Performance and Perception: Results from a Survey of U'S' Textile Manufacturers

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Performance and Perception Results from a Survey
of U.S. Textile Manufacturers
Patrick Conway and Robert A. Connolly
UNC Department of Economics
UNC Kenan-Flagler Business School
We gratefully acknowledge the support of the
Alfred P. Sloan Foundation and the UNC-Chapel
Hill Center for International Business Education
and Research (CIBER). Lisa Jones, Xuanlie Xie,
and Jimmy Wilson assisted in the survey process.
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ATC Import Quota Expiration

• Ten-year long phase-out of import quotas under
  Agreement on Textiles and Clothing (ATC)
  concludes at end of 2004
• about half of quota reduction still to occur
• Typical industry response is to seek delay in
  implementing quota phase-out
• no direct evidence on views at individual
  textile firms heterogeneity may be hidden

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Major Purpose of Study
Between March and July 2004, we surveyed textile
executives across U.S. asking for information in
three areas (first two address consolidated
firm) 1. firm characteristics (10 questions) 2.
recent firm performance (12 questions) 3.
attitudes about international (trade-
based) competition (12 questions)
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Survey Administration/Response

• Firms were identified using Reference USA
  database initial mailing (March 2004) invited
  participation in online survey
• 130 firms responded (March May)
• Second mailing (June 2004) provided paper survey
  with prepaid envelope, access to online survey
  with new id/password
• 143 additional responses (July August)

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
5
Summary of Firm Characteristics

• The majority of firms in sample are
• relatively small (sales, employment)
• relatively old (same owner gt 10 years)
• located in NC
• have computer links with customers
• The minority of firm in sample have
• have relatively high RD
• have relatively high foreign sales, output
• have 10 or more product lines

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Summary of Firm Performance I

• Revenue, employment, price declines are common
  over 1997 2004 period
• declines greater than 30 per cent werent
  particularly rare
• Market share declines are less common
• Diversification of product lines is common
• Minority have added foreign production

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Summary of Firm Performance II
Old, new firm outcomes differ (?2 5.84)
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Manager Views about ATC Effects
95 firms No response
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Survey Evidence on ATC Effects I
65
24
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Survey Evidence on ATC Effects II
No
Yes
93
Executives report overwhelming evidence that
foreign goods undercut domestic product prices.

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Sources of Foreign Competition
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Views about Exchange Rates
Agree 74 Disagree 8
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Strategic Response to Competition
1. New products 2. New
input, output markets
Most common
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Investment Response to Competition I
3
55
33
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Investment Response to Competition II
28
55
17
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Competing Against Imports I
Most common 1. Speed to customer (geography)
2. Long-term
relationship 3. Quality
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Competing Against Imports II
Most common 1. No Change
2. Cost Control 3. New Products
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Competing Against Imports III
72 firms None of the above
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Summary and Further Work

• Substantial variety of manager opinions about
• 1. Effects of ATC, its expiration
• 2. Strategies for competing
• Next Steps
• Multivariate analysis
• Attitudes vs. firm characteristics, performance,
  competition strategies

Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)
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Additional Research
Completed research on impact of import
competition on U.S. textile industry available
at http//www.unc.edu/home/pconway/textileresearch
.html Community adjustment conference
homepage http//www.unc.edu/depts/econ/PlantClosu
re/
Conway Connolly Presentation at UNC-Chapel Hill
Apparel Conference (October 15, 2004)