WASHINGTON — The U.S. textile industry is on the rebound and going on the offensive.
Textile executives attending the National Council of Textile Organizations’ annual meeting here last week said as the strong resurgence in the U.S. textile industry continues to build, they plan to carry that message to Congress and the White House in anticipation of action on several pending trade deals and measures this spring that will have a significant impact on their businesses.
“There is a natural gravitational pull for some business and programs to come back to the Western Hemisphere based on macroeconomic conditions, transportation costs, energy costs, [rising] labor costs in Asia,” said Auggie Tantillo, president and chief executive officer of NCTO. “The real driver is it is becoming a little more cost effective to produce in this hemisphere. That’s why the policy decisions that are made over the next couple of years are hyper critical to us. Conditions have turned and there is a resurgence. All the trend lines in our industry are up.…We want to keep the policy from interrupting what appears to be a set of positive trends for our industry.”
Executives pointed to a range of positive economic indicators that show the industry, which had been on the decline for two decades, is not only stabilizing but also growing. More than 13 foreign and domestic companies have revealed plans to invest a combined $2 billion in new U.S. textile facilities and create about 3,000 jobs in North Carolina, South Carolina, Georgia and Louisiana, said Jay Self, outgoing NCTO chairman, who is also chairman and chief executive officer of Greenwood Mills Inc.
He said the textile industry is adding jobs for the first time in two decades. Employment at U.S. textile mills increased to 233,900 in February from 230,700 a year earlier, according to the U.S. Department of Labor.
Textile shipments within the U.S. and abroad totaled $56.7 billion in 2014 and the U.S. industry has become the third largest textile exporter in the world. Exports hit $18.3 billion in 2014, a 45 percent increase since 2009.
“These impressive economic indicators allow us to deliver a powerful message to policy-makers, namely that the U.S. textile industry is not just surviving,” Self said. “We are, in fact, thriving.”
Several textile executives said during the conference that they are investing more to upgrade equipment to increase production and productivity this year. But some are also cautious about headwinds, including the stronger dollar versus a weak euro.
“We are adding machines,” said Bill Jasper, president and ceo of Unifi Inc. “We’ve probably added 8 to 10 percent to our capacity in the past year in the textured [category] and we plan to invest $100 million over three years in capital expenditures.”
Jasper said most of the new investment at Unifi will be dedicated to capacity increases in recycling plastic bottles and textile waste for its Repreve recycled fibers line. He also noted there has been a slight uptick in apparel sold in the U.S. that is made in America.
“We are seeing programs come back from Asia for several reasons,” Jasper said. “One is that costs are going up in China and Asia, and the Central American supply chain is becoming more cost competitive.”
Robert Chapman, chairman and ceo of Inman Mills, said the 114-year-old company had record profits and sales in 1998, but in 2001, the company shut two facilities and laid off 800 employees, cutting employment down to about 500 people.
“It was devastating,” Chapman said.
Since then, Inman has been experiencing a rebound and now employs 700 people. The company is also replacing and modernizing some of its older machinery.
“We have spinning machines that have been in our facilities for 10, 15, 25 years, and we are replacing some of those,” he said.
Jeff Price, incoming NCTO chairman who is also president of the specialty fabrics division of Milliken & Co., said Milliken is “actively expanding in several of our plants in the U.S.
“There is no doubt that the industry is growing,” Price said. “That is exactly what we are seeing right now — very positive trends.”
He said there has been a modest increase in Western Hemisphere business, but noted he is not sure whether to attribute it to a stronger U.S. economy, improved competitiveness of the Western Hemisphere or Made in USA initiatives like the one Wal-Mart has been leading.
“We’re going to put in quite a few new investments, upgrading our technology,” said Anderson D. Warlick, vice chairman and ceo of Parkdale Inc. “We’re going to spend close to $200 million this year.”
Warlick noted much of the investment will be directed toward new automation in ring spinning and nonwoven equipment in its U.S. cotton business.
He said the Western Hemisphere accounts for about 77 percent of the company’s overall exports.
Parkdale had been exporting more to China in the past few years, but the market has slowed down, Warlick said.
“That market is more of an arbitrage on cotton prices than anything else,” he said. “Our yarns get hit with some pretty high VAT taxes and duties going into that market. We anticipated that business slowing down. What we really have to watch now is the currency.”
A stronger dollar will affect Parkdale’s capital expenditures and Warlick expects it to affect exports and product that may be replaced by cheaper foreign supply chains.
“I think we probably have a six-month lag where it makes these imports a lot cheaper so some of the growth that perhaps many of us have experienced could be muted a little bit by the stronger dollar,” Warlick said. “I would certainly expect that. I would expect a strong dollar to affect overall volume in the second half of this year.”
NCTO plans to step up its engagement and lobbying in Washington this year to ensure that a major trade agreement such as the Trans-Pacific Partnership deal between the U.S. and 11 countries has a strong rule of origin and acceptable tariff phaseout period.
Executives were pleased to hear from U.S. Trade Representative Michael Froman that there would be “no surprises” in a final TPP. The U.S. has proposed a strict yarn-forward rule of origin that requires apparel be made of fabrics and yarns supplied by the U.S. or other TPP partner countries to qualify for duty-free benefits when shipped back to the U.S.
The administration’s recent announcement of a competition for a Revolutionary Fibers and Textiles Institute for Manufacturing Innovation that will backed by $75 million in public investment and requires a matching $75 million from private investment was also highlighted at the NCTO meeting.
The group’s board voted to approve a new rebranding campaign centered around the vitality and modernization of the textile industry. Self said NCTO needs to expand its voice and presence in Washington. He said companies and other trade associations spent $6.2 million last year on lobbying Congress and the administration. By contrast, NCTO’s operating budget in the past year was only $1.9 million.
“We face an extremely well-funded opposition in Washington,” Self said. “For too long we have allowed our opponents in Washington to define us as outdated and uncompetitive. This is simply not the case.…It’s time we take the offense and act like the important and vibrant industry that we are.”