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MONTREAL — When Canadian Buttons Ltd. here recently announced it was ending production of polyester buttons after 121 years in business, it blamed the China syndrome of cheaper clothing flooding the domestic market.<BR><BR>Since most of the...

MONTREAL — When Canadian Buttons Ltd. here recently announced it was ending production of polyester buttons after 121 years in business, it blamed the China syndrome of cheaper clothing flooding the domestic market.

Since most of the apparel coming into Canada was being made in China, it made sense to outsource production to suppliers closer to where the apparel was being made, so the company opened an office in Hong Kong.

The great maul of China also claimed Tiger Brand Knitting Co. of Cambridge, Ontario, which recently closed its doors after 124 years, resulting in the loss of 300 workers. The maker of fleece garments was sold to a company controlled by New York investor Ken Lazar, who will source its branded apparel in China.

Last December, two textile companies in Huntingdon, Quebec, near the Vermont border, announced plans to close six plants, putting close to 800 people out of work. Both companies blamed increased competition from China and a strong Canadian dollar.

One of the companies, Cleyn & Tinker, the largest Canadian manufacturer of worsted wool fabric, began winding down operations in April and is consolidating its business in Burlington, N.C. The other, sportswear fabric maker Huntingdon Mills (Canada) Ltd., has already closed, putting 250 people out of work.

Last spring, Gayley & Lord Inc., of Greensboro, N.C., cut 600 jobs from its Swift denim plant in Drummondville, Quebec, due to competition from Asia, notably China.

In an ironic twist, Synatex, China World Best, one of the largest state-owned conglomerates in China, closed its cotton fabric plant last year, also located in Drummondville, after the 90 plant workers signed their first collective agreement that would have increased wages 15.7 percent over two years. At the time, the company said the plant was having difficulties because of poor market conditions.

China has replaced the U.S. as the major supplier of textiles and clothing to Canada. Between 1992 and 1999, the U.S. share of total textile imports into Canada rose from 53 to 62 percent, spurred by the North American Free Trade Agreement. But since 1999, the share has fallen back to 53 percent and continues to decline.

This story first appeared in the May 17, 2005 issue of WWD. Subscribe Today.

During the same period, the U.S. share of total Canadian clothing imports declined from 20 to 9 percent, while China’s market share went from 20 to 42 percent.

Employment in Canada’s apparel industry peaked at 100,000 in 2000 and is now hovering around 70,000, according to Bob Kirke, executive director of the Ottawa-based Canadian Apparel Federation, which represents manufacturers and suppliers. But he said the reality in Canada is different than it is in the U.S.

“We’ve kept more direct employment here because we never created an outward processing regime like CAFTA and provisions under 807,” said Kirke, referring to the pending Central American Free Trade Agreement and the Caribbean Basin preferential trade pact, respectively. “In terms of imports, Canada has been relatively more generous, with China accounting for 42 percent of our clothing imports compared to about 18 percent in the U.S.”

Kirke said the Canadian government announced plans in December to eliminate duties on all raw materials, namely textiles that are not available in Canada. A final decision and report is expected by the end of summer, with duties refunded retroactive to Jan. 1.

“Unfortunately, Canadian companies going to upcoming U.S. trade shows won’t know if the fabric used in their women’s wear will be duty free,” he added. “But it’s the best shot to maintain a viable domestic production base.”

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