Recovering from what has been a rapid and largely unexpected decline will not be easy, says Vern Tyson, vice president, cotton operations, National Textiles in Winston Salem, N.C.
Tyson told participants in the Texas Gulf Coast Cotton Conference in Corpus Christi that the textile industry “is in crisis. We’re at a crossroads with domestic manufacturing and we have to do something to keep the industry vital.”
Tyson said the future of the industry depends on the following factors:
The global economy has to strengthen.
We must balance the playing field for international trade.
Labor-intensive operations must leave the United States. “That’s already happening.”
The industry must consolidate even more. “The core industry is okay under the current trading rules, but small companies may not make it, especially if we reduce tariffs on textile imports.”
U.S. cotton consumption will need to hold at 7 million to 7.5 million bales.
Domestic consumption could drop to 4 million to 4.5 million bales if tariffs are reduced.
“The world has changed,” Tyson said. “These are scary times and we don’t know what the future holds. But I believe at least part of the textile industry will be here to stay.
Tyson said the deterioration was rapid. “In 1998, we believed domestic cotton consumption would drop to 9 million bales. From 1992 through 1997, the textile industry was prospering with profits around $2.1 billion. Raw material consumption was up by 30 percent.”
He said production had increased by 40 percent over the past decade. “The average price of cotton was 74 cents a pound. We see no correlation of price to the industry hardships.”
The erosion began in 1997 and 1998, Tyson said, with the collapse of the Asian economy. A strong dollar also contributed to reduced sales.
At the same time, Asian imports increased by 80 percent. “U.S. prices plummeted to maintain market share, but the strategy was largely unsuccessful. We could buy yarn cheaper than we could make it,” he said.
Since the decline began, Tyson says more than 100 textile plants have closed and more than 60,000 employees have lost jobs.
“It’s the worst business downturn in the industry in 50 years. In June of 2000, we had 953 claims for unemployment compensation in the textile industry. In June of 2001, we had 11,104.”
The long-term health of the U.S. textile industry depends on the entire industry, grower, buyer and manufacturer, working together to develop solutions to production, quality and trade problems, Tyson said.
“It’s always good to get producers and mill representatives in the same room to share ideas,” he said.