports were up 2013 over 2012, all of which are good signs.”
He said employment numbers traditionally lag improvement in other economic indicators “because when you are going through hard times, you learn to do more with less, and before you bring people back on you really have to have not only stability in the marketplace, but a very firm outlook for the near term.”
The resurgence in apparel and textile production in the U.S. has gained momentum from a number of initiatives, ranging from the U.S. government’s promotion of Made in America to a Wal-Mart Stores Inc. domestic production program to rising costs and labor woes offshore.
Since September 2013, five companies have publicly revealed investments in seven spinning operations, according to the Commerce Department’s Office of Textiles & Apparel and NCTO. The investments have been reported to be worth a total of $753 million and could create up to 1,860 jobs throughout the Southeast.
Four of the five companies making new investments are foreign owned, including from Canada, India, Mexico and China. Gildan, a Canadian-based company, has said it plans to invest $250 million in three plants in Salisbury, N.C., Mocksville, N.C., and Clarkton, N.C., creating an estimated 500 to 700 jobs. Keer, a Chinese-based company, has said it will invest $218 million in a spinning plant in Lancaster County, S.C., employing some 500 new people. Mexican-based Gulf Coast/Zagis USA has said it will invest $130 million in a new plant in Bunkie, La., creating some 300 jobs, and Shrivallabh Pittie Group, an Indian-based company, has said it will invest $70 million in a new facility in Screven County, Ga., creating some 250 jobs.
Parkdale Mills is the only U.S.-based company among the five that has said it will invest $85 million in a new facility in Raburn Gap, Ga., creating an estimated 210 jobs, according to OTEXA.
“Over the past 15 years, nobody in their right mind would have said a Chinese company would be ready to invest in a textile plant in the U.S.,” Tantillo said. “All of the money, all of the capital investment was flowing in the other direction. What you see now is more than just a ‘feel-good story.’ There are some real economics behind what is transpiring here that is forcing some fairly radical decisions from an investment standpoint that we haven’t seen really since the late 1990s.”
Nate Herman, senior vice president at the American Apparel & Footwear Association, said U.S. apparel and textile production is up based on anecdotal evidence, but he said some small factories still close periodically, contributing to the employment decline. “From 2000 to 2007, apparel jobs dropped by over 50 percent,” Herman said. “The rate has slowed between 2007 and 2013, and is slowing even further between 2013 and 2014.
“The numbers are stabilizing,” Herman added. “What you find with a lot of remaining apparel manufacturers is that they were not necessarily running full shifts or second shifts, and are now able to have workers that they are using work full time, 40 hours a week, where they weren’t able to do that before. They are better utilizing their current works and not doing any mass hiring right now.”
Herman said apparel exports are also on the rise, signaling more production in the U.S. The biggest markets for U.S. apparel exports were Canada with $2.06 billion in goods shipped for the year ending May 30, followed by Mexico with $922 million and the group of 28 European Union countries with $741 million.
“There has been a shift to more finished apparel exports [in the data] and that is companies taking advantage of the Made in USA cachet to countries like Japan and the United Kingdom,” Herman said. “Canada has seen a significant gain over the last three to four years and that is a big market, and the U.K. has also seen a significant gain over the last few years.”
Apparel exports to Canada have tripled from $679 million in 2002 to $2.06 billion for the year ended May 30.
“Some brands we have in the U.S. are more rugged workwear brands and part of the Canadian oil boom during that period boosted exports,” Herman said. “The need for those products has grown significantly. I think there is also a recognition that we have duty-free arrangements that make U.S. products relatively more affordable,” referring to the North American Free Trade Agreement.
Herman said several Middle Eastern countries, particularly the United Arab Emirates, have also become big export markets and grown steadily over the last four years. U.S. apparel exports to the UAE rose to $121 million in 2013 from $14.5 million in 2002.
“You are talking astronomical growth,” Herman said. “With the growth of shopping, particularly in someplace like the UAE where there is a shopping mall every five feet in Dubai, companies are taking advantage that there is cachet with U.S. names and brands for Made in USA.”
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