TEXTILE INDUSTRY Quotas' end threatens jobs

Quotas protecting U.S. textile jobs will expire at the end of next year.
RALEIGH, N.C. (AP) -- If 2003 has seemed terrible for the U.S. textile industry, just wait -- next year could be far worse.
That's because quotas that suppress the number of low-cost imports are scheduled to expire at the end of 2004, meaning even tougher competition for American textile companies.
The American Textile Manufacturers Institute says some 8,900 U.S. textile jobs were lost in July. That doesn't include the effects of the July 30 bankruptcy declaration by Pillowtex Corp., the 106-year-old textile maker that could eliminate 7,600 jobs as it liquidates.
Jobs loss since April
Since April, the trade group said, the United States has lost 26,000 jobs in textiles and 21,000 jobs in apparel.
With China's textile makers anticipating the quotas' end, executives and union leaders say the United States could be left with little more than niche manufacturers if the Bush administration allows the barriers to expire as planned.
"It's a tsunami occurring the day after a hurricane. It's going to be a disaster to whatever is left of the textile and all other related industries," said Harris Raynor, vice president of the Union of Needletrades, Industrial and Textile Employees regional office in Atlanta. "The Pillowtex bankruptcy will be the tip of the iceberg."
Next year's deadline is the end of a decade-long phase-out for quotas used by the United States and other wealthy countries to limit imports from developing nations under the General Agreement on Tariffs and Trade, or GATT.
Predicts industry collapse
ATMI, the textile industry group, predicts the quotas' end will only accelerate China's growing market dominance. The group predicts that 630,000 jobs in textiles, apparel and related industries could be lost by 2006. About 745,000 Americans work in the textiles or apparel trades.
"The result will be the collapse of the U.S. textile and apparel industry," ATMI said in a report last month.
The effects could begin to be felt as early as next spring, as orders for U.S. fabric and yarn for clothing to be produced in 2005 drop.
"As orders are moved to China, a massive series of layoffs, mill closures and bankruptcies will ripple through the textile belt throughout the middle of 2004," the report predicted.
Charles Saunders owns Saunders Thread Co. in Gastonia, N.C., a niche company that spins thread from sophisticated materials like Kevlar, for use in safety clothing. Even though his company is profitable, Saunders believes the industry is headed for catastrophe.
"We may be here for four years, we may be here for four months," he said. "Who knows? It's a toss-up."
North Carolina would be the biggest loser, with about 85,000 more textile and apparel workers losing their jobs in the next three years -- or two out of every three now remaining.
Other textile states hit hard would be South Carolina with 42,000 layoffs, Alabama with 30,000 and Georgia with 25,000, the report said. Major apparel states California and New York would shed about 81,000 and 29,000 jobs, respectively.
The problem
The crux of the problem is the same as in every free-trade debate: Cheaper foreign imports benefit American consumers, but force domestic producers to cut prices or lose market share.
While U.S. textile workers are underpaid compared to most U.S. manufacturing workers -- earning an average of $13.60 an hour in 2001, compared to $20.32 an hour for all manufacturing jobs -- their counterparts in China average less than 69 cents an hour.
Textile executives say the quotas that have been in place for the last decade have helped slow the drain of U.S. textile jobs, serving as a life-support system for scores of communities.
But importers say the barriers come at a price, costing the typical American family of four an additional $300 to $750 a year for clothes.
Wachovia Corp. economist Mark Vitner notes that the benefits of free trade are often not obvious to consumers, who rarely ponder why they pay just $5 for a pack of 24 Pakistani-made kitchen towels at Wal-Mart or Costa Rican-made jeans for less than $10.
"People who benefit from free trade never realize it," Vitner said. "You really can't quantify whether the specific amount of purchasing power you enjoy is a result of free trade."
U.S. textile industry leaders have focused on the threat posed by China -- even though wages in India, Vietnam and Bangladesh are lower, while Haiti, El Salvador and Nicaragua have both rock-bottom wages and easy access to U.S. customers.