On Pins And Needles

As Quotas Expire, U.S. Textile Industry Braces for Change

Catrina Mickens inspects fabric for automobile interiors at the at a Guilford Mills plant in Greensboro, N.C. (Nell Redmond -- Bloomberg News)

JAMESTOWN, N.C. -- For Jeff Johnson and the 686,800 other workers in the U.S. textile and apparel industry, cries of "Happy New Year" tonight may well ring hollow: As of midnight, rules that have protected U.S. mills from foreign competition will expire, exposing an already troubled industry to the full force of globalization.

Wherever it leads -- whether to retooling plants to churn out high-tech fabrics or to widespread layoffs after surging imports -- Johnson and others at the Oakdale Cotton Mills think their world is about to change.

"We're apprehensive," said Johnson, 44, who has spent 28 years at the same yarn and twine-making firm where his father and grandfather worked, in a town where workers still inhabit the homes built by the company decades ago. "Not knowing is the big thing."

North Carolina's Piedmont Triad, an area in the central part of the state that encompasses Greensboro, High Point and Winston-Salem, is no stranger to the dynamics of world trade. The area has been hurt by a 10-year slide that has cut the number of U.S. textile jobs by more than half as production shifted overseas. In the process, such local anchors Cone Mills Corp. and Burlington Industries Inc. filed for bankruptcy protection.

Those still in business know the new year will catapult them into an even more integrated world, and they are girding for battle in a variety of ways -- pouring money into new technologies and products, slashing costs, casting off unprofitable lines, and lobbying Washington for temporary protections.

Allen Gant Jr., president and chief executive of Glen Raven Inc., predicted "tremendous change" with "a lot of displaced jobs," and he is repositioning his North Carolina company to concentrate on high-value textiles, such as the nylon used in bulletproof vests. Meanwhile, he is shedding businesses he thinks are most vulnerable to foreign competition.

"We don't do T-shirts. We don't do 'commodity apparel,' " Gant said. "We've tried very hard to exit those areas where we think [severe competition from China] will take place, and I feel very sorry for anyone who's in the way of that juggernaut."

The expiring quotas are causing concern around the globe. For the past three decades, the United States, Europe and Canada have maintained quotas limiting the amount of textiles and clothing that individual countries can export to them. Established to shelter the domestic textile industry in developed countries, the quotas were doled out in a way that let textile and garment plants in smaller countries such as Sri Lanka and Honduras prosper through guaranteed sales to the world's richest markets. Scrapping those quotas means that retailers and brand-name purveyors such as Wal-Mart, the Gap and Liz Claiborne can buy as many pants, tops, sheets, towels and other such products as they like from whatever country they like.

Although free trade won't prevail entirely -- the United States continues to impose tariffs averaging about 16 percent on imported clothing from most countries -- relaxing the rules is expected to benefit consumers by lowering prices. Another big winner will likely be China, whose low-cost, super-efficient manufacturers are widely predicted to grab a huge portion of the worldwide textile and apparel trade, more than half by some estimates.

Much debate surrounds forecasts about how the U.S. industry will fare under the new rules. Importers of apparel and some academic researchers argue that the U.S. industry's fears about a quota-free world are exaggerated, because China's gains will come at the expense of other developing countries rather than U.S. producers. Moreover, it is far from clear how extensively and how rapidly orders will switch to China, because importers prefer to rely on a mix of suppliers and new trade barriers may still disrupt the flow of goods.