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Title: Industrial Adjustment in the North Carolina Textile and Clothing Industry


1
Industrial Adjustment in the North Carolina
Textile and Clothing Industry
  • Gary Gereffi, Duke University
  • Global Apparel/Clothing Europe
  • Conference at the University of North Carolina,
    Chapel Hill
  • October 15, 2004

2
4 Themes
  • Global Context Apparel Value Chains
  • The Impact of Quota Phase Out in 2005
  • North Carolinas Textile Apparel Industry
    Whats Happening to Jobs?
  • Industrial Adjustment in North Carolina Top 10
    Trends

3
  • Apparel Value Chains
  • Dispersion and Consolidation

4
Apparel Value Chain Dispersion
  • 1970s - Global buyers source from East Asia
  • Retailers JC Penney, Kmart, The Limited, Gap
  • Brands Liz Claiborne, Nike, Polo, Calvin Klein
  • 1980s U.S. buyers use East Asian firms to
    source from new locations under quota system
  • 1990s Central and Eastern Europe expand OPT
    with EU
  • Mid-1990s Post-NAFTA Mexico shifts from
    assembly (maquilas) to full-package production
    for USA
  • 2000 AGOA grants tariff preferences to
    sub-Saharan Africa
  • 2005 Quota phase out and global consolidation!

5
Apparel Value Chain Consolidation
  • Buyers
  • -Wal-mart is largest U.S. apparel retailer and
    buys 14 of all Bangladesh garment exports
  • Suppliers
  • Li Fung (Hong Kong trading company) has
    offices in 56 countries and 400 factory
    relationships
  • Supply chain rationalization fewer, larger
    factories
  • Countries
  • Apparel exports from China account for 20 of
    world total (41.2 B in 2001)

6
Figure 1 Northeast Asia's Apparel Exports to
the World (SITC 84), 1985-2001
Source World Trade Analyzer, based on United
Nations data for SITC 84 (Articles of apparel
and clothing accessories).
7
  • The Impact of Quota
  • Phase Out in 2005

8
In 2005, Multi-Fiber Agreement Ends
Quota Abolition from 2005
MFA (1974 1994)
ATC (1995 2004)
Jan. 1, 1998 Another 17 Integration
Jan. 1, 1995 16 Integration
Jan. 1, 2002 Another 18 Integration
Jan. 1, 2005 100 Integration
Source World Trade Organization.
9
U.S. Integration Schedule Established by CITA 
(Committee for the Implementation of Textile
Agreements)
10
Table 1
Source Financial Times, July 19, 2004, p. 11.
11
Table 2
Source Financial Times, July 19, 2004, p. 11.
12
North Carolinas Textile and Apparel
Industry Whats Happening to Jobs?
13
Table 3
14
Table 4
15
Table 5
16
Table 6
17
Table 7
Source Employment Security Commission of North
Carolina, Announced Business Closings. SIC
codes Apparel (23) and Textiles (22).
18
Apparel Employees in North Carolina
Note NAICS code 315 (Apparel Manufacturing) Sourc
e Employment Security Commission of North
Carolina, Employment and Wage Data by
Industryhttp//eslmi12.esc.state.nc.us/ew/EWYear.
asp?Report1
19
Jobs Lost in North Carolina, 1995-2003
Source Employment Security Commission of North
Carolina, Announced Business Closings and
Permanent Layoffs http//eslmi12.esc.state.nc.us
/mls/MLSFrame.asp?contentsFrame5
20
Table 8
21
Industrial Adjustment in North Carolina Textile
and Clothing Top 10 Trends
22
Top 10 Trends in North Carolina
  • Textiles are king
  • NC is largest textile producer in USA (gt25)
  • Textiles most impt mfg. industry in NC (14)
  • NC textile mills have diversified markets
  • Apparel declining domestically, but still strong
    in Mexico and Central America
  • Non-apparel textiles (home furnishings and
    industrial use) are up
  • Textile mills geographically concentrated
  • Three counties with gt50 plants each 67 of
    employment in 20 counties (out of 98 counties)

23
  • Job losses have been devastating
  • During the past decade (1993-2003)
  • Textile jobs cut in half 178,000 to 86,000
  • Apparel jobs drop by two-thirds 90,000 to
    30,000
  • 5. End of MFA quotas will hurt apparel jobs
  • Job losses are spread unevenly
  • Broadwoven fabric, knit fabric, curtain, and
    finishing mills lost nearly 60 of their jobs
    since 1993
  • Nonwoven and fabric coating mills, and carpet and
    rug mills employ more people than 10 years ago,
    and pay relatively good wages

24
  • Textile mills are consolidating
  • International Textile Group merger of two
    biggest firms Burlington Industries and Cone
    Mills
  • Apparel manufacturers are going offshore
  • VF Corp. Offshore production was 30 of U.S.
    sales in 1995 and 80 today
  • Sara Lee NCs 2nd largest employer and the
    largest U.S. underwear maker outsourced 42 of
    apparel production in 1997 and cut 4,175 jobs
    (350 in NC) in 2004 to compete with China and
    other low-wage countries

25
  • High-tech textiles are most promising
  • NC firm Nano-Tex is leader in nanotextiles
    (smart fabrics)
  • NC also strong in some traditional sectors, like
    the hosiery industry
  • Textile workers will need higher skills
  • The textile jobs that remain or are created will
    tend to be better paying and require higher level
    and different technical skills than current
    textile jobs
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