JOB LOSSES IN TEXTILES APPAREL HIGHLIGHTED IN CAMPAIGN DEBATE
Byline: Joyce Barrett and Joanna Ramey
WASHINGTON — The Presidential campaign — led by Patrick J. Buchanan’s rallying cry of protectionism — has already brought the apparel and textile industry front and center in the debate of free trade versus blue collar jobs.
While some could view Senate Majority Leader Bob Dole’s decisive win in the South Carolina primary — in the heart of textile country — as a victory for free traders, the protectionist rhetoric from Buchanan is not likely to be tempered, nor are the job woes of domestic apparel and textile workers.
Many argue that no industry has been harder hit by opening up foreign markets than apparel and textiles, and President Clinton’s stance on free trade has often been ambivalent, supporting organized labor on the one hand, and championing an open-door policy on the other.
Dole, who has argued for tougher enforcement of current trade laws, won the Palmetto state’s Saturday primary with about 45 percent of the vote. Buchanan, who has argued that the U.S. should withdraw from the North American Free Trade Agreement, came in second with an unofficial 29 percent.
Magazine publisher Steve Forbes came in third with 13 percent of the vote, and Lamar Alexander trailed at fourth with 10 percent.
Dole’s message has gained momentum from his South Carolina win as he carries it to eight state primaries on Tuesday. New York’s primary is Thursday.
The mix of free trade and politics has long been a volatile formula.
The reason Buchanan has struck such a raw nerve with voters is largely explained is rooted in uncertainty over the wholesale changes much of the economy is undergoing. According to the February Consumer Confidence index, the average consumer is “tentative” about economic conditions both now and in the future.
“I think free trade and its impact on the U.S. is certainly a legitimate thing to be debated,” said David Weil, a Boston University professor who is part of a team of economists studying trends in the domestic textile and apparel industry at the Harvard Center for Textile and Apparel Research.
“What Buchanan has picked up on is that a major part of the economy is hurting. He has put that fact on the table as a key public policy debate,” Weil said. “The problem is that he is using the demagogic approach of saying there are simple causes: free trade and immigration. The shifts that are going on in the economy are more complex than that. There is not one easy quick fix.”
This is the dilemma, according to Weil: economic growth remains moderate, inflation and unemployment are low and the stock market continues to boom, while key sectors of the economy, like textiles, apparel and retailing, are undergoing wholesale restructuring.
At the same time, real wages have stagnated. For 10 years, apparel wages have increased 34 percent, compared to the 39 percent hike in the cost of living as measured by the Consumer Price Index. Textile workers have fared a bit better, with their wages over the decade increasing 40.1 percent. The average hourly wage paid textile workers is now $9.56 and apparel workers are paid $7.87.
“Very few economists would argue free trade doesn’t improve the economy on an aggregate level,” Weil said. “But can you say that everyone’s lot is benefiting? The answer is unequivocally no. Free trade is devastating to certain groups.”
Among the chief Republican candidates, Dole, Forbes and Alexander have chosen to focus on the positive aspects of free trade, while Buchanan has zeroed in on the dark side.
Buchanan is using closed textile and apparel mills as proof that imports are decimating domestic manufacturing. Last week he campaigned in South Carolina outside a shuttered mill in Clearwater. Saturday, while campaigning in Maryland, he cited London Fog Corp., which closed five plants in Maryland and Virginia in 1994, eliminating more than 1,000 jobs.
Typical of his supporters is union electrician Dennis Thomas, 45. Thomas waited patiently for Buchanan outside the Clearwater Finishing Plant, holding a rain-streaked hand-painted sign that said, “They are calling him a protectionist seeking to protect American jobs. They should campaign in Japan or Mexico. Vote Pat Buchanan.”
It doesn’t matter to Thomas that while parading as the champion of the working stiff who has lost his jobs to imports, Buchanan is opposing organized labor’s mantra that includes a hike in the minimum wage and prohibitions on employers who want to hire replacements for striking workers.
Thomas said Buchanan is his man, because he likes what the candidate is saying about U.S. trade policies: in addition to withdrawing from NAFTA, Buchanan charges that the World Trade Organization is a threat to U.S. sovereignty; he wants to end China’s most-favored-nation trade benefits, and he wants to raise tariffs on Japanese imports to 40 percent until the Japanese market is open to U.S. exports.
While Buchanan is preaching theory, the Clinton administration is dealing with reality. For three years it has sought to balance the needs of industrial sectors seeking protection and others seeking more open markets.
U.S. Trade Representative Mickey Kantor is cast as the administration’s tough guy on trade. When labor unions protested NAFTA’s provision to allow Mexican trucks to enter the U.S. unimpeded late last year, Kantor suspended it unilaterally and basically told Mexico to live with it.
In January, Kantor announced the formation of a trade enforcement task force that will retaliate against countries like China that violate U.S. trade law by transshipping goods or illegally copying products. About the same time, Kantor’s office leveled textile transshipping charges against China, which his office has estimated funnels about $2 billion a year in illegal shipments to the U.S.
At the same time, the administration remains under extreme pressure from U.S. retailers and other free traders to maintain China’s MFN. China has become a key low-cost supplier of U.S. consumer goods. It already provides 9.3 percent of the apparel imports shipped to the U.S. each year. All apparel imports now account for 50 percent of retail apparel sales, up from 25 percent in 1983 and 12 percent in 1973.
The issue of expanding NAFTA benefits to the Caribbean Basin’s apparel makers is no less a mine field for the administration. Domestic textile and apparel firms are clamoring for parity, arguing their Caribbean assembly operations are fast losing out to Mexico’s.
Just last week, Secretary of State Warren Christopher promised Central American leaders the president will ask for CBI parity this year. He acknowledges that protectionist sentiments this election year will make it difficult to get parity through Congress.
This roadblock must be some comfort to the administration, since it doesn’t want to ruffle union backers. On March 25, Clinton is expected to pick up the crucial support of the AFL-CIO, of which textile union UNITE is a member, and which staunchly opposes parity as another assault on the dwindling apparel industry.
Roger Milliken, chairman of Milliken & Co., Spartanburg, is one of six national advisers to the Buchanan campaign. His name is on Buchanan’s stationary, and he has wrested $14,000 for Buchanan’s coffers from his colleagues in the state’s industry.
“I am thrilled that my country is debating the issue of whether free trade, the way the U.S. practices it, is good for the American people,” Milliken said.
He calculates that if the value of U.S. exports equaled that of imports, 3.5 million more jobs would be created in the U.S., and almost 50,000 of those would be in South Carolina alone.
“No country ever stayed an economic force and neglected its manufacturing,” Milliken said. “That’s what the U.S. has done; we’re losing manufacturing jobs.”
He dismisses the 111,000 new jobs created in South Carolina by U.S. subsidiaries of foreign firms. He points to the more than 16,000 textile and apparel workers who have lost their jobs in the past five years and estimates that only 35 percent of them find jobs; only 30 percent are reemployed at the same rate, and 30 percent find jobs at the minimum wage.
Like Buchanan, Milliken blames much of the industry’s job loss on NAFTA.
Of the 55,753 workers deemed by the Labor Department to be affected by NAFTA since its implementation Jan. 1, 1994, about 19 percent, or 10,500, are from the apparel industry.
The domestic textile and apparel industries have taken their share of battering by imports. The real impact came after the MultiFiber Arrangement was negotiated in 1974 as an exception to the GATT, clearing the way for the U.S. to enter into bilateral textile and apparel agreements and a shift away from traditional U.S. suppliers.
Since 1974, the apparel industry has lost 490,600 workers and now employs 872,000, as the textile industry has shed 329,000 workers to employ 636,000.
Although the price of textiles still helps drive demand, and sourcing abroad is still a large part of many apparel companies’ business plans, there are other dynamics now reshaping supply channels, Weil notes, rebuking Buchanan’s use of closed textile mills as backdrops to illustrate that trade is the sole cause for lost jobs.
“Companies are making location decisions based on a number of parameters, not just wage costs,” Weil said. “For example, proximity to market is now very important for apparel, and that’s why there is a shift in production from Asia to Latin America.”
Likewise, Quick Response demands by retailers have required apparel companies to keep some production in the U.S.
South Carolina Governor David Beasley, a strong Dole backer, is not writing off the domestic textile industry as a future economic force, but his answer to displaced textile workers is this: “We’ll help you find a first-class job that has staying power. That is the type of job we are bringing into South Carolina. Every economy goes through transition, whether it’s agrarian, industrial or depends on apparel and textiles. Apparel and textiles have been downsizing in South Carolina for 15 years, and we’ll do everything we can to protect those jobs while at the same time bringing in other top-quality jobs.”
Walter Elisha, chairman and ceo of Springs Industries in Fort Mill, S.C., has difficulty hiding his exasperation at Milliken and those like him who favor tougher access to the U.S. market and strong retaliatory measures.
A Dole supporter, Elisha says much of the downsizing in the textile industry is because of technological advances, not import pressure.
“The preservation of manufacturing jobs is not a noble goal,” Elisha said. “When we reduce employment, the remaining people have more secure jobs. We have to decide what is the better good.”
In 1974, Elisha said, textile looms produced 8.3 square yards per hour. In 1994, modernized looms were capable of producing 29.5 square yards per hour.
While employment has dropped 30 percent during that time, productivity is up, he said. Productivity of workers at his plants has increased 3.4 percent at an annualized compound rate in the past 20 years.
Export markets offer growth opportunities to the industry, he said. In 1974, the industry exported $1.8 billion in products. In 1994, it exported $6.4 billion. Its largest export market is Canada, followed by Mexico and the European Union.
“For a company like Springs to grow, it either has to take market share from other domestic firms or look abroad,” Elisha said.
Elisha also preaches the importance of diversification, and says that firms have to change their product mix to accommodate the changing market.
“If you have the wrong product mix for the wrong market, you can’t make it,” he said.
But Butch Harris, president of Jackson Mills, disputes Elisha’s message of diversification and modernization. Just last month Harris closed a plant in Iva, S.C., and put 395 people out of work. He blames his firm’s problems on increased fiber prices, oversupply in the industry, and soft retail demand, as well as imports.
“We’ve always been flexible,” Harris said. “We would change our whole plan every day when we came to work. We’ve been more adaptable than most, but last April our business went off a cliff.”
Harris doesn’t deny that Buchanan’s message is striking a chord among displaced workers.
“He’s saying not everything is roses. and he’s right,” Harris said. “Our industry is undergoing great changes, and I don’t see anyone else happy about what they see. The changes we are going through are devastating.”
As the campaign continues, the debate over U.S. trade policy is unlikely to ease off, although Art Gundersheim, UNITE’s director of trade, views candidates’ latching onto the broader issue of ensuring job security as a means to court voters.
“I certainly see people electing a candidate who will do whatever is necessary to provide job security,” Gundersheim said. “And if they can show they can do this in another way besides Buchanan’s solution, then voters will be interested. The problem is, no one else has provided any other ideas.” — Fairchild News Service
First in a series that will run periodically.