WASHINGTON, D.C. — In a year-end textile trade and economic report, the National Council of Textile Organizations (NCTO) reported that while job losses and mill closings continued in 2004, the outcome was moderated because the U.S. government imposed the China textile safeguard just prior to the start of the year on certain products already removed from quota.
In 2004, U.S. textile and apparel employment fell to 676,500, which represents a loss of 32,100 industry jobs from year-end 2003. Domestic textile plant closings also continued during 2004, with at least 30 U.S. textile facilities shutting their doors.
In late December of 2003, the Committee for the Implementation of Textile Agreements (CITA) approved the textile industry coalition’s China safeguard petitions on knit fabric, dressing gowns and brassieres. As a result of these safeguard actions, growth in imports from China in these categories during 2004 was limited to 7.5 percent over the previous year’s level.
In contrast, in other apparel categories no longer under quota, China’s share of the U.S. market grew from nine percent in 2001 to more than 73 percent for November 2004.
Based on Department of Commerce figures, the U.S. textile and apparel industry is today facing price drops of 50 percent or more on imported textile and apparel products from China that are no longer under quota control.
China’s ability to quickly flood the U.S. and world markets with cheap textile and apparel products is the direct result of its unfair trading practices, including government subsidies to Chinese mills, currency manipulation and business loans to its largest textile and apparel producers that are rarely repaid, according to NCTO.
Without U.S. government approval of the threat-based safeguard petitions filed by members of the domestic textile coalition, and other actions to force China to halt its “blatantly unfair and illegal trade practices,” more than 650,000 U.S. textile, apparel and related jobs, and 30 million textile and apparel jobs worldwide, are in jeopardy of being lost, the NCTO said.
“The U.S. textile and apparel industry is one of the most innovative manufacturing sectors in our country,” said NCTO Chairman Allen Gant, CEO of Glen Raven, Inc., Glen Raven, NC. “The industry has invested billions of dollars in order to improve productivity, and as a result, it has become one of the most highly-automated and advanced manufacturing sectors in our economy.
“Nonetheless, our industry cannot be expected to compete against countries whose governments continue to ignore international rules and obligations by pouring billions of dollars into their domestic industries and using other unfair and illegal trading practices to gain market share.”
Gant added that, with the elimination of all textile and apparel quotas on January 1, it is critical that the U.S. government fulfill its commitment to this industry by working expeditiously to overturn the recent injunction by the Court of International Trade so that action can quickly be taken to approve threat-based safeguard petitions.
“If the government does not act promptly to resolve this matter, hundreds of thousands of U.S. workers will be at risk of losing their jobs, and this critical industry that contributes nearly $50 billion annually to the U.S. economy, and provides nearly 10,000 different products to the U.S. military, will be in jeopardy,” Gant said.
Imports from China rise
According to Commerce Department figures, during the last year, imports of textiles and apparel from China into the U.S. market rose to 11.5 billion square meter equivalents (SMEs) for the 12-month period ending November, 2004. This is a 43 percent increase over the comparable period for 2003.
As a result, China now has captured about 25 percent of the U.S. textile and apparel import market.
“Assuming China continues to behave in a predictable fashion based upon our experience in those categories removed from quota in 2002, China is expected to increase its total U.S. market share in textiles and apparel to about 70 percent if action is not taken on the industry’s safeguard petitions and if the U.S. does not force China to cease its unfair and predatory trade practices,” Gant said.
China’s ability to gain such market share so rapidly is in large part due to its ability to price these goods at as much as 76 percent below U.S. producer prices and 58 percent below the prices of other exporting countries, he added.
“Once again, China is only able to offer such prices because of the unfair trading practices it continues to employ,” he said.
Recognizing the impact that China and a few other textile-producing nations will have on world prices in the textile and apparel sector and their ability to quickly gain market share once quotas were removed, 96 trade associations from 54 countries formed the Global Alliance for Fair Textile Trade (GAFTT). In recent months, GAFTT has become active in supporting China textile safeguards throughout a number of countries, including the United States, Turkey and the European Union.
“Absent action from these and other governments, China is positioned to quickly gain a majority share of total worldwide textile and apparel trade, which includes more than $81 billion in exports to the United States,” Gant said.
With respect to industry performance in 2004, textile sales improved slightly, up 5.7 percent to $37 billion, but textile profitability remained marginal, at 1.8 percent of sales. This relatively flat growth, after several years of sharp layoffs and plant closings, is in part due to the government’s willingness to consider safeguard petitions based on both actual and threatened market disruption.
Report highlights
The annual business review also showed:
• U.S. textile employment contracted in 2004, although the pace of job losses was slower than previous years. NCTO attributed the moderation of job losses was in large part due to previously approved safeguard actions and a leveling off of the hemorrhaging that occurred after January 1, 2002, when the first wave of imports from China were removed from quota.
Total U.S. textile and apparel employment combined fell to 676,500 workers through year-end 2004, which represents a loss of 32,100 industry jobs from year-end 2003.
• Textile plant closings also continued during 2004, although at a slower pace than in 2003. In 2004, 30 textile plants were reported to have closed, compared with 50 plants in 2003. North Carolina and Georgia suffered the greatest number of plant closures in 2004, while North Carolina and South Carolina were the states that experienced the largest number of closures in 2003.
• Textile corporate sales improved 5.7 percent in 2004 after a 3 percent drop in 2003. Textile corporate sales are the sales of corporations whose largest percentage of revenue comes from textile operations as defined by NAICS categories 313 (Textile Mills) and 314 (Textile Product Mills) combined. In 2004, sales improved to $37.2 billion from $35.2 billion in 2003.
• Textile profitability remained marginal in 2004. After-tax corporate profits for Textile Mills and Textile Product Mills combined were $685 million through the end of 2004 (or 1.8 percent of sales). While profits decreased by $14 million from 2003, profitability as a percentage of sales actually increased from 1.5 percent to 1.9 percent.
• Textile mill shipments (Fabric, Yarn, Thread, and Finishing) declined 6 percent to $34.3 billion in 2004, after an 8 percent drop in 2003.
• The textile capacity utilization rate also saw a modest improvement in 2004. The utilization rate was 73.4 percent in 2003 compared with 74.2 percent in 2004.
The following information on import trends and safeguard actions paints a disturbing picture for the industry this year, according to NCTO:
• In 25 apparel categories removed from quota in 2002, China had taken a 73 percent share of the U.S. market as of November 2004. Prior to quota removal, China had only a 9 percent U.S. market share in these categories.
• In key categories removed from quota on January 1, average export prices for trousers, underwear, woven shirts and knit shirts from China are 76 percent below U.S. prices and 58 percent below the rest of the world.
• For the 12-month period ending October 2004, textile and apparel imports from China reached 11.5 billion square meter equivalents (SMEs), up 43 percent from the 8 billion SMEs recorded for the year ending November, 2003.
• On Dec. 30, the Court of International Trade enjoined CITA from further accepting, considering or otherwise proceeding on requests for safeguard actions based on threat of market disruption.
For more information, visit www.ncto.org.
