WASHINGTON — A perfect storm could be gathering over U.S. apparel and textile manufacturing.
Economists who have watched job losses mount over the past two years claim the horizon is ominously darkening for the twin industries, which lost 18,200 seasonally adjusted jobs in July alone, according to the Labor Department’s employment report released Friday.
This story first appeared in the August 4, 2003 issue of WWD. Subscribe Today.
It is one of the largest one-month drops in employment on record and does not even take into account the bankruptcy filing and liquidation of Pillowtex, the Kannapolis, N.C.-based home furnishings manufacturer that said last week it would close all of its U.S. plants and lay off 6,450 workers.
The Labor Department recently revised the index and divided up some of the textile and apparel job categories. On top of the staggering one-month loss in July, Labor’s revised June employment numbers showed an additional net combined loss of 9,100 jobs, bringing the total losses in the month 14,500. Factoring in the losses in July, the total apparel and textile employment stood at 745, 900.
Industry experts have long theorized that a critical mass of jobs would be reached and the job-loss rate would be halted. But economic conditions and trade policy are threatening to wipe out domestic employment in the sector altogether.
Apparel employment plunged by 9,300 seasonally adjusted jobs to 297,500 workers in July. Compared with July 2002, apparel employers slashed 60,400 workers from payrolls on a seasonally adjusted basis.
The textile mill category lost 6,900 jobs in July against June to employ 262,800 people, while textile mill products lost 2,000 jobs to employ 185,600 workers. The two combined now employ 448,400. Compared with July 2002, textile mills lost 31,400 jobs and textile mill products lost 10,500 jobs.
Such dramatic losses over time have mobilized domestic textile groups, which blame the losses primarily on imports from China. A group of 14 textile and fiber associations filed four petitions last month seeking to stem apparel and textile imports from China by instituting quotas under a special contingency deal allowing the world’s most-populated nation to join the World Trade Organization.
The U.S. government has 15 business days to make sure the petitions are valid and has not yet ruled. That will be followed by 30 days for public comment and another 60 days for a final determination.
“The time for action is long overdue — no more words, no more commitments,” said Augustine Tantillo, Washington coordinator for the American Manufacturing Trade Action Coalition. “[The administration] should approve the textile industry’s China safeguard petitions, exclude [trade preference levels] from all future trade agreements and back away from their proposal to eliminate all industrial tariffs. If these actions don’t happen, even more jobs will be lost.”
John Mothersole, chief economist with Global Insight, agreed with the industry’s contention that imports from China have led to massive job losses in the U.S.
“Ultimately, it’s the competitiveness of the U.S. cost structure versus low-cost producer overseas, which are generally in East Asia and almost always in China,” said Mothersole, noting that Mexican factory employment is also increasingly coming under pressure because of production relocation to China. “Even a country that has a much lower cost base than the U.S. is suffering.”
Charles McMillion, chief economist at MBG Information Services, said he expected this acceleration in job losses “because of a flood of imports [mainly from China], weakening demand and the low level of capacity utilization.”
McMillion said that’s why the textile industry has proposed the safeguard action against China.
“The textile industry is trying to keep sewing available in Mexico, so that U.S textile plants can supply Mexico or the Caribbean, and even Mexico is getting hammered,” he said.
Meanwhile, the sluggish economy also hit the retail sector, with apparel and accessories stores cutting 1,100 seasonally adjusted jobs from payrolls in the month to employ 1.274 million. Compared with July 2002, apparel and accessories store employment fell by 38,300.
Department stores shed 2,800 jobs in July to employ 1.683 million workers. Compared with July 2002, department stores cut 21,800 from payrolls.
General merchandise stores added 4,000 jobs in July to employ 2.83 million and added 3,400 against a year ago.
In the overall economy, employers slashed a total of 44,000 jobs, even as the U.S. unemployment rate fell in July from 6.4 percent in June to 6.2 percent.
“A declining unemployment rate is always better than a rising rate,” Mothersole said. “But the disturbing part is there was not an increase in jobs. Jobs were shed and the number of workers looking for employment dropped,” which is why the unemployment rate fell.