Economic Impacts of September 11th on the International Textile Industry

1
Economic Impacts of September 11th on the
International Textile Industry

• Lance Roy
• Derik Andreoli
• Ichiro Ehara
• Andrew Reichman
• University of Washington GTTL502/OPMGT536

2
Scope of the study

• Effects of Cumulative changes within Textiles
  Clothing Industry
• Segments of Focus
• US Retailers
• US Manufacturers
• World Producers

3
Scope of the study

• Controlling Factors
• Shift From Managed Trade to Global Trade
  Liberalization
• Multi Fiber Agreement (MFA)
• Eddie Bauer 1200 Suppliers in 55 Countries
• MFA- completely phased out by 2005
• New Security Measures
• C-TPAT
• 24 Hour Rule
• CSI

4
Timeline

• Pre 9/11
• Companies optimize efficiency
• Post 9/11
• Security elevated
• Efficiency subordinated
• Post MFA
• Global Trade Liberalization
• Security measures fully enacted

5
US Retail Perspective

• Security Effects
• Greater Predictability
• Longer Lead Times/Higher Inventory Costs
• Consolidation within Supply Chain
• Fewer Qualified Suppliers
• Preference for Sourcing within NAFTA
• Increased Infrastructure/Tech Investment
• Trade Liberalization Effects
• Consolidation of Supply Chain
• Reduced Cost Structure
• Reduced Diversification of Risk

6
US Manufacturer Perspective

• Security Effects
• Reduced Intl Competition ? Price Increases,
  Higher Capacities
• No Infrastructure Investment Required
• Domestic Supply not Subject to Regulations
• Trade Liberalization Effects
• Increased Intl competition ? Loss of Low Skill
  Jobs, Price Decreases
• Increased Infrastructure Investment
• Competition on Quality
• Competition on Efficiency

7
World Perspective

• Security Effects
• Shift in Production to More Developed Countries
• LDCs Increase Investment to Remain Competitive
• Trade Liberalization Effects
• Shift in Production to More Developed Countries
• LDCs Increase Investment to Remain Competitive
• Increased Price Competition
• Lower Prices, Lower Margins

8
Conclusion Net Effects

• US Retailers Net Positive
• Cost / Time Security - Liberalization Net
• Predictability Security Liberalization Net
• US Manufacturers Net Negative
• Security Liberalization -
• World Manufacturing
• More Developed Countries Net Positive
• Less Developed Countries Net Negative