Posted on 12/27/2004 7:38:09 PM PST by Coleus
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Sunday, November 14, 2004 |
After decades of decline, the once vibrant textile industry that transformed North Jersey into an industrial powerhouse is facing what leaders say could be its death knell.
On Jan. 1, the United States and many other countries will remove the last remaining import "quotas" protecting their textile and garment industries by limiting the flow of competing products across their borders.
That will allow an unlimited number of wool, yarn, clothing, sheets and other fabric items - most made by workers earning a fraction of American wages - into the United States, often to big retailers such as Wal-Mart and Home Depot.
Union and business leaders fear that what's left of the national textile and garment industry will be devastated.
"It will reduce [the industry] to a shell of its former self," said Robert Dupree, vice president of the American Textile Manufacturers Institute, a Washington-based trade group that estimates that the industries and support sectors employ about 1 million people.
"We could be looking at the loss of 600,000 or more textiles and apparel jobs," he said.
One of Paterson's last textile manufacturers said the quota removal will likely prompt even more customers to buy goods abroad.
The shift, said Victor Terraglia, owner of Lisa Industries, could spell the end for his company, a weaver and manufacturer of baby clothes, shawls, linens and other goods. He said foreign competition has cut company revenues by 60 percent in the last three years, forcing him to slash his workforce from 60 to 15.
"We have done everything that anybody could conceivably think of" to survive, Terraglia said. "The bottom line is, if the retailers choose not to buy domestic products, then there are no options but to stop manufacturing."
In North Jersey, the scenario is familiar. Since the heyday of the textile industry in the first part of the last century, manufacturers have struggled to survive in the state's relatively expensive, unionized business environment as competing manufacturers relentlessly searched for cheaper production locations.
The dynamic first shifted jobs from North Jersey to Southern states such as North Carolina, then to Mexico, Central America and the Caribbean.
In recent years, China and other Asian countries have emerged as boom areas for textile and garment manufacturing. And those industries are expected to grow dramatically after January.
The quota removal also will have a dramatic effect on industries affiliated with textile and garment manufacturing, such as embroiderers, say area businessmen.
Although embroidery products are not directly affected by the quotas, items that use embroidered trim are - such as bed linens, towels and clothing. And when those products are made abroad, few manufacturers want to buy the embroidered decoration in the United States, embroidery manufacturers said.
"This may be the finishing blow for some parts of our industry," said Steve Parseghian, 49, who owns Fairview-based Deerbrook Fabrics with his father, Ed.
Six years ago, trying to fight off foreign competitors, they spent nearly $750,000 on a 50-foot, Swiss-made computerized embroidery machine, the first of its kind in the United States. They hoped the machine's superior speed, flexibility and production volume would give them a market edge.
At first, it did. As many North Jersey embroidery factories closed, Deerbrook survived. But in recent years, company revenue has dropped 40 percent. Parseghian has laid off about one-third of his employees, who now number 32.
And in September, Deerbrook sold two of its seven machines.
"It's outsourcing - customers going to China and the Far East, having the product made there," Ed Parseghian, 75, said on a recent morning over the din of embroidery machines. "They don't need us anymore."Fifteen miles away, North Bergen-based United Embroidery has decided that the best way to beat the competition is to join it.
Just six years ago, United spent $5 million on four new embroidery machines and a new factory wing to house them. United's owners hoped they could fend off foreign competition by offering fast, high-quality design, embroidery, cutting and sewing services.
But now, the company is preparing to ship machines to new factories in Central America and China, and embroider there - in part because of the quota reductions, owner Larry Severini said recently.
"It's already affected us because of people gearing up for it," Severini said earlier this month, ,declining to elaborate on his company's plans. "We're not thriving. ... . With the competitive sprint for the lowest price on all consumer items, its just making it physically impossible to produce in this country."
The removal of quotas worldwide was part of a global agreement struck by numerous countries with the World Trade Organization in 1995 to reduce trade barriers. The deal phased out the quota reduction over 10 years to give countries time to prepare for the increased competition.
As the day nears, it has become an issue in the ongoing debate over the merits - and costs - of globalization.
Free-trade supporters say that global trade benefits everybody. They argue that when countries produce only goods that they can make efficiently, world production increases, consumers get lower prices and developing countries are helped by the commerce.
Free-trade critics argue that foreign manufacturers cut costs by exploiting workers in low-wage sweatshops and by skipping environmental protection measures. They say free trade costs jobs in the United States.
This time around, union and business leaders have vigorously pressured the White House and Congress to keep trade barriers on textiles.
Such pressure two weeks ago prompted President Bush to consider an industry request to limit imports from the biggest threat to the U.S. industry: China. Four days later, the federal International Trade Administration agreed to study the issue.
But some observers say there is little chance the effort will succeed.
"It's too little, too late," said Steven Frumkin, a business professor at Philadelphia University, who specializes in the textile industry. "Whatever he is going to do, there is going to be retaliation from the other side. ... All you wind up doing is creating a lot of battles that should have been fought a long time ago."
A report by the federal International Trade Commission concluded that China - with wages as low as 41 cents an hour - would become the "supplier of choice" for U.S. apparel companies and retailers. That wage rate compares, for instance, with $8.50 an hour paid by Deerbrook, the Fairview embroidery manufacturer.
India, Pakistan and Bangladesh also would become key suppliers, the report said. And formerly low-cost countries such as Mexico and parts of Central America - which have long taken work from U.S. manufacturers - will lose business as they find their wage rates of $1 to $2.50 an hour aren't competitive with Asia, the report concluded.
Indeed, Asian manufacturers are gearing up to meet the needs of the United States, which in 2002 imported textile and apparel goods worth about $72 billion.
"Everybody expects huge quantities to come from India," said Mohan Nawani, one of the two managing directors at Theme Apparels India, a clothing manufacturer and embroider in Bangalore, India.
In the past, Nawani said, his company has turned down U.S. business because it couldn't get permission to import the goods as a result of the quota limits. But with that obstacle soon to disappear, Theme Apparels is preparing to build a new 60,000-square-foot factory for its 500 sewing machines and 1,000 employees, Nawani said.
The company - which has made clothes for Wal-Mart, Target and JC Penney - hopes to double its revenue from U.S. customers to about $7 million in the quota-free era, he said.
Some New Jersey manufacturers wonder how much more damage their industry can sustain.
Just six years ago, the Ridgefield lace company Carolace Industries Inc. merged with two New York companies to form what the owners called the nation's largest lace and embroidery manufacturer.
But since the merger, Carolace has cut its workforce from about 700 to 200. And the company now imports nearly half its products, mostly from China, Taiwan and India, said the company's president, Howie Mann.
"Eventually we will import over 90 percent of our products, and that will probably happen over the next two years," he said. "The industry here is basically destroyed. I don't know how much damage can be done that hasn't already been done."
What does it mean?
Trade quotas are limits on the number of products that can be imported into a country. The United States has for decades used quotas to protect its textile and garment industries from cheap foreign goods. In 2002, for example, U.S. quota limits restricted textile and garment imports from 46 countries.
The United States and other members of the World Trade Organization (WTO) agreed in 1994 to eliminate quotas as part of talks that also focused on creating global rules for patents, agricultural subsidies, and food and health safety regulations.
Under the deal, WTO members agreed to increase steadily the amount of imports allowed into their countries until there were no limits. The first step reduced quotas by 16 percent on Jan. 1, 1995. Each country could decide for itself on which products it would increase imports first. The agreement stated that the final 51 percent should be removed on Jan. 1, 2005, leaving no quotas.
The United States limits the types of imports it will accept from different countries. Here are some of the annual import limits, which will be removed on Jan. 1:
Number of items Country Item that can be imported China Sweaters, silk blends 2.3 million India Cotton skirts 26.7 million Pakistan Cotton pillowcases 9.8 million South Korea Wool dresses 200,000 Indonesia Blue denim fabric 11.5 million square feet Brazil Terry and other pile towels 47.4 million
Source: World Trade Organization; U.S. International Trade Commission; U.S. Department of Commerce's Office of Textile and Apparel.
Read later.
I don't like Unions anymore than the next conservative, but allowing all our manufacturing centers to be eatin and digested is stupid.
I agree with you. NAFTA and the FTAA will ruin our manufacturing base in America IMHO.
They call NAFTA "free trade" I call it managed trade, it's over 900 pages!! What's so free about it? They have sections for mandatory health care, a court system, all it's doing is eating away at our US Constitution.
http://www.stoptheftaa.org/
Not to mention WorldNetDailey.Com
There are still textile mills left in Paterson? I thought the last one closed back in 1947.
And to add insult to injury on 1 Jan 2005, we get to start paying Chinese taxes on their textiles .....
its not just manufacturing, its technology jobs too. our private sector will only consist of service jobs if current trends continue unabated. even agriculture is being offshored.
Bump for later
As it was meant to do. I knew that NAFTA would export millions of jobs outside the U.S. and it has.
What they should do is open up the mills to the public and run tours. It will help their bottom line and students and the public will get to see something that we may never see again in the USA.
Put on your asbestos drawers, your going to need them. No matter how right you are. We do not even produce a single modern weapons system in house.
Everyone is afraid of China, but they bend over backward to accomodate China and the WTO. Why? Why should countries collectively allow their industries to be destroyed? What kool-aid has been served to the leaders of these nations?
***
1."We're not anti-international trade," Steve Dobbins, president of Carolina Millssaid. "We just don't want to get killed."
2.A flood of cheap Chinese clothing into world markets expected next year could wreak havoc with thriving Latin America textile producers like Peru by cutting off access to the lucrative U.S. Market.
3.Pakistan's vital textile industry could suffer from the imminent end of import quotas as international rivals seek to exploit the country's widespread disregard for labour and environment laws.
4.Smaller capacity textiles and clothing producers like Bangladesh, Mauritius or Tunisia fear their exports will be bulldozed aside by China once quotas that have so far capped its trade with major consumer markets are removed.
5.THE world is just five days away from the end of the textiles and garments quota system and the fear is almost universal that China, which still calls itself communist, will grab the major share of garment exports.
Also, your wranglers are probably cheaper because of some tariffs. Tariffs are a nice tax, in my opinion.
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