American textile companies bracing for import quotas to end

Paul Nowell

Monday, Dec. 27, 2004 | 11:13 a.m.

CHARLOTTE, N.C. -- To Carolina Mills Chief Executive Steve Dobbins, the elimination of import quotas on hundreds of textile products will only increase the pain his company has suffered for some time.

Until recently, Dobbins' firm operated 17 textile plants within a short drive of its Maiden, N.C., headquarters and employed 2,600 workers. But those plants have dwindled as customers went out of business, anticipating the expiration of the decades-old quotas on Jan. 1.

"Now, we have seven plants and 1,200 employees," Dobbins said. "Our annual sales were $200 million and now they are $100 million."

Most industry observers agree that companies like Carolina Mills will be among the losers and Chinese textile firms the big winners when the quotas are removed under a World Trade Organization agreement.

Dobbins' company, which has operated for 75 years in the foothills of the Blue Ridge Mountains, supplied polyester yarn to Charles Craft Inc., another textile maker that is closing two plants in February, putting more than 300 people out of work. At its peak, Charles Craft operated five textile plants and employed about 1,100 people; it now will operate a single plant in Harner, S.C.

Cass Johnson, president of the National Council of Textile Organizations, said the only thing that can save the industry is if President Bush grants safeguard petitions being sought by the textile lobby.

"If the government does approve the (safeguards), the industry can survive and we can keep some jobs. If not, there will be even more massive closings," Johnson said.

According to the industry group, about 350,000 or one-third of the nation's textile and apparel jobs have disappeared since 2001. Johnson predicts that as many as 650,000 jobs will be lost in the United States over the next two years if the quotas are completely eliminated.

Right now, most of the major U.S. players are located in the Southeast, including companies such as Milliken & Co., Springs Industries, International Textile Group and others like Avondale Mills, Mount Vernon, National Textiles and Carolina Mills.

Some of U.S. companies have already moved production offshore to countries like Mexico and China.

Just this month, Greensboro-based ITG announced a partnership with China Ting Group, a Hong Kong-based manufacturer and retailer of textile products.

The companies plan to build a plant in Hangzhou, China, to dye and finish interior fabrics. The plant, plus a warehouse and a distribution center, will be running by the end of 2005, ITG chief executive Wilbur Ross said.

In South Carolina, Springs Industries CEO Crandall Bowles recently blamed the impending end of the quotas for the company's decision to close two plants and eliminate 540 jobs. In a videotaped message to workers Dec. 1, Bowles offered a bleak picture for 2005 and beyond.

"You have all heard me talk for at least two years about the pricing pressures we face from imports -- products brought in by importers and increasingly by our own customers who travel all over the world, visit factories, and buy products themselves directly from manufacturers," she said. "This trend has accelerated this year due to the elimination of quotas at year-end."

Bowles concluded her message by assuring workers the company's "long-term outlook is positive."

"We will continue to manufacture in the U.S., though at a reduced size, based on flexible capacity, fast turnaround, short lead times, and lower required levels of inventory," she said.

U.S. textile companies are begging the government to grant at least a temporary reprieve. When Congress granted Most Favored Nation trade status to China, it created safeguards for the textile industry.

Manufacturers have filed a series of appeals with the Commerce Department's Committee for the Implementation of Textile Agreements. The committee is expected to rule in February on whether the growth of textile imports from China can, despite the Jan. 1 end to quotas, be limited to 7.5 percent a year.

Although the Chinese will benefit from the quotas' end, they're also concerned about the situation. Earlier this month, China said it will impose a new tax on textile exports, responding to U.S. and European pressure to limit them amid fears that its low-cost textiles will flood markets abroad.

Peter Kilduff, a textiles expert at the University of North Carolina at Greensboro, saw the announcement as significant.

"They (China) do not want to be seen as the villain of international trade," he said.

archive