The U.S. textile industry, reeling from a decade-long explosion of imports, must undergo a massive restructuring to continue as a viable competitor in global markets, according to economists and researchers who have studied the industry at length.
But there is little consensus in the industry on what the nature of this transformation should be, or whether it is even possible.
For the time being, the industry is counting heavily on the passage of a bill in Congress that ostensibly would create a more favorable competitive environment by limiting imports and halting unfair trade practices.
Trade and manufacturing experts admit that reducing the levels of fabric and apparel imports is only a partial solution to a much broader problem. But it would buy the textile industry some breathing room at least, its advocates say. They contend that, without the respite, within five years there won't be an industry to restructure.
These experts say that textile and apparel producers must begin planning now to:
Diversify their companies to achieve growth in areas where foreign competitors aren't strong.
Develop more specialized product lines and market segments.
Make greater use of advanced technology.
Consolidate through mergers.
Develop stronger markets for exports.
Textile and apparel manufacturers must "assess where their combination of management talent and relatively high productivity can be the differential between foreign labor costs," said Walter A. Lenahan, deputy assistant secretary of Commerce for textile trade.
Intensive lobbying by the industry for a special textile trade bill notwithstanding, few among even the staunchest advocates of government intervention really believe that a new trade policy or new trade legislation will lessen competition among the world's fabric and apparel producers.
A special trade bill "doesn't guarantee that we will prosper and survive, only that we have a fair chance," said Ellison S. McKissick Jr., president of the American Textile Manufacturers Institute.
At the moment, the U.S. textile and apparel industries obviously are losing ground fast. They have lost more than 300,000 jobs and have closed more than 200 plants in the past decade. At the same time, the imports surge has increased at an average annual rate of 18 percent since 1980. Last year, in fact, textile imports were up 32 percent, totaling $19 billion. Increases in imports have far outpaced the expansion in U.S. consumption of textiles, according to the Commerce Department. More than one-third of the U.S. market for clothes and fabric for clothes has been taken over by imports.
There are few indications, however, that the industry is ready to implement comprehensive long-range planning and marketing strategies that would make it more competitive. It is a very scattered industry, dominated by small, family-owned companies, making it difficult to amass the capital for major technology research or to obtain the clout to enlist the retail industry in its cause.
Technology is often cited as holding the most promise, but many in the industry say they feel that they have squeezed most of the juice from that apple. Indeed, new technology has made the industry far more efficient than other large manufacturing sectors of the American economy, the American Textile Manufacturers Institute (ATMI) maintains. Productivity and quality in manufacturing domestic textile fabrics is unsurpassed by foreign competitors, the group says.
Textile manufacturers have invested more than $1 billion annually in new plants and equipment over the past two decades. Virtually every major aspect of the manufacturing process that converts natural and man-made fibers to fabric is fully or semi-automated. Sophisticated machinery in most plants today weaves yarn into fabric twice as fast as the industry could 10 years ago. Extensive use of computers has speeded up the manufacturing process while increasing efficiency and quality.
"We run at about 95 percent efficiency, and I don't think you can do any better without using a computer," said Rudolph Owens, manager at an Alice Manufacturing Co. plant in Easley, S.C.
"Our company knows of no machine we can buy to improve quality and productivity," said Roger Milliken, chairman of Milliken & Co.
Even traditionally labor-intensive clothing makers are using computerized equipment to create designs, cut patterns and knit garments.
Further opportunities for apparel firms to take advantage of technological improvements are limited, according to a study by the Commerce Department. Fashion changes often require frequent adjustments of equipment and technique, giving an advantage to labor-intensive producers, the study continued. What's more, the smaller size of many firms and the scarcity of funds make development of new equipment difficult.
Still, there have been breakthroughs that could revolutionize key segments of the domestic apparel industry, enabling it to speed up production and assure retailers faster turnaround time between orders and shipments.
An example of this new technology is a machine that was developed in a cooperative program called (TC)2. The project, which was developed to produce flexible automated systems for apparel manufacturers, is funded and directed by a consortium of textile and apparel manufacturers, suppliers to the industries, organized labor and the Department of Commerce.
The joint venture, with Draper Laboratory of Cambridge, Mass., as developer, has produced a revolutionary machine capable of automatically assembling and stitching together pieces of a garment. The new machine is being tested in factories following successful laboratory tests last year.
Further technological breakthroughs are necessary, however, if the textile/apparel industry is to remain competitive, studies indicate. Indeed, the key to the future of the U.S. industry lies in its movement into a "new age of technology," according to North Carolina State University officials. Thus, the university last year proposed development of a National Center for Manufacturing Technology in Apparel, Textiles and Fibers. It envisions the center as a hub for development of new technologies that would enhance the competitive posture of the textile/apparel industry.
The apparel industry is so segmented that no single company can afford a major research effort "even approaching the level needed to solve the current and foreseeable problems," North Carolina State officials said in making the proposal last year. The textile industry is similar. Most of the 5,000 or so companies are small businesses.
Attempts to close the trade gap through the use of new technology face one other difficulty: No U.S. company builds textile machinery. American manufacturers relinquished the market to Europeans 20 years ago, thus forcing U.S. textile firms to import basic equipment or buy it from foreign-owned plants in this country.
Europeans improved on American machinery and became dominant in the market, according to Peter R. Philipp, a young German executive with PSP Marketing Inc., a textile machinery distributor in Charlotte, N.C. In fact, he said, foreign textile machinery builders played a key role in building up the textile production abroad that has caused the problem here. First Europeans, and then Japanese machine manufacturers, expanded their markets by subsidizing sales to developing countries, granting them low-interest, long-term credit terms.
The combination of advanced low-cost machinery and low labor costs has made developing countries formidable competitors.
To overcome that competitive edge, U.S. textile and apparel companies "must use the American genius for innovation, efficiency, reliable service, styling and promotion," according to the American Textile Manufacturers Institute.
While not advocating that U.S. manufacturers relinquish their remaining share of the clothing market, some analysts suggest that they seek a broader market for nonapparel products. At the same time, textile manufacturers are being urged to segment their markets, or specialize in the manufacture of products that are less import-sensitive.
With the apparel market shrunken by import saturation, most of the bigger textile companies with research capabilities have begun concentrating on new fibers and fabrics that foreign competitors find difficult to duplicate.
There is a large and growing market, for example, in several industrial areas, observed Jeffrey S. Arpan, professor of international business and director of the Center for Industry Policy and Strategy at the University of South Carolina. But there are market niches also in apparel and home furnishings, Arpan emphasized. What's more, he said, U.S. firms can capture a bigger market share in the manufacture of textile products that foreign competitors find too bulky and costly to ship.
Moreover, said Arpan, domestic manufacturers should put greater emphasis on apparel products tailored to U.S. fashion tastes. Palm Beach, for example, has developed a special market in men's wear, which "hasn't been duplicated" by foreign competitors, he pointed out.
Levi Strauss enjoys a similar position in the market. "Levi Strauss has had tremendous success" despite fierce competition from foreign manufacturers of jeans, Arpan pointed out. Foreign-made jeans enjoyed early success among U.S. consumers but lost considerable appeal eventually "because they didn't fit and didn't hold up." Thus, if U.S. manufacturers concentrate more on marketing, newer products and durability, they can remain competitive in the apparel area, Arpan said.
Even with improved technology and products, a major hurdle for the textile and apparel industries is persuading retailers to increase their purchases from domestic suppliers. Jospeh P. O'Neill, chief operating officer of the American Retail Federation, concedes there are built-in advantages to retailers who buy apparel from domestic sources and that long lead times and other factors involved in buying imports present some drawbacks. Nonetheless, import penetration is far less than textile and apparel manufacturers claim, according to O'Neill, who also is a spokesman for the Retail Industry Trade Action Coalition (RITAC).
RITAC opposes special textile trade legislation, contending that import restrictions would prove too costly for consumers and that thousands of retail jobs would be lost.
Textile industry officials charge, on the other hand, that U.S. retailers oppose limits on imports because sales of imported apparel products guarantee higher profit margins.
"As everyone knows, imports are marked up 300 to 400 percent and are sold at prices equal to or, in some cases, higher than, similar domestically produced goods," McKissick charged. "What we're talking about here is not higher costs to the consumer but reduced profits for importers."
But O'Neill said that to suggest retailers are guilty of price-gouging by selling imports at inflated prices is "ludicrous."
Such sharp differences between the retail sector and textile and apparel manufacturers appear to stand in the way of developing cooperative programs to improve their relative competitive positions.
"One of the industry's greatest challenges will be to gain consumer support for the domestic textile industry," said Jack Krol, vice president in charge of the textile fibers division at E. I. du Pont de Nemours & Co., a major producer of man-made fibers. "We need to help consumers understand the long-term implications of the import situation and its relevance to their own lives."
Beyond that, a key question is whether the U.S. textile industry will be in a position to compete in domestic and world markets in the coming decade and beyond.
A University of South Carolina study recommends, among other things, that textile manufacturers initiate joint technology and marketing research programs with suppliers and customers. "Closer cooperation among firms in the major segments of the U.S. textile complex would prove mutually beneficial, particularly in the research and and development and marketing research areas where the U.S. firms could reap the greatest returns in international competition," the study's authors conclude.
In the meantime, the industry "lacks a strong export orientation and has failed to develop needed skills in international management and international markets vital for the 1980s," they added.
On the other hand, there are indications that some major U.S. textile manufacturers may be prepared to shift their product emphasis for foreign as well as domestic markets. This is especially true in the case of apparel fabrics, where the influx of imports has had its most devastating impact.
J. P. Stevens & Co., for example, announced this past summer that it plans to divest its apparel fabrics divisions and devote more of its resources to the company's home furnishings and industrial segments, where new applications in the use of textiles are creating substantial growth opportunities.
Some industry studies suggest, however, that U.S. manufacturers should adopt a comprehensive marketing strategy aimed at deeper penetration of foreign markets. The key to establishing niches here and abroad, however, probably lies in stepped-up research to produce new products that surpass those of foreign producers in quality and appeal, industry sources acknowledge.
Yet another avenue for U.S. textile manufacturers appears to lie in diversification, which permits growth in areas where foreign producers are not strong. For example, American Enka Co., a subsidiary of a Netherlands company, has expanded its man-made-textile-fiber business in the United States by producing a nylon matting for reinforcement in construction projects.
Under any scenario, competition in the textile and apparel industries will increase and lead to further contraction, as smaller companies wilt under the pressure of competition, analysts predict.
"I don't think we will ever see an increase in employment and the number of textile plants in this country," Arpan said. "After decades of protectionism, the U.S. textile industry is reeling under the pressure of international competition."
If the industry is to survive as a viable competitor, "We've got to do a better job; manufacturers, cutters, sewers . . . " McKissick said. "It's a matter of the American people doing a better job."