The AMERICAN TEXTILE INDUSTRY

The AMERICAN TEXTILE INDUSTRY

• COMPETITION • STRUCTURE • FACILITIES • COSTS

By L.D. Howell

Agricultural Economist

Economic Research Service

Marketing Economics Division

Issued November 1964

UNITED STATES DEPARTMENT OF AGRICULTURE »WASHINGTON, D.C.

For sale by the Superintendent of Documents, U.S. (Jovernment Printing Office Washington, D.C, 20402 - Price 75 cents

PREFACE

This report, prepared by the Economic Research Service of U.S. Depart- ment of Agriculture, extends and brings up to date the information in Technical Bulletin 891, "Marketing and Manufacturing Margins for Textiles," published in 1945 and now out of print; Teclinical Bulletin 1062, "Marketing and Manu- facturing Service and Margins," published in 1952 and now out of print ; and Technical Bulletin 1210, "Changes in American Textile Industry—Competi- tion, Structure, Facilities, Costs," published in 1959 and now out of print. The information presented was brought up to date through 1962, or as near that date as data available in 1963 would permit.

The data were compiled mainly from secondary sources, including government and private agencies. Data made available by the Bureau of the Census, the Bureau of Labor Statistics, Federal Trade Commission, International Cotton Advisory Committee, U.S. Tariff Commission, National Association of Textile and Apparel Wholesalers, National Retail Merchants Association, Dun and Bradstreet, Inc., and National Cotton Council of America were especially useful in the preparation of this report.

Inadequate funds for publication necessitated the deletion of many tables prepared for this report. Other tables were reduced and combined. But the text is based on the tabulations before the deletions and reductions.

Credit is due Amos D. Jones for contributions to the section on marketing wool, Joseph L. Ghetti for contributions to the section on ginning cotton, and Evelina K. Southworth of the U.S. Tariff Commission for contributions to the section on manufacturing knit goods.

Contents

Pase Summary and conclusions v Competition and market outlets 1

American and foreign-grown cottons 1 American cotton and manmade fibers 2 American and foreign wool 4 American wool and manmade fibers 6 Prospects and related problems 6

Marketing channels and division of consumer's dollar 7

Cotton and cotton products 7 Marketing channels 8 Division of consumer's dollar 9

Wool and wool products 10 Marketing channels 10 Division of consumer's dollar 12

Marketing raw cotton 14 Margins in eluded in farm prices 14

Hauling from farm to gin 14 Ginning and bailing 16

Cotton merchandisers' margins 21 Receiving and related services 22 Compression of cotton 23 Storage and insurance 24 Transportation 24 Financing 25 Other services 26 Importance of reduction in costs 26

Marketing raw wool 27 Method and practices 28 Charges or costs 31 Means and importance of improvement_ 32

Yarn, except wool, and thread manufacturing 35 Nature and practices 35

Size and organizations 35 Man ufacturing methods 40 Machinery and equipment 42

Charges or costs involved 44 Means of improvement 45

Adjustments in quality 46 Improvements in manufacturing opera-

tions 48 Importan ce of improvement 51

Cotton fabric manufacturing 51 Nature and practices 51

Size and organizations 52 Man uf acturing methods 56 Machinery and equip ment 57

Charges or costs involved 58 Means and importance of improvement 63

Means of improvement 63 Importance of improvement 65

Page Wool products manufacturing 66

Nature and practices ~_ 66 Size and organization ] 67 Manufacturing methods 70 Machinery and equipment 73

Charges or costs 73 Means and importance of improvement 78

Adjustments in quality 78 Improvements in manufacturing opera-

tions 80 Manmade fiber and silk product manufacturingj.. 81

Nature and practices 81 Size and organization 82 Manufacturing methods 84 Machinery and equipment 84


Dyeing and finishing 89 Nature and practices "__ 90

Size and organization 91 Methods and practices [ 93 Machinery and equipment ^__ 94


Knit-goods manufacturing 95 Nature and practices 95

Size and organization 96 Manufacturing methods '_ 100 Machinery and equipment ~ 101

Charges or costs involved 102 Means and importance of improvement """"" IQ^

Manufacturing fabricated products 105 Nature and practices 106

Size and organization 106 Manufacturing methods __l no Machinery and equipment I 112'

Charges or costs involved '_ 114 Means and importance of improvement 118

Wholesaling textile products 121 Partially manufactured products IIIIII 121

Methods and practices 121 Charges or costs involved ~_ 122 Means and importance of improvement.. 124

Products for ultimate consumers 125 Methods and practices 125 Charges or costs involved ~_ 127 Means and importance of improvement ~ 130

Retailing textile products 132 Methods and practices "IIIII 132 Charges or costs involved HI 135 Means and importance of improvement ~~~ 140

Literature cited 143

HI

SUMMARY AND CONCLUSIONS

Cotton and wool produced in the United States continue to be confronted by greatly increased competition from other fibers. Expandmg production of foreign-grown cotton and wool and of manmade fibers, improvements in the quality or suitability of these fibers, and availability of m- creased quantities of the competing products at attractive prices are among the factors that adversely affect market outlets for American cotton and wool.

Trends in this competition are indicated by changes in supplies, prices, and consumption of competing products. The proportion of total world production of cotton, wool, and manmade fibers accounted for by American cotton decreased from more than one-half in the early 1930's to about one-fifth in the early 1960-s. The corresponding proportion for domestic wool decreased from 1.4 percent to 0.4 percent; whereas that for manmade fibers increased from less than 5 percent to more than 25 percent during this period.

Prices of American ^ cotton and wool in the United States in most of the recent years have been maintained above their normal free-market relationship to comparable prices in other countries, as a result of price-support programs for cotton and import tariffs on apparel wool. Prices of manmade fibers have declined in relation to domestic prices of cotton and wool. Prices of rayon staple fiber in cotton equivalent pounds, for example, declined from more than twice those of Middling 1%6-inch cotton during the late 1930's to 10 percent lower than those in the early 1950's and to 27 percent lower than those in 1962. Prices of rayon staple fibers, as proportions of domestic prices of Fine Good French Combing and Staple wool, declined from about 36 percent in the late 1930's to 20 percent in 1954, and amounted to 21 percent in 1962. Prices of other manmade fibers, particularly the newer noncellulosic ones, declined relatively more during the 1950's and early 1960's than did those of rayon.

Changes in price relationships were associated with substantial increases in the consumption of foreign-grown cotton and wool and manmade fibers in relation to consumption of American cotton and wool. The proportion of total world mill consumption of cotton accounted for by American cotton decreased from more than one-half during the early 1930's to less than a third in the early

^The terms "American cotton" and "American wool" or "domestic wool" are used to designate cotton or wool produced in the United States.

1960's. Annual mill consumption of wool in the United States decreased from 17 percent of the world total during the late 1930's to 13 percent m 1962. U.S. consumption of manmade fibers increased from about 23 percent of that for cotton, and 151 percent of that for wool, in 1947 to 58 percent of that for cotton, and to more than 5 times that for wool, in 1962.

Inroads made on market outlets for Ameri- can cotton and wool indicate that the threat of increased competition is serious and that it is becoming progressively more so. These developments and prospects emphasize the importance of exploring alternative means of strengthening the competitive position of American cotton and wool

Prospective demands for textiles indicate the possibility of maintaining or expanding consumption of American cotton and wool, if all potential market outlets are fully exploited. To exploit these outlets fully would require that adequate and dependable supplies of suitable qualities of cotton and wool and their products be made readily available to consumers at attractive prices. To meet these requirements, improvements are needed in the adequacy and efficiency of the services involved at each stage in producing and marketing cotton and wool and in manufacturing and distributing the products.

Data on margins for marketing textiles supply a basis for evaluating problems involved in reducing costs and in expanding market outlets. These margins cover charges made for assembling a.nd merchandising raw cotton and wool, manufacturing these products into yams and fabrics, fabricating apparel and household textiles, and distributing the finished products to ultimate consumers. Combined margins for these services for cotton products decreased from about 91 percent of the consumer's dollar in 1938 to about 82 percent in 1951, and amounted to about 85 percent in 1962. Similar margins for wool products decreased from about 90 percent in 1938 to 75 percent in 1951, and amounted to about 88 percent in 1962. These margins tended to increase from the early 1950's to the early 1960's.

The size of these margins emphasizes the importance of information to show the distribution of the consumer's dollar among important services and cost items. Estimates, based on official data and other information, were made to

"" Italic figures in parentheses refer to items in Litera- tiie Cited, p. 143.

IV

show average distribution of the consumer's dollar paid for textile products in 1939, 1947, 1954,1958, and 1962. Data available for this purpose are not complete, and some adjustments were required in making these estimates. Furthermore, the combined margins for the different services were adjusted to approximate the farm-to-retail price spread, as calculated by the Economic Research Service of the U.S. Department of Agriculture.

The farmer's share of the consumer's dollar paid for apparel and household textiles made of cotton increased, with advances in prices, from about 9 percent in 1938 to 18 percent in 1951, and amounted to 15 percent in 1962. The farmer's share of the consumer's dollar paid for textiles made of wool increased from 10 percent in 1938 to 25 percent in 1951, and amounted to about 12 percent in 1962. Gross margins for merchandising the raw fibers, including ginning and baling for cotton, but not including the scouring of wool, increased in recent years and averaged about 3 percent of the consumer's dollar in the early 1960's. Combined gross margins for spinning yarns, weaving fabrics, and dyeing and finishing cotton cloth decreased in recent years and averaged 12 percent of the consumer's dollar in 1962. The corresponding proportion for manufacturers of wool fabrics varied irregularly and amounted to 14 percent in 1962. Similar proportions for fabricators oí apparel and household textiles increased in recent years, and amounted to about 30 and 31 percent respectively for cotton and wool in 1962. Mar- g;ins for w^holesale and retail distribution of textile products have increased since 1947 and in 1962 averaged about 41 percent of the consumer's dollar.

Marketing margins for raw cotton increased from about 2.5 cents a pound of lint in 1939 to 7.2 cents in 1962. Charges for ginning and baling increased from about 0.8 cent a pound of lint in 1939 to 3.2 cents in 1962. Charges for other merchandising services increased from about 1.7 cents a pound in 1939 to 4.1 cents in 1962. The proportion of total cost of cotton to mills accounted for by these margins decreased from about 23 percent in 1939 to 12 percent in 1947, and then increased to about 20 percent in 1962.

Means of improving the marketing of cotton include (1) more general use of suitable conditioning, cleaning, and ginning equipment, well organized and operated; (2) utilization of this equipment to nearer full capacity for a longer time each year; (3) development and use of suitable automatic samplers and higher density presses at gins; (4) increased use of improved facilities and equipment for handling cotton at compresses and warehouses ; (5) improved bagging and handling practices for bales to reduce waste and contamination of lint; and (6) development of more adequate and dependable classification and market information services, upon the basis of which the sale and purchase of cotton on description can be expanded.

Marketing margins for wool in 1946 averaged 5.7 cents a pound, or about 12 percent of the Boston price, for grease wool in original bags; 6.8 cents a pound, or 16 percent of the Boston price, for graded wool bought in the grease; and 27.1 cents a pound, or 25 percent of the Boston price, for scoured wool. Data for more recent years indicate that charges for handling, grading, and transportation increased considerably from 1946 to the middle 1950's. They were reduced somewhat by the early 1960's. Apparently charges for scouring and carbonizing during the late 1950's and early 1960's were lowêr than they were in 1946.

Means of improving the marketing of wool include (1) more and improved preparation of wool for marketing and manufacture at or near points of origin; (2) increased use of improved facilities and equipment for handling, preparing, and storing wool at warehouses; (3) improved packaging of wool, including use of suitable bagging to prevent contamination and waste, and compressing into suitable bales to facilitate handling, transportation, and storage; and (4) development of more adequate and dependable classification and market information services, upon the basis of which the sale and purchase of wool on description can be expanded.

Adequate classification and market information services for cotton and wool would require (1) that differences in all important quality elements of these fibers be ascertained and evaluated ; (2) that the sample used be truly representative of the quality or qualities of fibers included in the bale or lot and that it be correctly identified with the bale or lot from which it was taken; (3) that the evaluations be in accordance with uniform standards upon the basis of which differences in all iniportant quality elements of the fibers can be described for commercial purposes with reasonable accuracy; (4) that the evaluations be made by competent and reliable classifiers under conditions conducive to accurate evaluations; and (5) that facilities be provided for assembling the samples, recording the evaluations on convenient forms, and making this information available in time for its use in selling and buying the cotton and wool.

Mergers and acquisitions in the textile industry in recent years have changed the organization and management of many operating units. These changes were associated with some decrease in average size of textile manufacturing establishments as measured by the number of employees. Census data for 1958 show that 34 percent of the weaving mills processing cotton and manmade fibers, with 11 percent of the looms, did weaving only. About 53 percent of the mills with 74 percent of the looms and 83 percent of the spindles had spinning and weaving machinery or throwing, spinning, and weaving machinery. About 13 percent of the mills with 15 percent of the looms and 17 percent of the spinning spindles had weaving

and finishing or spinning, weaving, and finishing machinery. In wool manufacture in 1958, about 78 percent of the mills with 79 percent of the looms had equipment for both spinning and weaving. A comparison of these data for both cotton and wool with similar data for 1954 shows a considerable increase in vertical integration, a combination of two or more successive stages.

Gross margins of manufacturers of yarns and fabrics, as proportions of the wholesale value of the products, decreased, on the average, from 1947 to 1958, but the changes varied considerably from one type of product to another. With advances in wage rates and other developments, the proportion of these margins accounted for by salaries and wages in 1958 averaged higher for cotton and wool products and lower for manmade fiber products than in 1947. Average value added by manufacture per dollar of payroll decreased from 1947 to 1954, despite substantial improvements in plants and equipment, and then increased to 1962.

Improvements in the manufacture of textile yarns and fabrics may result from using the qualities of raw materials relatively best adapted, physically and economically, to the production of specified products, and from modernizing equipment and manufacturing operations. Better adjustments in qualities of cotton and wool used, for example, could be based on detailed analysis of mill operations, under controlled conditions, to show differences in value, for mill purposes, of cotton and wool of different qualities but physically usable in the production of specified products. Differences in value for mill purposes are made up of a combination of differences in processing costs and in quality or value of the products as a result of differences in quality of the cotton or wool used. Data showing such differences in value for mill purposes, along with data showing differences in the cost of cotton or wool as a result of differences in quality, would need to be taken into account in determining the quality of cotton or wool relatively best adapted to the production of specified products.

A basic requirement for determining the qualities of cotton and wool relatively best adapted to the production of specified products is that differences in all important quality elements of cotton and wool be ascertained and evaluated. Techniques and equipment would need to be developed for accurately measuring differences in these quality elements, and in the quality or value of the products, and for relating differences in these quality elements of cotton and wool to differences in processing performance and in quality or value of the products. Considerable progress has been made in developing techniques for measuring differences in some properties of cotton and wool fibers, but at least some of the known quality factors need to be more accurately measured and evaluated, and perhaps other important ones need to be identified, measured, and evaluated.

Adjustments in quality of cotton and wool to mill requirements would need to be based on more complete information than is now available to show not only the influence of differences in the various quality elements of the fibers on their value for use in the manufacture of specified products but also the influence of these differences on costs of raw fibers to mills, on costs of producing the cotton and wool, and on prices to farm producers. When reasonably complete and integrated, such information would supply a basis for arriving at approximations to the best adjustments in the quality of cotton and wool to mill requirements. But developments in technology, in farm production, in marketing, and in other factors may result in considerable changes in qualities of cotton and wool that are relatively best adapted to the production of specified products.

Improvements in manufacturing operations have been made in recent years, but further modernization is greatly needed. A report in 1958 indicated that during the 10-year period, 1948-57, the textile industry spent $4.4 billion for new plants and equipment, and productivity per man- hour rose 67 percent. Yet it was estimated that fully 65 percent of the textile manufacturing equipment was obsolete in 1957. Of the textile manufacturers who were replacing old facilities with new plant and equipment in 1958, 37 percent expected these replacement expenditures to pay for themselves in 1 or 2 years, 47 percent in 3 to 5 years, and 16 percent in 6 or more years (^^). A report in 1958 on operating costs in the textile industry indicated that labor costs to mills can be cut as much as 80 percent in opening and picking, 10 to 33 percent m carding, 75 to 80 percent in drawing, 60 to 70 percent in roving, 40 to 60 percent in spinning, 65 to 70 percent in slashing, 30 percent in weaving, and 50 to 75 percent in manufacturing knit goods (63), A foUowup report in 1961 emphasized the continuing need for further improvements and pointed out specific means that have been and are being developed to greatly increase the efficiency of the manufacturing operations (i).

Research in the carded cotton yarn industry in 1950 also indicated possibilities for substantial improvements, particularly in labor costs. Pos- sible reductions in costs in individual establishments ranged up to 60 percent in labor costs and up to 40 percent in total manufacturing costs. The more promising improvements included use of new and modern machinery, especially opening and picking equipment, long-draft fly frames, and larger long-draft package spinning machines; some rearrangement of machinery in most of the buildings then in use; installation of evaporative cooling systems, including more modern humidifying systems and better lighting equipment; increased machine assignment per man; an equalization of reasonable workloads as determined by competent specialists; and adjustments in size of mills and in number of counts of yarn spun (105).

VI

Similar information is needed for other important segments of the textile manufacturing industry as a basis for indicating the means by which and the extent to which it would be feasible to increase efficiency and reduce costs of manufacturing operations. Eeports indicate that results of similar studies of other segments of the textile industry are likely to present an even more star- tling picture than those presented for manufacturers of carded cotton yarn {93). Case studies and other developments reported in 1958 and 1961 confirm the need for, and possibilities of, further improvements {63^ 1), A report in 1961 indicated that much of the textile machinery in place in 1960 was installed prior to 1940 and less than one-fourth was installed since 1950 {1), This situation apparently indicates that economic applications are lagging far behind technological developments in the textile manufacturing industry. Manufacturing costs are therefore substantially higher than they would be if technological developments were fully utilized.

Integration in industries manufacturing apparel and related products in recent years has resulted in some changes in organization and management of operating units. Changes in degree of vertical integration are indicated by increases in the proportion of the establishments, employees, and value added by manufacture accounted for by multi-industry companies engaged in different segments of the textile industry. Changes in degree of horizontal concentration, on a company basis, from 1947 to 1958 showed increases in 12 industries, decreases in 6 industries, and no changes in 3 industries. Average value added by manufacture per dollar of payroll in 1954 and 1958 varied directly with degree of vertical and horizontal integration in both the men's and boys' and the women's and children's clothing industries {10).

Gross margins for manufacturers of apparel and other fabricated textile products increased from about 48 percent of the value of the products in 1939 to about 57 percent in 1958. These proportions varied considerably from one kind of product to another. The proportion of gross margins accounted for by costs of wages decreased from 40 percent in 1939 to 36 percent in 1947, and amounted to 37 percent in 1958. Average value added by manufacture per dollar of wages decreased from $1.76 in 1947 to $1.61 in 1954, despite substantial improvements in machinery used, increased to $2.24 in 1961, and amounted to $2.21 in 1962.

Improvements in the manufacture of apparel and related products might well include more attractive styling and good construction of products, installation and use of modern facilities and equipment, adjustments in sizes of plants to facilitate effective use of the more efficient equipment and methods, and development of labor-relations programs that would enlist the cooperation of both

labor and management in formulating and carrying out plans to modernize establishments for efficient operation. Modernization of plants might well be supplemented by in-service training programs for improving the skill of employees. Uti- lization of employees to their full potentialities, to the mutual benefit of employees and management, may be an effective means of reducing costs of manufacturing and distributing textile products.

Combining two or more of the successive links in the chain of manufacturing and distributing processes for textile products may be an important means of achieving economies and a closer linkage between production planning and ultimate consumer requirements. Developments during World War II were favorable in some respects to the extension of unified control. Inte- gration in the textile industry in the 1950's and early 1960's apparently indicates a continuing and perhaps growing interest in possibilities of further combinations. But additional information relating to economic possibilities of and limitations to both horizontal and vertical integration is needed as a basis for adequate appraisals.

Gross margins of textile and apparel wholesalers increased in recent years and averaged about 17 percent of net sales in 1962, compared with 16 percent in 1939 and a high of almost 19 percent m the early 1940's. Operating expenses of these wholesalers averaged about 15 percent of net sales in 1962, about the same as in other recent years but higher than in the late 1940's and early 1950's. Expenses of manufacturers' sales branches and offices also increased, and averaged 9 percent of net sales in 1958. These expenses per dollar of sales usually average less for establishments with a large volume of sales than for those with a small volume. Selling and administrative expenses account for most of the wholesalers' gross margins. Profits during the 1950's and early 1960's averaged less than 2 percent of net sales.

Gross margins of department stores averaged 36.1 percent of net sales in 1962, slightly lower than in other recent years, but somewhat above the low point of 35.2 percent reached in 1949. Payroll expenses, the largest item of costs, averaged 18.1 percent of net sales in 1962, about the same as in other recent years, but somewhat higher than the low point of 15.4 percent reached in 1945. Operating profits, amounting to 2.4 percent of net sales in 1962, were lower than those in the 5 years immediately preceding this period and were lower than in any other recent year. Gross margins of men's and boys' clothing and furnishing stores, women's and children's clothing stores, and family clothing stores average considerably less than those of department stores.

Means of reducing costs of distributing textile products include methods for increasing the general efficiency of existing agencies, concentrating services in the hands of agencies or com-

Vll

binations of agencies that can perform them most efficiently, and reducing "unnecessary" services. Improvements in general efficiency of the agencies involve problems of organization and operation, selection and management of personnel, location of places of business, number and kinds of commodities handled, volume of operations, and purchase and sales policies, among others. De- tailed information on the influences of each important factor on efficiency and costs is needed to indicate the extent to which and the most effective means by which it would be feasible to bring about improvements. Research of the type indicated for carded cotton yarn, with appropriate modifications, should supply the information needed {105).

Wholesalers^ gross margins may be reduced by increasing to more nearly optimum the volumes handled by the smaller operators and by concentrating a larger proportion of the services in the hands of the larger and more efficient establishments. In 1958, operating expenses per dollar of net sales of apparel by merchant wholesalers averaged about half as much for operators with annual sales of over $2 million as for those with annual sales of less than $50,000. Although factors other than size may also be involved, it appears likely that at least a part of these differences in operating expenses is attributable to differences in efficiency that arise from differences in volume of sales.

Retailers' margins may be reduced by simplifying the selling process so as to permit and encourage self-selection and self-service by customers. This simplification may be facilitated by open display of merchandise, arranged on the basis of consumers' primary interests, and by ar-

rangements for payment at a convenient desk set up for that purpose. Such simplification makes possible reductions in retail margins mainly by reducing payroll costs, which average more than half of the total operating expenses of retailers. Accurate labeling to show the quality and size of the products, on the basis of adequate standards, would facilitate self-service methods. These and other economies in retailing would make possible substantial reductions in costs of distributing textile products. These reductions would be to the advantage of farm producers and consumers.

The relative importance, from the viewpoint of costs, of increasing efficiency and of reducing the margins for manufacturing and distributing textile products may be indicated by data showing that a reduction of 10 percent in these combined margins during 1939, 1947, 1954, 1958, and 1962 would have amounted to about 8.5 percent of the costs of the finished products to ultimate consumers, to about two-thirds of the gross returns to farmers for the cotton and wool used, and to about three times the total costs of marketing the raw fibers, including the ginning and baling of cotton but excluding the scouring of wool. A reduction of 10 percent in costs of manufacturing textiles, including the fabrication of apparel and household textiles, would have amounted to about a third of the gross returns to farmers for the cotton and wool used and substantially more than the total costs of marketing the raw fibers. A reduction of 10 percent in costs of retailing during this period would have amounted to more than total costs of marketing the raw fibers used and to more than a fourth of the gross returns to farmers for the cotton and wool used.

Vlll

THE AMERICAN TEXTILE INDUSTRY COMPETITION—STRUCTURE—FACILITIES—COSTS

By

L. D. HowELL, Agricultural Economist, Marketing Economics Division, Economic Research Service

COMPETITION AND MARKET OUTLETS

Market outlets for American cotton and wool continue to be adversely affected by greatly increased competition from cotton and wool produced in other countries and from manmade fibers produced in the United States and abroad. Con- tinuing increases in production of foreign-grown cotton and wool and of manmade fibers, improvements in the quality or suitability of these fibers, and the availability of these competing products at attractive prices are among the factors that adversely affect market outlets for American cotton and wool.

Trends in the nature and extent of this competition are indicated by data showing recent changes in supplies, prices, and consumption of these competing products. Data are presented on changes in supplies, prices, and consumption of American cotton in relation to those for foreign-grown cotton and for manmade fibers; on similar changes for wool produced in the United States in relation to those for foreign wool and for manmade fibers ; and on prospects and related problems.

American and Foreign-Grown Cotton The proportion of world production of cotton

accounted for by production in the United States- has decreased markedly in recent years (table 1). During the 5 years ended wâth 1932, cotton produced in the United States accounted for about 57 percent of the world total. Following inaugu- ration of the agricultural adjustment program in this country in the early 1930's, production of cotton in the United States was reduced, but that in other countries continued to increase and, during the 5 years ended with 1939, cotton produced in the United States accounted for only about 44 percent of the world total. Production of cotton in the United States and in other countries decreased during World War II and then increased in the early postwar period. During the 5 years ended with 1952, cotton produced in the United States accounted for about 45 percent of the world total. Production of cotton in this country decreased

from 16.4 million bales in 1953 to 10.9 million in 1957, and then increased to 14.9 million in 1962; but that in other countries continued to increase with the result that during the 5 years ended with 1962 cotton produced in the United States accounted for only about 30 percent of the world total.

Prices of American cotton in the United States in most of the years since 1933 have been maintained above the normal free-market relationship with those of other countries, as a result of price- support operations. These differences in relative prices, except as offset by export payments; shortages of dollar exchange; and other developments have resulted in considerable shifts in foreign consumption from American to cotton of other growths {4S). During the 5 years ended with July 1932, American cotton accounted for 56 percent of total world mill consumption of all growths and for about 42 percent of mill consumption outside the United States. During the 5 years ended July 1939, after initiation of price-support loan and agricultural adjustment programs in the United States in 1933, American cotton accounted for about 42 percent of total world mill consumption of all growths and for about 25 percent of mill consumption outside the United States.

During and after World War II, the adverse effects of differences between prices of American cotton and of foreign-grown cottons, shortages of foreign exchange, and other factors related to foreign outlets for American cotton have been offset to some extent by financial aid from the U.S. Govern- ment for exports of American cotton. These aids include (1) grants, gifts, and sales for local cur- rency; (2) short-term credit sales repayable in dollars; (3) barter transactions; and (4) export subsidies or payments (60).

From 1945 to 1951, domestic prices of American cotton averaged substantially more than the government loan rate. Financial aids for cotton exports averaged 44 percent of the value of American cotton exported, and American cotton accounted for about 45 percent of total world mill consump-

r86-S0'6—64-

TABLE 1.—World production of cotton^ wool^ and manmade fibers^ 193^-38 and 1938-62

Year

Cotton 2 Wools Manmade fibers *

Ameri- All Total Domes- Foreign Total Rayon, All Total can other tic acetate other

Million Million Million Million Million Million Million Million Million pounds pounds pounds pounds pounds pounds pounds pounds pounds 6,146 7,805 13, 951 207 2,021 2,228 1,401 0 1,401 5, 554 15, 216 20, 770 130 2,921 3,051 5,027 1,048 6, 075 6,974 15, 360 22, 334 140 3,082 3,222 5, 557 1,453 7,010 6,851 15, 796 22, 647 145 3,079 3,224 5,738 1,792 7,530 6,873 15, 115 21, 988 143 3, 112 3,255 5,931 2,053 7,984 7, 136 16, 274 23, 410 134 3,128 3,262 6,314 2,634 8,948

Total

Average:1934-38 1958 1959 1960 1961 1962

Average:1934-38 1958 1959 1960 1961 1962

Million pounds 17, 580 29, 896 32, 566 33, 401 33, 227 35, 620

Proportion of total

Percent 34. 9 18. 6 21.4 20. 5 20.7 20.0

Percent Percent Percent Percent Percent Percent Percent Percent 44.4 79.3 1. 2 11.5 12.7 8.0 0 8.0 50.9 69.5 .4 9.8 10. 2 16. 8 3.5 20.3 47. 2 68.6 . 4 9.5 9.9 17.0 4.5 21.5 47.3 67. 8 . 4 9.2 9. 6 17. 2 5. 4 22.6 45.5 66.2 .4 9. 4 9.8 17.8 6.2 24.0 45.7 65. 7 . 4 8.8 9.2 17.7 7.4 25. 1

Percent 100. 0 100.0 100.0 100.0 100. 0 100, 0

1 Year for cotton begins August 1; that for wool and manmade fibers January 1.

2 Commercial cotton. Excludes the quantities produced for household use. Based on estimates of the

tion of all growths and for about 21 percent of total mill consumption outside the United States.

During the 7 years ended July 1958, domestic prices of American cotton averaged near the government loan rate, government financial aids for exports averaged 60 percent of the value of Ameri- can cotton exported, and American cotton accounted for about 33 percent of total world mill consumption of all growths and for about 14 percent of mill consumption outside the United States.

Domestic prices of American cotton averaged higher than the choice B loan rate and lower than the choice A rate during the 2 years ended July 1961. They averaged near the single loan rate applicable during the year ended July 1962. During these 3 years, aids for exports averaged 57 percent of the value of American cotton exported. Dur- ing the same years, American cotton accounted, on the average, for about 32 percent of total world mill consumption of cotton of all growths and for about 16 percent of mill consumption outside the United States.

Prices of cotton to manufacturers continue to be considerably higher in the United States than they are in other countries. In 1960, for example, net cotton costs per linear yard of fabric in the United States exceeded those in Japan by about 6 percent for cotton used in sheeting and print cloth and by about 14 percent for cotton used in broadcloth and gingham (tables 33 and 34, pp. 60, 61). With the costs of raw cotton, labor, and other items in other countries lower than those in the United States,

International Cotton Advisory Committee and Bureau of the Census reports.

3 From reports and publications of the Commonwealth Committee.

* From Textile Organon.

the raw cotton equivalent of U.S. imports of cotton products increased from 67,500 bales in 1952 to about 645,500 bales in 1962, a total increase of about 856 percent. Exports of cotton products by domestic manufacturers decreased from the equivalent of 703,900 bales of cotton in 1952 to the equivalent of 459,000 bales in 1962, a decrease of about 35 percent.

The information presented clearly indicates that cotton price-support operations m the United States have been associated with substantial increases in consumption of foreign-grown cotton in relation to that of American cotton. They have also been associated with large increases in imports of cotton products manufactured in other countries in relation to exports of cotton products manufactured in this country. These developments and prospects of further expansions in production of cotton and cotton products outside the United States emphasize the importance of exploring alternative means of strengthening the competitive position of American cotton and cotton products manufactured in the United States

American Cotton and Manmade Fibers

The competitive position of American cotton is also adversely affected by continuing increases in supplies and improvements in quality or suitability of manmade fibers available at reduced prices. World production of these fibers, in pounds, increased from about 10 percent of that for cotton in

1934-38 to 38 percent in 1962 (table 1). In the United States^ production of manmade fibers increased from about 4.5 percent of that for cotton in 1934-38 to 16 percent in 1947-49 and to 33 percent in 1962. Although no satisfactory measures of changes in quality of manmade fibers are available, improvements in the quality or suitability of at least some of these fibers are generally recognized.

A pound of manmade fibers is equivalent to more than a pound of cotton for use in comparable fabrics. Adjusting these fibers to cotton equivalents shows that total world production of manmade fibers increased from the equivalent of about 14 percent of that for cotton in 1934-38 to 26 percent in 1947-49 and to 55 percent in 1962. In the United States, production of manmade fibers increased from the equivalent of about 7 percent of that for cotton in 1934-38 to 24 percent in 1947- 49 and to 54 percent in 1962.

Per capita consumption of cotton and manmade fibers varies widely from one contintent and country to another (table 2). In most instances, per capita consumption of both fibers has increased in recent years, but usually the increases for manmade fibers were proportionally greater than those for cotton. For the world as a unit, per capita consumption of manmade fibers on a poundage basis increased from 14 percent of that for cotton in 1938 to 31 percent of that in 1959. Corresponding proportions by specified areas show increases from about 33 to 55 percent in Western Europe, from 3 to 34 percent in Eastern Europe and Russia, from about 11 to 40 percent

in North America, from 6 to 21 percent in Central and South America, from 5 to 14 percent in Asia, and from 8 to 46 percent in Africa. The proportions in Oceania (islands in the South Pacific, not in Asia or America, including Malaysia, Australia, and Polynesia, among others) varied irregularly from year to year (table 2).

Prices of many, if not most, manmade fibers have been reduced in recent years; whereas domestic prices of American cotton have been and continue to be maintained at relatively high levels as a result of loan and adjustment programs. Dur- ing the 5 years ended July 1939, equivalent prices of rayon staple fibers averaged 118 percent higher than those of Middling i%6-inch cotton, but during the 5 years ended July 1952 they averaged 12 percent lower. During the 5 years ended July 1961 they averaged 21 percent lower, and during the year ended July 1962 they averaged 28 percent lower. Similar changes occurred in the relationship between prices of rayon staple fibers and prices of Strict Middling li/ig-inch cotton. De- clines in prices of acetate, nylon, Dacron, Orion, and other manmade fibers during the 1950's and early 1960's were about as great as or greater than those for rayon.

The declines in prices of manmade fibers in relation to domestic prices of American cotton were associated with substantial increases in mill consumption of these fibers in relation to consumption of cotton in the United States (table 3). Average annual mill consumption of manmade fibers increased from 2.7 pounds per capita in 1935-39, or the equivalent for use in comparable fabrics

TABLE 2.—Per carita consumption {net available for home icse) of cotton^ wool^ and Trmnmade fibers^ specified areas and years^ 1938-69

Item and 3êar Western Europe

Eastern Europe

and USSR

North America

Central and

South America

Asia Africa Oceania * World

Cotton : 1938

Pounds 8.8 9.0

10.4 10.4

3.3 3.5 3.5 3.5

2.9 3.4 5.4 5.7

15. 0 15. 9 19. 3 19.6

Pon/nds 6.8 7.5

12. 1 12.3

1.3 1. 1 2.0 2.0

0.2 1. 1 3.9 4.2

8.3 9.7

18. 0 18. 5

Pounds 20.7 25.8 21.6 21. 8

2.4 4.0 2.4 2.6

2.2 7.4 9.3 8.8

25.3 37. 2 33.3 33.2

Pounds 6.4 6.6 7.1 7. 1

0.9 1.1 .9 .9

0.4 1. 1 1.7 1. 5

7.7 8.8 9.7 9. 5

Pounds 4.2 2.6 4.9 5. 1

0.2 . 1 . 2 .2

0.4 . 2 .6 .7

4.8 2.9 5. 7 6. 0

Pounds 2.4 2.4 2.4 2. 4

.2

. 2

0. 2 .2

1.4 1. 1

2.8 3.0 4.0 3.7

Pounds 8.4

10.1 9.7

10.6

2.9 7. 1 4. 2 4.4

2.9 3.3 4. 0 4.4

17. 0 20.5 17.9 19.4

Pounds 6.4 6.0 7.3 7.4

0.9 1.0 1. 0 1.0

0.9 1. 2 2. 2 2.3

8.3 8. 2

10. 5 10.7

1949 . 1958 1959__ .

Wool: 1938 1949 1958 1959 ._

Manmade fibers: 1938 1949___ 1958 1959

Total: 1938 1949 1958 1959 _

1 Includes Near East and Far East. In 1958 and 1959 Aden, Cyprus, Jordan, and Libya are also included. Adapted from reports of Food and Agriculture Organization of the United Nations.

(p. 3) of about 16 percent of that for cotton, to 9 pounds in 1948-52, or the equivalent of about 48 percent of that for cotton. In 1956-60, it increased to 10.6 pounds, or the equivalent of about 62 percent of that for cotton, and in 1962 to 13.1 pounds, or the equivalent of about 92 percent of that for cotton.

TABLE 3.—Mill consumption of cotton^ loool^ and mauTYiade fhers^ United States^ specified years^ 193J^-62

Cotton Wooli

Manmade fibers

Year Ray- Total on, Oth- All ace- er 2 tate

Million Million Million Million Million Million Average: pounds pounds pounds pounds pounds pounds

1934-38._ 3,090 344 283 16 299 3,733 1947 4,666 698 988 70 1,058 6,422 1958 3,867 331 1, 127 637 1, 764 5,962 1959 4,334 435 1, 252 812 2,064 6, 833 1960 4, 191 411 1,055 823 1,878 6,480 1961 4,082 412 1, 127 936 2,063 6,557 1962 4, 190 429 1,264 1,160 2,424 7,043

Proportion of total

Average: Percent Percent Percent Percent Percent Percent

1934-38-_ 82.8 9.2 7.6 .4 8.0 100.0 1947 72. 6 10. 9 15. 4 1. 1 16.5 100.0 1958 64.9 5.5 18.9 10.7 29.6 100.0 1959 63.4 6. 4 18.3 11.9 30. 2 100.0 1960 64. 7 6.3 16.3 12.7 29.0 100.0 1961 62. 2 6.3 17.2 14.3 31. 5 100.0 1962 59. 5 6. 1 17.9 16. 5 34.4 100.0

1 Apparel and carpet wool on scoured basis, as reported by Bureau of the Census.

2 Includes noncellulosic and manmade waste. Adapted from reports of Bureau of the Census and

Textile Organon.

The relationship of changes in domestic mill consumption of cotton to changes in consumption of manmade fibers also is indicated by statistical analysis of data for the years 1920-40 and 1947-52 {61). The analysis shows that after adjustments for the inñuence of other factors, a change of 1 percent in consumption of manmade fibers was associated, on the average, with a change of about 0.1 percent in consumption of cotton in the opposite direction. During the two periods, per capita consumption averaged 26 pounds of cotton and 3 pounds of manmade fibers. Taking these differences into account, it appears that a change of 1 pound in consiunption of manmade fibers was associated, on the average, with a change in the opposite direction of about 0.86 pound of cotton consumed. Analysis of data for the periods 1927-32, 1935-40, and 1948-60 indicates that, with other factors constant, an increase or decrease of

1 percent in domestic consumption of noncellulosic manmade fibers in cotton equivalent pounds was associated, on the average, with a decrease or increase respectively of about 0.14 percent of cotton consumed {32),

Changes in the proportion of manmade fibers to cotton consumed in the United States in the manufacture of specified end-use products vary considerably from one product to another (table 4). Consumption of manmade fibers in all end- use products combined, on a poundage basis, increased from about 9 percent of that for cotton in 1937 to about 57 percent of that in 1962. Cot- ton's competitive position apparently was relatively strongest in children's and infants' wear, but the proportion of the market regained since 1951 was relatively greater in women's and misses' apparel. Gains made by manmade fibers were relatively greater in industrial products and in home furnishings.

Continuing improvements in the competitive position of manmade fibers in relation to cotton in the united States may be accounted for mainly by increases in production of these fibers, improvements in their quality or suitability, and reductions in prices of manmade fibers in relation to prices of cotton. These developments and prospects of further increases in production and improvements in the quality or suitability of manmade fibers emphasize the importance of exploring alternative means of strengthening Amer- ican cotton's position in competition with these fibers {IfS),

American and Foreign Wool

The proportion of world production of wool accounted for by the United States decreased from about 10 percent in 1934-38 to 6 percent in 1947-54 and to 4 percent in 1962 (table 1, p. 2). Produc- tion of domestic wool decreased from an annual average of about 207 million pounds, clean basis, in 1934-38 to 120 million pounds in the early 1950's, and amounted to 134 million pounds in 1962. Annual production of wool in all other countries combined increased from less than 2 billion pounds, clean basis, in 1947 to more than 3 billion pounds in 1962.

Annual mill consumption of wool in the United States increased from an average of 344 million pounds, clean basis, or 17 percent of the world total, in 1934-38 to a high of 698 million pounds in the postwar period, or 29 percent of the world total in 1947, and amounted to 427 million pounds, or about 13 percent of the world total, in 1962. At least a part of the decrease indicated may be accounted for by relatively high prices of apparel wool in the United States, despite incentive payments, associated with import tariffs on apparel wool and to increases in imports of wool products.

Prices of apparel wool in the United States have been and continue to be maintained above their free-market relationships to wool in other

countries by import tariffs. From 1930 to 1948 the import duties ranged up to 37 cents a pound, scoured basis, but since 1948 they have ranged up to 27.75 cents a pound. In addition, prior to the National Wool Act of 1954, prices of domestic wool were supported by Government loan and purchase programs. As a result of these price sup- ports, substantial quantities of domestic wool were

accumulated in Government stocks, while manufacturers in the United States imported apparel wool for consumption.

Incentive payments under the provisions of the ISTational Wool Act of 1954 began in 1955, and price-support loans and purchase programs for wool were discontinued. Consequently, during the late 1950's and early 1960's, American wool com-

TABLE 4.—Fiber coTisumption in the manufacture of specified end-use products^ specified years ,1937-62'

End use and fiber 1937 1949 1959 1961 1962

Apparel : Men's and boys' :

Cotton._ _ _

Million pounds

808 210 34

Million pounds

835 168 111

Million pounds

1,091 181 167

Million pounds

1,093 154 198

Million pounds

1 1 P;Q Wool 168 Manmade_ 232

Total- ______ 1, 052 1,114 1,439 1,445 1,559

Women's and misses': Cotton 270

90 172

321 152 324

498 161 380

447 155 427

457 Wool 168

470 Manmade_

Total _ 532 797 1,039 1,029 1, 095

Children's and infants': Cotton _ _ 178

19 11

192 31 27

311 26 50

322 25 53

337 26 60

Wool Manmade

Total 208 250 387 400 423

All apparel: Cotton__ _ 1,256

519 217

1,348 351 462

1,900 368 597

1,862 334 678

1,953 362 762

Wool Manmade

Total 1,792 2, 161 2,865 2,874 3.077

Homef urnishings : Cotton- 817

162 29

759 190 79

1,055 178 431

1, Oil 157 494

1,046 159 600

Wool Manmade _

TotaL_ _ __ _ 1,008 1,028 1,664 1,662 1,805

Other consumer type Products: Cotton _ _ _ 322

25 77

400 42

146

399 24

227

375 23

242

383 22

256 Wool Manmade

Total 424 588 650 640 661

Industrial uses: Cotton __ 1,255

50 14

893 48

300

656 12

630

600 11

563

599 11

639 Wool- __ Manmade

Total 1,319

3,650 556 337

1, 241 1,298 1, 174 1, 249

All end uses: Cotton 3, 400

631 987

4, 010 582

1,885

3,848 525

1, 977

3,981 554

2,257 Wool Manmade

Total 4, 543 5, 018 6,477 6, 350 6,792

1 End-use consumption of wool shown exceeds mill consumption plus semimanufactured imports as a result of double counting.

Adapted from Textile Organon (91).

peted more effectively with imported apparel wools in domestic markets, consumption of domestic wool increased, imports of apparel wool for consumption decreased, and Government stocks of wool were liquidated.

Despite the discontinuance of price-support loans and purchase programs, costs of apparel wool to manufacturers in the United States continue to be substantially higher than they are in other countries. In 1960, for example, net costs of wool used in the manufacture of worsted sharkskin averaged 35 percent higher in the United States than in the United Kingdom and 15 percent higher than in Japan (table 48, p. 75). Net costs of wool used in the manufacture of high- grade woolen flannel averaged 30 percent higher in the United States than in the United Kingdom, and similar costs of wool used in the manufacture of lower grade woolen flannel averaged 74 percent higher in the United States than in Italy (table 48, p. 75). With costs of raw wool, labor, and other items in other countries substantially lower than those in the United States, imports of manufactured wool products into this country from 1954 to 1962 increased more than 100 percent and domestic exports of wool products decreased 22 percent.

American Wool and Manmade Fibers

Marked increases in production, improvements in quality or suitability, and reductions in prices of manmade fibers continue to adversely affect market outlets for wool as well as for cotton. World production of manmade fibers increased from about 63 percent of that for wool in 1934-38 to about the same as that for wool in 1947 and to 260 percent of that for wool in 1962 (table 1). In the United States, production of manmade fibers increased from less than twice that of wool in 1934-38 to about 7 times that of wool in 1947 and about 18 times that of wool in 1962.

Domestic prices of manmade fibers advanced less than prices of wool during the late 1940's and early 1950's, and declined less during the late 1950's and early 1960's. Prices of rayon staple fiber, for example, as proportions of prices of Fine Good French Combing and Staple wool, averaged 36 percent during the 5 years ended 1938, declined to an average of 20 percent in 1954, and amounted to 21 percent in 1962. Prices of other manmade fibers, especially the newer noncellulosic ones, such as nylon, Orion, Dacron, Acrilan, and Dynel, declined more during the late 1950's and early 1960's than did those for rayon.

Mill consumption of manmade fibers has increased more rapidly in recent years than that for wool. In the United States, mill consumption of manmade fibers increased from about 87 percent of that for wool in 1934-38 to more than three times that for wool in 1950-54 and to more than five times that for wool in 1962. The greatest

increases since 1950 have been in the newer noncellulosic fibers, which apparently are more directly competitive with wool for many uses than are rayon and acetate. Analysis of data for the period 1920-40 and 1948-60 mdicates that, with other factors constant, an increase or decrease of 1 percent in domestic consumption of noncellulosic staple fibers on a wool equivalent basis was associated, on the average, with a decrease or increase respectively of about 0.28 percent of apparel wool consumed {S2).

World per capita consumption of wool has shown no definite trend in recent years ; whereas that for manmade fibers has increased markedly. World consumption of manmade fibers increased from about the same amount as that for wool in 1938 to more than tv/ice as much in 1959 (table 2, p. 3). Per capita consumption of both wool and manmade fibers varies widely from one con- tinent to another. In most instances, no definite trends in recent years are indicated for wool, but per capita consumption of manmade fibers on most of the continents increased markedly. Consump- tion of manmade fibers in Western Europe increased from 88 percent of that for wool in 1938 to 173 percent in 1959. Corresponding proportions for other areas show increases from. 15 to 210 percent in Eastern Europe and Russia, from 92 to 338 in North America, from 44 to 166 percent in Central and South America, from 200 to 350 percent in Asia, and from 100 to 550 percent in Africa. In Oceania the proportions varied irregularly from one year to another (table 2, p.

Changes in proportions of manmade fibers to wool consumed in the United States in the manufacture of specified end products vary considerably from one product to another (table 4, p. 5). For all end-use products combined, consumption of manmade fibers increased from about 61 percent of wool consumed in 1937 to 344 percent in 1961. The competitive position of wool was relatively weakest in industrial products and was strongest in women's and misses' apparel.

Relatively higher prices of wool than of manmade fibers and associated relatively higher costs of finished v/ool products in the United States than in other countries are accounted for, at least in part, by tariffs on apparel wool imported into this country. Changes in relative prices and in consumption of wool and manmade fibers and prospects of further increases in production and improvements in quality or suitability of these fibers emphasize the importance of exploring alternative means of strengthening the competitive position of wool with these fibers (J^).

Prospects and Related Problems

Developments and trends outlined above clearly indicate that cotton and wool produced in the United States are confronted by greatly increased

competition as a result of (1) continuing expansion in production of foreign-grown cotton and wool and of manmade fibers, (2) improvements in the quality or suitability of these fibers, and (3) increased availability of the competing products at reduced prices. With further expansion in production of competing products in prospect, inadequate market outlets for American cotton and wool at remunerative prices may continue to handicap the cotton and wool industries in this country, unless prompt and effective actions are taken to maintain or expand these outlets. Given a reasonably prosperous peacetime economy and continued increases in population, prospective deraands for textiles indicate the possibility of maintaining or expanding consumption of cotton and \Yool, if all potential market outlets are fully exploited.

To exploit fully these outlets for cotton and wool would require: (1) adequate and dependable supplies of suitable qualities of raw cotton and wool, readily available to manufacturers at attractive prices; (2) efficient manufacture of a variety of suitable and attractive cotton and wool yams and fabrics, appropriately finished and made available at attractive prices for use in industry and in fabricating apparel and household products; (3) suitable and attractive styling and good construction of apparel and household products made of suitable cotton and wool fabrics; (4) education of consumers regarding the quality, variety, and adaptability of these products; (5) timely adjustments in the manufacture and distribution of these products to meet consumer requirements; and (6) increased efficiency in the entire chain of marketing, manufacturing, and distributing procedures so that a variety of suitable and attractive products made of cotton and wool are readily available to consumers at attractive prices.

Cotton and wool compete with manmade fibers and other products as raw materials, as yams and fabrics, and as fabricated products. The effectiveness of this competition may be largely in- ñuenced by differences between the quality, suitability, and prices of cotton, wool, and their products and the quality, suitability, and prices of competing products. Among important factors that may affect the quality, suitability, and cost of textile products at each stage of the marketing, manufacturing, and distribution procedure are (1) the size, organization, and control of the op-

erating units; (2) kind and arrangement of buildings, machinery, and equipment used; (3) kind and effectiveness of the labor used; (4) operating methods and practices; and (5) kinds, qualities, and suitability of the materials used.

The problem of making available adequate supplies of suitable qualities of cotton and wool and their products at attractive prices involves consideration of the costs at each stage from farm production of the raw fibers to retail distribution of the finished products. The importance of marketing services and costs may be indicated by data showing that gross margins for assembling and merchandising raw cotton and wool, manufacturing yarns and fabrics, fabricating apparel and household textiles, and distributing the finished products to ultimate consumers account, on the average, for about seven-eighths of the consumer's dollar paid for apparel and household textiles made of cotton and wool. It is apparent from the width of these margins that reductions in them may have important influences on returns to farm producers, on costs of finished products to ultimate consumers, and on market outlets for cotton and wool.

The size of these margins and the seriousness of the threat of increased competition from manmade fibers and other products emphasize the importance of information that will show the influence of the different factors on the adequacy, efficiency, and costs of the marketing, manufacturing, and distributing services required and that will indicate means of improvement. Data are presented in this report to show changes in size and organization of the operating units, in machinery and equipment used, in operating methods and practices, and in charges or costs for the services rendered at each important stage involved in taking cotton and wool from farms and delivering the finished textile products to ultimate consumers. The data presented are designed to show the relative importance of these margins from the viewpoint of cost, to indicate some of the factors responsible for or associated with differences in adequacy and costs of services, and to serve as a basis for suggesting feasible means of improvement.

Information on marketing channels and the division of the consumer's dollar paid for cotton and wool products is presented as a background for the more detailed data relating to specific stages of the marketing procedure.

MARKETING CHANNELS AND DIVISION OF CONSUMER S DOLLAR

The data for cotton and wool begin with the movement of these items from the farm and with prices to farmers; those for manmade fibers and related products begin with the delivery of fibers and prices paid for them by manufacturers of textile products.

Cotton and Cotton Products Taking cotton from farms and delivering it in

the form of finished clothing and household textiles to ultimate consumers require the services of many different types of middlemen. They include

ginners, warehouse and compress operators, transportation agenices, and merchandisers of raw cotton ; manufacturers of cotton yarns and fabrics ; fabricators of cotton apparel and household textiles ; and wholesale and retail distributors. These services begin w^hen seed cotton is hauled from farms to gins where such services as conditioning and cleaning of seed cotton, separating the lint from the seed, cleaning the lint cotton, and pack- ing and wrapping it into bales of approximately 500 pounds are rendered.

MARKETING CHANNELS

From the gin, cotton usually moves to warehouses, which may be operated in connection with compresses, where it is assembled and stored. Much of the cotton, particularly in central and western areas of the Cotton Belt, is compressed to a higher density to facilitate storage and transportation. From warehouses and compresses it usually moves to mills by railroad or motortruck or by some combination of truck, rail, and water transportation. Taking cotton from gins and delivering it to mills involves merchandising services such as assembling, compressing, storing, insuring, transporting, financing, and risk-bearing.

At the mill, bales are opened and the cotton is cleaned, carded, combed (for fine yarns), and spun into yarn. On the average, about 4 percent of the gross weight of the bale is tare, less than 3 percent is nonlint waste, and most of the re-

mainder, which amounts to about 93 percent, is made into yarn (fig. 1). According to census reports for 1958, for example, about 81 percent of the yarn was woven into cloth, 10 percent was used by the knit-goods industry, 3 percent was made into carpet and tufting yams, 2 percent was used in thread, and 4 percent was used in making other yarns.

Census reports indicate that in 1958 about 18 percent of the woven cloth was used in the gray or unfinished form, less than 6 percent was colored yarn fabric, and about 76 percent was finished from the gray (97). Finishing gray goods includes bleaching, dyeing, and printing. Of the total linear yardage finished in 1958, about 44 percent was bleached and white finished, 33 percent was plain dyed and finished, and 23 percent was printed and finished. In 1962 the corresponding proportions were 44, 34, and 22 percent respectively (76^6^). Styling and finishing of a large part of the cotton cloth is controlled by converters (persons who take gray goods and have them finished), but substantial proportions are controlled by mills, with or without the coUaboration of the fabricators.

Much of the finished cloth usually goes to cutters, where it is made into wearing apparel and household goods. Estimates of cotton consumption by end uses show^ that the proportion that went into apparel increased from 36 percent in 1947 to about 54 percent in 1962; that used in

Consumed in U. S.

APPROXIMATE DISTRIBUTION OF A TYPICAL BALE OF COTTON, 1958

TARE 20 LB

WASTE

(NONLINT) 13 LB.

feiJa^û^^ fe^^ M?nA HOUSEHOLD GOODS INDUSTRIAL USERS

U. S. DEPARTMENT OF AGRICULTURE NEC. ERS 2763-64(4) ECONOMIC RESEARCH SERVICE

Figure 1

household goods increased from 28 percent in 1947 to 29 percent in 1962 (70), The remainder went into industrial uses. Clothing and household textiles usually go either directly or indirectly through wholesalers, jobbers, or other agencies, to retailers.

DIVISION OF THE CONSUMER'S DOLLAR

Charges for the many services performed in transforming raw cotton into finished cotton goods and in making them available to the consumer account, in most instances, for a large share of the consumer's dollar paid for the finished products. Data on retail values of a group of 25 cotton articles of clothing and household furnishings and on receipts by farmers for equivalent quantities of cotton indicate that from 1935 to 1962 returns to farm producers for the cotton used amounted, on the average, to about 15 percent of the consumer's dollar. Marketing margins amounted to 85 percent of the consumer's dollar (fig. 2) (72), The proportion of the consumer's dollar represented by the farm value of the cotton usually varied irregularly with prices of cotton. It ranged from about 9 percent in 1938, when farm prices of cotton averaged about 8.60 cents a pound, to 18 percent in 1951, when farm prices of cotton averaged about 38.88 cents a pound, and amounted to 15 percent in 1962, when farm prices averaged 31.80 cents a pound. From the early 1950's to

the early 1960's, the farmer's share tended to decrease.

The proportion of the consumer's dollar accounted for by the farm value of cotton varies widely among products. During the 10-year period, 1953-62, the proportion for clothing averaged 12 percent, and ranged from 11 percent in 1960 and 1961 to 13 percent in 1954 and 1955. For household furnishings, the proportion averaged 23 percent for the 10-year period and ranged from 21 percent in 1960 to 25 percent in 1954 and 1955. During the 11 years 1952-62, the farmer's share of the retail price averaged 7 percent for business shirts, 16 percent for work shirts, and 34 percent for sheets.

The large proportions of the consumer's dollar accounted for by marketing margins emphasize the importance of breakdowns to show the items included. Estimates, based on official data and other information, were made to show the average distribution of the consumer's dollar paid for cotton apparel and household goods in 1939, 1947, 1954, 1958, and 1962. Data available for this purpose are not complete, and in some instances they are not strictly comparable. Consequently, some adjustments were required in approximating margins on the basis of these data and other information. Furthermore, estimated margins were adjusted to approximate the farm-to-retail price spreads for cotton clothing, household textiles.

MARGINS FOR COTTON PRODUCTS

2.40

COTTON USED ANNUALLY I PER FAMILY IN |

25 COTTON ARTICLES

' ' ' ' ' I I ' ' I I ■ ' ' I I ' I ■ I 11 I ' I ' I ' I

1940 1950 1960 1940 1950 1960 ^RETA/L VALUE OF A CROUP OF 25 COTTON CLOTHING AND HOUSEHOLD ARTICLES EQUIVALENT TO 1 LB. LINT COTTON.

^■ESTIMATED PRICES RECEIVED BY FARMERS FOR COTTON OF GRADE AND STAPLE LENGTHS REQUIRED IN THE MANUFACTURE OF VARIOUS ARTICLES.


Figure 2

9

and yard goods, as calculated by the Economic Eesearch Service, U.S. Department of Agriculture.

Approximations were made to show the average distribution of the consumer's dollar paid for these products on the basis of the specific conversions made or services rendered. Eesults show that charges for marketing services in dollars increased markedly during the 1940's. The proportion of the consumer's dollar that went to cotton growers for farm production (receipts by farmers less ginning charges) increased, on the average, from about 9 percent in 1939 to 15 percent in 1954, and then decreased to about 14 percent in 1962. The proportions accounted for by margins for ginning, baling, and merchandising raw cotton, and for wholesale and retail distribution, decreased from 1939 to 1947, and then increased to 1962. The proportions accounted for by margins for spinning yarns, weaving cloth, and dyeing and finishing fabrics decreased markedly from 1939 to 1954, and then decreased gradually to 1962. The proportion accounted for by margins for manufacturing apparel and household textiles continued to increase, and amounted to about 30 percent in 1958 and 1962 (fig. 3).

Information on specific items of cost is not complete, and in some instances data for the different agencies are not strictly comparable. But approximations based on available information indicate that, of the spread between retail prices of cotton apparel and household goods and returns to growers for the cotton used, the proportion accounted for by wages and salaries decreased from about 53 percent in 1939 to 51 percent in 1947, and then increased to about 56 percent in 1962. The proportion of these spreads accounted for by profits increased from about 5 percent in 1939 to 16 percent in 1947, and then increased to about 6 percent in 1962. Proportions accounted for by alJ other items decreased from about 42 percent in 1939 to 32 percent in 1947, and then increased to 37 percent in 1962 (fig. 4). During the years for which estimates were made, wages and salaries of employees engaged in marketing, manufacturing, and distributing cotton and cotton products averaged almost four times as much as returns to growers for farm production of the cotton, and profits to these intermediate agencies averaged about half as much.

Data on the distribution of the consumer's dollar paid for apparel and household goods made of cotton may indicate the relative importance, from the viewpoint of costs, of increasing efficiency and reducing costs for the different services. During the years studied, margins for ginning and baling, combined with those for merchandising cotton, amounted, on the average, to less than 7 percent of the combined margins for manufacturing and finishing cloth and for fabricating it into apparel and household goods, or for wholesale and retail distribution of these products. Thus, a reduction of only 4 percent, for example, in the margins for

wholesaling and retailing, or for manufacturing and finishing cloth and fabricating it into apparel and household goods, would have reduced the spread between retail prices to consumers and prices to growers for the cotton more than a 50-percent reduction in total margins for ginning, baling, and merchandising the raw cotton.

Although these differences in size of margins are important, they may not reflect accurately the relative opportunities for making savings in marketing costs that can be passed back to cotton growers or on to consumers of the finished products. A determination of the extent to which it would be feasible to reduce these margins would require detailed studies of each important segment of the marketing, manufacturing, distribution procedures to evaluate the influence of the factors affecting the adequancy, efficiency, and costs of the services, and to discover the most feasible means of improving the adequancy and efficiency of the services and of reducing costs for the various agencies. Eesults of such studies are not available for many of the agencies, but the available information on margins and costs and on means of reducing them is presented in this report in about the order in which the marketing services are rendered, beginning with movement of cotton from farms.

Wool and Wool Products Wool utilized in the United States is of two

rather distinct kinds, apparel and carpet wools. Apparel wool includes the finer fibers used mainly in the manufacture of apparel yams and fabrics. Carpet wool consists of the coarser fibers used mainly in the manufacture of carpets and rugs. In 1962, apparel wool accounted for about 65 percent, and carpet wool for about 35 percent, of all wool consumed by mills in the United States. All of the carpet wool and substantial proportions of the apparel wool were imported. About seven- eighths of the wool produced in the United States in 1962 was shorn wool, obtained from shearing live sheep. The remainder was pulled wool, obtained by pulling the wool from the skins of slaughtered sheep. Production of both kinds of wool is widely distributed throughout the United States.

MARKETING CHANNELS

Soon after sheep are shorn, fleeces are usually packed for shipment in bags weighing from. 175 to 300 pounds when filled. Some of this wool is assembled by local dealers or handlers and sold to merchants in central markets or to manufacturers, but many growers, particularly the large producers, sell directly to merchants in central markets or to mill buyers. A large portion of the wool usually moves out of producing areas to central markets or to mills soon after it is clipped. Producers of pulled wool usually sort it into uniform lots and put it in bags or bales which range

10

Where it Goes

THE CONSUMER'S COTTON DOLLAR, BY OPERATIONS OR SERVICES

Paid for Apparel and Household Goods, Selected Years

$1.00 ^Retailing

Wholesaling

Manuf. apparel and

► household goods

Manuf., dyeing, and finishing-

(yarns and fabrics

/AMerchandising cotton

y^Ginning and baling

Farm production

1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA. AND PARTLY ESTIMATED.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2765-64 ( 4 ) ECONOMIC RESEARCH SERVICE

Figure 3

Where it Goes

THE CONSUMER'S COTTON DOLLAR, BY COST ITEMS


I Profits '

lAll other

■ Salaries and wages

Farm production

1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA, AND PARTLY ESTIMATED. *NET PROFITS OF ALL AGENCIES, EXCEPT FARM

PRODUCERS, AFTER DEDUCTION OF FEDERAL INCOME AND EXCESS-PROFIT TAXES. O INCLUDES DEDUCTIONS FOR FEDERAL INCOME AND EXCESS-PROFIT TAXES.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2766-64(4) ECONOMIC RESEARCH SERVICE

Figure 4

11

in weight from 140 to 800 pounds when filled. Much of it is sold directly to mill buyers {S6).

Most of the imported apparel wool goes to central markets, where it is handled by the same merchants and manufacturers who handle the wool produced in the United States. Imported carpet wool also goes directly to central markets, where it is handled by a specialized group of merchants and manufacturers, most of w4iom are located in Philadelphia.

Domestic and imported wools are assembled in warehouses, at concentration points, or in central markets, where they are sorted into lots of uniform quality and stored until needed by manufacturers. Most of the wool required by manufacturers, particularly those producing wôrsted fabrics, is bought in the grease. But considerable quantities, particularly that used by woolen mills, are bought in the scoured state. This wool usually is scoured by dealers or processors.

The apparel wool manufacturing industry consists of two major divisions, the worsted and the woolen. Of the virgin apparel wool consumed in the United States, the worsted division accounted for about 66 percent in 1948 ; the proportion decreased to 49 percent in 1957, and then increased to 62 percent in 1962. Worsted manufacturers sort, blend, and scour wool ; card, comb, and convert it into semimanufactured products known as tops; and spin the tops into yarn. Woolen manufacturers combine and mix the wool and other materials used, card it, and spin it into yarn without combing it and converting it into tops. If wool manufacturers do not buy the wool on a scoured basis, they have it scoured.

Most of the worsted and woolen yams are woven into fabrics, but some of them go into knit goods. Census data .show that in 1958 about 85 percent of the yarn produced by worsted and woolen manufacturers wâs weaving yarn and 15 percent was knitting yarn (fig. 5). About 88 percent of the weaving yarn was used in making apparel fabrics, about 7 percent was used in blankets, and 5 percent in other nonapparel fabrics. Apparel fabrics are used chiefly for making men's and women's outerwear. In 1958 about 46 percent of these fabrics were used in the manufacture of men's and boys' clothing and 54 percent in women's and children's clothing.

DIVISION OF CONSUMER'S DOLLAR

The value added to wool by marketing, manufacturing, and distribution services is so great that returns to farm producers for the raw wool are only a small proportion of the prices paid by consumers for the finished products. The retail value of 20 representative wôol products and the farm value of the wool used in their manufacture show that during the 27 years 1935-62, gross returns to growers for the raw wool averaged about

14 percent of the retail prices to consumers for the finished products (fig. 6) .^

The proportion of the retail value of wool products accounted for by the farm value of the wool ranged from about 9 percent in 1958, when prices per pound, grease weight, received by farmers for shorn wôol averaged 37 cents, to 25 percent in 1951, when farm prices averaged 97 cents. In 1962, when farm prices averaged 48 cents per pound it amounted to 11.5 percent. From the early 1940's to the early 1960's the proportion tended to decline.

Marketing margins for wool, or the spread between prices to farmers for the raw fibers and prices paid by consumers for the finished products, amounted, on the average, to about 86 percent of the consumer's dollar during the 27-year period, 1935-62. The proportion, by years, ranged from about 75 percent in 1951 to 91 percent in 1958, and amounted to 88 percent in 1962. The relative size of these margins emphasizes the importance of a breakdown to show the amounts contributed by the various services and the cost of items included.

Based on official data and other information, rough approximations were made to show the average distribution of the consumer's dollar paid for wool clothing and household goods in 1939, 1947, 1954, 1958, and 1962. As previously indicated on page 9, data available for this purpose are not complete, and in some instances they are not strictly comparable. Consequently, some adjustments were required in approximating margins on the basis of these data and other information. Furthermore, the estimated margins were adjusted to approximate the farm-to-retail price spreads for 20 items of woolen and worsted clothing and household goods, as calculated by the Economic Research Service, U.S. Department of Agriculture.

The results show that the proportion of the consumer's dollar that went to growers for farm production of wool increased, on the average, from 11.8 percent in 1939 to 13.4 percent in 1954, decreased to about 9 percent in 1958, and amounted to 11.5 percent in 1962 (fig. 7).

^ Data were assembled by K. Parr and R. O. Been for use in constructing farm-to-retail price spreads for 1926- 41. The items included are men's overcoats, suits, sweaters (medium and expensive quaUty), jackets, top- coats, and trousers ; women's coats, dresses, hats, flannel robes, and sport coats; boys' suits, overcoats, trousers, sweaters, and jackets; girls' coats and dresses; and blankets. The values shown were arrived at by weighting the retail price of each item by the number bought by the average wage earner's family, as reported by the Bureau of Labor Statistics in "Money Disbursements of Wage Earners and Clerical Workers, 1934-36." (130). In arriving at the farm value of the wool used, the quantity and kind of wool required for each of the 20 items were estimated and weighted by the average number of articles purchased per family. The arithmetical products thus obtained were multiplied by the average annual farm price of wool. Farm-to-retail price spreads for more recent years were estimated by the use of indexes for specific items, as reported by the Bureau of Labor Statistics.

12

Consumed in U. S.

APPROXIMATE DISTRIBUTION OF WOOL, 1958

ÍTOTAL WOOL CONSUMPTION 100%

/v^WOOLEN AND WORSTED YARN llX^Zyy/ZA

^ WOVEN GOODS 61%;?

:ÂPPAREL FABRICS 54%á^g>v>i

MEN'S & BOYS' CLOTHING

25%

U.S. DEPARTMENT OF AGRICULTURE

28%

OTHER NONAPPAREL FABRICS

3%

WOMEN'S & CHILDREN'S CLOTHING

29%

NEC. ERS 2767-64(4) ECONOMIC RESEARCH SERVICE

Figure 5

MARGINS FOR WOOL PRODUCTS

120

WOOL USED ANNUALLY PER FAMILY IN |

20 WOOL ARTICLES

Q I I I I I I I I I I I I I I I I I I I

1940 1950 1960 1940 1950 1960 */N COMBINING THE VALUES FOR THE 20 ITEMS, PRICES WERE WEIGHTED BY THE NUMBER OF ARTICLES PURCHASED BY THE AVERAGE WAGE EARNER'S FAMILY AS REPORTED BY THE BUREAU OF LABOR STATISTICS. COMPLETED DATA FOR ALL ITEMS WERE NOT AVAILABLE EACH YEAR AND TOTALS WERE ESTIMATED FOR SOME YEARS ON THE BASIS OF RATIOS OF AVAILABLE ITEMS TO TOTALS,

OFARM VALUE OF 4.86 POUNDS OF TERRITORY WOOL AND 5.85 POUNDS OF WOOL FROM EASTERN STATES.


Figure 6

13

Where ff Goes

THE CONSUMER'S WOOL DOLLAR, BY OPERATIONS OR SERVICES


^Retailing

' iWholesaling

/^Manuf. apparel and ^household goods

Manuf.,dyeing, and finishing I yarns and fabrics

^Merchandising wool

^Farm production

1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA, AND PARTLY ESTIMATED.

U. S, DEPARTMENT OF AGRICULTURE NEC. ERS 2769-64(4) ECONOMIC RESEARCH SERVICE

Figure 7

Where ¡t Goes

THE CONSUMER'S WOOL DOLLAR, BY COST ITEMS


1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA. AND PARTLY ESTIMATED. *NET PROFITS OF ALL AGENCIES, EXCEPT FARM

PRODUCERS, AFTER DEDUCTION OF FEDERAL INCOME AND EXC ESS - P ROF IT TAXES. ÎNCLUDES DEDUCTIONS FOR FEDERAL INCOME AND EXC ESS - P ROFIT TAXES.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2770-64(4) ECONOMIC RESEARCH SERVICE

Figure 8

15

specific requirements for hauling seed cotton, loading them fully, when feasible, for each trip to the gin, and obtaining return loads whenever

GINNING AND BALING

Most of the cotton produced in the United States is taken to gins, where the seed cotton is conditioned, coarse trash removed, the lint separated from the seed and subjected to one or more stages of lint cleaning, and where it is baled before it is sold by the farm producer. Only a small part of the U.S. crop is sold as seed cotton, and a substantial portion of it is remnants harvested toward the end of the season.

Charges or Costs

Charges for ginning cotton and related services vary considerably from year to year with changes in general business conditions, in prices of cotton,

and in costs of bagging and ties. They vary aUo from one State or region to another with differences in condition of seed cotton and in kinds and amounts of services rendered. For the United States as a whole, average charges for ginning and wrapping a 500-poimd bale of American Up- land cotton, including charges for conditioning and cleaning seed cotton, the use of lint cleaners, and for bagging and ties, increased from $4.04 for the 1931 crop, when farm prices of cotton averaged 5.66 cents a pound, to 16.80 for the 1963 crop, when farm prices averaged about 32.1 cents (table 5). The proportion of the farm value of cotton accounted for by ginning charges ranged from 5 percent for the 1946 crop, when farm prices averaged 32.63 cents a pound, to 14 percent for the 1931 crop, when farm prices averaged 5.66 cents. For the 1963 crop, when farm prices averaged 32.1 cents a pound, the proportion averaged about 11 percent.

TABLE 5.—Average charges per 500-pound gross-weight hale and proportion of farm value for ginning Upland cotton^ hy States^ specified years^ 1939-63

State Year beginning August—

1939 1945 1951 1955 1959 1963

Alabama Dollars

3. 17 5.12 5.21 4. 61 4.63 3.44 4.77 4.96 5.97 5.24 3. 16 5.88 2.70 4.38 5.46

Dollars 7.08 8. 90 9. 50 8.40 7. 13 6.87 8.26 8.09

12. 11 9.21 7.39

11.68 7. 00 7.77

10. 65

Dollars 8.37

11.41 13.42 11.20 10. 00 9.71

11. 17 10. 68 17.75 14.42 10.07 15. 84 9.58

10.40 14. 18

Dollars 9. 08

13.68 14. 08 13.84 11.32 9.71

12. 77 11.30 17. 05 12. 71 10.48 14.61

9. 60 11.86 14.02

Dollars 11.43 16.88 15. 71 15.91 13.94 11.23 15. 08 13.73 17. 81 14. 01 12. 51 15.52 11.73 13. 96 15.94

Dollars 12. 72

Arizona 19.48 Arkansas- 17.20 California 18.58 Florida 15. 86 Georgia 13.50 Louisiana 16.01 Mississippi 14.76 Missouri 19.52 New Mexico 17.65 North Carolina 13. 73 Oklahoma 19.20 South Carolina 14.25 Tennessee _ _ _ 15.28 Texas 18. 11

United States ^ 4.67 9.00 1 12. 04 1 12. 75 1 15. 02 116. 80

Proportion of farm value

Alabama Percent

6.9 9. 1

11.8 9.6 9.7 7.3

10.6 10.7 13.4 11. 1

6. 6 14. 1 5.7 9. 7

12. 5

Percent 4.4 5. 9 6. 1 5.0 4. 5 4.2 5. 1 4. 9 7.9 5. 5 4. 5 7. 7 4.3 4. 8 6. 9

Percent 4.4 5.9 7. 1 5.7 5. 5 5.0 6. 0 5.4 9.9 6. 7 5.2 8.9 5. 1 5.4 7.8

Percent 5.3 8.5 8.6 8.4 6.7 5.7 7.8 6.7

10.4 7.8 6.5

10. 0 5.8 7. 1 9.3

Percent 6.9

10. 1 9.6 9.9 8.8 6.8 9.2 8.3

11. 1 8.0 8.3

11. 1 7.4 8.3

10. 8

Percent 7. 8

Arizona 11.8 Arkansas 10.5 California 11. 0 Florida _ 10.0 Georgia 8.3 Louisiana 9.9 Mississippi 8.9 Missouri 12. 0 New Mexico 10.3 North Carolina 8.3 Oklahoma 13. 1 South Carolina 8.6 Tennessee 9.2 Texas 12. 0

United States _ _ - 10.3 5.7 16.4 17. 9 19.5 110. 5

1 Includes separate charges for drying seed cotton or use of lint cleaners. Adapted from reports of Economic Research and Agricultural Marketing Services.

16

During the 1963-64 season, average charges for ginning and related services for a 500-pound bale of American Upland cotton, including charges for bagging and ties, ranged from $12.21 in Vir- ginia to $19.52 in Missouri. The proportion of the farm value of cotton accounted for by these charges ranged from about 8.3 percent in Georgia and North Carolina to 13.1 percent in Oklahoma (tableo).

Keflecting lower rates of ginning and associated higher costs, charges for ginning American-Egyp- tian cotton are much higher than those for ginning American Upland. Seasonal average charges for ginning and wrapping American-Egyptian cotton increased from $12.57 per bale for the 1942 crop to $27.06 for the 1963 crop.

Factors Affecting Charges or Costs

Many factors are responsible for or associated with changes in ginning charges from one period to another and with differences in these charges from one State to another.

General business conditions.—Charges for ginning cotton usually vary directly with prices of cotton, farm wage rates, and general business conditions. From Í928 to 1931, ginning charges were reduced, on the average, about 32 percent. This reduction was associated with average reductions of 69 percent in farm prices of cotton, 28 percent in farm wage rates, and 14 percent in the index of industrial production. From 1931 to 1962, ginning charges increased more than 300 percent. During the same period, farm prices of cotton fluctuated considerably, but in 1962 they averaged more than 5.5 times as high as they were in 1931. Farm wage rates increased about 500 percent and industrial production increased about 300 percent. These changes since the early 1930's reflect substantial reductions in the purchasing power of the dollar.

Volume of ginning.—Average cost per bale for ginning cotton usually is influenced by the volume of ginning per gin plant. Differences in costs may result from differences in size of gin plants used to optimum capacity, in volume of ginning per unit of ginning equipment, or in some combination of the two factors. Data on the extent to which average ginning costs per bale are influenced by size of gin plant, when the volume of ginning per gin stand was about the same, appear inconclusive {18^ 75. 76^ 126). Average costs per bale for ginning cotton usually decrease considerably with increases in proportion of the capacity of the gin utilized over extended periods {11, 19, 23, 52, 67, 58, 73, 75. 76, 8If).

Weight of seed cotton per bale.—The quantity of seed cotton required per 500-pound bale may be influenced considerably by the variety of cotton, by humidity and other conditions at the time of ginning, and by methods of harvesting. The longer staple varieties usually give a smaller lint outturn and are somewhat more difficult to

clean and to gin than the shorter staples. For the 1962 crop, the quantity of handpicked seed cotton required to make a 500-pound bale averaged 1,405 pounds for American Upland and 1,469 pounds for American-Egyptian {101,) . American-Egyp- tian has an extra long staple and is gmned on roller gins; whereas Upland has a shorter staple and is ginned on saw gins.

Quantities of seed cotton required per 500-pound bale of Upland averaged 2,006 pounds for hand- snapped, 1,534 pounds for machine-picked, 2,214 pounds for machine-stripped, and 2,555 pounds for machine-scrapped cotton {10Í). Ginning charges per 100 pounds of seed cotton usually are about the same for cotton harvested by different methods. Under these conditions, costs of ginning a 500-pound bale would average about 43 percent more for hand-snapped, 9 percent more for machine-picked, 58 percent more for machine- stripped, and 82 percent more for machine- scrapped cotton than for handpicked cotton.

In North Carolina, about 73 percent of the 1962 crop was handpicked and 27 percent was machine picked ; whereas in Oklahoma almost all the crop was hand snapped or machine harvested. Charges for ginning a 500-pound bale of cotton, excluding charges for bagging and ties, averaged 60 percent higher in Oklahoma than in North Carolina. Other factors also help to account for differences in ginning charges. Data for Missouri, for example, show that 17 percent of the 1962 crop was hand picked, 77 percent was machine picked, and 6 percent was hand snapped; but ginning charges, excluding bagging and ties, averaged 55 percent higher than in North Carolina and 2 percent lower than in Oklahoma.

Supplementary equipment.—Increases in the proportion of the crop harvested by hand snapping, machine picking, and machine stripping have necessitated increased use of supplementary ginning equipment. During the 15-year period, 1947-62, the proportion of the U.S. crop harvested by handpicking decreased from about 78 percent in 1947 to 20 percent in 1962 ; whereas the proportions hand snapped and machine harvested increased from about 22 percent in 1947 to 80 percent in 1962. Increases in the use of supplementary equipment, such as dryers for conditioning green or damp seed cotton, cleaners for removing dirt and small particles of foreign matter, and extractors for removing burs and other coarse materials associated with the changes in harvesting practices, greatly influenced charges or costs of ginning {98,106).

Gins in the Southeastern States usually have less auxiliary equipment and also lower ginning charges than those in other parts of the Cotton Belt, although factors other than the use of auxiliary equipment also may help to account for differences in ginning charges. Data for gins in Georgia show that in 1951, for example, average replacement costs ranged from $54,000 for single

17

gins with no overhead cleaners, one or two driers, and one bur extractor to $88,850 for elaborate gins with lint cleaners, one or two overhead cleaners, one or two dryers, and one bur extractor. Costs per bale for these gins ranged from $9.28 for the simple gins with an average volume of 2,011 bales to $11.57 for elaborate gins equipped with lint cleaners and with an average volume of 1,940 bales {11). These costs have increased in recent years.

In the Eio Grande and Pecos Valleys of Texas and New Mexico, the value of gin plants in the 1950-51 season averaged $34,000 for standard gins with moderate overhead cleaning equipment, but with no bur machines or lint cleaners, and $85,000 for specially equipped gins with lint cleaners {35). Ginning costs per bale averaged $11.50 for the standard gins with an average volume of 3,345 bales and $12.39 for the specially equipped gins with an average volume of 3,878 bales {35).

In Arizona, replacement costs per gin in 1952 were about $153,000 for specially equipped gins with huiler fronts, extractor feeders, one or more driers, a large bur machine, 12 to 21 cylinders of overhead cleaning, and in some instances lint cleaners. These costs were about $100,000 for standard gins with huUer front, extractor feeders, usually with one drier or heat on the feeders, all with less than 12 cylinders of overhead cleaning, and some with lint cleaners. Ginning costs in the 1952-53 season averaged $9.47 per bale for specially equipped gins with an average volume of 11,781 bales and $8.67 for standard gins with an average volume of 11,246 bales.

In addition to equipment for conditioning and cleaning seed cotton, many gins have installed equipment for cleaning the lint after it is removed from the seed. The proportion of gins in the United States with lint cleaners increased from less than one-third in the 1954-55 season to about 94 percent in the 1962-63 season {31^, 106). In the 1961-62 season, about 33 j)ercent of the gins had only one stage of lint cleaning, 49 percent had two stages, about 10 percent had three stages, and a few had four stages of lint cleaning. In 1956, costs of providing a one-stage lint cleaning for a plant with B gin stands of 90 saws each in California ranged from about $9,750 to more than $17,000, or from 5 to 8.5 percent of the total cost of the gin. Charges for lint cleaning averaged about $1.60 per bale {83),

In Arkansas in 1954 and 1955, initial costs of lint cleaners ranged from about $8,000 to $18,500, depending on the type of machine and the number of gin stands. The additional cost of lint cleaning was estimated at 94 cents per bale in 1954, when the average volume was 3,468 bales per gin and 84 cents per bale in 1955, when the average volume was 4,129 bales per gin {19), Similar data for gins in Georgia in the 1951-52 season show that replacement costs of lint cleaners averaged about $16,000 {11), Costs per bale for cotton taken through one stage of lint cleaning aver-

aged about 72 cents per bale for fixed costs and 84 cents for operating costs, a total of $1.56 {11),

In 1961, costs of one-stage lint cleaners installed in gins in the Midsouth, in the Texas High Plains, and in California, complete with all necessary motors, fans, and accessories, ranged from about $12,000 to $19,000. Costs for three stages of lint cleaners ranged from about $36,000 to $58,000. With an average ginning rate of 6 bales per hour and an annual volume of 6,000 bales, cost to gins for one stage of lint cleaning was estimated at 43 cents per bale for single-stream cleaning and 68 cents per bale for split-stream cleaning. The cost for three stages of split-stream cleaning, under these conditions, was $2.04 per bale in the Midsouth and $1.96 per bale in Texas and California. Costs per bale would decline moderately with increases in volume above 6,000 bales, but would rise sharply with a decline in volume below that level {59),

Other equipment for cotton gins may include automatic lint cotton samplers and presses for compressing bales at gins to densities equal to or higher than the regular standard density. Automatic samplers were designed to provide a sample representative of cotton throughout the bale, to reduce the amount of cotton removed by multiple sampling, and to lower damages to bale covers and to cotton from exposure. By the early 1960's, mechanical devices for sampling cotton during ginning had been installed in more than 190 gins, mainly in Texas and California. Three different makes of mechanical samplers were in use. Each possessed distinctive features, but all extracted, accumulated, pressed, and packaged a series of sub- samples taken at intervals while the cotton was being ginned. The cost of owning and operating one of these samplers was estimated in 1958 at 16 cents per 9-inch sample at gins with an annual volume of 9,000 bales and at 22 cents per 9-inch sample at gins with annual volume of 4,000 bales. Use of some of these samplers was discontinued in the early 1960's.

Eq[uipment for compressing cotton to standard or higher densities at gins is of recent development. In 1960, about 2 percent of the gins in the United States had this equipment. Most of them were in California. In the 1958-59 season, the cost of this equipment installed amounted to about $49,000 for standard density presses and $68,000 for high density presses. Costs per bale of operating standard and high density presses exceeded those for flat presses by $1.31 and $1.94 respectively when annual volume was 4,000 bales and by 83 cents and $1.15 respectively when annual volume was 9,000 bales {20),

Labor, power, and other items.—Ginning costs are influenced considerably by the cost of labor, power, and other expenses of operating and maintaining ginning and auxiliary equipment {29^ 73). As indicated in a previous section (p. 16), increases in ginning charges from the less than $5 per bale in 1939 to $17.08 in 1962 were associated

18

with greater proportional increases in farm wage rates. In 1962, farm wage rates per day, without room or board, averaged $4.32 in South Carolina, $6.10 in Arkansas, $7.80 in Oklahoma, and $7.62 in New Mexico {108). Average ginning charges in these States were $14.17, $17Jl, $19.79, and $17.36 per bale respectively.

Costs per bale of power and fuel in ginning operations vary with the kind and amount of powder and equipment used, size of the gin plant, and the number of bales ginned. In Arkansas in 1955, for example, the cost of power and fuel amounted to $1.32 per bale for gins powered by electricity and 50 cents for gins powered by diesel engines. These gins had about the same amount of seed cotton cleaning and drying equipment. Annual volume of cotton ginned averaged 4,675 bales for gins powered by electricity and 4,214 bales for gin powered by diesel engines {'29), In 1960, the cost of electric power for gins in Arkansas and Missouri averaged $1.69 per bale of cotton and ranged from less than $1 to more than $3 per bale (4^).

Cost per bale for drying seed cotton varies with the type of fuel used and from one State or region to another. In 1960, costs of drying seed cotton in Arkansas and Missouri averaged 27 cents per hale for gins using natural gas for drying and 54 cents for gins using propane or butane (^^). Other items of cost, including maintenance, insurance and taxes, interest on investments, and miscellaneous expenses, account for substantial proportions of total costs. Since most of these items tend to be fixed, the cost per bale for most of them decreases markedly with increases in the number of bales ginned per gin stand {^2).

Quality of services performed.—Costs of ginning and the value of lint ma;^ be greatly influenced by the adequacy of ginning services. The proportion of cotton that shows rough preparation is used as a measure of the quality of the ginning services. Of the 1962 cotton crop, the proportion that was rough ginned or gin cut averaged about 0.2 percent for the United States and ranged from less than 0.04 percent in Arizona to about 0.7 percent in Oklahoma.

Bagging and ties.—Charges for bagging and ties, when assessed separately, averaged $4.94 per bale, or about 29 percent of total charges for ginning the 1962 crop (lOJi), Average charges for these materials by States ranged from $4.15 per bale in South Carolina to $5.25 in Missouri. In the southeastern States, charges for these materials usually average less than in other areas. These relatively low charges are accounted for chiefly by the fact that ginners in those States cover a considerable proportion of the cotton with secondhand materials; whereas in other areas, ginners customarily use new bagging and ties {SO),

Types of bagging used include open and close- woven jute, sugar bag cloth, cotton, and other materials. Costs vary with the kind used. The pro-

portion of the 1957 crop, for example, covered with new open-weave jute bagging ranged from 28 percent in the Southeast to 78 percent in the West. The proportion covered with bugar bag cloth ranged from 22 percent in the West to 71 percent in the Southwest, and amounted to 67 percent in the Southeast. Apparently use of sugar bag cloth decreased from 1957 to the early 1960's. Second- hand ties were used on 36 percent of the bales in southeastern States ; they were used on only 5 percent of the bales in the United States {81).

Supplementary services rendered.—Services rendered in connection with ginning, the charges for which are included with those for ginning, may materially affect total ginning charges. Such services, in addition to those already indicated, may include hauling from gin to warehouse, cotton yard, or railroad platform; storing lint cotton on the gin yard and cottonseed at the gin ; sampling the bales; and advancing credit for producing and harvesting the crop. In addition, ginners buy a substantial part of the cotton crop, and most of the conttonseed crushed is bought by or through ginners. Proportions of lint purchased by ginners decreased from about 33.3 percent in the 1947-48 season to 8 percent in the 1960-61 season, and then increased to 20 percent in the 1962-63 season {Slf.^ 101,),

Means of Reducing Costs

Because conditions vary from one area to another, specific information on the situation in each locality would be needed as a basis for indicating the means by which and the extent to which it might be feasible to reduce ginning costs and charges in specified localities.

Increase in volume of ginning.—The fact that average costs per bale for ginning cotton usually decline as the volume increases and that nearly 34 percent of the gins in the United States ginned 1,500 bales or less in 1962 indicates that ginning costs might be reduced considerably by increasing the volume ginned per gin. This would require further reductions in the number of gins. The number of gins operated in the United States decreased from about 6,800 in 1947 to 5,400 in 1962. Further reductions might well be made in some areas by discontinuing the use of old, badly worn, and obsolete equipment and by limiting the construction of new plants and replacements, other than necessary repairs, to those required for efficient operations.

The possibility of further increases in volume of ginnings per unit of equipment by reducing excess ginning capacity may be indicated by data on the extent to which ginning capacity was utilized during the heaviest part of the ginning season. This information provides a basis for estimating the extent to which the volume of ginning per imit of equipment might be increased by reducing excess capacity, without providing additional storage space for seed cotton or changing harvesting practices. Census data indicate that

19

in 1956, for example, in about 27 percent of the cotton-producing counties in the United States, less than 40 percent of the estimated total ginning capacity (on the basis of a 12-hour day) was used during the peak of the ginning season. Outside of irrigated counties, the proportion of counties that utilized less than 60 percent of their estimated ginning capacity (on the basis of a 12-hour day) during the peak period amounted to 53 percent for the United States, and ranged from 23 percent in Mississippi to 96 percent in Oklahoma. The proportion of gin capacity utilized during peak periods in irrigated counties was substantially greater than that utilized in other areas (^^).

These data clearly indicate that substantial reductions in the amount of ginning equipment used, and corresponding increases in the volume of ginning per unit of equipment, might be made in many parts of the Cotton Belt with little or no delay in harvesting and ginning and with no increase in storage space required for seed cotton. Unfavorable weather, the availability of cotton, the necessity for repairing machinery, and other factors may make it impossible to operate all gins continuously at full capacity (on a 12-hour day basis) for extended periods. But during the busiest part of the ginning season, gins may be operated (many actually are) for considerably more than 12 hours each day. In some instances, gins are known to have been operated 24 hours a day, 6 or 7 days a week, for a considerable period of time. Furthermore, the pressure on ginning facilities, when the movement of cotton to gins is heaviest,^ might be eased and the period during which gins can operate at more nearly full capacity extended somewhat by providing storage space for substantial quantities of seed cotton at the gin and by inducing farm producers to store more seed cotton on farms during the peak of the harvesting season. But additional costs of such storage and related factors would also need to be taken into account.

Where gin plants are too small for efficient operation, average costs per bale for ginning may be reduced by increasing the number of gin stands per plant, as well as by increasing the volume of ginning per stand. This might be accomplished by combining existing stands, preferably only the better ones, into fewer plants and by limiting construction of new plants to the larger sizes. To be economically feasible, savings in costs attributable to greater efficiency of the larger plants would need to equal or exceed expenses of making the changes. In addition to such horizontal combinations, savings under some conditions might result from vertical integration through combining with regular ginning the functions of one or more of such services as financing production and marketing of cotton, operating cottonseed oil mills, and buying and selling cotton and cottonseed.

In some instances, reductions in costs of ginning by increases in the volume per gin stand and per

gin plant might be offset to some extent by increases in distance of hauling and possibly by some delays in getting cotton ginned, particularly during the peak of harvest. But in many instances, increases in volume per gin plant could be accomplished by reducing the number of gin plants in specific villages or towns, where two or more gins are operated, without increasing appreciably the distances seed cotton would have to be hauled. The fact that in the 1947-48 season, for example, more than three-fourths of the seed cotton was hauled 6 miles or less to gins indicates that in many instances the volume per gin could be considerably increased without making the distance from the farm to the gin very great {99),

Further concentration wnthin a short period of the movement of seed cotton from farms to gins, as a result of expanding machine harvesting, would tend to increase the difficulties involved in fully utilizing ginning equipment for longer periods each season. The feasibility of storing limited quantities of seed cotton at the gin, at the farm, or at both places has been considered a means of reducing the peak load demands for ginning services {125.126). Reports indicate that seed cotton may deteriorate in storage if not kept in suitable condition, but is not adversely affected if stored where the moisture is relatively low.^ Ap- parently the cotton harvesting-ginning pattern in one area of California was altered in 1962 by the use of wire baskets for storing seed cotton at a cost of 70 cents per bale {26). "Turnrow storage" in the field has been suggested as a means of spreading the peak load of ginning in Arkansas {125). Additional information is needed to show the conditions under which and the extent to which it would be feasible to store seed cotton as a means of lengthening the ginning period.

Careful selection and efficient use of supplementary equipment.—The cost of conditioning, cleaning, and other supplementary equipment, and the fact that some equipment, if not properly used, may seriously damage cotton fibers emphasize the importance of careful selection and use of equipment. For best results, the equipment used would need to be limited to that relatively best adapted, mechanically and economically, for rendering the services than can be performed more effectively and economically at gin plants than at other locations and by other agencies. In addition, this equipment would need to be operated efficiently and in such a wây as to minimize damages to the cotton fibers.

As previously indicated (p. 18), use of lint cleaners at gins has increased greatly in recent years. Results of research indicate that the use of lint cleaners usually increases the bale value

* Cooke, J. B. and Reid, T. P. HANDLING AND STORAGE OF SEED COTTON FROM FIELD TO GIN. A paper presented at Southeast Section of Amer. Soc. Agr. Engin., Memphis, Tenn., Feb. 24, 1959.

20

to producers for cotton that, without lint cleaning, would be of the lower grades; and usually decreases the bale value to producers for cotton that, without lint cleaning, would be of the higher grades (59), These results also indicate that lint cleaning at gins increases the cost, reduces the quantity, and lowers the quality or value of lint to mills. Such increases in costs and reductions in quantity and value of lint to mills plus costs of lint cleaning at gins may be greater than any immediate benefits to farm producers plus reductions in transportation costs and in costs of lint cleaning at mills as a result of lint cleaning at gins. If so, lint cleaning at gins, particularly if more than one cleaner is used, may wêaken the competitive position of the American cotton industry as a whole, including cotton producers.

Careful harvesting and conditioning of seed cotton.—Costs of ginning and damage to lint from cleaning and ginning might be reduced by picking the cotton carefully so as to include only small amounts of trash, instead of snapping, machine-picking, or stripping and including large amounts of foreign matter with the seed cotton (38). But the feasibility of handpicking depends upon the extent to wîich the cost exceeds costs of other methods of harvesting, taking into account field waste, reductions in quality, and differences in costs of ginning and related services.

In 1953 and 1955, the total cost of mechanical picking in North Carolina, including field and grade losses and additional ginning charges, was equivalent to the cost of handpicking at $3.58 per hundredweight of seed cotton (88). In 1958, machine-harvesting costs in Arkansas were greater than hand-harvesting costs at $3.50 per hundredweight of seed cotton, unless the acreage harvested wâs large (^/). Costs of machine picking in the Mississippi Delta, including estimated losses in yield and grade, were higher in 1958 than costs of handpicking at $3.50 or less per hundredweight of seed cotton (82). In 1949, costs of handpicking in California averaged substantially more than costs of machine pickmg, including field waste, grade loss, and additional costs of ginning (IS). Data for 1952-55 indicate that harvesting cotton with mechanical strippers was more economical on the black prairies of Texas than hiring crews to pull or snap it by hand (7^). Picking instead of snapping or machine-harvesting cotton may delay harvesting and increase damage from exposure in the field.

Efficiency in organization and operation.— The kind and amount of ginning and auxiliary equipment, the condition or state of repair in which it is kept, and the method of organizing and operating it also may influence ginning costs considerably. The choice of kinds of equipment in plants already set up may be limit>ed, but it may be an important consideration in setting up new plants or in making replacements. Any reductions in costs resulting from the use of auxil-

iary equipment might well be made by efficient use of the more suitable types rather than by the reduction or elimination of equipment needed for rendering essential services. With adequate volumes of cotton for efficient operation reasonably certain, a ginner probably is more likely to use a suitable quantity and kind of equipment and to keep it in good condition so as to improve the quality of ginning services and to reduce ginning costs per bale.

Eesults of research indicate the possibility of substantial savings in ginning costs by more efficient organization and operation of gin machinery and equipment (127). Careful selection and efficient utilization of labor, power, and other items of expense may also reduce ginning costs (7^, 126), Data on variations in connected horse- power, m number of fans, and in power cost per bale for gms in Arkansas and Missouri during the 1960-61 season indicate that a substantial reduction in ginning costs could be made in many of the gms by improvements in plant design or gm layout that would reduce the number of fans required to move cotton through the ginnino- sys- tem (42, 82), Data for gins in California and in west Texas m 1962 show that substantial savings m costs might be made by rearrangements and reductions m the number of trash removal fans (ISS),

Substantial proportions of the cotton ginned, and even larger proportions of the cottonseed, are bought by the gin operator. The possibility of further integration to include delinting and possibly other processing of cottonseed at the gin has been suggested as a means of more fully utilizing labor and power facilities at gins (126). Adequate information is not available to ascertain the conditions under which and the extent to which these and other types of integration would be feasible.

Importance of Reductions in Costs

Available information indicates that in many instances ginning costs might be reduced by one- fourth or more by increasing the volume of ginning per unit of equipment, by using suitable equipment and operating it more efficiently, and by other economies. The relative importance of such savings is apparent when it is observed that, if such reductions had been reflected in prices to cotton growers in the 1962-63 season, the resulting increase m income would have been about $4.27 per bale, or about 2.7 percent of the farm value of the cotton.

Cotton Merchandisers' Margins

Merchandisers- gross margins for raw cotton are the differences between the prices at gins and the costs of cotton delivered to mills. These margins include costs of services incident to taking the cotton from gins and delivering it to mills at the

21

time in the quantity and of the quality desired. These services include receiving, sampling, weighing, classing, compressing, stormg, insuring, transporting, financing, and risk-bearing, among others.

RECEIVING AND RELATED SERVICES

After most cotton leaves the gin, it is assembled in public warehouses or compresses where several services are rendered incident to its compression, concentration, and storage. These services usually include issuing warehouse receipts, weighing, sampling, marking or tagging, and storage up to 30 days. In some instances, costs of these services are paid by producers and included in farm prices.

Charges or Costs

Average charges for receiving cotton at public warehouses and compresses in the United States ranged from 23 cents per bale in the 1939-40 season to 81 cents in 1958-59, and amounted to 74 cents in 1963-64 (table 6). Although receiving charges have increased greatly since 1939, they did not advance proportionally as much as prices of cotton up to 1950. After 1950, prices of cotton declined, but receiving charges continued to increase to 1958, and then declined to 74 cents in 1963. The proportion of the farm value of cotton represented by receiving charges decreased from 0.5 percent in the 1939-40 season to 0.3 percent in 1950-51. It incresaed to more than 0.5 percent in 1957-58, and amounted to less than 0.5 percent in the 1963-64 season.

TABLE 6.—Average charges per tale at public cotton warehouses and compresses^ hy States^ spéci- fia years, 19S9-6S ^

State Receiving charges—

1939 1947 1951 1955 1959 1963

Alabama _ _ CenU 30 27 15 22 37 28 28 17 25 37 15 35 15 23

Cents 47 {') 55 50 35 51 55 55 50 0) 50 32 55 52

Cents 56 75 56 78 53 57 57 55 75 44 75 46 50 76

Cents 66

100 53

100 60 60 58 50 88 44 75 38 56 82

Cents 71

100 67 96 73 73 66 65 86 51 66 65 69 75

Cents 85

Arizona 60 Arkansas 66 California _ _ _ 52 Georgia - - 92 Louisiana _ _ 74 Mississippi 66 Missouri 65 New Mexico 95 North Carolina. 54 Oklahoma.- _ _ _ _ _ 75 South Carolina __ 71 Tennessee _ _ 66 Texas - - 90

United States 23 52 65 70 75 74

TABLE 6.—Average charges per hale at public cotton loarehouses and compresses^ by States^ specified years 1939-63 ^—Continued

Alabama Arizona Arkansas California Georgia Louisiana Mississippi Missouri New Mexico North Carolina Oklahoma South Carolina Tennessee Texas

United States

Alabama Arkansas California Georgia Louisiana Mississippi Missouri New Mexico Oklahoma South Carolina Tennessee Texas

United States

Alabama Arkansas California Georgia Louisiana Mississippi Missouri New Mexico Oklahoma South Carolina Tennessee Texas

United States

Storage charges (per month)—

1939 1947 1951 1955 1959 1963

23 20 15 20 22 20 19 15 25 25 15 25 15 23

20

31 (^) 30 25 30 30 30 30 40 {') 30 32 30 32

30

41 30 34 30 46 35 35 33 37 40 45 41 36 40

37

47 40 38 42 51 42 39 35 49 45 50 47 37 47

43

54 51 50 45 54 51 49 50 49 50 49 53 51 48

50

55 49 50

347 57 51 50 50 48 50 50 52 50 51

51

Standard density compression charges—

61 60 100 50 61 60 60 76 76 50 60 76

62

98 95 130 100 96 95 95 125 100 93 95 101

98

116 100 140 108 111 102 100 160 125 104 100 132

119

120 82 167 116 113 95 88 163 130 119 82 145

120

129 101 168 129 128 109 100 175 163 130 100 162

139

140 120 184

136 123 120 190 200 132 120 184

158

High density compression charges—

70 100 125 125 150 75 115 125 107 140

100 130 150 177 185 65 100 119 125 147 68 108 124 128 144 75 115 128 119 142 75 115 125 122 140 79 150 185 185 185 76 100 125 135 163 65 102 112 125 146 75 115 125 106 140 76 103 134 146 163

77 110 134 146 166

159 160 208

Î54 160 160 200 200 147 160 184

184

See footnotes at end of table.

1 Based on published tariffs of major units of the public cotton warehouse industry, chiefly represented by those with compress facilities. Most of the storage companies included insurance in the storage charge.

2 Data insufficient for reporting. 3 Charge does not include insurance.

Adapted from reports of Economic Research and Agricultural Marketing Services.

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During the 1963-64 season, average receiving charges by States ranged from 52 cents per bale in California to 95 cents in New Mexico. Variations in these charges may be accounted for largely by differences in services. The storage period included, for example, ranged from 0 to 30 days and, even if storage rates were all the same, this ranê would account for considerable differences m charges. Furthermore, the kinds and amounts of other services included also vary, and some compresses do not make a receiving charge if they compress the cotton.


Costs of the services in connection with receiving cotton at warehouses and compresses may be reduced by minimizing unnecessary assembling and handling before shipment to mills and by rendering the necessary services more efficiently. A large amount of cotton changes hands several times in the course of movement through marketing channels. In many instances, these changes are accompanied by duplicate sampling and additional handling. Such resampling means additional service charges, waste of cotton used, damage to bagging, and exposure of the cotton to further waste and damage from contamination.

Such duplication and waste might be reduced by the development and use of suitable equipment for taking automatically adequate and authentic samples of cotton bales during ginning operations. As indicated above (p. 18), more than 190 automatic samplers had been installed in gins, mostly in Texas and California, by the early 1960's. Many farmers, ginners, classers, and spinners apparently considered samples taken by these automatic samplers as representative as or more representative than cut samples. But, as previously indicated, use of some of these samplers was discontinued in the early 1960's.

Disadvantages from the use of these mechanical samplers include: (1) high cost per bale in gins with small annual volume, (2) complicated features and failure to sample every bale, (3) buyers' preference for fresh cut samples, and (4) differences in dimensions and quality of cut and mechanically drawn samples. To overcome these disadvantages, special efforts might be made to develop simpler, more dependable, and less expensive mechanical sampling devices and to reduce the need for fresh cut samples. The most effective use of such sampling devices would require reliable means for correctly identifying the sample with the bale from which it was drawn, suitable methods of handling and storing the samples to preserve the quality of the lint included, and willingness of traders to sell and buy the cotton on the basis of these samples.

Savings might also be made by reducing or eliminating unnecessary duplications of services such as weighing, marking, and tagging. Research indicates that labor and other costs of handling and

weighing cotton could be reduced through improved methods of operation, including use of temporary blocks, and through use of improved handling and weighing equipment, including clamp trucks and mobile beam scales {131^ 182).

COMPRESSION OF COTTON

Cotton bales vary considerably in size, shape, and density. They include the flat or square gin bale and the standard- and high-density compressed bales. Flat gin bales are, on the average, about 56 inches long, 28 inches wide, and 45 inches thick. Density averages about 12 pounds per cubic foot. Standard-density bales are, on the average, about 56 inches long, 31 inches wide, and 22 inches thick. In these bales, density averages about 23 pounds per cubic foot. The average high-density bale is about 57 inches long, 22 inches wide, and 21 inches thick. Its density averages about 32 pounds per cubic foot. These dimensions and densities vary considerably with the weight of the bale {136),

Most of the cotton crop in this country is put up at first in flat gin bales. Charges for this service are included in those for ginning. Flat bales are bulky and, except in the Southeastern States where most of the cotton goes from gins directly to local mills, most of them are compressed to standard or high density to minimize costs of transportation and storage.

Charges or Costs

Charges for compressing cotton are made, in most instances, on a per bale basis, but in some instances they are based on actual weight. Rates charged for compression to standard density usually are somewhat lower than those for compression to high density. In the 1963-64 season, rates for standard-density compression averaged $1.58 per bale for the United States ; averages by States ranged from $1.20 per bale in Arkansas, Missouri, and Tennessee to $2.00 in Oklahoma. For high- density compression, the U.S. average rate was $1.84 per bale; averages by States ranged from $1.47 per bale in South Carolina to $2.08 in Cali- fornia (table 6). U.S. average rates for standard- density compression increased from 62 cents in 1939 to $1.58 in 1963 and the rates for high-density compression increased from 77 cents in 1939 to $1.84 in 1963.

The compress industry performs several services other than compressing. These include weighing, sampling, marking, insuring, reconditioning, storing, and loading out the cotton. Revenues derived from these other services account for a large part of total revenues received by compress companies.


Since a large portion of the total revenues of compress companies are derived from services other than the compression of cotton, the extent

23

to which compress charges could be reduced may be influenced considerably by efficiencies in the other services and the charges made for them. Compression of cotton to higher densities at gins has been considered a promising means of reducing costs of compressing and related services at gins {135),

Eesults of research designed to evaluate the possibilities and limitations of these higher density presses at gins indicate that tariff charged by Cali- fornia compresses in 1958 for compressing flat bales to standard density averaged $1.68 per bale. These compresses also levied a special delivery fee averaging 67 cents a bale on gin standard-density bales, leaving a net difference in value at warehouses of $1.01 a bale in favor of gin standard- density bales. As a result, marketing agencies usually paid ginners an additional dollar a bale for gin standard-density bales. The additional expense of turning out standard-density bales instead of flat bales ranged from $1.31 a bale for ginners with an annual volume of 4,000 bales to 83 cents for ginners with an annual volume of 9,000 bales. The volume at which the average cost of compressing standard-density and flat bales was the same was indicated at about 6,500 bales. The break- even volume for gin high-density presses would be substantially greater [20). The annual volume of cotton ginned at many of the gins in the United States is substantially lower than these break-even volumes.

STORAGE AND INSURANCE

Large quantities of cotton are held from the time it is ready for market until it is needed by mills. Stocks of American cotton in the United States on August 1 increased from a low point of 2,166,000 bales in 1951 to 14,490,000 bales in 1956. It decreased to 7,228,000 bales in 1961, and amounted to 11,200,000 bales in 1963. In addition, most of the American crop usually is ready for market during the first half of the crop year. Cot- ton in these stocks and that from the current crop needs protection to avoid or minimize deteriora- tion and to prevent destruction by fire and other hazards. These services are performed by warehouses with or without compressing facilities.

Charges or Costs

Charges for storage and insurance for cotton vary from year to year, from one State or region to another, and with the size of the bale (table 6). In the 1963-64 season, monthly charges for uncompressed cotton, or for compressed cotton for which no differential was provided, averaged 51 cents per bale per month for the United States. Averages by States ranged from 47 cents in Cali- fornia to 57 cents in Georgia. Average rates for the United States increased from 20 cents in 1939- 40 to 51 cents in 1963-64, but this increase was

proportionally less than the advance in cotton prices.

Because of differences in space required, rates charged by many warehouses with compressing facilities are lower for compressed than for uncompressed bales. Warehouses that do not provide differential rates usually compress all cotton upon arrival or reserve the right to compress the cotton in the event of a shortage of storage space

Carryover of American cotton in the United States on August 1, 1961 totaled 7,228,000 bales. The 1961 crop of American cotton totaled 14,384,000 bales, most of which was made ready for market during; the first half of the crop year. Domestic consumption of this cotton during the 1961-62 season totaled about 8,954,00 bales, and exports totaled 4,915,000 bales. Under these conditions, the quantity of American cotton ready for storage in the United States during the 1961-62 season averaged about 11,081,000 bales. If this cotton were all stored and insured at the average monthly rate of 52 cents per bale until needed for consumption by domestic mills or exported, storage and insurance charges that season would have amounted to about $69,145,000, or an average of about $3.20 per bale of the crop and carryover in the United States that year. Similar charges amounted to about $3.62 in the 1963-64 season, $3.45 in the 1958-59 season, $3.15 in the 1954-55 season, $1.50 in the 1947-48 season, and $1.45 in the 1939-40 season. All of this cotton may not have been stored and insured all of the time, but losses, on the average, from not doing so probably about equaled the storage and insurance charges made by commercial warehouses.


C^harges for storage and insurance may be reduced by one or more of several means. Com- pression of cotton to a higher density before storage might be used to reduce storage costs. In some instances, rates may be reduced considerably by increasing the period of continuous storage. Sub- stantial savings apparently would result from use of suitable machinery and equipment for handling, weighing, and stacking cotton, and from a convenient system of arranging the bales so they can be shipped out with minimum handling (i^, 55, 86,131,132).

Since, in many instances, storage and insurance are provided in connection with related services, such as receiving, sampling, marking, and compressing, any economies in organization and operation of the combined business would make possible a reduction in charges for storage and insurance. Use of any excess storage space for other commodities also might be advantageous.

TRANSPORTATION

Cotton is shipped from producing areas by rail, motortruck, or some combination of rail, truck,

24

and water transport directly to domestic mills, to ports, or to compress or concentration points. From these points it goes to domestic mills or is exported. Data on proportions moving to these outlets in recent years are not available, but during the 1938-39 season, about 6 percent of the cotton from interior compress points went to interior concentration points, 41 percent to domestic mill points, and 53 percent went to ports {13I{). Since the end of World War II, cotton production has shifted westward, and direct buying by domestic mills has increased. Information for evaluating the influence of these changes on the movement of cotton through marketing channels is not available.

Charges or Costs

Charges for transporting cotton by rail usually are based on a fixed schedule of rates relating to size of load and distance shipped. Data based on freight revenue and the value of cotton trans- ported on first-class railroads, on indexes of freight rates, and on other information indicate that charges for rail transportation of cotton in the United States increased from an average of about $2.80 per bale in 1939 to $3.90 in 1947 and to $5.15 in 1954, decreased to $4.95 in 1958, and amounted to $5.05 in 1961 and 1962. Indexes show that rail freight rates for cotton increased from 66 percent of the 1957-59 average in 1945 to 108 percent in 1953 and 1954, and then decreased to 99 percent in 1961 {103),


Costs of transporting cotton may be reduced by lowering freight rates, reducing or eliminating, when feasible, crosshauls and backhauls, loading cars to capacity to obtain minimum rates, the use of through-rate privileges whenever possible, and substituting other means of transportation for rail when savings in charges are available. Decreases in the index of freight rates for cotton since 1954 and apparent increases in the proportion trans- ported by trucks indicate that some progress has already been made by the use of these means.

FINANCING

Cotton merchants buy the large volume of cotton sold by farm producers during or soon after harvest and supply the demands of spinners throughout the year. This requires the financing of cotton from the time it is ready for market until it is needed for consumption by mills or for export. Information on the average length of time cotton is financed is not complete, but the carryover of American cotton in the United States on August 1 ranged from 14 percent of production in 1951 to about 111 percent of production in 1956. Most of the crop usually is harvested and sold, or pledged as collateral for government loans, by farm producers during the first half of the crop year; whereas mill consumption of cotton is dis-

tributed fairly uniformly throughout the year. The average quantity of American cotton carried in stock in the United States during the year ranged from about 40 percent of the crop in the 1951-52 season to 123 percent of the crop in the 1956-57 season.

Charges or Costs

Interest charges for financing the holding of cotton vary considerably from one merchant to another. Rates charged the smaller local merchants who obtain funds from local banks may be higher than those charged the larger merchants. In recent years, large quantities of cotton have been carried as collateral for Commodity Credit Corporation loans to farm producers at an annual interest rate of 3.5 percent. This rate apparently is lower than the average for cotton merchants.

On the basis of an average interest rate of 4 percent, interest charges amounted, on the average, to about 15 cents per 500-pound bale per month in the 1939-40 season, when farm prices averaged 9.09 cents per pound; 53 cents in the 1947-48 season, when farm prices averaged 31.93 cents; and 56 cents in the 1954-55 season, when farm prices averaged 33.61 cents. Interest rates increased markedly in the late 1950's and early 1960's. On the basis of an average interest rate of 4.5 percent, interest charges amounted to about 62 cents per bale per month in the 1958-59 season, when farm prices of cotton averaged 33.23 cents a pound. On the basis of an average interest rate of 5.5 percent, interest charges amounted to about 73 cents per bale per month in the 1962-63 season, when farm prices of cotton averaged 31.80 cents.

The average length of time individual bales were financed varied considerably from one year to another. American cotton available in the United States for financing averaged about 11,076,000 bales during the 1961-62 season. If all this cotton had been financed at a rate of 5.5 percent per year, costs for financing would have amounted to $99,904 million, or about $4.65 per bale of total carryover and crop of American cotton in the United States that year. Similar costs for other years averaged about $5.05 in the 1962-63 season, $4.40 in the 1958-59 season, $4.15 in the 1954r-55 season, $2.70 in the 1947-48 season, and $1.10 in the 1939-40 season.


As costs of financing cotton are based on the interest rate charged, the value of the cotton, and the length of time it is financed, a decrease in any one or all of these would reduce the costs of financing. Interest charges, particularly for the smaller local merchants, may be reduced by an increase in the volume of business through mergers or by other means that would permit getting money on terms comparable to those obtained by the larger merchants. The average length of time cotton is financed is influenced considerably by the size of

736-806—^64- 25

the carryover. The increase in carryover of American cotton in the United States on August 1 from 2,166,000 bales in 1951 to 14,490,000 bales in 1956 was responsible for a substantial increase in costs of financing, and a reduction to 7,228,000 bales in 1961 tended to reduce costs of financmg. Further reductions to more nearly normal amounts would have contributed in an important way toward reducing costs of financing cotton but the carryover increased to about 11,200,000 bales in 1963.

OTHER SERVICES

Aside from the services already discussed, marketing involves classing and assembling cotton for sale in even running lots, risk bearing, and selling. A risk bearer assumes responsibility for risks from price changes, losses in cotton weight, and from rejection of cotton because of its failure to meet quality specifications. Selling costs may be m- cluded under "overhead expenses."

Cotton usually is classified to facilitate sale from one to several times, and it may be assembled more than once during its passage through commercial channels to mills. When prices are not stabilized by government loans and adjustment programs, merchants, particularly the larger ones, usually hedge their market interests or position in spot cotton by offsetting transactions in future markets. But not all risks of loss from changes in prices may be offset by this means {ItS^51). The general practice is for buyers to make deductions for any failure of the cotton delivered to meet specifications as to weight or quality, but usually no credit is allowed for overweight or for qualities above specifications.

Selling and incidental services involve selling commissions and several other items grouped under overhead costs, such as salaries and bonuses, traveling expenses, telephone and telegraph expenses, rents and taxes, supplies and stationery, interest and depreciation, membership dues and fees, legal and other professional services, and profits.

Charges or Costs

Data relating to charges or costs for these other services in marketing cotton are not complete. Re- ports for the 1956-57 season indicate that standard charges for buying and local handling of cotton at points of origin were $1.20 per bale in Bakers- field, Calif. ; 90 cents in Dallas, Tex. ; and 95 cents in Greenwood, Miss. Charges for taking cotton in mixed lots and concentrating it into even-running lots were $1.40 per bale in Bakersfield, $1.60 in Dallas, and 70 cents in Greenwood. Selling costs averaged about 90 cents per bale in Bakers- field and Greenwood and 85 cents in Dallas. These charges were for cotton shipped to Carolina and New England mills. For cotton shipped to Ger- many or Japan, charges for buying and local handling, concentration, and selling; and costs other than those for compression, transportation, inter-

est, storage, and insurance averaged about $8 per bale {28),


Merchandising raw cotton appears to be a highly competitive business, and the possibility of making substantial reductions in costs of the marketing services without changing marketing methods and practices, therefore, may be limited. Large quantities of cotton are sold by growers on the basis of an inspection of samples taken from the bales at the gin, cotton yard, or warehouse. In recent years, increased quantities have been sold in local markets on description on the basis of government classification. The number of buyers in local markets ranges from one in some to a dozen or more in others. In many instances, sales necessitate resampling and reclassification for each change or proposed change in ownership. This repetition of services results in damage to bale coverings, in contamination and waste of cotton, and in increased costs of marketing.

Apparently marketing procedures could be simplified and costs of services reduced if cotton were sold on description throughout the marketing system on the basis of a dependable classification. Such a classification would require (1) that the sample classified be truly representative of the quality or qualities of cotton in the bale and that it be correctly identified with the bale from which it was drawn; (2) that the classification be made in accordance with uniform standards upon the basis of which the quality of cotton can be described for commercial purposes with reasonable accuracy; (3) that the classifications be made by competent and reliable classifiers under conditions conducive to accurate classifications; (4) that facilities be provided for assembling the samples^ recording the classifications on convenient forms, and for making the information available in time for use in selling the cotton; and (5) that sellers and buyers have enough confidence in the classification service to be willing to sell and buy cotton on the basis of this information {37).

All of these requirements are not likely to be fully met within the immediate future. But, as indicated above, by the early 1960's, mechanical devices for sampling cotton bales during ginning had been installed in more than 190 gins, mostly in Texas and California. These automatic samplers were designed to provide a sample representative of cotton throughout the bale, to reduce the amount of cotton removed by multiple sampling, and to minimize damage to bagging from cutting and to cotton from exposure {37), Use of these samplers has been retarded by (1) the high cost per bale at gins with small annual volumes, (2) the complicated features of samplers, (3) the practice of obtaining fresh cut samples each time the bale is sold or offered for sale, and (4) the difficulty of obtaining mechanically sub- samples taken from the thin outer portions of the bale {25).

26

Officiai standards for grade and length of staple have long been established and in general use, but lack of standards for the quality elements included under the term "character," limit the dependability and usefuhiess of classifications based on official standards. Measures of differences in fineness, strength, and other fiber properties, in addition to grade and staple length, have been developed and are used to a considerable extent in marketing. Use of standards and classifications m marketing cotton has been expanded considerably and further progress is anticipated. To make the maximum contribution toward increasing the efficiency and reducing the costs of marketing, these developments would need to be combined with other improvements in marketing methods and practices.

A principal limitation to further improvements m the marketing of cotton relates to the small volume of cotton handled in many local markets. In many instances, the volume handled is so small that it is not feasible to provide facilities adequate for rendering efficiently such services as classification, assembling, compression, and storage. Apparently market services could be improved and their costs per unit reduced by reorganizing and integrating cotton marketing so the volume handled would be adequate to make possible the effective use of modem facilities and equipment in rendering efficiently the essential marketing services. In addition, adjustments in the quality of cotton produced in accordance with mill requirements would facilitate improvements in marketing. Such adjustments might require further developments in the evaluation and standard measures of the quality elements of cotton, in classification services available to growers, and in market news so that prices to growers would reflect differences in value to mills of the quality of cotton produced.

Importance of Reductions in Costs

Estimated charges or costs of services involved in taking cotton from farms and delivering it to mills have increased considerably in recent years, but the proportion of such costs to total costs of cotton to mills continued in 1962 to be substantially below what they were in 1939 (table 7). Although charges for ginning and baling increased from an average of about 0.8 cent a pound of lint in 1939 to 3.2 cents in 1962, the proportion of the average price of cotton to mills accounted for by these charges was greater in 1939 than in any other recent year. Estimated gross margins for merchandising cotton increased from about 1.65 cents a pound in 1939 to 4.08 cents in 1962. But the proportion of prices to domestic mills accounted for by these margins decreased from 15.4 percent in 1939 to 7.6 percent in 1947, and then increased to 11.4 percent in 1962.

If costs of ginning, baling, and merchandising cotton had been reduced by 10 percent during the 1962-63 season, for example, the reduction would have amounted to about 0.7 cent a pound. This would equal about 2.5 percent of returns to growers for farm production and 0.37 percent of costs to consumers of finished cotton apparel and household goods. A reduction of 10 percent in charges for ginning and baling would have amounted to 0.32 cent a pound, or about 1.1 percent of returns to growers for farm production and 0.16 percent of costs to consumers of finished apparel and household goods. A reduction of 10 percent in merchandisers' gross margins would have amounted to about 0.4 cent a pound, or about 1.4 percent of returns to growers for farm production and 0.21 percent of costs to consumers of finished apparel and household goods.

MARKETING RAW WOOL

All wool produced in the United States is apparel wool. Large quantities of it are imported over a tariff duty of 11 to 27.5 cents a pound, clean basis. Production of wool in this country decreased from 221 million pounds, scoured basis, in 1942 to 120 million pounds in 1950, and amounted to about 134 million pounds in 1962. During the 5 years 1946-50, imports of apparel wool for consumption averaged 277 million pounds, clean content, a year and ranged from 155 million pounds in 1949 to 473 million in 1946. These imports decreased from 272 million pounds in 1951 to 67 million in 1958, and amounted to 126 million in 1962 {103),

Carpet wools are admitted into this country free of duty. During the 5 years 1946-50, imports of carpet wool for consumption averaged about 175

million pounds a year, clean basis, and ranged from about 118 million pounds in 1949 to 233 million in 1948. During the 1950's, these imports ranged from 89 million pounds in 1951 to 192 million in 1959, and amounted to 143 million in 1962.

Most of the wool produced in the United States is shorn wool, obtained by shearing live sheep. Considerable quantities of pulled wool are obtained by pulling the wool from skins of slaughtered sheep. Small quantities obtained by detach- ing wool from carca sses of sheep which died on the range or farm are known as dead or murrain wool. During the 5 years 1946-50, shorn wool accounted for about 85 percent and pulled wool about 15 percent of total production in the United States. In 1962 the proportions were 89 and 11 percent respectively.

27

TABLE 7 —Avproximate average gross margin per pound and proportion of total cost of producing and marketing American cotton^ hy items^ specified years^ 1939-6%

Item

Farm production ^ — Ginning and baling 2_

Farm prices-..

Receiving and related services. Compressing ^ Storage and insurance * Transportation ^ Financing ^ Another 7

Year beginning August

1939

Cents 8.27 .82

1947 1954 1958

Total merchandising margins.

Average cost to mills

Farm production ^ Ginning and baling ^

Farm prices

Receiving and related services Compressing ' Storage and insurance * Transportation ^ Financing ^ All other 7

Total merchandising margins

Average cost to mills

9.09

.05

.09

.29

.56

.22

.44

1.65

10.74

Cents 30.36

1.57

31.93

. 10

. 15

.30

.78

.54

.74

2.61

34.54

Cents 31.28 2.33

33.61

.14

.23

.63 1.03 .83 .84

3.70

37.31

Cents 30.49 2.74

33.23

.16

.26

.69 1.00 .88 .91

3. 90

37. 13

1961

Cents 29.69 3.11

32.80

.16

.28

.64

.99

.93

.93

3.93

36.73

1962

Cents 28.65 3.15

31.80

.15

.28

.72

.99 1.01 .93

4.08

35.88

Proportion of cost to mills

Percent 77.0 7.6

84.6

.5

.8 2.7 4.8 2.7 3.9

15.4

100.0

Percent 87.9 4.5

92.4

.3

.4

.9 2.3 1. 6 2. 1

7.6

100. 0

Percent 83.8 6.3

90. 1

.4

.6 1.7 2.8 2.2 2.2

9.9

100. 0

Percent 82. 1 7.4

89.5

.4

.7 1.9 2.7 2.4 2.4

10.5

100. 0

Percent 80.8 8.5

89.3

.4

.8 1.8 2.7 2.5 2.5

10.7

100.0

Percent 79.8 8.8

S. 6

.4

.8 2.0 2.8 2.8 2.6

11.4

100.0

1 Includes hauling to gin. XT o T^ + ^..+ ^f 2 Based on data published by US. Department of

Agriculture. Charges attributed to Imt equals charges for bagging and ties plus a prorata share of other gmnmg charges based on the relative farm value of Imt to seed.

3 Average rate per bale multiplied by estimated proportion compressed to standard and high density. .

4 AvSâge number of bales in the United States during the year, adjusted for domestic consumption and exports multiplied by average rate for storage and insurance and Sie product divided by the amount of the carryover at

Production of wool is widely distributed over the United States. Every State produces some wool. In 1962, production of shorn wool ranged from about 13,000 pounds, grease weight, m Khode Island to 52,225,000 in Texas. The 10 largest wool-producing States that year, listed by rank, were Texas, Wyoming, California, South Dakota, Colorado, Montana, New Mexico, Utah, Iowa, and Idaho Production by these 10 States made up about 70 percent of the U.S. total for that year. Pulled wool is produced mainly m slaughtering and meatpacking plants in centers such as Chicago, San Francisco, New York, Denver, and Philadelphia; but considerable quantities are pro-

the beginning of the year plus ginnings of the crop of the same year. x- ^ ^

5 Based on official information and partly estimated. 6 Farm value of average number of bales of American

cotton in United States, adjusted for domestic consumption and exports, multiplied by interest rate (4 percent in 1939, 1947, and 1954; 4.5 percent in 1958; and 5.5 percent in 1961 and 1962) and the product divided by carryover at the beginning of the year plus gmnmg from crop of that year.

7 Estimated, including an allowance for proùts.

duced in wool puUeries, independent of major meatpacking plants.

Methods and Practices

Marketing wool in the United States involves the handling of domestic shorn and pulled wool, and also that imported. The total amount of wool produced in this country, plus that imported for consumption, decreased from 1,396 million pounds, grease weight, in 1946 to 464 million in 1958, and amounted to 641 million in 1961. During the 5 years 1958-62, domestic shorn and pulled wool accounted for 47 percent, imported apparel wool

28

for 21 percent, and carpet wool for 32 percent of the total handled by the wool industry in this country. These proportions vary considerably among years as a result of changes in domestic production and imports.

Most of the domestic clip is shorn from Feb- ruary through July and usually most of the producers sell their wool at or soon after shearing time. Before the National Wool Act of 1954 be- came effective in April 1955, most of the wool was sold by producers from April through July. Since 1955, sales by producers have been concentrated mainly from March through June. More than 70 percent of the 1961 clip was sold by producers during this period. But practices with regard to time of selling vary considerably. In some years, considerable quantities of wool are sold (con- tracted) by growers well in advance of shearing. Furthermore, in some years large quantities are consigned by producers to handlers and may not be sold for several months or for 1 or more years.

Wool as it comes from the sheep varies widely in fineness, length, strength, and other characteristics of the fibers, and in the kinds and amounts of foreign matter mixed with the fibers. Pro- ducers and many buyers in producing areas are unable to accurately evaluate these quality elements as a basis for selling and buying the wool. Consequently, much wool is sold, especially by producers of small clips, on a more or less flat price basis, with little variation in prices on the basis of the quality of individual clips. Such pricing offers little inducement to farmers and ranch- men to improve the quality and preparation of wool offered for sale.

Lack of uniform standards for some of the chief quality elements of wool, and of adequate classification and market information services, may help to account for the failure of prices to producers to reflect more of the diflferences in the quality and preparation of wool. Official U.S. standards for grades of wool, based on fineness or diameter of the fibers, were established in the 1920's, and revisions of these standards were proposed in 1955 and in 1963. But these revisions have not been accepted in the wool trade {109^ 110^ 111), Fa- cilities and methods have been developed for taking adequate samples and for measuring the shrinkage or yield of wool. Suggested staple lengths for grades of grease wool have been prepared, but official standards for length, strength, color, and other quality elements of the fibers are not available. Technical and other problems involved in evaluating the quality elements and yield of wool are such that only small amounts are graded at shearing pens as a basis for sale by producers.

Warehouses in producing areas handled about 90 percent of the shorn wool marketed in 1956. About 80 percent of this wool was obtained from individual producers. The remainder was obtained through pools, interwarehouse purchases,

and from small speculators. Of the wool handled by these warehouses, 43 percent was consigned, 53 percent was purchased on warehouse account, and 4 percent was handled on some other basis. Of the wool handled on warehouse account, 53 percent was purchased prior to delivery, 46 percent was purchased on delivery, and about 1 percent was purchased after consignment. Warehouse operators sold about 74 percent of this wool to manufacturers and 26 percent to dealers. This wool moved from warehouses mainly by rail and truck to New England and Southeastern States (55).

Some of the more popular services and proportions of the total volume warehoused that received each service were : Sampling for buyer inspection, 12 percent; grading at warehouse, about 52 percent ; core testing, 33 percent ; sorting, 3 percent ; scouring, 7 percent; and baling, 6 percent (55). During the late 1950's and early 1960's, apparently both the volume of wool scoured and the volume baled in producing areas increased, particularly in the Southwest.

Additional operations required in taking wool from farms and ranches and delivering it to manufacturers involve such services as assembling, transporting, storing, financing, and merchandising. Marketers engaged in these operations, classified on the basis of the nature and extent of the services and other functions performed, include brokers, commission agents or handlers, dealers, topmakers, and other manufacturers. But a firm may engage in two or more types of operations during any marketing season.

Brokers arrange for the purchase or sale of wool and are paid a fee for their services, but usually they handle neither the physical wool nor the financial settlement for it. They take no part in the grading, sorting, or other preparation of the wool. Some brokers with purchase orders from eastern merchants or mills go west and buy specified quantities of selected types of wool to meet special requirements. They usually pay the grower by draft and attend to shipping the wool. {12S).

Commission agents or handlers receive wool on consignment, take responsibility for its care and preparation while it is held for sale, sell to and collect from buyers, deduct expenses and commissions, and remit the balance to the owner. In 1956, shorn wool consigned to operators accounted for about 43 percent of the wool handled at warehouses in producing areas. The volume of wool consigned usually is greatest in years when prices at shearing time are relatively low. Such prices may induce many growers to store wool in antici- pation of higher prices.

Dealers buy and take outright posssesion of the wool, usually pay the full price at the time of purchase, and sell it as advantageously as possible for their own account. Wool handled on warehouse account or purchased on delivery in 1956 amounted to 53 percent of all wool handled by warehouses in producing areas that year {ß5).

29

Dealers commonly do a great deal of grading and other preparation of wool, especially that of the domestic clip. A variation from the ordinary dealer type of operation is the practice of con- tracting for the purchase of wool before it is shorn. In 1956, about 7 percent of the 215 million pounds of wool marketed through warehouses was sold on contract before it was shorn (65). The contracts specify the amounts to be delivered and prices to be paid. Since it is impossible to esti- mate wool shrinkage accurately before the sheep are shorn, considerable risks of loss from under- estimates of shrinkage, as well as from changes in prices, are involved. Because of these risks, buyers are necessarily conservative in the prices they offer.

Marketing practices involved in taking wool from growers and delivering it to manufacturers vary considerably from one area to another, with differences in the size of individual clips, and with other factors. In territory States (the 11 Western States and the western part of South Dakota) where many of the clips are large, considerable amounts of the wool are sold at the ranch by the producer to agents of central market operators, particularly those in Boston. When possible, buyers inspect the clips at the shearing shed during the shearing season as a basis for estimating shrinkage and quality. When such inspection is not feasible, the wool may be examined in the barn on the grower's ranch, or it may be bought without inspection on the basis of knowledge of previous clips of the same producer (^^).

In 1956, about 69 million pounds of wool, or more than 60 percent of the shorn wool produced in the territory States, were handled by 39 west- em warehouse operators. About 87 percent of the wool handled was obtained from individual producers. About 54 percent was consigned, 39 percent purchased on warehouse account, and 7 percent was purchased on delivery or handled on some other basis. Operators of these warehouses graded 37 percent, core tested 35 percent, scoured 10 percent, and baled 11 percent of the wool handled. About 54 percent of the wool sold by warehouse operators was offered on an individual clip basis. Private treaty sales accounted for 87 percent and sealed bid sales 13 percent of the wool sold. About 84 percent was sold to manufacturers and 16 percent to dealers. About 73 percent was moved from warehouses by rail, 21 percent by truck, and 6 percent by ship. Sixty-six percent went to New England, 20 percent to Southeastern States, and 14 percent to the Pacific Northwest and other outlets (5^).

A large part of the wool produced in Texas is delivered to local warehouses for storage and sale. In addition, operators of Texas warehouses handle substantial quantities of wool produced in other States. These operators provide facilities for concentrating wool in volumes large enough for more efficient handling, prepare it for storage and sale, and display sample bags for inspection by buyers.

Of about 64 million pounds of wool handled by Texas warehouses in 1956, slightly more than half was consigned; the remainder was purchased on warehouse account.

Operators of these warehouses graded 23 percent, core tested 31 percent, scoured 9 percent, and baled 6 percent of the wôol handled. More than three-fourths of this wool was offered for sale by warehouse operators on an individual clip basis. Private treaty sales accounted for 97 percent, and sealed bid sales 3 percent of the wool sold. About 60 percent of this wool was sold to dealers; the remainder went to topmakers and other manufacturers. Sixty-six percent of this wool was shipped to New England and 25 percent to Southeastern States. More than 90 percent of it was moved from warehouses by truck (55).

In fleece wool States (all except Texas and territory States), much of the wool is bought by resident country dealers or by representatives of topmakers and other manufacturers. In many instances the wool is ungraded; in others it may be rough graded as fine, medium, and rejects. Coun- try dealers may buy on their own account or on commission against orders from central market dealers, topmakers, and other manufacturers. In recent years, topmakers and other manufacturers have purchased increased quantities of this wool from growers and from country dealers {12Ji),

Of the 90 million pounds of wool handled by wârehouses in producing areas of the Central and Eastern States in 1956, about 29 percent was consigned, 67 percent was purchased on warehouse account, and 4 percent was handled on some other basis. About 76 percent of this wool was obtained from individual producers. Operators of these warehouses graded 80 percent, core tested 32 percent, scoured almost 4 percent, and baled 2 percent of the wool handled. Only about 8 percent of the wool sold at warehouses was offered for sale on an individual clip basis. Private treaty sales accounted for about 96 percent and sealed bid sales for 4 percent of the wool sold by warehouse operators. Eighty-eight percent of the wool was sold to manufacturers and 12 percent to dealers. Sixty- six percent of this wool was moved from warehouses by rail and 34 percent by truck. About 82 percent of this wool wâs sent to New England, 15 percent to Southeastern States, and 3 percent to other outlets {55).

Substantial quantities of wool are marketed through cooperative associations, including pools. The methods used in physical handling, showing, and selling through these associations are similar in most respects to those of other agencies. The proportion of U.S. production of shorn wool marketed cooperatively averaged about 24 percent during the 6-year period 1952-57 and amounted to about 21 percent in 1962.^

^ Data supplied by Walter L. Hodde, Fanner Coopera- tive Service.

30

The number of Boston dealers and the volume of wool handled by them have decreased markedly in recent years. Yet more than 170 wool dealers in Boston were listed in Davidson's Textile Blue Book for 1962 and about 30 of them were members of the National Wool Trade Association that year. Dealer houses vary greatly in size and organization and in kind and volume of wool handled. A small house may have only one traveling buyer, five or six resident agents in producing areas, and one salesman. A large house may have 2 or 3 traveling buyers, 40 or 50 resident agents in producing areas, and 3 or 4 salesmen. Quantities of wool handled annually by individual dealers may range from less than 1 million pounds to more than 20 million.

Kesident agents of dealers buy wool mostly on commission under the supervision of traveling buyers. In addition to buying wool, these agents see that it is assembled and properly shipped. They also keep their principal posted on wôol- growing conditions, current prices in the country, and the activities of competitors (36).

Dealers may grade or otherwîse prepare wool and try to sell it to topmakers and manufacturers at prices that will net them a profit. Dealers' salesmen contact processors or manufacturers, de- scribe their wôol or show small samples, quote prices, and try to interest them in buying the dealer's holdings. If interested, the prospective buyer examines the wool in the dealer's warehouse before definitely deciding to buy it (36)

Domestic pulled wool usually is sold by meat packers, through their Boston offices, direct to manufacturers. Offers and sales of this wool are made on the basis of small samples. A 2-pound sample may represent 20,000 pounds. If the pur- chaser finds that the wool received is not equal in quality to that in the sample, he may reject it. Some pulleries sell direct from their plant to manufacturers through traveling salesmen or by corre- spondence, and others sell through commission agents in Boston (36).

Charges or Costs

Data on costs of marketing wool in recent years are incomplete. However, a large part of the 1946 domestic clip was handled by the Commodity Credit Corporation. Data on prices at Boston, on farra prices, and on deductions for merchandising services for this wool provide a basis for indicating the costs or margins involved. Cost data for more recent years provide a basis for indicating changes made up to 1962.

Gross merchandising margins for 106 million pounds of grease wool purchased by the Commod- ity Credit Corporation in original bags during 1946 averaged 5.69 cents a pound, or about 12 percent of the Boston price (44)- Average margins by States ranged from 5.36 cents for wool from Colorado to 7.03 cents for that from Oklahoma.

Costs of freight and trucking averaged 2.41 cents a pound for the United States and ranged from 0.62 cent for wool produced in New England and the Middle Atlantic States to 2.57 cents for that produced in Arizona, California, Idaho, Nevada, Oregon, and Washington. Handling charges averaged 2.15 cents a pound for the United States; averages by States ranged from 1.25 cents for wool produced in Texas to 4.50 cents for tliat produced in New York. Service and appraisal charges were listed at 1.125 cents for wool from each of the States (44)'

For 169 million pounds of graded wool purchased in the grease, gross merchandising margins averaged 6.85 cents a pound, or about 13 percent of the Boston price. State averages ranged from 5.91 cents for wool produced in Wyoming to 7.78 cents for that produced in Oklahoma. Charges for freight and trucking averaged 2.00 cents a pound for the country as a whole, and ranged from 0.625 cent a pound for wôol produced in New Eng- land and the Middle Atlantic States to 2.57 cents for that produced in Far Western States. Grad- ing charges were listed at 0.75 cent a pound for wool from each of the States.

Gross merchandising margins for scoured wool in 1946, including costs of scouring and carbonizing, averaged 27.08 cents a pound, or about 25 percent of the Boston price. Averages by States ranged from 22.74 cents a pound for wool from Texas to 28.89 cents for that from California. Cost of freight and trucking averaged 5.08 cents a pound for the United States ; averages by States ranged from 1 cent for wool from New England to 5.59 cents for that from Far Western States. Handling charges averaged 8.2 cents a pound for the United States, and ranged from 4.8 cents for wool from Texas to 10.5 in many other States. Cost of service and appraisal was listed at 2.8 cents for wool from all States. Scouring and carbonizing charges were listed at 10 cents for all States except California, where the charge wâs listed at 12 cents a pound.

Maximum charges for handling wôol permitted in the wool handler's agreement for the 1954 price- support loan program provide some basis for indicating changes in costs since 1946. In 1954, maximum charges for handling amounted to 4.75 cents a pound for lots of less than 2,000 pounds, 3.5 cents for lots of 2,000 to 5,000 pounds, and 2.25 cents for lots in excess of 5,000 pounds. Charges for country services of accumulating and assembling small lots of less than 2,000 pounds in the United States were listed at 1.5 cents a pound. Grading charges were 2.25 cents for lots of less than 2,000 pounds and 1.5 cents for lots of 2,000 pounds and larger.

More recent data indicate that in the early 1960's wool-handling charges at warehouses, including storage up to 6 months or more, ranged from about 1.5 cents to 4.5 cents a pound. They were apparently somewhat lower than those in 1954

31

and 1946, particularly in the Western and South- western States. Grading charges reported ranged from 1.5 cents to 2 cents a pound, and apparently were about the same as those in 1954 and in 1946. Fragmentary data available indicate that scouring and carbonizing charges in the late 1950's and early 1960's were lower than those in 1946.

Transportation costs for wool increased from about 2.16 cents a pound in 1946 to 2.79 cents in 1958 and then decreased to about 2.07 cents in the early 1960's. Keductions in these costs were associated with increases in the amounts of wool scoured and baled or baled in the grease in producing areas. They were also associated with shifts from rail to truck transportation, particularly for wool from Texas and other Southwestern States, and with shifts in manufacturing from New England and Middle Atlantic States to Southeastern States.

Means and Importance of Improvement

Recommendations for improving services connected with the marketing of wool would need to be based on information showing the comparative advantages and disadvantages of performing such marketing services as skirting, grading, sorting, scouring, packaging, storing, and processing wool at different locations, by different agencies, and by use of different facilities and methods. Results of analysis should show the influence of different factors on the adequacy and costs of services, on the quality and adaptability of wool for further processing, and on costs of moving wool to centers of consumption. Such information is limited. Specific suggestions on means of improvement must be limited accordingly.

Wool producers in many localities undoubtedly could strengthen their competitive position and increase their incomes by improving the quality, uniformity, and preparation of their wool. Bene- fits from these improvements could be enhanced if all producers, particularly the smaller ones, in an extended area of uniform environment would co- operate in producing wool of about the same quality. This cooperation would facilitate combining wool from small flocks into lots of fairly uniform quality and lots large enough to be marketed more eificiently. Larger proportions of premiums paid by mills for the better qualities of wool and of discounts made for the lower qualities, reflected in prices to producers, would encourage them to improve the quality, uniformity, and preparation of their wool.

The relationship between prices and qualities of wool in producers' local markets could be improved (1) by making more generally available to producers and buyers a practical and dependable wool classification service (2) by offering for sale well prepared wool of uniform quality in lots large enough to be handled economically, and (3) by

supplying producers and local buyers with adequate information on prices of the various qualities of wool and on market outlets.

WOOL CLASSIFICATION AND MARKET INFORMA- TION SERVICE

The feasibility and usefulness of a wool classification service to producers and local buyers may be materially influenced by (1) availability and suitability of wool for sampling (2) adequacy of the sample on the basis of which the classifications are made (3) adequacy of the standards on the basis of which the various quality elements are evaluated and described (4) accuracy of the evaluations of the quality elements represented by the sample on the basis of the established standards (5) confidence of sellers and buyers in the adequacy of the classification service, and their willingness to sell and buy wool on the basis of this information (6) adequacy of market news service for use as a guide in selling and buying wool, and (7) cost of the services.

Availability of Wool for Sampling

Wool may be available for sampling at the farm or ranch, at the warehouse, or at other concentration points. Where flocks are large and the wool fairly uniform, adequate samples may be taken at the farm or ranch. But in 1959, fewer than 2 percent of the wool-producing units had 1,000 or more sheep each, according to census reports. Small farm flocks would need to be assembled before shearing, or the wool would need to be concentrated after shearing at warehouses or at other concentration points, to provide volumes large enough for adequate sampling. In 1959, about 84 percent of the wool-producing units had fewer than 100 sheep each, according to census reports. The large number of these small flocks and variations in quality of the wool emphasize the advis- ability of assembling the wool, grading or otherwise preparing it, and combining it into lots of adequate uniformity and size prior to sampling.

Adequacy of Samples

The adequacy of the sample from a lot of wool is determined largely by the nature and extent of the variations in quality of the wool, the number of bags or bales sampled and the parts of the bale from which the sample is drawn, the method and equipment used in obtaining the sample, and the care taken in handling and conditioning it. Lots of wool that are fairly uniform in quality offer few difficulties in obtaining representative samples. But it may be quite difficult to get representative samples from lots containing widely different qualities of wool not uniformly distributed in the same or different bags or bales. Such variations com- plicate the problem of determining the bags or bales to be sampled, the parts of the bags or bales

32

to be sampled, and the equipment and method to be used in drawing the sample. Quality differences may be so diverse and so irregularly distributed as to require assorting and recombination into lots of more uniform quality before sampling.

Differences in results of analysis of samples from the same lot of wool taken by different methods, by cores of different sizes, or from different parts of the bags or bales may be great enough to result in substantial gains or losses in individual instances, if wool is bought on the basis of one sample and sold on the basis of another taken from the same lot (114). To assure the representativeness of the samples and to increase the acceptability of the quality evaluations based on them, provisions may need to be made for having certified samples drawn, prepared, and identified by qualified samplers who may be licensed and supervised by a competent and unbiased agency.

Uniform Standards for Quality

The usefulness of a classification service in marketing wool depends largely upon the adequacy of the standards on the basis of which the various quality elements are evaluated and described. These elements of quality include all of the physical properties of wool that affect its value or usefulness, such as yield of clean wool, fineness of fibers, length of staple, uniformity and strength of staple, crimp of staple, and color.

Methods and equipment for determining yield on the basis of core samples have been developed, but apparently some questions remain with regard to^ the accuracy or dependability of results obtained by the use of coring tubes of different sizes. Official standards for grades or fineness of wool have been developed, but there is some opposition to their use as a basis for selling and buying wool on description (109, 110, 111), There are no official standards for length, strength, uniformity, or crimp of staple, color, or other quality elements of wool fibers, except fineness.

The development of standards on the basis of which all important quality elements of wool can be evaluated and described with reasonable accuracy appears to be essential to the development of effective classification and market information services. As a prerequisite to the development of such standards, all important quality elements need to be identified and evaluated, and adequate methods and equipment developed for measuring significant differences in them. Considerable time and the cooperation of both public and private agencies in the wool industry may be needed to meet these requirements. These statements are not intended to imply, however, that standards for all quality elements of wool must be satisfactory to all marketing agencies before classification and market information services to producers can or should be initiated. It may be advisable to start

these services with what is now available, and to improve the evaluations, standards, and services as time and opportunity permit.

Variations in Classification or Evaluation

Accuracy of the evaluations of the important quality elements of wool in the sample, as well as the representativeness of the sample and the adequacy of the standards, may greatly influence the usefulness of wool classification services. Accu- racy of these evaluations may be materially influenced by the competence of the analyst or appraiser, the method and equipment used, the conditions under which the evaluations are made, and the physical condition of the sample at the time of analysis or appraisal.

Evaluations of quality elements in individual samples are subject to some variations on the part of almost all analysts or appraisers, even under the most favorable conditions (^). Such variations may be great enough to affect materially the usefulness of a classification service as a basis for selling and buying wool on description. They emphasize the importance of having the quality elements of wool evaluated by competent and unbiased analysts or appraisers, under favorable conditions, and subject to the supervision of a competent and unbiased agency.

Confidence in the Adequacy of Services

General acceptability and usefulness of a wool classification service may depend upon the availability of the service, when needed, confidence in the adequacy and dependability of the evaluations, and willingness of producers and buyers to sell and buy on the basis of such evaluations. The time between the sampling and sale of wool may be an important consideration, especially for producers who desire to sell immediately after shearing. The facilities and personnel available, and the costs involved also are important.

Confidence in a wool classification service and the willingness of producers and buyers to co- operate in selling and buying on the basis of the information provided by it may be influenced largely by the dependability of the classification. This dependability, in turn, may be greatly influenced by the adequacy of the standards used, the representativeness of the samples, the conditions under which the samples are evaluated, the competency of the analysts or appraisers, and the way in which the information or evaluations may be used.

Despite the limiting influence of some of these factors, the classification of samples of wool taken by approved methods and techniques and evaluated on the basis of reasonably adequate standards may be accurate enough to be of considerable assistance to growers and buyers in marketing wool. Also, it may be accurate enough for effective use in selling and buying wool on description, if no

736-806 -64- 33

selections or rejections of individual lots on the basis of other information on quality are allowed. Apparently, then, a means of building up and maintaining confidence in a classification service would be to provide for the sale of all wool by producers on the basis of the classification by a reliable agency, and to permit no selections or rejections of individual lots on the basis of other information on quality. Under such situations, differences in value of lots of the same description, as a result of variations in classification, and differences in quality of wool of the same description would be offsetting. This would mean that^ on the average, for a substantial number of lots, little gain or loss would result from differences in classification (4^).

Adequate Market Information

In addition to an adequate classification service, wool producers need current information on prices of wool of various qualities in local and central markets, on the demand and supply situation for wool, and on costs of selling in alternative markets for use in determining when, where, and at what prices to sell their wool.

Cost of the Service

Data on costs of supplying such classification services are incomplete. Estimates based on the limited information available indicate that obtaining samples and analyzing them to show yield, fineness, staple length, crimp, color, and other quality elements of the wool may cost as much as $50 or more per lot of wool sampled. These costs may be influenced considerably by the availability, quality, and uniformity of the wool sampled. Costs per pound of wool sampled would vary inversely with the size of the lots. If, for example, analysis of a sample cost $50, this cost would amount to 5 cents a pound for a lot of 1,000 pounds, 0.5 cent for a lot of 10,000 pounds, and 0.1 cent a pound for a lot of 50,000 pounds.

Benefits of the Service

A practical and dependable wool classification and market information service for producers would (1) increase the bargaining power of those who produce wool of higher qualities and encourage improvements in the quality and preparation of wool (2) increase the usefulness of price quotations in selling wool on the basis of its quality (3) make possible reductions in costs of multiple showing, sampling, and reappraisals (4) improve the collateral value of warehouse receipts for wool (5) reduce risks of loss from errors in quality evaluations, and (6) make possible other economies in marketing wool.

Practical difficulties in developing and maintaining such a service doubtless would vary from

one locality to another. The successful operation of wool classification and market information services in one locality, under one set of conditions,, should not be interpreted to mean that similar services would produce equally good results in others. The volume and uniformity of the wool produced, facilities and personnel available, and the attitudes and reactions of producers and buyers may differ considerably from one locality to another. These differences may be important practical considerations in determining the feasibility of developing and maintaining wool classification services in the various localities.

STORAGE AND RELATED SERVICES

Storage and related services for wool may be improved by use of more suitable buildings, better operating methods, and improved equipment for handling, grading, sorting, packagmg, storing, and other services of warehouse operators. Stor- age space may be more efficiently utilized by compressing wool to a higher density before it is stored. Substantial savings apparently would result from the use of adequate machinery and equipment for handling, weighing, bagging, baling, and stacking wool and from a convenient system of arranging the bags or bales so they could be shipped out with minimum handling {131^ 132), Research results indicate that in wool warehouses grading 2 million pounds annually, improved work methods and equipment can reduce costs for grading operations by as much as 34 percent for consigned wool and by as much as 30 percent for warehouse-owned wool {128). Results of additional engineering and cost studies are needed to show more specifically the means by which the adequacy and efficiency of these and other storage and related services for wool can be improved.

TRANSPORTATION AND RELATED SERVICES

The charge for transportation is one of the largest items of cost involved in marketing raw wool. Costs of transportation services may be greatly influenced by the type of transportation agency used, by the condition of the wool and the way it is packaged, and by other factors. During the late 1950's and early 1960's, rates charged for transporting wool were reduced considerably. These reductions were associated with substantial increases in the amount of wool scoured and baled or baled in the grease in producing areas. Scour- ing reduces the weight of wool by removing foreign matter, and compressing to a higher density in baling permits loading of more wool per car or per truck. Both scouring and compressing tend to reduce transportation costs. Additional information is needed to show the feasibility of making further reductions in transportation costs by these and other means.

34

IMPORTANCE OF IMPROVEMENT

From the viewpoint of cost, the importance of improving the marketing of wool may be indicated by the fact that in recent years gross merchandising margins have averaged about one-fifth of gross returns to growers for the wool, or more than $20 million m 1961, and 2.5 percent of the

retail value of these goods. It is apparent from these data that large proportional reductions in costs of merchandising raw wool would have relatively little influence on the total marketing margins, or spread between the prices to farm producers and the retail prices paid for finished apparel and household goods made of wool.

YARN, EXCEPT WOOL, AND THREAD MANUFACTURING

In 1958, the yarn, except wool, manufacturing industry included 356 establishments primarily engaged in spinning yarns wholly or chiefly by weight of cotton, manmade fiber staple, or silk staple. These establishments were owned or controlled by 268 companies. Tire cord and tie cord fabric producers, formerly included in this industry, were placed in a new industry, in accordance with the 1957 edition of the Standard Industrial Classification Manual.

The value of total shipments by the yarn manufacturing, except wool, industry in 1958 was about $855 million. Ninety-three percent of this amount was accounted for by primary products. Second- ary products, accounting for about 7 percent of the value of shipments, included broadwoven fabrics, thrown filament yarns, wool yarns, and thread. The value of shipments of primary products by this industry accounted for 77 percent of the value of these products shipped by all industries. Only about one-fourth of the spun cotton, manmade fiber, and silk yarns produced by all industries in 1958 were shipped. The remainder was used in the manufacture of woven fabrics. About two- thirds of these shipments were distributed directly or indirectly through manufacturers' sales offices and branches to other manufacturers, and 31 percent were shipped to other plants of the same company. Only small proportions were shipped to merchant wholesalers and to other outlets (table 8).

Thread mills are establishments primarily engaged in manufacturing thread of cotton, manmade fibers, or silk. Important products of this industry inchide sewing, crochet, darning, em- broidery, tatting, hand-knitting, and other hand- craft threads. In 1958, the value of shipments of thread by this industry totaled $148 million and accounted for 90 percent of its total product shipments. Shipments of thread by this industry represented 91 percent of that shipped by all industries in 1958 and 94 percent of that shipped in 1954.

Nature and Practices

At niills cotton bales are opened and the lint cotton is cleaned, carded, combed (for fine yarns), and spun into yarns. In 1958, according to census reports, yarns spun on the cotton system totaled more than 4,000 million pounds. Five-sixths of these yarns were made of cotton ; most of the re-

TABLE 8.—Distribution of manufacturers^ shipments of yarn spun on cotton and silk systems^ ly class of customer and outlet. United States, 1958

Customer and outlet Value Propor- tion

Manufacturer to— Sales offices, branches, etc Other plants, same company Other manufacturers- _

Million dollars

81 345 592

46 9

41

Percent 7.3

31.0 53 1

Merchant wholesalers 4 1 Exports .8

3. 7 All other. __

Total 1, 114 100 0

Sales offices, branches, etc. to— Other manufacturers 80

2 1

96. 4 Exports. __ 9 4 Another 1 2

Total 83 100 0

Adapted from Census of Manufactures (96).

mainder were made of manmade fibers. A large proportion of yarn production in the United States is integrated with weaving and other operations. In 1958, yarns produced on the cotton system by establishments for their own use accounted for about three-fourths of the total. Some integrated mills sell surplus yarns not needed in their weaving departments. Thread mills are highly specialized in the manufacture of thread as a finished product.

SIZE AND ORGANIZATION

Changes in the size and organization of establishments manufacturing yarn and thread may be indicated by information on the number of spindles and the quantity of fibers consumed, ownership and organization of the establishments, and mergers and acquisitions of firms. Some of the information available, particularly that on number of spindles, on fibers consumed, and on mergers and acquisitions, relates to larger segments of the textile industry than the yarn and thread industries. This overall information is summarized in this section and referred to in subsequent parts of this report.

35

Number of Spindles and Quantity of Fibers Consumed

The number of spindles in place customarily indicates the size of plants or the size of the cotton textile industry. The world total number of cotton spindles in place increased from 123,349,000 in 1950 to 129,447,000 in 1959. In 1960, it amounted to 125,867,000, substantially below the 147,648,000 spindles in place in 1939 (table 9). During the 1950's, the total number of spindles in place decreased in North America and Western

Europe but increased in South America, Eastern Europe, Eussia, Asia and Oceania, and Africa. The proportion of the world total number accounted for by non-Communist countries decreased from about 85 percent in 1950 to 79 percent in 1960; whereas the proportion in the Communist Bloc increased from 15 percent in 1950 to 21 percent in 1960. The proportion of the world total accounted for by the United States decreased from about 19 percent in 1950 to about 16 percent in 1960.

TABLE 9.—Number of cotton spinning spindles and of hales of cotton consumed^ hy countries^ 1939^ 1950^ and 1960

Country Cotton spinning spindles in place ^ Bales of cotton consumed 2

1939 1950 1960 1939 1950 1961

North America: Canada

Thousands 1,159

884 25,911

95

Thousands 1, 117

986 23, 286

173

Thousands 817

1,350 19, 916

334

Thousands 286 226

6, 858 18

Thousands 421 310

8,883 55

Thousands 335

Mexico _ - -- 500 TTnited States -- 8,279 Other - -- - - - 106

Total 28, 049 25, 562 22,417 7,388 9,669 9,220

Western Europe: Têlffiuin ___ 1,984

9,794 12, 225 5,324 1,241

444 2,000 1,249

36, 322 2,287

1,802 8, 148 5,785 5, 566 1, 170

536 2,210 1,156

29, 580 2, 056

1,493 5,802 5,909 4,611 1, 020 1,105 2,589 1,169 9,710 2,349

321 1,316 1,204

665 260 110 140 141

2,690 621

406 1, 160

873 936 280 165 270 140

2, 092 595

427 France - - -- - 1,397 Germany (Federal Republic) 1,500 Italy -___ --- -_ -- -- 1,040 Netherlands _ _ _ - -- 377 Portugal -- - 303 Spain __ -- -- -- 580 Switzerland - 195 TTnited Kingdom 1,232 Other - - __- 805

Total -- 72, 870 58, 009 35, 757 7,468 6,917 7,856

Eastern Europe: Czechoslovakia __ _ _ - - 3,330 2,331

750 1, 067

689

1, 950 1, 150 2,001 1,377

200 315 125 410 414

460 480

Poland _- _-- - 1,764 668

350 338

600 Other --_ - - - 775

Total 5,762 4,837 6,478 888 1,264 2,315

USSR total 10, 350 9,483 10, 800 3,765 3,350 6,300

Asia and Oceania: China - - - - - -- 4,730

10, 054 11, 502

4,251 10, 534

3, 739 167

1,508

9,600 13, 864 13,218 1,941 4, 256

3,295 3,436 2, 517

2,700 3,270 1, 032

145 785

7,700 India - 4,620 Japan _ _ 3, 169 Pakistan 1,085 Other - - ---_ __ _- 600 623 2, 142

Total --- - --- 26, 886 20, 199 42, 879 9, 871 7, 932 18, 716

World total 147, 648 123, 349 125, 867 30, 353 31, 003 47, 504

Non-Communist _ 126, 806 20, 842

104, 778 18, 571

98, 989 26, 878

22, 405 7, 948

23, 689 7,314

31, 189 Communist Bloc 16, 315

1 Estimated number of spindles in 1939 and 1950 as of January, those in 1956 as of July, and those in 1959 and 1960 as of December.

2 Year ended July. Adapted from Cotton World Statistics prepared by the International Cotton Advisory Committee.

36

World mill consumption of cotton increased from about 31 million bales in 1950 to 48 million in 1960, and amounted to 47.5 million in 1961. Be- tween 1950 and 1960 increases are shown for all major geographic divisions, except North Amer- ica, and for most of the individual countries (table 9). The proportion of world total mill consumption of cotton accounted for by non-Communist countries decreased from about 76 percent in 1950 to 66 percent in 1961 ; that for the Communist Bloc increased from about 24 percent in 1950 to 34 percent in 1961. The proportion accounted for by the United States decreased from about 29 percent in 1950 to about 17 percent in 1961.

Spinning activity is indicated by the number of active spindles and by the number of hours spindles are operated during a specified period. In the United States, the number of active spindles decreased from more than 31 million in 1930 to about 17 million in 1962 (table 10). Most of the decrease occurred in New England and other States outside the Cotton Belt. Of the total number of active spindles in the United States, the proportion in cotton-growing States increased from less than half in 1925 to about 95 percent in 1962; whereas the proportion in New England decreased from 46 percent in 1925 to 5 percent in 1962. Of the total U.S. consumption of cotton, the proportion consumed by mills in cotton-growing States increased from ßS percent in 1925 to about 97 percent in 1962, and that consumed in New England decreased from 26 percent in 1925 to less than 2 percent in 1962 (table 10).

Kates of mill consumption of cotton vary directly with the number of active spindles, the proportion of total capacity utilized, and the coarseness of yarns produced. The proportion of spinning capacity utilized in the United States, based on an 80-hour week, ranged from 62 percent in 1925 to 156 percent in 1960, and averaged 155 percent in 1962. Mill consumption of cotton ranged from less than 6 million bales in 1925 to 10.7 million in 1951, and amounted to about 9 million bales in 1962. Cotton consumption per active spindle increased markedly from 1925 to 1951 and continued at relatively high rates through 1962. Changes in cotton consumption per 100 spindle hours were relatively small (99).

Spindle activity and rate of cotton consumption in cotton-growing States during the 1960-61 year were high in relation to the average for all other areas combined (table 11). The total number of hours spindles were operated during this year average about 146 percent of capacity (for an 80- hour week, for spindles active at the end of the year) in cotton-growing States, compared with about 134 percent in New England and 146 percent in the United States as a whole. The quantity of cotton consumed per 100 spindle hours in 1960- 61 averaged 3.87 pounds in cotton-growing States, 2.25 pounds in New England, and 3.79 pounds in the United States as a whole.

TABLE 10.—Number of active spindles and proportion of cotton consumed^ hy areas^ united States^ specified years^ 1930-62,

Yeari

1930 1940 1950, 1960 1961 1962

1930 1940 1950 1960 1961 1962

United States

Cotton- growing States

New- England States

All other

Active spindles ^

Thousands Thousands Thousands 31, 245 18, 586 11, 351 23, 586 17, 641 5,279 20, 518 16, 574 3,603 17, 521 16, 261 1,191 17, 273 16, 184 1,042 16, 774 15, 993 741

Thousan ds 1,308

666 341

69 47 40

Proportion of cotton consumed

Percent Percent Percent 100. 0 77.8 18.7 100.0 85.4 11.8 100. 0 90.7 7.5 100.0 96. 2 3.4 100. 0 96.3 3. 3 100.0 96.9 2.9

Percent 3.5 2.8 1.8 .4 .4 .2

^ Year ending July. 2 Active at anytime during year to 1945; active at end of

year for other years. Adapted from {99),

Ownership and Operation

The type of ownership or control of some cotton yarn and thread mills has been changing. Cot- ton yarn mills that were under corporate ownership or control in 1958 accounted for 93 percent of the total number of establishments, and employees of these mills accounted for 99 percent of the total number of employees in this industry (table 12). Of the total number of establishments, the proportion operated by corporations increased from 1939 to 1954 but decreased from 1954 to 1958 ; whereas the corresponding proportion of the total number of employees in this industry remained about the same.

Yam mills operated from central administrative offices as multiunits decreased from about 50 percent of the total nmnber of mills in 1939 to 46 pecent in 1958. But the proportion of total employees accounted for by multiunits increased from 61 percent in 1939 to 64 percent in 1954, and then decreased to 62 percent m 1958 (table 12).

The proportion of thread mills under corporate ownership or control increased from about 71 percent of the total in 1939 to 80 percent in 1954 and to 83 percent in 1958. The proportion operated from central administrative offices as multiunits increased from 23 percent in 1939 to 26 percent in 1954 and to 45 percent in 1958. Average number of employees per mill decreased for both multiunit and single-unit establishments, but according

37

TABLE 11.—Numher of active cotton spindles^ hours operated^ and cotton consumption^ hy area^^ united States, 1961 ^

Active spindles ^

Total spindle hours

Proportion of

capacity '

Cotton consumed

State

Total Per 100 spindle hours

Cotton-growing States : South. Carolina

Thousands 6,021 4,810 2,637 1,427 1,289

Millions 38, 701 28, 599 15, 445 8,369 7,460

Percent 154. 5 142. 9 140. S 141. 0 139. 1

IrOOO bales 2,520 2, 445 1, 539

842 600

Pounds 3. 13

North Carolina 4. 10 Georgia - - 4. 78 Alabama 4. 83 All other _._- -- 3. 86

Total or averaee -- 16, 184 98, 574 146.4 7, 946 3.87

New England: Massachusetts - - - 414

246 241 141

1,949 1,650 1,306

916

113.2 161.2 130.3 156. 2

79 116 39 39

1.95 Maine -- -- -- 3.37 Rhode Island -- 1.43 All other -_ 2. 04

Total or averasre 1,042 5,821 134.3 273 2.25

Other States 47 166 84.9 34 9. 83

United States -- 17, 273 104, 561 145. 5 8, 253 3.79

1 Year ending July. 2 Spindles consuming 100 percent cotton. 8 Proportion of capacity for 80-hour week for spindles active at end of year. Adapted from (99).

to census reports, the proportion of total employees accounted for by employees of multiunits increased from about 65 percent in 1939 to 87 percent in 1958.

Mergers and Acquisitions

Mergers and acquisitions in the textile industry, including those of yarn and thread mills, apparently have resulted in considerable changes in the organization and management of many operating units. According to the Cotton Textile Institute, the ownership of about 154 cotton textile companies engaged in spinning, weaving, or both, changed between 1940 and 1946 (117). These firms owned more than 4,400,000 spindles and more than 88,000 looms, or approximately one-fifth of the industry's productive facilities.

Eecent reports of the Federal Trade Commis- sion on corporate mergers and acquisitions in the textile and apparel industries show that during the 6 years 1955-60, about 295 acquisitions were made by 112 acquiring firms. Acquisitions by years ranged from 34 in 1958 to 56 in 1956. Assets of acquiring firms ranged from less than $10 million to more than $500 million. About 8 percent of the acquiring firms indicated assets of more than $100 million and 21 percent indicated assets of more than $50 million. Annual acquisitions per firm ranged from 1 to 11, and only 13 percent acquired more than 2 firms during any 1 year. Total acquisitions per firm during the 6 years

ranged from 1 to 43, and fewer than 5 percent acquired 10 or more firms each. These ac<][uisitions and mergers apparently represent various combinations of vertical, horizontal, and conglomerate integration.

Vertical integration is the combination under one management of operating units in two or more stages in the manufacture and distribution of products. These may be spinning and weaving, weaving and finishing, finishing and fabricating, fabricating and wholesaling, wholesaling and retailing. Acquisitions of textile firms by vertical integration increased markedly from 1940 to 1946. About half of the spindles that changed hands^ during this period did so as a result of vertical integration. Among the most active purchasers in this kind of acquisition were selling agents and converters, cotton mill operators, cutters, and other end-use firms.

Horizontal integration is the merging of two or more firms or establishments on the same level of production or distribution, such as two or more spinning, weaving, finishing, fabricating, wholesaling, or retailing establishments. Acquisitions of textile firms or establishments by horizontal integration also increased markedly from 1940 to 1946. Approximately 18 percent of the mergers during this period were horizontal combinations.

Conglomerate integration is the merging of two or more firms or establishments not in the same industry and not engaged in the same or different

38

TABLE 12.—Number of establishments and average number of employees per establishment for yarn mills^ except wool^ by type of ownership and operation^ united States^ 1939^ 1951^^ and 1958

Type of ownership and operation

Establishments Average employees per

Establishments ^

1939 1954 1958 1939 1954 1958

Ownership or control: Corporate

Num- ber 318

13 15 3

Num- ber

336 11 9 1

Num- ber

330 13 13

0

Num- ber

218 34 33 53

Num- ber

251 49 (')

Num- ber 204

Partnership Individual Other _____ _

23 5 0

All 349

148 26

357

180 20

356

166 26

202

179 33

239 191

Operation: Single unit:

Corporate Other _

153 14

All 174 200 192 157 151 134

Multiunit: Corporate Other

170 5

156 1

164 0

252 47

257 0

All _ 175 157 164

356

246

202

350

239

257

All 349 357 191

1 In 1939 only wage earners are included; in 1954 and 1958 all employees are included.

2 Witliheld to avoid disclosing figures for individual companies.

Adapted from Census of Manufactures.

stages of the production, marketing, manufacturing, and distribution of the same products. In 1958, establisliments that employed about 10 percent of the total number of employees of all estab- lislnnents classified in the textile mill products <îategory were operated by companies classified in other categories. Of the total number of employees of companies classified in the textile mill products category in 1958, about 15 percent were in establishments classified in other industry categories (101).

Several factors contributed to the wave of mergers in the 1940's. IVofit margins, affected by price controls during the war emergency, expanded demand, and other factors led some mills to integrate forward by buying or building finishing plants to take advantage of wider margins on converted goods. This development, in turn, made it necessary for some converters and custom- finisliing plants to integrate backward by buying mills to secure a supply of goods for their finishing operations. Some selling houses found it necessary to integrate by buying mills to control a full line of products for sale. In some instances, wholesale houses and mills that owned their own

•sales agencies found it advisable to integrate both

backward and horizontally to control their sources of goods and to take advantage of wider margins. Some industrial firms which use yarns and fabrics in the manufacture of other products found it advantageous to buy cotton mills to supply their requirements, either partially or fully (30^ 62).

Such integrations in the textile industry apparently niultiply with prosperity and decline with depression. The first real wave of mergers during this century came with the boom following World War I. It was temporarily arrested during the depression that began in 1921. Absorption and purchases of businesses increased with improvements in business conditions in the middle 1920's. A peak reached in 1929 was followed by another letup during the depression of the early 1930's. Increased interest in mergers began again in the early 1940's, and the rate of acquisitions reached a high level in 1947. Following a decline in the rate of mergers during the late 1940's and early 1950's, another wave started in 1953, and except for some letup in 1957 and 1958, continued to the early 1960's.

Mergers and acquisitions, along with changes in types of ownersliip and operation of cotton yarn and thread mills after 1947, apparently were associated with irregular changes in average size of individual mills, as indicated by the number of employees. Average number of employees per yam mill decreased from 256 in 1947 to 210 in 1958. The proportion of yarn mills with 100 or more employees decreased from 70 percent of the total in 1947 to 66 percent in 1958 (table 13). The proportion with fewer than 20 employees decreased from 14 percent in 1947 to 13 percent in 1958. The number of employees per thread mill averaged about the same in 1958 as in 1947, but the proportion of mills with 100 or more employees increased and those with fewer than 20 employees decreased (table 13).

The trend toward greater concentration in the textile industry is indicated by reports that the share of total spindles accounted for by the largest four firms increased from 5 percent in 1937 to 17 percent in 1955 {129). In 1958, cotton yarn mills operated by 4 of the largest of 263 companies accounted for 24 percent of the total value of shipments of the industry (table 14). Mills operated by 20 of the largest companies, or less than 8 percent of the total number, accounted for 54 percent; and 50 of the largest companies, or 19 percent of the total, accounted for 74 percent of the value of shipments of the industry. The proportion of the total value of shipments accounted for by specified numbers of the largest companies decreased from 1954 to 1958.

Similar data for the thread industry show that in 1958 mills operated by 4 of the largest of 70 companies accounted for 68 percent of the value of shipments by the industry (table 14). Mills operated by 20 of the largest companies, or about 29 percent of the total number, accounted for 92 per-

39

TABLE 13.—Number of yarn^ except wool^ and thread mills^ hy number of employees, United States, 19Ii7 and 1958

Employees per Yarn mills Thread mills

plant 1947 1958 1947 1958

500 and more 250 to 499 100 to 249 50 to 99

Number 42 91

150 40 24 28 18 11

Number 27 56

151 50 26 17 10 19

Number 9 2

10 14 13 10 16 15

Number 7 8 8

13 20 to 49 13 10 to 19- 14 5 to 9 9 1 to 4 14

Total 404 356 89 86


cent of total shipments. The share of the value of shipments accounted for by specified numbers of the largest companies did not change much from 1947 to 1958 (table 14).

Additional data on companies manufacturing cotton yam and thread are combined with those on companies manufacturing broadwoven fabrics and those engaged in finishing textiles, except wool (table 28, p. 57).

In addition to concentration on a company basis, integration in the textile industry may involve various other combinations of manufacturing, financing, and selling agencies. For example, in 1958, one company, formed as a mill sales agency, represented mills producing more than 500 million yards of cloth annually for converters, apparel manufacturers, and retail piece goods departments {5). This company was selling agent for 23 textile manufacturing companies in 10 States in the United States and in 3 other countries. Principals of this company had financial interests in some of the manufacturing companies. The agent initiated or cooperated with all the manufacturers in planning operations, plant modernization, fabric development, styling, pricing, packaging, advertising, and market analysis. Sales offices were maintained in 11 cities in the United States and 2 in Canada. Furthermore, a close working relationship between this selling company and its financing affiliate was guaranteed by interlocking director- ates and by some duplication in executive officers. This financing company had a volume of business in 1958 of about $101 million (5).

One or more of a number of factors may moti- vate mergers, in addition to wartime advantages as a result of price controls and other regulations. Unprofitable companies may be acquired so that their losses may be used as income tax credits. Closely held companies may be sold as a means of converting accumulated profits into capital gains. Mergers may be used (1) to assure dependable

supplies of raw materials and adequate market outlets for the products; (2) to diversify various textiles as a means of coping with fluctuations in popularity among fibers and of facilitating the blending of fibers; (3) to coordinate the various stages of production with consumer requirements and; (4) to facilitate financing for operating units of the most economic size, for acquiring improved facilties and equipment, and for providing modem management methods, including research and advertising.

Adequate information is not readily available for determining to what degree these motivating purposes are served by mergers and acquisitions in the textile industry. It is also inadequate for determining the influence of such combinations on the adequacy and efficiency of the marketing services, on prices to producers and consumers, or on competition among fibers. Evidently the problem of formulating and developing feasible plans for assembling and analyzing adequate information for such determinations would be an extremely difficult one. Some have concluded that integration has not essentially altered the overall competitive structure of the textile industry {129).

MANUFACTURING METHODS

Cotton yarns are classified according to cleaning processes, to twist or construction, and to yarn numbers. According to cleaning processes they are classed as carded, double carded, or combed. By twist or construction, they are known as warp, filling, knitting, ply, cord, sewing thread, or twine. Yarn numbers under 8s identify very coarse yam ; 8s to 16s, coarse ; 16s to 32s, medium ; 32s to 60s, fine; 60s to 120s, fine; and over 120s, very fine. The type of yarn and its number determine the type and number of processes required in its manufacture. The number of processes range from 4 to 16 for single yams, but the usual number is from 8 to 12.

Conventional or regular-draft processing usually requires two more processes than the more modem long-draft processing. Production of plied yams, sewing thread, tire cords, and other cable strands necessitates one or two additional processes known as twisting. Auxiliary processing equipment needed by yarn mills for the preparation of yams for twisting, for warps, or for sale may be winders, spoolers, coners, and beamers. Further steps may be those of bleaching, dyeing, gassing, and mercerizing.

The main processes involved in the manufacture of cotton yarn usually include the following:

Opening and Cleaning

Bales of cotton of different densities usually are rceeived at mills in lots of 100 bales or more from a number of sources. After the ties and bagging are removed from the bales, cotton from a few bales is blended to produce a uniform quality of

40

TABLE 14.—Share of total shipments of the cotton yam and thread manufacturing industry accounted for hy largest companies^ united States^ 1958^ 1951^^ and 19Ji7

Industry and year Com-

panies ^ Value of

shipments ^

Concentration ratio: Proportion of total shipments accounted for

by 3— Primary product speciali-

4 largest companies

8 largest companies

20 largest companies

zation *

Yarn mills: Cotton system: ^

1958 Number

263 278

70 84 83

1,000 dollars 1, 145, 238 1, 030, 627

165, 906 183, 746 154, 269

Percent 24 26

68 66 65

Percent 36 40

79 78 78

Percent 54 56

92 92 90

Percent

1954 _-_ - _ --- 92

Thread mills: ^ 1958 --- - 90 1954 - 88 1947 - 85

1 Determination of company affiliation is based on census reports and public records. Value of shipment totals for establishments has been summarized into company totals in each industry. "Largest companies are determined by each company's value of shipments in the specified industry.

2 Includes, for all manufacturing establishments classified in the industry, not only (a) their value of products ''primary" to the industry, but also (b) their value of "secondary" products, which are primary to other industries, and (c) their "miscellaneous receipts," such as receipts for contract and commission work on materials owned by others, scrap and salable refuse, repair, etc. Excludes sales of products bought and resold in the same condition. The 1954 and 1947 figures for some industries reflect minor revisions of previously published census data.

3 The percentages consist of the sum of the value of shipments of the largest 4, 8, 20, or 50 companies, divided by the total value of shipments of the industry.

material for further processing. This blending applies particularly to mills that produce staple fabrics and to those that maintain uniform standards of quality during extended periods of time.

Formerly, it was general practice to use a machine with a high rate of production. Known as the bale breaker, this machine is used to open and mix cotton. The more modem practice is to feed portions of a few bales continually to each of several so-called blending hoppers and have the loosened cot^ton from each hopper fall onto a traveling lattice to provide mixing and to convey the material to the next machine in the cleaning line.

This cotton is conveyed by either pneumatic or mechanical means, or both, to the first of a series of cleaning machines. Finally, after it is cleaned, mainly of the heavier impurities, by agitation, rotary beaters, and screens, it is delivered from the cleaners in a rolled-up sheet known as a lap. These laps, weighing 10 to 50 pounds, are then placed in racks on wheeled platforms or conveyors and transferred to the carding department.

Carding

The carding operation disentangles the masses of fibers in a picker lap and cleans them further

^ The ''primary product specialization ratio" measures the extent to which plants classified in the industry spe- cialize in products regarded as primary to the industry; that is, value of shipments of primary products is expressed as a ratio of the total shipments of all products made by these establishments (excluding miscellaneous receipts, such as receipts for contract and commission work on materials owned by others, scrap and salable refuse, repair, etc.). The 1954 and 1947 ratios for some industries reflect minor revisions of previously published census data.

^ Includes data for yarn mills, silk system. Comparable data are not available for 1947 because of changes in the 1947 classification of plants or products in the industry.

^ Data not available. 7 Jobbers were included in 1947 but excluded in 1954

and 1958.

Adapted from (120),

by removing most of the fine trash, some short fibers, and other particles of foreign matter. It transforms the bulky lap into a rope-like strand called card sliver. This strand, weighing 40 to 70 grains a yard, is coiled uniformly into a can.

Combing

The combing process is applicable to the longer staple cottons that are used for products having fine yam counts and for products that require high strength and smooth appearance. Its primary purpose is to remove short fibers and paral- lelize the longer fibers into an even sliver. Comb- ing processes are among the most expensive operations in making yams. They include sliver lapping, ribbon lapping, and combing. The sliver tapper combines several slivers into a sheet or ribbon and rolls it onto wooden cores. Some slivers are combined after a small amount of drafting; others without drafting. Four or six ribbons or laps of slivers are fed to the ribbon lap per, which further parallels the fibers and combines the resultant thin drafted sheets of fiber into one sheet or lap. It then rolls the lap onto cores, where it remains ready for use at the comber. Six or eight ribbon laps are fed to the comber, and a single sliver is produced. The comber removes from

41

10 to 20 percent of noil (waste), which contains niany of the shorter fibers, fine particles of foreign matter, and tangled fibers, and delivers a clean sliver in which the fibers are highly paral- lelized. The product of this machine, comber sliver, is coiled neatly into cans and delivered to the drawing frames.

Drawing

The card or comber sliver is delivered to drawing frames, which combine six or eight slivers for drawing or drafting the fibers to increase parallelism and uniformity and to reduce the combined strands to approximately the size of a single strand. The combined strands are coiled sys- tematically into cans.

The Roving Process

Eoving operations successively reduce the sliver from the drawing process to a much smaller strand of fiber, called roving, by the drafting action of the drawing rolls. This drafting action also adds to the parallelism of the fibers, inserts a slight amount of twist to give the strands sufficient strength for handling, and winds the strands onto a bobbin. During the 1950's and early 1960's, these processes were in a stage of transition as a result of the development of so-called long-draft processes, which make it possible to perform in one process what was formerly done in two or more.

Spinning

The final process in the manufacture of yam is spinning. Here the roving from the last roving process is fed into the spinner, either as a single or double strand, drafted to the desired size, and twisted to produce the correct hardness or some other quality. Yam, the product of spinning, is wound onto small bobbins.

Spooling or Winding

Yarns produced from spinning are necessarily put in small packages or on bobbins wliich contain relatively short lengths of yarn. Before this yarn is usable in other processes, except that of filling (yam spun directly for use in the shuttle or looms), several bobbins of it must be combined end to end to make a considerably longer strand. Many forms of winding are prevalent in the textile industry. Some are cone, cheese, tube, spool, and doubler winding.

Winding permits inspection of yarn, cleans it further, eliminates weak places and lumps, and, through use of knot-tying devices, either hand operated or machine-operated, produces small non- slip knots that are not difficult to handle in later processes. These conditions are necessary to permit economical operation of warpers, slashers, looms, and twisters.

Warping or Beaming

An auxiliary process to weaving and to some ply yam twisting is the laying parallel of a large number of strands over the surface of a large beam (spool) and the wînding of great lengths of the strand onto the beam. Often from 350 to 600 strands are wound uniformly, as to spacing and tension, at a rate of from 400 to 900 yards a minute. This gives a full beam containing 20,- 000 to 36,000 yards or more. A full beam may contain yarn equal to the fiber from li/^ to 2 bales of cotton.

Twisting

Twisting is necessary when ply yarns and cords are to be made. Cones, parallel tubes, cheeses, or spools of yarn produced on the winding machines are fed two or more strands together to make ply yams. The further combining of ply yams in later twisting produces cabled yams or cords. These processes are also used in the production of sewing thread.

Machinery and Equipment

Changes in the amount and kind of machinery and equipment used in the manufacture of cotton yarn since World War II have resulted in a number of improvements. The number of improved long-draft spindles increased from 1942 to 1954 and then decreased in 1958. The largest ring spindles increased markedly from 1942 to 1958 (table 15). Decreases in the number of regular draft and shorter ring spindles were greater than the corresponding increases in improved long-draft and larger ring spindles. The total number of spindles also decreased. Marked increases in the number of combs from 1942 to 1947 were followed by greater decreases from 1947 to 1958, so that the number of combs in 1958 was 48 percent less than that in 1947 and about 35 percent less than that in 1942.

Information on the condition of machinery and equipment of cotton yarn manufacturers is limited, but some indications of the condition may be derived from results of a survey made in Í950 of 15 representative carded cotton yam mills. They showed that none of the buildings were new and modem. Twelve mills had buildings that were in good condition and fairly well laid out in most respects; three mills had buildings that appeared to be in need of considerable alteration and repair.

Floor spacing and arrangement of machinery and equipment for efficient flow of materials between products were considered good for five of the mills, fair for seven, and poor for three of the mills. Cotton warehouses and wâstehouses were conveniently located in relation to the opening and picking rooms for 12 of the mills. The arrangements for two mills were only fair in this respect,

42

TABLE 15.—Number of cards^ combsând spindles in the cotton and manmade fiber industries^ by type of machine^ united States^ 191^2^ 19J^7^ 195If, and 1958

Type of machine 1942 1947 1954 1958

Cards -- Number 90, 582 7,245

Number 86, 442 9,138

Number 88, 670 5,996

Number 88, 312

Combs - 4,737

Spindles (thousands) : Roving:

Long draft 883 2,942

1, 145 1,901

1, 277 757

997 Regular draft 310

Total _- 3,825 3,046 2,034 1,307

Cotton-system spinning: Ring spinning: 1

By type: Long draft Regular draft

12, 420 11, 766

14, 385 8,227

18, 153 3,421

17, 856 1,354

Total 24, 186 22, 612 21, 574 19, 210

By diameter, inches: 1% and under iKeto IK PK6to2>^ 2^6 and over

5,137 9,457 8, 690

902

4,440 7,620 8,715 1,837

3,776 5,242 9,856 2,700

2, 615 3,840 9,428 3,327

Total 24, 186 22, 612 21, 574 19, 210

Mule spinning _ (0 118 33 20

Total spinning 24, 186 22, 730 21, 607 19, 230

Doubling and twisting, inches: 2

1% and under 508 1,233 1,219

412

513 1, 166 1,266

568

190 795

1,348 659

72 113/6 to 2% 541 2K6 to ?>%- . 1,223 3%6 and over • 821

Total 3,372 3,513 2,992 2,657

Throwing and twisting Silk-system spinning

1,884 597

2,629 203

41, 729 106

Warping equipment: High-speed warpers Low-speed warpers

2,763 2, 644 1,245

1,622 622

Total P) 5,407 1,245 2,244

^ 1942 data for mule spinning spindles included in ring spinning spindles.

^ Cotton system. ^ Not available. ^ Accurate data not available.

Adopted from Bureau of Census reports.

and that for one was poor enough to materially reduce efficiency.

The type, amount, and condition of the opening and picking equipment used by eight of the mills were good ; equipment used by four mills was not of the most improved type but was in good condition ; and that used by three mills was neither modern nor in good condition. Breaker and finisher draw frames for 10 mills were modern and in good

condition, those for 2 mills were of the improved type but were rather old, and those for o mills were quite old and in poor condition. Five of the mills had modern fly frame equipment. In one mill this equipment was fairly modern ; in nine it was not modern. Spinning equipment for 1 mill was good, but that for 13 mills was not modern. One mill had a partial installation of modern spinning equipment.

A new machine, developed in the early 1950's to improve the opening and fluffing of cotton, offers substantial benefits to mill operators. As cotton passes through the machine, it is fluffed and blended without damage to the fibers, it is claimed, and considerable amounts of trash are removed. In more recent years the lint cotton opener has been integrated with a carding cleaner, with the result that cleaning efficiency has greatly increased {66, 77),

Although some equipment used in the manufacture of cotton yarn and thread is old and in unsatisfactory condition, improvements have been and are being made. Census reports indicate that expenditures for plant and equipment by manufacturers of cotton yarn and thread increased from about $7 million in 1939 to $34 million in 1947. It then decreased to $20 million in 1958 and was about $36 million in 1962. The proportion of these amounts spent for new plants and equipment ranged from 77 percent in 1939 to 85 percent in 1958 (table 16).

TABLE 16.—Total expenditures for plant and equipment by manufacturers of cotton yarn and thready by industry group, United States, 1989, 194,7,1954, and 1958 "^

Industry, plant, and Expenditures

equipment 1939 1947 1954 1958

Yarn mills: New equipment New plant

1,000 dollars 3,662 1,189 1,471

1,000 dollars

18, 059 9,721 1,770

1,000 dollars

15, 028 3,473 2,072

1,000 dollars 13, 792

1, 715 All other _ 2, 705

Total___ __ ___ 6,322 29, 550 20, 573 18, 212

Thread mills: New equipment New plant-

751 19 73

1, 879 2,329

167

4,933 3, 610

416

1,319 458

All other _ _ _ _ 56

Total 843 4,375 8,959 1, 833

1 In 1958 and 1954 establishments that reported on the short form were asked to show only their total expenditures for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments that reported detailed expenditures by type to obtain separate expenditure figures for new plant, new equipment, and used plant and equipment.


43

Charges or Costs Involved

Cotton yam and thread manufacturers' gross margins, or the spread between costs of materials, supplies, parts, and containers used and the value of the products, vary from one establishment to another, from one time to another, and with the kind of yarn and thread produced. Census reports on cotton yarn show that in 1958 manufacturers' gross margins averaged 36.5 percent of the value of the yarn produced (table 17). This proportion was substantially less than that in 1947 but greater than that in 1954. Raw cotton accounted for most of the costs included under "materials, supplies, parts, and containers," but the spread between the cost of raw cotton and the value of the yarn was somewhat greater than the proportion derived from census data. Wages and salaries, the largest item of cost included in the margin, accounted for about 58 percent of manufacturers' gross margins in 1958, compared with 52 percent in 1947 and 64 percent in 1954.

Manufacturers' gross margins for thread averaged 41 percent of the value of thread produced in 1958, compared with about 50 percent in 1947 (table 17). Wages and salaries accounted, on the average, for about 52 percent of manufacturers' gross margin in 1958, about 57 percent in 1954, and 43 percent in 1947.

Costs of manufacturing cotton yarn vary with the type of yarn produced and from one mill to another. In 1950, for example, the proportion of the total cost of carded cotton yarn to manufacturers, excluding selling expenses, accounted for by processing costs averaged about 28 percent for 10s hosiery yarn, 34 percent for 20s hosiery yarn, and 39 percent for 30s hosiery yarn {105). The proportions by mills ranged from about 25 to 32 percent for 10s yarn, 32 to 38 percent for 20s yarn, and from 38 to 40 percent for 30s yarn. The proportion of processing costs accounted for by labor ranged from 52 to 65 percent for 10s yam and from 51 to 64 percent for 20s yarn {105).

In 1950, average production per man-hour by mills ranged from 9.55 pounds to 15.16 pounds for 10s hosiery yam and from 7.34 pounds to 9.60 pounds for 20s hosiery yarn. Average hourly wage rates ranged from 93 cents to $1.15 for manufacturers of 10s hosiery yam and from 93 cents to $1.17 for manufacturers of 20s hosiery yarn. Average labor costs per pound ranged from 7.50 cents to 11.37 cents for 10s hosiery yam and from 10.22 cents to 12.97 cents for 20s hosiery yarn. Some of the influence of differences in wage rates on costs per pound was offset by differences in production per man-hour {105).

Differences in size of mills may affect unit costs of manufacturing cotton yam. But the influence of such factors as differences in ability and efforts of managers, in variety and quality of the yams spun, in kinds and amounts of machinery used, and in quality of the cotton consumed apparently

TABLE 17.—Valii^s^ costs^ and margins for yam and thread mills^ except wool, united States. 191,7 and 1958

Item Yarn mills

Value of products^

Cost of materials, etc.2

Gross margin

Salaries and wages _

Salaries Wages

Fuel Purchased electric

energy Contract and com-

mission work Others

1947

i.œo dollars

781, 897

433, 730 348, 167

180, 076

16, 158 163, 918

2,036

10, 451

1,912 153, 692

1958

1,000 dollars

843, 850

Thread mills

535, 963 307, 887

178, 828

22, 016 156, 812

1,924

12, 852

2,653 111, 630

1,000 dollars

154, 269

1947 1958

77, 559 76, 710

33, 240

6,310 26, 930

1,240

756

7,342 34, 132

1,000 dollars

165,919

97, 851 68, 068

35, 479

8,473 27, 006

1,231

h 705

2,354 27, 299

Proportion of value of products

Value of products ^ Percent

100.0 Percent

100.0 Percent

100.0 Percent

100. 0

Cost of materials, etc.2._ _ _ 55. 5

44.5 63.5 36. 5

50.3 49. 7

59 0 Gross margin 41.0

Salaries and wages. 23.0 21.2 21. 5 21.4

Salaries 2. 1 20. 9

2. 6 18.6

4. 1 17.4

5 1 Wages 16 3

Fuel . 3

1.3

. 2 19.7

. 2

1.5

.3 13.3

.8

. 5

4. 8 22. 1

7 Purchased electric

energy 1. 0 Contract and com-

mission work Others _

1. 4 16 5

1 Excludes products bought for resale without further processing. Data for 1954 and 1958 are adjusted for changes in inventory.

2 Includes supplies, parts, and containers. 3 Includes depreciation, interest, insurance, rent, taxes,

other expenses, and profits.

Adapted from Census of Manfactures.

are such that costs vary somewhat irregularly with the size of the plant. Data for 15 mills surveyed in 1950 show that manufacturing costs for plants spinning 12 or fewer counts of yam averaged substantially less for mills with 7,000 to 14,000 spindles than for mills with fewer than 7,000 spindles. Costs for mills spinning more than 12 counts and with 14,000 to 25,000 spindles averaged substantially lower than those for mills with a smaller number of spindles {105).

The number of counts of yam spun and the frequency of changes in the variety of products manu-

44

factured may coîttribute to relatively high manufacturing costs. The 15 carded cotton yarn mills surveyed in 1950 showed a wide range in number of counts of yam spun. Average manufacturing costs per pound of yam for small and medium- sized mills varied directly and substantially with the number of counts spun. For the larger mills, average manufacturing costs varied somewhat irregularly with the number of counts spun {105). The relationship of size and number of counts to cost indicates that carded cotton yarn mills with fewer than 7,000 spindles usually are too small for the most efficient operation, even for the manufacture of only a few counts of yarn ; that mills with 7,000 to 14,000 spindles may be large enough for efficient operation if the number of counts is small ; and that the size of mills usually would need to exceed 14,000 spindles if 12 or more counts are to be spun and if the most efficient operation is to be expected (/6^5).

Developments in recent years emphasize the im- porlcince of changes in costs of labor in the manufacture of textile products. ^ Average hourly earnings of production workers increased from 93 cents in 1947 to $1.55 in 1962 in cotton yam mills and from $1.02 in 1947 to $1.60 in 1962 in thread mills. Average value added by manufacture per hour of labor increased from $1.88 in 1947 to $3.12 in 1962 in yarn mills and from $2.54 in 1947 to $3.88 in 1962 in thread mills, according to census reports. In yam mills, value added per dollar of wages and per dollar of total payroll in 1962 averaged $2.02 and $1.78 respectively, and was greater than that in 1954, but less than that in 1947, despite improvements in machinery and equipment used (table 18). In thread mills, value added per dollar of wages and per dollar of payroll in 1962 averaged $2.42 and $1.90 respectively, and was greater than that in 1947, 1954, or 1958 (table 18).

Average hourly earnings of production workers and value added by manufacture per hour of labor, per dollar of wages, and per dollar of payroll in yarn and thread mills varied widely from one State or region to another in 1947 and 1958 (table 18). Wage rates per hour usually averaged highest in Middle Atlantic States and lowest in South Atlantic States. Differences in average wage rates per hour varied irregularly with differences in average value added per hour of labor, per dollar of wages, and per dollar of payroll. Wages of production workers in 1958 accounted for about 89 percent of total payroll for yarn mills and 76 percent of that for thread mills.

In 1958, data by companies show that value added per hour of labor, per dollar of wages, and per dollar of payroll by manufacture of cotton yarn and thread varied irregularly with the size of the company as indicated by the number of employees {120). Average wage rates per hour varied irregularly with the size of cotton yarn manufacturing companies, but an inverse relation-

ship is indicated between wage rates per hour and the size of thread manufacturing companies.

In 1958, value added per dollar of payroll by cotton yarn mills operated by corporations averaged more than that for those operated by partnerships and less than that for those operated by individuals (table 19). Comparable values added by thread mills operated by corporations averaged about the same as those for niills operated by partnerships, and were substantially greater than those for mills operated by individuals. Value added per dollar of payroll by yam and thread mills operated as multiunits averaged substantially more than that for mills operated as single units (table 19).

In 1958, value added by manufacture of yam and thread, broadwoven fabrics, and finished textiles (except wool) per dollar of payroll averaged $1.53 for establishments operated by single-unit companies and $1.59 for those operated by multiunit companies, according to census reports (table 28, p. 57). Similarly, value added per dollar of payroll averaged $1.54 for establishments operated by multiunit companies primarily engaged in a single industry, compared with an average of $1.60 for establishments operated by multiunit companies engaged in more than one industry. Value added by establishments primarily engaged in the manufacture of these products, operated by companies primarily engaged in other industries, averaged $1.57 per dollar of payroll. The relationship of value added per dollar of payroll to kind of integration in 1954 was similar in most instances to that indicated for 1958 {101). These results appear to indicate that average value added by manufacture per dollar of payroll varied directly with the degree of inteo:ration. But adequate information is not available to indicate whether or to what extent these differences in average value added per dollar of payroll may be attributed to factors other than differences in kind or degree of integration.

Means of Improvement

The manufacture of cotton yarns and fabrics can be improved by the use of qualities of cotton that are relatively best adapted, physically and economically, to the production of various products and by other means of increasing the efficiency of the manufacturing operations. Attempts to bring about these improvements would necessitate an evaluation of the influences of a number of variables, separately and in combination. These variables may include (1) differences in all important quality elements and costs of cotton; (2) type and condition of the manufacturing machinery and equipment used, layout or organizational setup of this machinery and equipment, labor used, operating speeds, settings, and draft organization; (3) types and quality of yarns produced; and (4) the interactions among these factors.

45

TABLE 18.—Value added hy yam mills^ cotton system^ and thread mills^ per dollar of payroll^ per dollar of wages^ and per hour of labor^ and average wage rates per hour^ ly region and State^ 1947 and 1958 ^

Value added by manufacture

Type of mill and region Total

Per dollar of— Per hour of labor

Wage rates

per hour

Payroll Wages

YARN MILLS 1947

Northeast and North Central.. ._ _ 1,000 dollars

30, 114 262, 858 197, 253 33, 867

Dollars 1.62 1. 92 1.96 1. 63

Dollars 1.85 2. 10 2. 13 1. 76

Dollars 1. 96 1.89 1. 94 1. 82

Dollars 1. 06

. 90

. 91 1. oa

South Atlantic _ _ North Carolina. _

East South Central

United States 326, 839 1. 86 2. 03 1. 88 .9a

1958

New England. _. . 5,216 10, 611

272, 107 174, 830

70, 750 43, 662 27, 151 5,865

1. 27 1. 68 1. 68 1. 64 L 65 1.75 1. 75 1. 33

1.59 2. 04 1. 88 1. 84 1.85 1.97 1. 97 1. 47

2.41 3. 44 2. 52 2. 42 2. 56 2. 87 2, 90 2. 65

1. 52 1. 68 1.34 1. 32 1 ^R

Middle Atlantic _ South Atlantic _ _

North Carolina Georgia __ _

East South Central _ ___. 1 46 Alabama. __ _ 1 47

Another . 1 80

United States 337, 461 1. 67 1. 89 2. 58 1. 37

THREAD MILLS 1947

New England 41, 236 9,929

16, 207

1.99 2. 51 1. 89

2, 43 3. 79 2. 20

2. 63 3. 96 1. 95

1 08 Middle Atlantic ... _ 1 04 Another 8Q

United States. _ 67, 372 2. 03 2. 50 2.54 1 02

1958

New England _ 20, 412 5,199

35, 809 1,545

1. 64 1. 99 1.84 1. 58

2. 25 3. 05 2. 31 2. 04

3.37 5. 07 3. 29 3. 05

1 50 Middle Atlantic _. 1 66 South Atlantic _. 1 42 An other 1 50

United States ... _ __ 62, 965 1. 77 2. 33 3. 41 1 46

^ For 1958, value added is adjusted by taking into account value added by manufacturing operations and net chan ge during the year in inventories of finished goods and work-in-process. Data'^for 1947 are unadjusted.


ADJUSTMENTS IN QUALITY

Better adjustments in the qualities of cotton used in the manufacture of specified types and qualities of yarn and fabrics would need to be based on results of adequate experiments or tests designed to provide accurate evaluations of all important quality elements of cotton. These evaluations would show the influence of differences in the vari-

ous combinations of quality elements of cotton used on (1) the quantity, quality, and market value of the yarns and fabrics produced and (2) manufacturing costs of the yams and fabrics, including labor, overhead, and reasonable returns to management and capital. For manufacturing purposes, differences in quality or value of cottons that are of different combinations of quality elements but usable in the manufacture of the specified

46

TABLE 19.—Value added hy cotton yarn and thread mills^ iy type of ownership and operation^ united States^ 1958

Type of ownership

Total Per dollar of payroll

and operation Yarn mills

Thread mills

Yarn mills

Thread mills

Ownership: Corporate. _ _ _

1,000 dollars

290, 044 1,707

468 0

1,000 dollars

62, 307 490 168

0

Dollars 1.63 1.49 2. 96

0

Dollars 1.78

Partnership _ _ _ 1.79 Individual 1.06 Other._ _ __ 0

All 292, 219 62, 965 1. 63 1.77


Corporate 102, 247 2,175

0) 0)

1.54 1.67

0) Other C)

All _ _ . 104, 422 7,429 1.54 1.42

Multiunit : Corporate Other, _

187, 797 0

0) 0)

1. 68 0

0) 0)

All 187, 797 55, 536 1.68 1. 84

All 292, 219 62, 965 1. 63 1.77

1 Withheld to avoid disclosing figures for individual companies.


products would be indicated by differences in the spread between the value of the products and manufacturing costs. The quality of cotton relatively best adapted to the manufacture of a specified type and quality of yarn and fabric is that with the lowest net cost, adjusted for waste, in relation to its value to mills for that purpose.

In addition to supplying an improved basis for making needed adjustments in the quality of cotton used, accurate evaluations of all important quality elements of cotton would provide a basis for (1) setting up adequate standards for the various quality elements of cotton ; and (2) pricing- cotton on the basis of these standards throughout marketing channels, including those to farm producers. Such evaluations would require suitable equipment and methods for accurately measuring (1) differences in all important quality factors of cotton, and (2) the influence of these differences on the processing performance and on the quantity, quality, and value of the products. Considerable progress has been made in developing facilities and methods for measuring some quality factors of cotton, but at least some of the known quality factors need to be more accurately evaluated and perhaps other important ones need to be identified and evaluated.

Apparently one of the quickest and most satisfactory means of relating the various quality factors of cotton to processmg performance and to the quantity, quality, and value of the resultant products is by carefully controlled pilot plant studies in which commercial equipment for processing the cotton and reliable measures for indicating differences in quality or value of products are used. The size, equipment, organization, and operation of the pilot plant would need to be such that the results obtained would be readily convertible to the equivalent of similar results obtainable in commercial plants using comparable qualities of cotton in the production of comparable products. Any differences between pilot plant and commercial results may be accounted for by the influence of differences in such factors as size of the operating units, type and condition of equipment, layout or organizational setup, labor used, operating speeds, settings, and draft organization. Accurate measures of the influence of these factors would be needed for converting pilot plant results to commercial plant equivalents, and the cooperation of operators of commercial plants would be required for developing these measures. Without such conversions, results of pilot plant operations may be of limited usefulness.

^Variations in the kinds and combinations of machinery and equipment used and in the organizational setup of commercial plants, particularly over short periods of time, may not be feasible for developing all the information needed to show the influence of these factors on the value of cotton of specified qualities in the manufacture of specified products. But some indications of the influence of such variations may be obtained by comparing results of the use of similar qualities of cotton in the manufacture of similar products by different plants at the same time and by the same plant at different times, where differences in equipment, organization, and operations were involved. Manufacturers of cotton products, textile research agencies, and possibly others may have developed information on the influence of these and other factors on differences in values among cottons of various combinations of quality factors for use in the manufacture of specified products. This information would need to be assembled and evaluated for dependability and adequancy as a basis for formulating plans for developing additional information needed.

Variations in such factors as equipment, operating speeds, settings, and draft organization might well be made in pilot plants and possibly in some commercial plants as a means of evaluating the influence of these changes on differences in value among cottons of various combinations of quality factors for use in the manufacture of specified products. Measures of differences in value of cotton of various combinations of quality factors for use in the manufacture of specified products, based

47

on results from the use of the same kinds of machinery and equipment, operating speeds, settings, and draft organization, may not correctly reflect the differences in potentials of the different quality combinations. One combination of quality factors may give best results when one type of machinery and equipment, operating speeds, settings, and draft organization is used in the manufacture of specified products; whereas, other combinations of quality factors may give best results when other types of machinery and equipment, operating speeds, settings, and draft organization are used.

A means of minimizing or eliminating such discrepancies, and of obtaining more accurate measures of differences in quality of the cotton, would be, first, to ascertain the best kinds of equipment, operating speeds, settings, and draft organization for each quality of cotton used in the manufacture of specified products. Then, differences in quality or value of the cottons used for this purpose, under these conditions, would be reflected in differences in the extent to which the value of the products exceeded processing costs, adjusted for the value of waste.

The term "cotton products" may refer to the output at any stage of manufacture from yams to fabricated apparel and other products ready for ultimate consumers. Differences in quality or use value of intermediate products, as indicated above for cotton, are reflected in variations in the spread between the value of the products they are used to produce and costs of manufacturing them under optimum conditions. Ideally, it might be logical to start with the evaluation of differences in quality or value of finished fabrics used in the manufacture of specified apparel or other consumer goods and to work in reverse order back to the evaluation of differences in quality or value of cotton. But because of practical considerations, it may be advisable first to measure differences in quality of cotton on the basis of differences between the value of yarns produced and costs of processing them, despite the fact that these measures may not accurately reflect differences in potential values of the cotton.

Measures of differences in physical characteristics of cotton fibers and economic evaluations of these differences would supply a basis for setting up uniform standards for the quality factors of cotton. Graduations of differences based on physical measurements and on experiences and practices in the industry may need to be adjusted on the basis of economic evaluations, so the graduations would approach as nearly as practical, differences small enough to reflect all significant differences in use value to mills and large enough for reasonably accurate and expeditious determinations for commercial purposes. Such standards would facilitate better adjustments in quality of cotton to mill requirements.

Manufacturers of cotton and of other textile products presumably have considerable informa-

tion on the influence of differences in some quality factors of cotton on processing costs and on quality of the products. But better adjustments in the quality of cotton to mill requirements would need to be based on more nearly complete information showing more specifically the influence of differences in all important quality factors of cotton on its value for use in the manufacture of specified products, on costs to mills, and on prices and costs to farm producers of the cotton. This information, if reasonably complete and integrated, would supply a basis for arriving at approximations to the best adjustments in quality of cotton to mill requirements. But developments in technology, in plant breeding, and in other areas may result in considerable changes in qualities of cotton relatively best adapted to the production of particular products. Such changes would necessitate réévaluations from time to time on the basis of changed conditions.

With differences in all important quality factors of cotton accurately measured and evaluated in terms of uniform standards, differences in prices of cotton to mills as a result of differences in quality, under perfect market conditions, would reflect differences in the costs of producing cotton of different qualities. But not all quality factors of cotton have been so measured and evaluated. Furthermore, the market mechanism apparently is such that prices of cotton to producers reflect only a part of the differences in value, for mill purposes, attributable to differences in quality factors that have been measured and evaluated. Under such conditions, price incentives to producers would be at variance with the best adjustments in quality of cotton to mill requirements, in accordance with the principle of comparative advantage.

IMPROVEMENTS IN MANUFACTURING OPERATIONS

The problem of increasing efficiency in the manufacture of cotton yam may involve consideration of such factors as location, size, organization, and control of the operating units ; kinds and arrangement of buildings, machinery, and equipment used; labor used; operating methods and practices ; and the quality of raw materials used. In- tegration in the textile industry has resulted in changes in the organization and control of some operating units. But adequate information is not available to show whether or to what extent these changes affect (1) the adequacy and efficiency of the manufacturing operations, (2) the quality and suitability of the yams and fabrics produced, or (3) the competition among fibers.

The possibility of making large reductions in manufacturing costs through modernization of equipment and operations was indicated by results of a study of the carded cotton yarn industry in 1950. This study was designed to show how man-

48

ufacturers of cotton yarn could increase efficiency and reduce costs. It was made for the U.S. De- partment of Agriculture on contract by the Ralph E. Loper Co., a textile cost-engineering firm, with the advice and assistance of the Carded Yam As- sociations, Inc. Detailed cost data for a representative sample of manufacturers of carded cotton yarn were assembled and analyzed to show the in- ñuence of various factors on efficiency and costs of each important stage or process of the manufacture of specified kinds of yarn under actual operating conditions. Detailed specifications, based on cost-engineering data and other information, were prepared for model, low-cost establishments manufacturing typical kinds of carded cotton yarn. Data on the more desirable buildings, floor plans, machinery and equipment ; labor requirements; draft programs; and production were shown along with data relating to costs for the different processes and operations. Conclu- sions regarding the possibilities of and most feasible means for increasing the efficiency and reducing the costs of manufacturing the yarn were based on the results of analyses of data for the representative sample of establishments, on the results indicated for the model, low-cost establishments, and on the contractor's cost-engineering knowledge of and experience with the industry.

Eesults show that in 1950 total costs of manufacturing 10s yarn, for example, for the mills surveyed ranged from 12.88 cents a pound to 17.78 cents and averaged 15.05 cents. Similar costs indicated for the model mill totaled 10.54 cents a pound. They were 4.51 cents, or about 30 percent lower than the average for all mills studied, and 7.24 cents, or about 40 percent lower than for the mill with the highest costs. Differences in costs for mills spinning 20s and 30s yarns followed a similar pattern. Such differences in manufacturing costs apparently indicate that economic applications by some manufacturers of carded cotton yarn were lagging far behind tested technological developments in the industry. The results indicate that manufacturing costs were substantially higher than they would have been if the economic benefits of technological improvements had been fully utilized {106).

These differences in manufacturing costs are largely accounted for by differences in cost of labor. Costs of labor for 10s yam, for example, ranged from 7.50 cents a pound to 11.37 cents and averaged 8.85 cents for the mills surveyed, compared with 4.50 cents for the model mill. That these differences in labor costs are accounted for mainly by diff'erences in quantity of yarn produced per man-hour is indicated by the fact that production of lOs hosiery yarn per man-hour by the mills surveyed ranged from 41 to 66 percent of that for the model mill and averaged 55 percent. Average costs of labor, by departments, for the mills studied exceeded those indicated for the model mills by amounts ranging from 43 percent

for drawing to 181 percent for fly frames for 10s hosiery yarn, and from 14 percent for opening and picking to 147 percent for fly frames for 20s yarn {106),

Such differences in unit labor costs emphasize the importance of adjustments to increase efficiency and to reduce costs. If adjustments were made so that costs of labor for each department of each of the mills surveyed approximated that for the operator with the lowest cost for that department, total costs of labor for 10s yarn, for example, would be reduced 15 percent for the lowest cost mill, 44 percent for the highest cost mills, and 28 percent, on the average, for all mills combined. Adjust- ments to approximate the conditions indicated for model mills would result in reductions ranging from 40 to 60 percent.

Some of the more promising means of increasing efficiency and reducing the cost of manufacturing yams, as indicated by the results of the study men- tioned, include (1) increased use of new and modern machinery, especially opening and picking equipment, long-draft fly frames, and larger long- draft package spinning machines; (2) some rearrangement of machinery for better flow of the work and more efficiency in operations; (3) better lighting and improved cooling and humidifying systems; (4) increased machine assignment for some workers and the equalization of reasonable work loads for machines and employees; and (5) adjustments in size of mills and in number of counts of yam spun.

Substantial improvements in the textile industry were reported in 1958, but further modernization was greatly needed {63), During the 10 years 1948-57, the textile industry spent $4.4 billion for new plants and equipment, of which about $3.5 billion were for machinery and equipment. Pro- ductivity per man-hour, based on yards of broadwoven goods produced, rose during this 10-year period from 7.7 yards to 11.6 yards, an increase of 67 percent, or 6.7 percent per year. Despite these improvements, it was estimated that fully 65 percent of the textile manufacturing equipment in place in 1957 was obsolete. Of the textile manufacturers who were replacing old facilities with new plants and equipment in 1958, 37 percent of them indicated that they expected these replacement expenditures to pay for themselves in 1 or^ 2 years, 47 percent in 3 to 5 years, and 16 percent in 6 or more years {63),

An investigation of the textile industry in 1958, department by department, to ascertain what could be done by mills to strengthen their competitive position indicated the possibility of substantial improvements. Case studies showed that the use of modern opening and picking machinery, arranged and operated to suit individual mill requirements, reduces labor costs up to 80 percent, produces better picker laps, improves subsequent operations, and makes possible the use of lower grade cotton {63), A followup report in 1961

49

indicated that pickers have been improved since 1953, but that not over 7 percent of the textile mill installations in 1960 included the newest types of equipment. Only 14 percent of the total installations have been in place since 1950. More than two-thirds of the pickers in place in 1960 were installed prior to 1940 (1).

Case studies reported in 1958 indicate that the use of new carding equipment speeds production per man-hour and reduces labor costs 10 to 33 percent in carding, 75 to 80 percent in drawing, and 60 to 70 percent in roving (63). The folloAvup report in 1961 indicates that only 10 percent of the cards in place in 1960 were installed since 1950 and 80 percent were installed prior to 1940. However, about half of the cards in place have been improved somewhat by the addition of automatic stripping. A new type of card in the developmental stage in the early 1960's was expected to increase productivity five to one and to reduce operating costs substantially (7). Improved drawing frames, introduced during the late 1950's, increase productive efficiency about 300 percent and reduce labor requirements about 75 percent. But of the drawing frames in place in 1960, about 15 percent were installed since 1950 and more than half were installed prior to 1940 (7).

Further developments expected in 1962 include an improved carding system effected by connecting two conventional cards in a tandem arrangement. In this arrangement the carded fibers of the first card are continuously transferred at high speed to a second cylinder, where the finishing carding actions are performed before the sliver is delivered to the coiler. This system is said to (1) increase production by 300 percent or more over the conventional card, (2) improve the quality of the sliver by a full grade with same grade of cotton or produce the same quality of sliver with a lower grade of cotton, (3) reduce the number of neps, and (4) effect savings in floor space (10),

The most modem combers are reported to have a productive efficiency 138 percent greater than previous models and to reduce payroll costs by 90 percent. Of the combs in place in 1960, less than one-fourth were installed since 1950 and 20 percent were installed prior to 1940 (1). The newest, most recently developed roving equipment is said to reduce man-hours by 75 percent per 40- hour shift and to reduce labor costs about 67 percent. But only about 27 percent of the roving machines in place in 1960 were of the improved types that reflect these savings to mills. About 35 percent of the roving spindles in place were installed during the transition period 1940-50, when long-draft roving was first introduced. This was a great advance in machine efficiency (1).

A report in 1958 indicated that modern spinning machinery doubles production per man-hour, reduces labor costs in spinning by 40 to 60 percent, improves yarn quality, reduces ends down, and increases machine efficiency. Since 1952, develop-

ments in spinning include the use of larger rings, longer traverses, greater bobbin capacity, individual spindle drives, more compact frames, and other improvements. Yet only about 19 percent of the spinning equipment in place in 1960 was installed since 1950, and about 59 percent was installed prior to 1940 (i).

Reports indicate that a new continuous automatic spinning system will be ready for installation by late 1963. Several manual material- handling operations are eliminated in this system. Output of yarn per man-hour is expected to be as much as 72 percent greater, and cost of labor 42 percent less than that for the standard mill. An automatic spinning-frame doffer is a key part of the automation. It doffs and replaces with empty bobbins at a rate of 400 bobbins in 3 minutes, then transports the yarn to the next operation. Total costs could be 25 percent more than those for a conventional spinning system, but payout for the automatic doffers may be as low as 2.5 years. Re- ports indicate that elements of the system could be installed in American mills one at a time, and that^ the investment necessary for complete conversion to automation could thus be made by stages (S, 78).

A 1958 report indicated that new yarn-preparation machines can reduce payroll costs 35 to 80 percent, but a large proportion of the machines in use are 20 to 30 years old {63). New spoolers can reduce man-hours of labor up to 37 percent and produce cleaner and better running yarn {6S), A report in 1962 indicated that a new automatic cone winder can increase cone winding productivity by as much as 300 percent per spindle, improve yarn quality, and sharply reduce labor costs {6). A new twister-winder machine requires 50 percent fewer man-hours than older machines formerly used for the same job {63). A report in 1961 indicated that a new yarn-handling system for winders of coarse cotton yam saved 58 percent in indirect labor costs (1),

The reports cited indicate the possibility for making further substantial improvements in the manufacture of yarn through more general use of improved machinery and equipment, well organized and operated. Since the end of World War II, marked improvements have been made in almost all kinds of machinery and equipment used in the manufacture of yarns. Yet in 1960, 20 to 80 percent of the spinning and related machinery was installed prior to 1940, and only 10 to 27 percent was installed since 1950 {1). The modernization of yarn manufacturing machinery and equipment involves financing the purchase of new and modern machinery and minimizing losses from scrapping the old and obsolete machinery. For modernization to be economically feasible, prospective benefits from modernization of individual plants would need to be great enough to equal or exceed costs of the new machinery, losses from scrapping the old, and expenses of making

50

the changes. An increasing number of executives in the textile industry can partially solve the problem of financing modernization by leasing equipment, and thereby conserve their working capital U).

IMPORTANCE OF IMPROVEMENT

The importance of using labor more efficiently in the cotton yarn manufacturing industry is emphasized by the fact that hourly earnings of laborers in this industry in 1958 averaged 48 percent higher than those in 1947. The proportion of gross margins of cotton yarn manufacturers accounted for by wages increased from 46 percent in 1947 to 51 percent in 1958, despite substantial improvements in machinery and equipment used. More general use of improved automatic machinery and equipment and more effective ad-

justments in the organization and operation of manufacturing establishments would increase the efficiency and reduce the costs of labor.

The relative importance of increases in efficiency, from the viewpoint of costs and margins, may be indicated by the fact that a reduction of 25 percent, for example, in gross margins for manufacturing cotton yarn would result in savings greater than total costs of ginning and baling. A reduction of this size would also result in savings of more than half the total merchandising costs for the raw cotton used, almost 10 percent of return to growers for farm production of the cotton used, and about 1 percent of the costs to consumers of finished cotton apparel and household textiles. Such savings might result in increased returns to farm producers, reduced costs to consumers, and expanded market outlets.

COTTON FABRIC MANUFACTURING

This section relates mainly to the manufacture of cotton broadwoven and narrow fabrics. The cotton broadwoven fabric industry is made up of establishments primarily engaged in weaving fabrics over 12 inches wide wholly or chiefly of cotton. Establishments weaving gray goods and further processing them into finished fabrics or fabricated products, such as sheets, pillowcases, towels, and washcloths, are also included.

The narrow fabrics industry is made up of establishments primarily engaged in weaving or braiding cotton, wool, silk, and manmade fibers, including glass fibers, into fabrics 12 inches or less in width. Establishments primarily engaged in weaving or braiding fabric-covered elastic into fabrics 12 inches or less in width are also included.


Most of the mills in the cotton broadwoven fabrics industry, particularly the larger and medium-size ones, perform many or all of the processing operations involved in converting raw fibers into woven fabrics. These processes include fiber preparation, spinning, spooling, warping, slashing, weaving, shearing, and inspecting. The practice of finishing yam by bleaching, dyeing, or mercerizing it before weaving is fairly common. Some fabrics are bleached, dyed, and finished and some are fabricated into such products as sheets, pillowcases, towels, and washcloths before they leave the mill.

Principal materials consumed by this industry are cotton fibers and cotton yarn. In 1958, about four-fifths of the yarn spun on the cotton system was produced by establishments for their own use. Since 1917 annual consumption of yarn by cotton broadwoven fabric mills ranged from a low of about 2,899 million pounds to a high of 3,899 mil-

lion, and amounted to 3,160 million in 1962 (table 20). Most of the yarn was made of cotton, but yarn made of manmade fibers increased from about 7 percent of the total in 1947 to about 13 percent in 1953 and then declined to about 4 percent in 1962.

TABLE 20.—Tarn consumed hy manufacturers of hroadwoven cotton goods^ hy type of yam^ united States, 1H7 and 1958-62

Type of yarn 1947 1958 1959 1960 1961 1962

Cotton: Carded ._

Million pounds 3, 135

230

Million pounds 2,392

382


415

Million pound 2, 578

424

Million pounds 2, 515

435


Combed 431

Total - - 3,365 2,774 3,058 3,002 2, 950 2,977

Rayon and acetate: Spun 8

232 32 28

44 33

35 34

39 30

52 Filament 31

Total 240 60 77 69 69 83

Nylon 12 15 17 15 18

AU other: 1 Cotton 2 18

9

12 5

17

18

2 16

16

17

2 16

17

14

2 17

16

20

2 19

20 Rayon and ace-

tate 2_ _ __ 30 Wool, alpaca and

mohair Others

2 30

Total 44 53 51 50 57 82

Total an types- 3,649 2,899 3,201 3, 138 3,091 3,160

1 Includes blends and mixtures, 2 Used as part of blends or mixtures. 3 Includes such fibers as acrylic, polyesters and protein

fibers, ñax, jute, linen, etc.

Adapted from Bureau of Census Current Industrial Reports.

51

Production of cotton broadwoven fabrics from blended yarns or mixtures of two or more fibers increased from 343 million linear yards in 1958 to 502 million in 1962, or about 4 and 5.5 percent respectively of the total yardage produced. Of the total production of cotton blends in 1962, about 60 percent was cotton and rayon, 15 percent was cotton and acetate, 12 percent was cotton and nylon, and 13 percent was cotton and two or more other fibers, according to census reports.

The value of shipments by the cotton broadwoven industry decreased from $2,913 million in 1947 to $2,838^ million in 1954, and amounted to $2,749 million in 1958, according to census reports. Primary products include gray goods, such as duck, print cloth, sheeting, colored yarn fabrics, and fine fabrics; finished fabrics; and fabricated products such as sheets, pillowcases, towels, and washcloths. Primary products, valued at $2,517 million in 1958, accounted for 92 percent of the total value of shipments and receipts of this industry and 83 percent of the total value of the shipments of these products by all industries. Secondary products include broadwoven fabrics made of manmade fibers and silk, cotton yarn, and yarn made of manmade fibers.

In 1958, shipments of cotton broadwoven gray goods by manufacturers were mainly to sales offices and branches of the same company, other plants of the same company, other manufacturers, and wholesale merchants (table 21). Distribution of these products from sales offices and branches was mainly to other manufacturers and merchant wholesalers.

Operations performed in narrow fabric mills include yam preparation, weaving, braiding, and finishing. Some mills spin yarns from cotton or manmade fibers for their own use, and most of the narrow fabrics are finished in this industry. The value of shipments of this industry increased from $215 million in 1947 to $301 million in 1958. Pri- mary products accounted for 87 percent of the value of all shipments of this industry and 97 percent of the value of these products shipped by all industries in 1958.

In 1958, distribution of narrow fabrics by manufacturers was mainly to other manufacturers, wholesale merchants, and sales offices and branches of the same company (table 21). Sales offices and branches distributed most of the products handled to other manufacturers and to merchant wholesalers.


Changes in the size and organization of the cotton broadwoven fabric industry are indicated by information on the number of looms and quantity of yam consumed, ownership and operation of manufacturing establishments, and on mergers and acquisitions.

TABLE 21.—Distribution of manufactureras sales of cotton broadwoven gray goods and narrow fabrics^ by class of customer and outlet^ United States, 1958

Broadwoven gray goods

Narrow fabrics

Customer and oulet

Value Pro- portion


Manufacturer to— Sales oiEces and branches,

etc

Million dollars

353

156

427 486 409

26 116

Percent 17. 9

7.9

21.7 24.6 20. 7 1.3 5. 9

Million dollars

31

0

14 126

73 7

19

Percent 11 5

Other wholesalers, same company _ 0

Other plants, same company. 5 2

Other manufacturers Merchant wholesalers Retailers, not owned Allother___ _

46. 7 27.0

2. 6 7 0

Total 1,973 100.0 270 100.0

Sales offices and branches, etc. to—

Other manufacturers Merchant wholesalers Retailers, not owned Ail other _

212 140

12 19

56.4 37. 2 3.2 ?. 9.

17 7 3 5

53.1 21.9 9.4

15 6 1 1

Total 376 100.0 32 100 0


Number of Looms and Quantity of Fabrics Produced

The number of broadlooms in place in cotton mills in 1962 totaled 303,046, or 48 percent fewer than in 1931 and 23 percent fewer than in 1951 (table 22). But increases in yam consumed and in fabrics produced per loom in place were relatively greater than the decreases in number of looms. The result was that in 1962 total consumption of yarn was about 53 percent greater and total production of fabrics was about 33 percent greater than in 1931.

Of the total number of cotton and manmade fiber looms, the proportion located in cotton-growing States increased from about 70 percent in 1942 to about 85 percent in 1958 (table 23). The proportion in New England decreased from 22 percent in 1942 to 11 percent in 1958, and that in the Middle Atlantic States decreased from 8 percent in 1942 to less than 4 percent in 1958.

Narrow fabric mills are located mainly in the Middle Atlantic and New England States, but in recent years the number of these mills in Southern and other States has increased. The proportion of these mills in the Middle Atlantic and New England States decreased from about 84 percent in 1947 to 77 percent in 1958, and the proportion of total employees decreased from about 81 percent

52

TABLE 22.—Number of hroad looms in cotton mills^ pounds of yam consumed^ and yards of hroadwoven goods produced^ united States^ specified years, 19Sl-ß2

Looms in place 1

Yarn consumed Broadwoven goods produced

Year

Total Per

loom in

place

Total Per

loom in

place

1931 1939 1949 1955 1959 1960 1961 1962

Number 588, 128 442, 698 380, 862 367, 215 323, 153 320, 664 315, 170 303, 046

Million pounds 2, 056 2,501 3,064 3,286 3,201 3, 138 3,091 3,160

Pounds 3,496 5,649 8,045 8,948 9,906 9,786 9,807

10, 429

Million yards 2 6,984 8,287 8,406

10, 175 9,603 9,366 9, 168 9,256

Yards 2 11, 875 18, 719 22, 071 27, 708 29, 717 29, 208 29, 089 30, 542

1 Average number at end of quarter or at end of year. 3 Linear yards 1939-62 and square yards 1931-35.


TABLE 23.—Numher of cotton and manmade fber looms in place, hy State and region, 19^2,19Jt9, 195JÍ, and 1958

Region and State Looms in place

1942 1949 1954 1958

Cotton-growing States: Alabama

Number 34, 870 54, 404 85, 383

144, 770 43, 949

Number 30, 050 54, 208 84, 635

135, 682 44, 434

Number 30, 915 56, Oil 88, 123

155, 950 43, 020

Number 27, 415

Georgia 59, 070 North Carolina South Carolina Other States!

77, 044 152, 402

36, 099

Total 363, 376 349, 009 374, 019 352, 030

New England States: Massachusetts Rhode Island and

Connecticut Maine, New Hamp-

shire, and Ver- mont

56, 790

35, 029

25, 201

53, 931

25, 506

22, 707

41, 547

16, 877

22, 260

23, 456

11, 692

13, 023

Total - - 117, 020 102, 144 80, 684 48, 171

Middle Atlantic States 2_ All other States

39, 483 2, 248

39, 573 2,131

26, 360 1,816

14, 736 580

United States 522, 127 492, 857 482,879 415, 517

1 Includes Arkansas, California, Kentucky, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, and Virginia.

2 Includes Delaware, Maryland, New Jersey, New York, and Pennsylvania.

Adapted from Bureau of Census Current Industrial Re- Dorts and Census of Manufactures.

in 1947 to 73 percent in 1958, according to census reports. Of the total number of narrow fabric plants, the proportion in Southern States increased from 10 percent in 1947 to 17 percent in 1958, and of the total number of plant employees the corresponding proportion increased from 11 percent in 1947 to 24 percent in 1958.


Ownership and operation of cotton broadwoven fabric mills have changed somewhat since 1939. Of the total number of mills, the proportion under corporate ownership or control decreased from about 95 percent in 1939 to 91 percent in 1958, but the proportion of total employees accounted jpor by these mills continued to be about 99 percent (table 24). Mills operated from central administrative offices as multiunits decreased from 62 percent of total mills in 1939 to 54 percent in 1958. But the proportion of total employees accounted for by multiunits increased from 77 percent in 1939 to 83 percent in 1958.

The proportion of narrow fabric mills under corporate ownership or control increased from 71 percent in 1939 to about 85 percent in 1958, and the proportion of total employees accounted for by these mills increased from about 91 percent in 1939 to 95 percent in 1958, according to census reports. Mills operated from central administrative offices as multiunits accounted for 28 percent of all narrow fabric mills in 1939 and 22 percent in 1958. Employees in multiunit mills accounted for 47 percent of total mill employees in 1958, about the same proportion as in 1939.


As already indicated, mergers and acquisitions in the textile industry have resulted in considerable changes in the organization and management of many operating imits. The extent of integration in cotton, manmade fiber, and related broadwoven fabric mills in 1958 may be indicated by data showing, by size of mill, the number with weaving machinery only ; with spinning and weaving machinery; with weaving and finishing machinery ; and with spinning, weaving, and finishing machinery (table 25). These data relate mainly to vertical integration, and as indicated earlier in this report (p. 38), about half of the spindles that changed hands in recent years did so in connection with vertical integration.

In 1958, about 34 percent of the mills with 11 percent of the looms did weaving only. About 53 percent of the mills with about 74 percent of the looms and 83 percent of the spindles had spinning and weaving machinery; throwing and weaving machinery; or spinning, throwing, and weaving machinery. About 13 percent of the mills with 15 percent of the looms and 17 percent of the spinning spindles had weaving and finishing or spinning, weaving, and finishing machinery. More than two-

53

TABLE 24.—Number of establishments and average nurriber of employees per establishment for manufacturers of cotton broadwoven fabrics^ by type of ownership and operation^ united States. 1939, 195Í, and 1958


Establishments Average employees per

establishment *

1939 1954 1958 1939 1954 1958

Ownership: Corporate Partnership Individual Other

Num- ber 627

13 19

2

Num- ber 540

19 23

0

Num- ber

453 18 25 0

Num- ber

492 « 31

Num- ber

547 42

9 0

Num- ber 536

35 7 0

All 661 582 496 472 509 491


Corporate Other

225 26

255 41

183 43

319 27

P) «

218 19

All 251 296 226 289 208 180


402 8

285 1

270 0

588 419 0)

751 0

All 410 286 270 585 821 751

All 661 582 496 472 509 491

1 In 1939 only wage earners are included; in 1954 and 1958 all employees are included.


Adapted from Census of Manufacturers.

thirds of the throwing and twisting spindles were in establishments with throwing and weaving machinery; 23 percent in mills with spinning, throwing, and weaving machinery ; and 7 percent in mills with spinning, weaving, and finishing machinery.

In addition to other types of machinery reported, vertically integrated mills had, on the average, in 1958 more than 4 times as many looms per mill as those that reported weaving machinery only (table 25). The number of looms per mill for both integrated and nonintegrated mills ranged from less than 50 to 2,000 or more, but 56 percent of the integrated and only 8 percent of the nonintegrated mills had 500 or more looms each. Mills with 500 or more looms each accounted for about 42 percent of the total number of establishments, 82 percent of the number of looms operated, 84 percent of the spinning spindles, and 77 percent of the throwing and twisting spindles in the cotton, manmade fiber and related broadwoven fabric industry. The degree of vertical integration in 1958 was greater than that in 1954 {4-i).

Between 1947 and 1958 mergers and acquisitions, along with changes in types of ownership

and operation, of cotton broadwoven and narrow fabric mills apparently were associated with decreases in the average size of individual mills, as indicated by the number of employees. The average number of employees per mill in the cotton broadwoven fabric industry decreased from 574 in 1947 to 480 in 1958, a decrease of 16 percent, according to census reports. Mills with 500 or more employees decreased from about 42 percent of the total number in 1947 to 33 percent in 1958 (table 26). Establisliments with less than 50 employees increased from 23 percent of the total in 1947 to 27 percent in 1958.

The average number of employees per mill in the narrow fabrics industry decreased from 58 in 1947 to 50 in 1958. Mills with 100 or more employees decreased from about 16 percent of the total number in 1947 to 14 percent in 1958, and those with fewer than 20 employees increased from about 46 percent in 1947 to 50 percent in 1958 (table 26).

The degree of concentration in the cotton broadwoven and narrow fabric industries, on a company basis, may be indicated by the proportion of the total value of shipments accounted for by specified numbers of the largest companies. Data on the cotton broadwoven fabric industry show that in 1958 mills operated by four of the largest companies, or about 1 percent of the total number, accounted for 25 percent of the value of total shipments (table 27). Twenty of the largest companies, or 6 percent of the total number, accounted for 59 percent; and 50 of the largest companies, or 16 percent of the total number, accounted for 79 percent of total shipments. Proportions of total shipments accounted for by the 4, 8, and 20 largest companies increased markedly from 1954 to 1958. ^ The degree of specialization in this industry is indicated by data showing that in 1954 and 1958 about 94 percent of total shipments of cotton broadwoven fabric mills were accounted for by products regarded as primary to this industry (table 27).

Similar data on the narrow fabric industry show that in 1958 mills operated by 20 of the largest companies, or about 4 percent of the total number, accounted for 41 percent of the value of total shipments by the industry (table 27). Fifty of the largest companies, or about 11 percent of the total number, accounted for 62 percent of total shipments. Proportions of total shipments accounted for by the 4, 8, and 20 largest companies in 1958 were larger than those in 1954 and about the same as those in 1947. The proportion of total shipments by narrow fabric mills accounted for by primary products decreased from 96 percent in 1954 to 94 percent in 1958.

Of the 2,360 establishments primarily engaged in the manufacture of yarn, thread, broadwoven fabrics, and in finishing textiles, except wool, in 1958, about 95 percent were operated by companies primarily engaged in this segment of the textile

54

TABLE 25.—Number of cotton and manmade fiber weaving mills^ looms^ and spindles^ by size of mill and degree of integration^ United States^ 1958

Looms per mill

Degree of integration ^ All 1-49 50-99 100-499 500-999 1, 000-

1, 499 1, 500- 1,999

2,000 or more

Wêavinff onlv - Number

229 313

38 6

26 64

Number 68

9 2 4

Number 54 10

Number 88

103 16

2 3 12

2 41

Number 11 98 14

Number 28 41 24

Number

25

2~§"

Numoer

Süinnins: and weaving: __ - - 27 Throwing and weavine _ {') Spinning, throwing, and weaving W^pavins" and finishing

(') 2 14

3 Spinning,^ weaving, and finishing i') 10 6 4

Total 676 88 74 243 143 59 35 34

Looms operated

Weaving only - 43, 943 275, 375

22, 909 7,882 3,220

62, 188

1,978 465

2 204

3,894 682

20, 385 32, 566 5,444

2 1, 645 2, 551

2 20, 146

6,697 65, 744

9, 980

210, 989 50, 786

2 7, 281 42, 317

'2"6,"237'

W Sninnine: and weaving 82, 815 Throwing and weavinff _ _ _ (') Spinning, throwing, and weaving \Vf»flvins" nnd finishiner

(') 2 669

212 Spinning,^ weaving, and finishing {') 12, 499 10, 584 18, 747

Total 415, 517 2,789 5,315 67, 884 97, 274 72, 637 60, 035 109, 583

Cotton and silk system spinning spindles

Spinning and weaving Thousands 12, 197

164 2,579

Thousands 36

Thousands 57

Thousands 2,028

2 53 2 847

Thousands 2,993 «

Thousands 2,165

416'

Thousands 1,884

2 111 2 1, 308

Thousands 3,034

Spinning, throwing, and weaving Spinning,^ weaving, and finishing

(') 8 «

Total 14, 940 36 65 2,314 3, 607 2, 581 2,409 3,928

Throwing and twisting spindles

Throwing and weaving 595 199 63

« {') 2 178 313

— (3J — —(3J — (')

Spinning, throwing, and weaving Spinning,^ weaving, and finishing

e)

Total -_- 857 2 16 (') 181 344 2 316 (^) (')

1 Degree of integration determined by type of machinery reported.

2 Combined with data withheld to avoid disclosing information for individual companies.

industry and 5 percent by companies classified in other industries (table 28). The corresponding proportions in 1954 were about the same as in 1958. Single-unit companies accounted for about 64 percent of these establishments in 1958 and 65 percent in 1954. Of the establishments operated by companies classified in this segment of the textile industry, about 36 percent in 1958 and 29 percent in 1954 were classified in other industries. They included manufacturers of other textile mill products, manufacturers of apparel and related products, and wholesale and retail distributors of textile products.

3 Data withheld to avoid disclosing information for individual companies.

^ Includes spinning and throwing. Adapted from Census of Manufactures.

The size of establishments operated by multiunit companies, as indicated by the number of employees, averaged more than five times that of companies operated as single units. The number of employees per establishment classified in this industry averaged slightly less for those operated by companies classified in other industries than for those operated by companies classed in the same industry (table 28).

Of the 1,555 establishments primarily engaged in the manufacture of narrow fabrics and miscellaneous textile mill products in 1958, about 92 percent were operated by companies classified in

55

TABLE 26.—Number of hroadwoven cotton and narrow fabric mills by number of employees^ united States, 19J¡7 and 1958

Employees per plant

Broadwoven cotton fabric

mills

Narrow fabric mills

1947 1958 1947 1958

1,000 and more 500 to 999 ___

Number 105 147 147

66 41 47 24 18

7

Number 61

104 121

57 22 30 24 23 54

Number 1 5 9

60 72

114 98 54 66

Number

5 250 to 499 _ ___ 7 100 to 249 55 50 to 99 - 75 20 to 49 _ __ 100 10 to 19 - 89 5 to 9 62 1 to 4 .__ 95

Total - ___ 602 496 479 488


this industry and 8 percent by companies classified in other industries (table 28). Single-unit companies accounted for about 80 percent of these establishments in 1958 and 83 percent in 1954. Of the establishments operated by companies in this segment of the textile industry, about 14 percent m 1958 and 12 percent in 1954 were classified in other industries.

The number of employees per establishment averaged about five times as great in 1958 for establishments operated by multiunit companies as for those operated by single-unit companies. Em- ployees per establishment averaged more for establishments in this industry operated by companies in other industries than for those operated by companies in this industry (table 28).

MANUFACTURING METHODS (7 79)

Preparation of Yarn

The weaving of gray goods in mills combining spinning and weaving operations necessitates the preparation of warp. Winding and warping are usually the functions of yam departments or of yam mills, but the slashing and drawing in of the warp are functions of weaving departments or weaving mills. Combining several warper beams, each of which contains from 350 to 600 ends of yam, into a single sheet for weaving and coating the yarn with a sizing of starches, gums, softeners, pénétrants, preservatives, and sometimes inert loading agents constitutes an important step in preparing warp for weaving.

Warp yarns for fabrics from the sheerest to the heaviest weight, if of single yams, are given warp sizing or slashing. The main purpose is to increase loom production by giving the warp yam a protective coating so that it can withstand the chafing action of the loom parts and adjacent strands of yam. Sizing is sometimes applied to give additional weight to the fabric.

The crosswise thread of a fabric must be on relatively small bobbins to fit into the shuttle, the device used to carry the filling back and forth between and across the warp threads. In mills with both spinning and weaving operations, most filling is spun directly into bobbins suitable for the shuttle. Weaving mills that buy their yarns usually buy their filling in large packages and rewind it onto filling bobbins. The fairly recent introduction of automatic filling winders has made it desirable for many mills with both yarn and weaving operations to spin their filling yams on larger packages and rewind them onto filling bobbins. This helps to increase production in the weaving

TABLE 27.—Share of total shipments of cotton broadwoven and narrow fabrics manufacturing industry accounted for by largest companies, united States, 1958,195^, and 191^7


panies 1 Value of

shipments ^

Concentration ratio : Proportion of total shipments accounted

for by 3— Primary product special-

4 largest companies

8 largest companies


ization *

Cotton broadwoven fabric mills : ^ 1958__ _ __ -- -- -

Number 321 413

455 489 445

1,000 dollars 2,719,432 2, 789, 621

289, 110 250, 162 215, 194

Percent 25 18

16 13 17

Percent 40 29

26 21 25

Percent 59 49

41 37 41

Percent 94

1954 ____________ 94 Narrow fabric mills i^

1958 94 1954 _ _ _ _ 96 1947_ -_- -- _-- -- 95

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 41. * See footnote 4, table 14, p. 41. 5 Comparable data are not available for 1947 because

of changes in the 1947 classification of plants or products in the industry.

6 See footnote 7, table 14, p. 41. Adapted from (IW).

56

TABLE 28.—Number of companies and estahlish- ments^ average employees per establishment^ and average value added per dollar of payroll by manufacturers of specified products^ United States, 1968

Item Com-

panies Estab- lish-

ments 1

Aver- age em-

ployees per

establish- ment

Value added

per dollar

of payroll

MANUFACTURERS OF YARN, THREAD, BROADWOVEN FABRICS, AND FINISHING, EXCEPT WOOL

Companies in this industry 2_ Number 1, 748

Number 2,245

Number 210

Dollars 1.58

Single-unit companies Multiunit companies

1,514 234

1,514 731

80 477

1. 53 1.59

Single-industry Multi-industry

Companies in other industries .

91 143

78

145 586

115

223 540

271

1. 54 1.60

1. 57

Total or average 1,826 2, 360 213 1.58

MANUFACTURERS OF NARROW FABRICS AND MISCELLA- NEOUS TEXTILE FABRICS

Companies in this industry 2_ 1, 352 1,437 43 1.78

Single-unit companies Multiunit companies

1, 249 103

1, 249 188

28 146

1.75 1.84

Single-industry Multi-industry

Companies in other industries .. _

46 57

84

80 108

118

110 172

111

1. 73 1.80

1. 88

Total or average 1,436 1, 555 48 1. 80

1 Establishments in yarn, thread, broadwoven fabrics, and finishing.

2 These companies had 800 establishments in other industry categories and 459 in central administrative offices, auxiliaries, sales branches, and sales offices.

Adapted from {101).

room, as the bobbins are cleaner and more uniformly wound. Often, filling is given a steam or wetting treatment just before it goes to the loom to eliminate the tendency to kink, to make it run better, and to bring its moisture content up to standard.

Weaving Operations

Fabrics are woven with one of three foundation weaves—plain, satin, and twill—or with some combination of these weaves. Special types include the leno, terry, plain, and other weaves. The leno weave is used for such fabrics as marquisette, cur- tain goods, men's summer shirtings, women's dress

goods, and for special bags, such as those for fruits and laundries. The terry weave is used for turkish towels and other articles with terry pile. The cam or plain automatic loom is used for most gray goods and other goods of the plain weave. This loom uses up to five harnesses for twill and satin wêaves.

Weaving consists of interlacing the crosswise or filling threads with many lengthwise or warp threads. In automatic weaving, this is done at a high speed. The loom does not stop unless a warp end breaks, a filling supply gives out, or a part breaks. A loom may run many days without stopping, and yet produce first-quality goods all the time. The quality of the warp yarn is an inñu- ential factor in preventing loom stoppage.

Speed of operation depends upon the type of loom used, its width, and the construction of cloth being made. The narrower looms can be operated at faster speeds than the wider ones ; plain looms, faster than fancy ones; and those making light construction fabrics, faster than those making heavy construction fabrics.

Construction is a term indicating type of weave, width of fabric, warp ends per inch, filling picks (ends) per inch, and weight per yard. One common printcloth construction requires 2,488 separate warp ends, but only a single filling end. Filling yarn is inserted when producing fabric at a rate of 80 to 260 picks per minute. For a loom operating at 180 picks per minute, fabric production for printcloth would approximate 5 yards per hour.

Preparation of Fabric

Fabrics produced usually are rolled automatically by the loom onto large rolls on wooden or steel cores. The length of the roll depends upon the space under the loom, the weight of the cloth, and th^ length of cut used by the mill. The rolls of fabric are removed, often without stopping the looms, and taken to the cloth room, where they are sewed end to end, rolled into large rolls, cleaned (brushed or sheared), and inspected. These rolls are either shipped directly to finishing plants or cut into pieces of specific lengths, folded, and baled for shipment.

MACHINERY AND EQUIPMENT

The total number of looms in place in mills of the cotton manufacturing industry decreased from 394,000 in 1947 to 302,000 in 1962, a decrease of about 23 percent within 15 years (table 29). The number of each kind of loom in place in 1962 was substantially less than that in 1951. The number active at the end of the year w-as less for the first and secoiul shifts and gTeater for the third shift m 1962 thíin 11 years earlier. Total loom hours operated varied irregularly from 1947 to 1962, despite reductions in the number of looms in place.

Many cotton looms in operation in the United States during the 1940's and 1950's wêre not of the most improved types. Some apparently were not in good condition. But increased expenditures for

736-806—64- 57

TABLE 29.—Number of looms in place and num^- her active at end of year^ hy shifts^ and total loom hours operated^ hy hind of loom^ for cotton manufacturing industry^ United States^ specified years^ 19Jí7-62

TABLE 30.—Total expenditures for plant and equipment hy manufacturers of cotton hroadwoven and narrow fahrics^ hy industry groups^ United States, 1939, 191^7, 195Ip, and 1958 ^

Year Kind of loom

All Plain Dobby Box Jac- quard

Total looms in place

1947 1959 1961 1962

Number 393, 942 322, 239 314, 551 302, 388

Number 327, 333 267, 444 262, 012 249, 848

Number 32, 379 26,914 25, 666 26, 089

Number 24, 101 20, 784 20, 302 19, 902

Number 10, 129 7,097 6, 571 6,549

Active at end of year, 1st shift

1947 1959 1961 1962

382, 246 316,013 308, 357 292, 820

318, 691 264, 850 258, 187 243, 007

31, 431 25, 771 25, 427 25, 299

23, 303 19, 738 19, 366 18, 848

8,821 5,654 5,377 5,666

Active at end of year, 2d shift

1947 - 1959 1961 1962

364, 204 313, 289 306, 194 290, 668

306, 030 263, 409 257,011 241, 734

28, 907 25, 650 25, 285 25, 210

22, 400 19, 375 19,019 18, 465

6,867 4,855 4,879 5,259

Active at end of year, 3d shift

1947 1959 1961 1962

191, 922 297, 408 293, 631 281, 315

166, 344 252, 288 247, 568 234, 707

15, 596 24, 549 25, 241 24, 895

8,397 17,218 17, 348 17, 824

1,585 3,353 3,474 3,889

Total loom hours operated (in thousands)

1947 1959 1961 1962

2, 002, 486 1, 985, 542 1,911,792 1, 871, 263

1, 708, 458 1, 683, 884 1,617,814 1, 568, 069

146, 224 155, 299 153, 348 155, 214

113, 597 117,321 112,366 117, 948

34, 207 29, 038 28, 264 30, 032


new plants and equipment indicate that considerable improvements were made during the late 1940's and 1950's. Census reports show that total expenditures for plant and equipment by manufacturers of cotton broadwoven and narrow fabrics increased from $24,651,000 in 1939 to $90,345,000 in 1947. It decreased to $63,214,000 in 1958 (table 30) and amounted to $116,597,000 in 1962. Ex- penditures for new equipment and new plants increased from $21,372,000 in 1939 to $84,442,000 in 1947, and amounted to $54,748,000 in 1958.


equipment 1939 1947 1954 1958

Broadwoven: New equipment New plant

1,000 dollars

16, 171 3,951 2,907

1,000 dollars

55, 447 23, 325

5,665

1,000 dollars

45, 802 9, 397 9,844

1,000 dollars 41, 666

6, 775 All other 7, 775

Total 23, 029 84, 437 65, 043 56, 216

Narrow fabric: New equipment New plant

1,046 204 372

3,869 1,801

238

3,626 1,176

513

4,448 1, 859

All other . _ 691

Total 1,622 5,908 5,315 6,998

1 In 1958 and 1954 establishments that reported on the short form were asked to show only their total expenditures for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments that reported detailed expenditures by type to obtain separate expenditure figures for new plant, new equipment, and used plant and equipment.


Charges or Costs involved

Gross margins of manufacturers of cotton broadwoven and narrow fabrics vary with the kind of fabric produced, from one establishment to another, and from one time to another. They show the spread between costs of raw materials, supplies, parts, and containers and the value of the products. Census reports relating to cotton broadwoven fabrics show that manufacturers' gross margins as a percentage of the value of products decreased between 1947 and 1958, averaging about 44 percent of the value in the latter year ( table 31). Similar data relating to narrow fabric mills show decreases in gross margins of from 55 percent in 1947 to about 51 percent in 1958 (table 31). Eaw fibers and yarn consumed accounted for most of the costs included under "materials, supplies, parts, and containers." But the spreads between the costs of these fibers and yarns consumed and the value of the fabrics produced were somewhat greater than the proportions derived from census data.

Increases in the proportion of the value of cotton fabrics accounted for by costs of materials used since 1939 were attributable in part to advances in the price of cotton. Wages and salaries accounted for about 61 percent of the gross margins of manufacturers of cotton broadwoven fabrics in 1958. This proportion was somewhat smaller than the 63 percent in 1954 but substanitally greater than the 46 percent in 1947. For narrow fabrics, the

58

TABLE SI.—Values^ costs, and margins for cotton fabric manufacturers, united States, 194^7 and 1958

Item

Value of products ^

Cost of materials, etc.2 Gross margin

Salaries and wages

Salaries Wages

Fuel Purchased electric energy Contract and commission work. Other 3

Value of products

Cost of materials, etc.2_ Gross margin

Salaries and wages.

Salaries. Wages.-

Fuel Purchased electric energy Contract and commission work. Other 3

Broadwoven fabrics

1947

1,000 dollars 3, 294, 623

1, 651, 794 1, 642, 829

764, 532

64, 661 699, 871

14, 983 32, 683 32, 827

797, 804

1958

UOOO dollars 2, 673, 028

1, 498, 667 1, 174,361

722, 355

77, 726 644, 629

13, 853 41, 741 46, 054

350, 358

Narrow fabrics

1947

1,000 dollars 208, 116

93, 575 114, 541

63, 861

12, 257 51, 604

973 1, 265 5,303

43,139

1958

1,000 dollars 287, 712

140, 445 147, 267

85, 923

20, 698 65, 225

1,426 2, 103 3,439

54, 376


Percent 100. 0

50. 1 49. 9

23. 2

2. 0 21. 2

. 5 1. 0 1. 0

24. 2

Percent 100. 0

56. 1 43. 9

27. 0

2. 9 24. 1

. 5 1. 6 1. 7

13. 1

Percent 100. 0

45. 0 55. 0

30. 7

5. 9 24. 8

. 5

. 6 2. 5

20. 7

Percent 100. 0

48.8 51.2

29. 0

7.2 22. 7

. 5

. 7 1. 2

18. 9

1 Excludes products bought for resale without further processing. Data for 1958 are adjusted for changes in inventory. mciUQes supplies, parts, and containers.

3 Includes depreciation, interest, insurance, rent, taxes, other expenses, and profits. Adapted from Census of Manufactures.

proportions for corresponding years were 58, 61, and 56 percent respectively.

Gross margins for individual manufacturers vary with the kind of raw materials used, the processing or manufacturing operations involved, and the kind and quality of products manufactured. Some manufacturers buy cotton yarn, weave it into cloth, and sell the fabrics as gray goods. Others buy raw cotton, spin it into yarn, and weave the yarn into cloth. Still others buy raw cotton, spin it into yarn, weave the yarn itno cloth, and finish or fabricate the cloth into consumer products. In addition, differences in quality of raw cotton, yarns, and fabrics also affect manufacturers' gross margins.

Eeports of the Federal Trade Commission show that during the first half of 1936, for example, gross margins for 67 weaving companies averaged 46 percent of net sales of cloth produced, and that these margins for 264 combined spinning and weaving companies averaged 55 percent of net sales (118), Differences between these average

margins are attributable to the fact that raw materials used by mills engaged exclusively in weaving were mainly yarns and that these mills limited their operations chiefly to weaving, whereas the raw materials used by combined spinning and weaving mills were largely raw cotton and these mills spun yarn and wove it into fabrics. Data for 33 cotton textile manufacturing corporations m 1939 and for 56 in 1940 show that gross margins for individual corporations ranged from less than 40 percent of net sales for those producing mostly coarse gray goods to more than 70 percent for corporations producing finer products, finished goods, and fabricated products (46),

Mill margins, or spread between average wholesale prices of 20 constructions of unfinished cotton cloth and the cost of the cotton used in their manufacture, during the 9 years ended July 1963, ranged from about 38 percent of the value of the cloth in 1957-58 to 48 percent in 1959-60, and averaged 41 percent in 1962-63. These propor-

59

tions vary irregularly with prices of cotton and of cotton cloth (table 32).

Gross margins of manufacturers usually vary directly, and costs of raw materials vary inversely with the fineness of the fabrics produced. In 1944, for example, net costs of cotton averaged 48 percent and manufacturers' gross margins averaged 52 percent of the net selling price of carded cotton yarn fabrics. For combed cotton yarn fabrics, net cotton costs averaged 32 percent and manufacturers' gross margins averaged 68 percent of the net selling price {Ji7). Data on the manufacture of textile products in 1950, prepared by Barnes Textile Association, Inc., show that for cotton printcloth both the cost of materials and manufacturers' gross margins each accounted for 50 percent of total costs. For cotton voile, the cost of materials accounted for 34 percent and manufacturers' gross margins for 66 percent of total costs {15),

In 1960, the net cost of cotton and the total of all other costs of manufacturing sheeting, printcloth, broadcloth, and gingham apparently were greater in the United States than in Japan (tables 33 and 34). The proportion of total costs accounted for by operating costs, and particularly by labor costs, was much greater in the United States than in Japan. In 1959, average hourly earnings of textile workers in Japan were less than one-sixth of average hourly earnings of similar workers in the United States, according to data provided by the Bureau of Foreign Labor Con- ditions, Bureau of Labor Statistics, U.S. Depart-

TABLE 32.—Price of unfinished cloth^ fvice of cotton,^ and mill nuirgin^ united States^ 195^-62

TABLE 33.—Average cost per linear yard of producing sheeting and printcloth in the united States and Japan^ 1960 ^

Cloth prices ^

Cotton prices 2

Mill margins ^

Year beginning August

Actual Propor- tion of cloth prices

1954 ___ _ --- Cents 61.54 64.05 61.22 56.75 58. 68 63.84 59. 00 60. 61 60. 52

Cents 36.22 36.27 34 51 35.33 35. 24 33.47 32.87 35.71 35. 61

Cents 25.32 27. 78 26.71 21.42 23. 44 30. 37 26. 13 24. 90 24.91

Percent 41. 14

1955 - -- 43.37 1956 43. 63 1957--_ 37.74 1958 _- 39.95 1959 - --- 47. 57 1960_ _ _ _ 44. 29 1961 - --- 41. 08 1962_ _ _ 41. 16

1 Average wholesale price for 20 constructions. Prices per yard are converted to the approximate value of cloth obtainable from a pound of cotton.

2 Average price based on landed quotations (group 201 mill points) for 4 growths—Southeast, Memphis territory, Texas-Oklahoma, and California.

3 Difference between cloth prices and prices for the average qualities of cotton used in the 20 constructions.

Adapted from {112),

Sheeting Printcloth

Item of cost United States

Japan United States

Japan

Total cost Cents

14. 60 Cents

11.39 Cents

18.40 Cents 14. 55

Net cost of cotton All other costs

8.40 6. 20

7.81 3. 58

8.71 9. 69

8. 23 6.32

Operating costs 5. 16 2.60 7.83 4.49

Labor ^ _ 3.92

.70

. 27

. 27

1.72

.35

.32

.21

5.58

1. 22

.48

.55

2. 46 Materials and

supplies 3 Fuel, power,

and water Depreciation

.91

.65

.47

Overhead costs 1.04 .98 1.86 1.83

Allowance for seconds

Sales--- . 07 .25

.20

.52

.04

. 31

.31

.32

. 15

.35

. 19 1. 17

."Î8 General operat-

ing expenses *— Miscellaneous 5--

1. 05 .60

Proportion ( if total cost

Total cost - -_ _- Percent 100. 0

Percent 100.0

Percent 100. 0

Percent 100.0


57.5 42. 5

68.6 31.4

47.3 52.7

56.6 43.4

Operating costs 35.2 22.8 42.6 30.8

Labor ^ _ 26.8

4.8

1.8 1.8

15. 1

3. 1

2.8 1.8

30.3

6.7

2.6 3.0

16.9 Materials and



6.2

4. 5 3.2

Overhead costs 7.3 8.6 10. 1 12. 6


Sales .5

1.7

1.4 3. 7

. 4 2. 7

2. 7 2.8

.8 1.9

LO 6.4

i."3 General operat-

ing expenses *__ Miscellaneous ^--

7.2 4. 1

^ Sheeting, carded ; width, 40 inches ; construction, 44 x 40 ; weight, 4.25 yards per pound ; 20s-18s ; gray. Print- cloth, carded; width, 39 inches; construction, 80 x 80; weight, 4 yards per pound ; 40s-40s ; gray.

Încludes "fringe" labor costs as well as basic wage costs.

Încludes chemicals, dyes, and other materials and supplies.

* Includes overall company administrative and similar costs.

''Includes property taxes, interest, overhead salaries, and administrative expenses.

Adapted from (115).

60

TABLE 34.—Average cost per linear yard of producing broadcloth and gingham in the united States and Japan^ 1960 ^

Broadcloth Gingham

Item of cost United States

Japan United States

Japan

Total cost _ _ Cents

26. 15 Cents

18. 35 Cents

33. 55 Cents 22. 13


IL 80 14.35

10. 29 8.06

10.33 23. 22

9. 05 13. 08

Operating costs 12. 49 6.23 18.42 10. 50

Labor 2 _ 9.09

1. 53

.67 1. 20

3. 18

.88

.74 L43

11.69

3.79

L 05 1. 59

4. 57 Materials and



3.88

.61 1. 44

Overhead costs 1. 86 1. 83 4.80 2. 58


Sales . 10 .37

. 68

. 71

. 08

.33

.74

.68

.27

. 67

.80 3. 06

. 10

. 34 General opera-

ting expenses ^_ Miscellaneous ^__

. 91 L23

Proi Dortion ( 3f total cost

Total cost- Percent 100. 0

45. 1 54. 9

Percent 100.0

56. 1 43.9

Percent 100. 0 30. 8 69. 2

Percent 100 0

Net cost of cotton __ All other costs

40. 9 59. 1

Operating costs 47.8 33. 9 54.9 47.5

Labor 2___ 34.8

5.8

2.6 4.6

17.3

4.8

4. 0 7.8

35. 7

IL 3

3.1 4.8

20 6 Materials and



17.6

2.8 6.5

Overhead costs 7. 1 10.0 14. 3 n. 6


Sales General operat-

ing expenses *. Miscellaneous ^--

. 4 1. 4

2. 6 2.7

. 4 L8

4. 0 3.8

. 8 2.0

2. 4 9. 1

. 4 1. 5

4. 1 5.6

1 Broadcloth, combed; width, 40 inches; construction, 136 X 60; weight, 3.65 yards per pound; 40s-40s; gray. Gingham, combed, two color; width, 47 inches; construction, 90 x 60; weight, 4.25 yards per pound; 40s-40s; gray.

2 Includes ''fringe" labor costs as well as basic wage costs.

3 Includes chemicals, dyes, and other materials and supplies.

^ Includes overall company administrative and similar costs.

^ Includes property taxes, interest, overhead salaries, and administrative expenses.

Adapted from {115).

ment of Labor and the Northern Textile Associa- tion. Overhead costs averaged greater in the United States than in Japan, but the proportion of total costs accounted for by overhead costs were less in the united States than in Japan in three out of four cases.

The large proportion of gross margins of manufacturers of cotton fabrics accounted for by wages and salaries and recent increases in wage rates emphasize the importance of labor in the manufacture of these products. Census reports indicate that average hourly wage rates increased from $1.02 in 1947 to $1.68 in 1962 in cotton broadwoven fabric mills and from $1.04 in 1947 to $1.66 in 1962 in narrow fabric mills. Wage rates usually were lowest in Southeastern States, but in broadwoven fabric mills in 1958 they ranged from $1.31 in Texas to $1.84 in the West (table 35). From 1947 to 1958, average value added by manufacture increased per hour of labor but decreased per dollar of wages and per dollar of payroll in broadwoven fabric mills (table 35). Average value for all three measures then increased, averaging $3.15, $1.88, and $1.66 respectively in 1962.

In narrow fabric mills, average value added per hour of labor increased from $2.19 in 1947 to $4.09 in 1962. But average value added per dollar of wages and per dollar of payroll increased from $2.10 and $1.69 in 1947 to $2.47 and $1.87 respectively in 1962. The decreases in both types of mills from 1947 to 1954 occurred despite substantial improvements in equipment used as indicated by expenditures for new plant and equipment.

Value added by manufacture per dollar of payroll, per dollar of wages, and per hour of labor varied considerably from one State or region to another (table 35). The influence of differences in wage rates on costs of labor were offset, at least to some extent, by differences in value added per hour of labor. Value added per dollar of wages and per dollar of payroll by broadwoven fabric mills in Southern States averaged higher than that by similar mills in New England but lower than that by mills in Middle Atlantic and North Central States. For narrow fabric mills, value added per dollar of wages and per dollar of payroll averaged highest in Southern States in 1947 and in 1958 but averaged highest in North Central States in 1954.

Geographic differences in value added per hour of labor by manufacturers of broadwoven cotton fabrics, when related to corresponding differences in average wage rates per hour, gave correlation coefficients of 0.16 in 1947, 0.94 in 1954, and 0.72 in 1958. Regression coefficients indicate that from one geographic area to another a difference of 1 percent in value added per hour of labor was associated, on the average, with a corresponding difference in wage rates per hour of 0.40 percent in 1954 and 0.21 percent in 1958.

61

TABLE 35.—Value added hy cotton fabric manufacturers^ per dollar of payroll^ per dollar of wages^ per hour of labor^ and average wage rates per hour^ hy region and State^ 1947 and 1958 ^


Type of mill and area Total


Wage rates per hour

Payroll Wages

1947

BROADWOVEN COTTON MILLS

Northeast and North Central 1,000 dollars

281, 534 112,473

1, 280, 802 325, 586 376, 334 269, 332 156, 601

Dollars 1.80 1. 77 2. 11 2. 23 2. 15 1. 99 2. 10

Dollars 2. 02 1. 94 2.29 2. 41 2.31 2. 16 2.26

Dollars 2.24 2. 14 2.28 2. 41 2.29 2. 16 2.33

Dollars 1. 11

Massachusetts 1. 10 South and West 1. 00

North Carolina 1. 00 South Carolina . 99 Georgia 1. 00 Alabama _ _ 1. 03

United States 1, 562, 336 2. 04 2. 23 2. 27 1. 02

1958

New England 69, 029 25, 519 25, 487 19, 255 1,875

849, 831 246, 143 354, 407 178, 012 138, 085

88, 505 23, 869

517

1.21 1.31 1. 02 1.72 1. 82 1. 52 1.55 1. 54 1.43 1.46 1.42 1.53 1.82

1.38 1.48 1. 17 2.22 2. 56 1. 69 1. 71 1.70 1. 61 1. 61 1. 57 1. 66 2. 62

2. 16 2.32 1. 82 3.96 3.52 2.47 2. 55 2.47 2.24 2. 24 2. 23 2. 17 4. 83

1. 57 Maine. _ __ 1. 57 Massachusetts _ __ 1. 56

Middle Atlantic.. 1. 78 North Central __ 1. 38 South Atlantic 1. 46

North Carolina. . 1. 49 South Carolina. 1. 45 Georgia ._ 1. 39

South Central 1. 39 Alabama. 1. 42 Texas ... ...... 1. 31

West - 1. 84

United States _ . _ . 1, 078, 592 1.49 1. 67 2. 43 1. 46

NARROW FABRIC MILLS 1947

New England. ._ 40, 755 46, 546

5, 158 15, 600

142

1. 57 1. 71 1. 71 2. 39 1. 73

1.93 2. 12 2. 42 2.48 2. 12

2. 05 2.27 2. 17 2.24 2.33

1. 06 Middle Atlantic ...... 1. 07 North Central . 90 South . ... . 90 Pacific. . 1. 10

United States __ _ ___ 108, 201 1.69 2. 10 2. 19 1. 04

1958

New England . . 54, 412 48, 804 4,635

34, 631 156

1. 58 1. bb 1. 73 2. 02 .90

2.06 2.20 2. 21 2. 41 1. 17

3. 16 3. 61 3. 41 3.33 2. 03

1. 53 Middle Atlantic __ 1. 64 North Central. __ 1. 54 South .____._._ 1. 38 Pacific . ._ _- 1. 73

United States 142, 638 1. 66 2. 19 3.35 1. 53

1 For 1958, value added is adjusted by taking into account value added by manufacturing operations and net change during the year in inventories of finished goods and work-in-process. Data for 1947 are unadjusted.


62

Data for 1958 show that wage rates per hour and value added by manufacturers of cotton fabrics per dollar of payroll, per dollar of wages, and per hour of labor varied irregularly with the size of the company, as indicated by the number of production workers {120), Similar data, on a plant basis, for 1947 and 1954 show that wage rates per hour and value added per dollar of wages and per hour of labor also varied irregularly with the size of plants {120).

Value added per dollar of payroll in 1958 averaged less for cotton broadwôven and narrow fabric mills owned or controlled by corporations than for those owned or controlled by any other agency (table 36). Value added per dollar of payroll by broadwoven fabric mills operated as single units averaged less than that added by mills operated as multiunits. Value added per dollar of payroll by narrow fabric mills operated as single units averaged greater than that added by mills operated as multiunits.

Data on degree of specialization among manufacturers of specified kinds of cotton broadwoven fabrics do not show any consistent relationship between degree of specialization and value of shipments per plant, value added per dollar of payroll,

TABLE 36.—Value added hy cotton hroadwoven and narrow fabric mills,^ iy type of ownership and operation^ united States^ 1958


Type of ownership and operation Fabric mills Fabric mills

Broad- woven

Nar- row

Broad- woven

Nar- row

Ownership : Corporate.

1,000 dollars

1, 074, 342 3,224 1,026

0

1,000 dollars

136, 270 3,627 2,741

0

Dollars 1.49 1.68 1.86

0

Dollars 1. 65

Partnership Individual Other.

2.23 1.76

0

All 1, 078, 592 142, 638 1.49 1. 66

Operation: Single Unit:

Corporate Other. ___ _ _

161, 224 4,250

(0 0)

1.39 1.72 (1)

All .- 165, 474 75, 797 1.39 1. 68

Multiunit: Corporate Other._ _

913, 118 0 i? 1.51

0 (0 0)

All 913, 118 66, 841 1.51 1. 64

All - ... 1, 078, 592 142, 638 1.49 1. 66



or value added per dollar of wages (table 37). In 1954 and 1958, value added per dollar of pay-

roll by manufacturers of yam, thread, broadwoven fabrics, and by establishments finishing textiles (except wool) appeared to vary directly with degree of integration. Value added per dollar of payroll averaged more for multiunit companies than for single-unit companies, and that for multi- industry companies averaged more than that for single-industry companies (table 28, p. 57). For manufacturers of narrow fabrics and miscellaneous textile mill products, value added per dollar of payroll in 1958 varied directly with degree of integration. In 1954, value added per dollar of payroll averaged greater for single-unit companies and single-industry companies than for multiunit companies and multi-industry companies (table 28, p. 57).


Improvements in the quality, suitability^ and attractiveness of cotton faorics, from the point of view of consumer preference, and adequate supplies of these products at attractive prices are important means of expanding outlets for cotton products. Special chemical treatments and finishes, along with improved mechanical processing, offer great possibilities of improving the quality of cotton products so they can compete more effectively with the ever-increasing supplies and improved qualities of manmade fibers. Additional information is needed to show the changes in construction, weight, finishes, and other characteristics required for cotton fabrics to compete most effectively and to serve as a basis for developing suitable equipment and techniques for manufacturing improved products efficiently.

Means of Improvement

The problem of increasing efiiciency in the manufacture of cotton fabrics, as well as cotton yarn (p. 45), may involve consideration of such factors as the location, size, organization, and control of operating imits ; kinds and arrangement of buildings, machinery, and equipment used ; labor used : operating methods and practices; and kinds and qualities of raw materials used. Since most of the yarn used in cotton fabrics is produced by manufacturers of these fabrics, the section on "Adjustments in Quality" (p. 46) applies to the yarn production phase of the manufacture of cotton fabrics. In recent years integration has resulted in changes in the organization and control of some plants manufacturing cotton fabrics. But adequate information is not available to indicate whether, or to what extent, these changes affect the efficiency of the manufacturing operations, the quality and suitability of the fabrics produced, or the competition among fibers.

63

TABLE 37.—Number of establishments^ value of shipmênts^ and value added by manufacturers of specified kinds of cotton broadwoven fabric per plant^ per dollar of wages^ and per dollar of payroll^ by degree of specialization^ united States^ 1958

Product class and degree of specialization Establish-

ment Shipment per plant

Value added by manufacture per-

Plant Dollar of-

Pavroll Wages

Cotton broadwoven fabric: 90 percent or more 75 to 89 percent Less than 75 percent

All

Duck and allied fabrics: 90 percent or more 75 to 89 percent Less than 75 percent

All

Sheeting and allied fabrics: 90 percent or more 75 to 89 percent Less than 75 percent

All

Printcloth yarn fabric (gray goods) : 90 percent or more Less than 90 percent

All

Colored yarn fabric: 90 percent or more 75 to 89 percent Less than 75 percent

All

Fine goods, gray: 90 percent or more 75 to 90 percent Less than 75 percent

All

Number 403

32 60

1,000 dollars 5,702 5,887 4,234

1,000 dollars 2,228 2, 197 1,786

Dollars 1.47 1.48 1. 63

Dollars 1.65 1. 65 1. 86

495 5,536 2, 173 1.49 1. 67

17 9 5

1, 532 4,401 6,036

614 1, 772 2,524

1.65 1. 36 1. 54

1. 90 1. 51 1. 72

31 3, 092 1, 258 1.49 1.67

48 15 28

4, 066 8, 336 9,366

1, 374 2, 807 3, 443

1.25 1.32 1.38

1.38 1.44 1.51

91 6,401 2,247 1. 32 1.45

52 13

5, 528 11,763

2, 191 4, 506

1.43 1.40

1. 58 1. 54

65 6,775 2, 654 1.42 1. 56

21 5

11

7, 584 3, 367 8,526

3, 196 1,398 2,812

1. 86 1.66 1.46

2. 04 1.83 1.66

37 7,294 2,839 1.71 1.90

37 7

10

5, 655 9, 301 9, 398

2,468 3,869 3, 737

1. 52 1.26 1. 53

1.69 1.36 1. 69

54 6, 821 2,885 1.47 1. 62


Reports indicóte that increased use of improved machinery and equipment, suitably organized and operated, would result in substantial improvements. As indicated in another section of this report (p. 45), during the 10 years ended with 1957, the textile industry spent $3.5 billion for machinery and equipment. During the same period, productivity per man-hour, based on yards of broadwoven goods produced, increased 67 percent. Nevertheless, it was estimated that about two-thirds of the textile manufacturing machinery in place in 1957 was obsolete {63), In 1958, 37 percent of the operators who were replacing old facilities with new plant and equipment indicated that they expected these replacement expenditures to pay for themselves in 1 or 2 years, 47 percent

in 3 to 5 years, and 16 percent in 6 or more years {63), In 1958, data on age of equipment showed that only 23 percent of textile manufacturing facilities were installed since 1950 and that 59 percent were installed prior to 1946 {63).

Case studies reported in 1958 indicated that the installation and use of modern, high-speed warper and drawing-in machines, for example, enable some mills to increase warping speeds greatly, to make drawing-in labor savings of more than 75 percent, and to bring about other improvements {63). Modernization of slashing equipment was said to pay off more rapidly than modernization of equipment in any other department of a textile mill {63). Slashers may be modernized by rebuilding old ones or by replacing the old with

64

new ones. In some instances, rebuilt slashers de liver twice as much and new slashers deliver u; to three times as much yarn per minute as oL ones (63). Weaving mills were said to be increasing productivity per man-hour up to 30 percent by replacing old looms with modem ones. A wide sheeting loom introduced in 1956 was said to be increasing production 26 percent at each of four mills. Other mills had rebuilt old looms for an average gain of 11 percent in productivity {6S).

Improved equipment reported in 1961 include the new Draper x-3 single-shuttle loom; Cromp- ton and Knowles pick-and-pick automatic bobbin, multiple-shuttle loom; the Warner and Swasey weaving machine; the Fletcher high-speed, automatic narrow fabric loom; and the Draper shut- tleless loom (1). The use of any of this equipment is said to result in considerable increases in productivity and substantial reductions in unit costs of the products. One of the modern single- shuttle looms reported in 1958 is said to increase weaver productivity 300 percent and fixer productivity 130 percent, and to reduce wêaving and fixing payroll 66 percent. The new single-shuttle loom reported in 1961 is expected to increase productivity and further reduce unit costs (i).

One of the most dramatic machines developed since the early 1950's is said to be the automatic loom winder, a device which may be a part of a new modem loom or installed on an old model loom. It eliminates 10 steps in the handling of yam preparatory to weaving, including two machine processes, thereby freeing valuable floor space for additional machinery. In mills having looms with this device, payroll savings may be as much as 45 percent, depending upon fabric construction. But only about 15 or 20 percent of the looms in place are reported to have undergone this type of modernization (i). Of the looms in place in 1960 only 25 percent were installed since 1950 and 45 percent wêre installed prior to 1940 (/).

Results of these developments suggest the possibility of further substantial improvements in the manufacture of cotton fabrics. The conditions under wîich and the extent to w^hich these and other developments could be most feasibly utilized in increasing efficiency and reducing costs of individual plants may need to be based on information similar to that developed for manufacturers of carded cotton yarns, as indicated on pages 46 and 47 (IOS). To obtain such information for manufacturers of cotton fabrics would require the assembly and analysis of detailed cost data for a representative sample of manufacturers. The purpose of this data would be to show the influence of various factors on costs of labor, overhead, and other items at each stage or process in the manufacture of specified kinds of fabrics under actual operating conditions. In addition, detailed specifications for model low-cost establishments for manufacturing typical kinds of cotton fabrics would need to be

prepared on the basis of cost-engineering data and other information. These specifications would show the more desirable buildings, machinery and equipment, floor plans, labor requirements, operating programs, and production data. Detailed cost data for the different processes and operations would need to be developed for the model plants.

A comparison of data on one representative establishment with that of others and with data developed for the model, low-cost plants would indicate the nature and extent of changes needed to increase efficiency and reduce costs of producing specified fabrics. Similar information on manufacturers of carded cotton yam in 1950 indicated the possibility of reducing manufacturing costs for some mills by as much as 40 percent {105), It was reported in 1951 in connection with comments on the carded yam study that, although cotton- spinning mills were among the industry's most progressive mills, the average spinning mill was operating 10 to 20 years behind the times, as far as costs and efficiency were concerned. It was also reported that a similar study in other branches of the textile industry very likely would turn up an even more striking picture {93), This situation apparently indicates that economic applications were lagging far behind technological developments in the cotton textile manufacturing industry. Manufacturing costs, therefore, were substantially higher than they would have been if teclinological developments had been fully utilized.

Case studies of developments in the late 1950's and early 1960's and data on age of machinery in place in 1960 indicate that some manufacturers of cotton broadwoven fabrics can improve their efficiency and substantially reduce costs by the use of improved machinery and equipment suitably organized and operated. For such modernization to be economically feasible, prospective benefits would need to be great enough to equal or exceed costs of the new equipment, losses from scrapping the old and obsolete equipment, and the expenses of making the changes. Reports indicate that an increasing number of textile executives partially solve the problem of financing the modernization of plants by leasing equipment and thus conserv- ing their working capital {4).

Importance of Improvement

The importance of increasing efficiency and reducing labor costs is emphasized by the fact that the proportion of the gross margins of manufacturers of cotton broadwoven fabrics increased from about 43 percent in 1947 to 55 percent in 1958, according to census reports. Hourly earnings of laborers in this industry in 1962 averaged 55 percent more than those in 1947 and were about four times as great as those in 1939. Apparently the efficiency of laborers could be increased and unit costs of labor reduced by more general use of im-

736-806—64- 65

proved automatic machinery and equipment and better adjustments in the organization and operation of manufacturing establisliments.

The relative importance of increasing efficiency and reducing the costs of manufacturing cotton fabrics, including dyeing and finishing, may be indicated by data which show that during the late

1950's gross margins for rendering these services averaged almost as much as gross returns to growers for production of the cotton used, about three times as much as total costs of ginning and merchandising the cotton, and about 12 percent of the costs to consumers of finished apparel and household goods.

WOOL PRODUCTS MANUFACTURING

Establishments primarily engaged in manufacturing wool products include scouring and combing plants ; yarn mills, including those producing carpet and rug yarn; and woolen and worsted fabric mills.

Wool scouring and combing plants are primarily engaged in processing wool fibers for spinning. Important processes included in this industry are wool scouring and carbonizing, and combing and converting wool and manmade fibers into top.

Wool yarn mills, including those producing carpet and rug yam, are primarily engaged in spinning, twisting, winding, or spooling yarn wholly or chiefly by weight of wool, mohair, or similar animal fibers. These mills produce both weaving and knitting yams.

Broadwoven wool fabric mills include establishments primarily engaged in weaving fabrics over 12 inches in width wholly or chiefly by weight of wool, mohair, or similar fibers; those dyeing and finishing woven wool fabrics or dyeing wool, tops, or yam ; and those shrinking and sponging wool goods for the trade.


A variety of products are produced by establishments in the wool products manufacturing industry. In 1958, the value of shipments and other receipts of 81 scouring and combing plants operated by 78 companies totaled $88 million. Primary products, consisting of scoured wool, wool tops, and noils, constituted 60 percent of this amount; secondary products, consisting principally of yam spun on the woolen and worsted systems and woolen and worsted apparel fabrics, about 6 percent; and miscellaneous receipts, mainly from commission scouring or combing of wool owned by others, 34 percent. In 1958, shipments of scoured wool, wool tops, and noils valued at $90 million represented 59 percent of the products shipped by all industries. Large quantities of scoured wool, wool tops, and noils are produced by yarn mills and by integrated spinning and weaving mills for their own use.

The proportion of fibers consumed in woolen spinning accounted for by virgin wool decreased from about 84 percent in 1947 to 32 percent in 1962 (table 38). The proportion accounted for by manmade fibers increased from about 5 percent in 1947 to 22 percent in 1962, and that accounted for by

cotton decreased from about 10 percent in 1947 to less than 2 percent in 1962.

In worsted combing, the proportion of fibers consumed that was wool decreased from about 92 percent in 1947 to 84 percent in 1958 and then increased to 92 percent in 1962. The proportion of fibers consumed in the manufacture of carpet and rug yarns accounted for by wool decreased from 97 percent in 1947 to 78 percent in 1958 and then increased to about 84 percent in 1962. Similar proportions for manmade fibers increased from about 1 percent in 1947 to 21 percent in 1962 (table 38).

Production of woolen and worsted fabrics, except felts, from blended yarns or mixtures of two or more fibers increased from about 58 million linear yards in 1958 to 62 million in 1962, or about 25 and 23 percent respectively of total yardage produced. Of total wool blends produced in 1962, about 35 percent were wool and nylon, 28 percent were wool and one other manmade fiber, and 37 percent were wool and two or more fibers, according to census reports.

In 1958, the value of shipments and other receipts of 150 wool yarn mills, operated by 142 companies, totaled $274 million. Of this total 79 percent was accounted for by wool yarns ; 14 percent by secondary products, such as other yams, tops, and noils ; and 7 percent by miscellaneous receipts, mainly from contract work on materials owned by others. Shipments of wool yarns accounted for 85 percent of total shipments by this industry and for 78 percent of total shipments of these products by all industries. Weavmg mills produce large proportions of wool yarns for their own use.

In 1958, yarn spun on woolen and worsted systems was shipped mainly to other manufacturers ; other plants of the same company ; and sales offices, branches, and administrative offices of the same company (table 39). Considerable amounts were distributed to merchant wholesalers, retailers, and other customers not specified. Sales offices, branches, and administrative offices, in turn, distributed their products mainly to other manufacturers.

In 1958, there were 469 broadwoven fabrics mills, wool, including those engaged in dyeing and finishing. These mills were owned by 411 companies. This industry includes a large number of integrated mills which convert raw fibers into finished fabrics. The value of shipments and other receipts of this industry in 1958 totaled $929 million Of this total, 91 percent was accounted for

ßß

TABLE 38.—Fibers consumed on woolen and worsted systems^ united States^ specified years^ 1H7-62

Item 1947 1959 1961 1962

Woolen spinning: Shorn and pulled

wool

1,000 pounds

189, 555 147, 385

38, 952 20, 652 2,738

1,000 pounds

122, 478 152,010

7,200 71, 408 4,825

1,000 pounds

112, 597 130, 032

6,590 67, 788 5,533

1,000 pounds

109, 935 Other wool ^ Cotton Manmade fibers 2 Other fibers 2

142, 362 5,794

74, 384 6,091

Total 399, 282 357, 921 322, 540 338, 566

Worsted combing: Shorn and pulled

wool __ 336, 345 13, 880 5,920 8,539

142, 452 «

10, 105

150, 475 e) 6,148

170, 312 Mohair _ (?) Manmade fibers 2 Other fibers 2

4,577 (?)

Total 364, 684 160, 613 164, 796 185, 916

Carpet and rug yarns: Shorn and pulled

wool _ _ 168, 644 26, 979

2, 384 3,619

170, 404

37, 433 (?)

149, 057 (?)

42, 450 (?)

148, 853 Other wool ^ Manmade fibers 2 Other fibers 2

45, 003 (?)

Total ._. 201, 626 233, 482 212, 579 214, 325

Total all types. _ 965, 592 752, 016 699, 915 738, 807

TABLE 39.—Distribution of manufacturers'^ shipments of yarns spun on woolen and worsted systems and of wool carpet and rugs^ by class of customer and outlet^ united States^ 1958

*As defined in Wool Products Labeling Act of 1939. 2 Prior to 1953, manmade fibers other than rayon and

acetate were included in other fibers. * Withheld to avoid disclosure of individual company

information. Adapted from Bureau of Census reports.

by primary products, consisting of wool gray and finished cloth, and wool blankets; 6 percent by secondary products, consisting of wool yams, scouring and combing mill products, and other secondary products; and 3 percent by miscellaneous receipts. Shipments of wool gray and finished cloth and wool blankets in 1958 accounted for about 94 percent of the industry's total shipments and for 96 percent of shipments of these products by all industries.

The woven carpets and rugs industry comprises establishments primarily engaged in weaving carpets and rugs from any textile yarn. The value of shipments and other receipts of this industry in 1958 totaled $336 million. Of total shipments and other receipts, 86 percent were primary products, 12 percent were secondary products, and 2 percent were miscellaneous receipts. In 1958, shipments of woven carpets and rugs by this industry represented 87 percent of its total shipments and 97 percent of shipments of these products by all industries.

In 1958, manufacturers of carpets and rugs shipped their products mainly to merchant wholesalers ; retailers ; and to sales offices, branches, and

Yarn Carpets and rugs

Customer outlet



Manufacturer to— Sales ofiäces, branches,

etc _

Million dollars

33

81 203

14 9

35

Percent 8.8

21. 6 54. 1 3.7 2.4 9.4

Million dollars

114

0) 9

118 93 28

Percent 31. 5

Other plants, same company (0

Other manufacturers Merchant wholesalers Retailers, not owned Another

2.5 32.6 25.7 7.7

Total 375 100.0 362 100.0

Sales offices, branches, etc. to—

Other manufacturers 32 0)

«1

97.0

0) 3.0

Merchant wholesalers Retailers, not owned Another- _________

37 75

3

32. 2 65. 2 2.6

Total -_ 33 100.0 115 100.0

1 Withheld to avoid disclosure of figures for individual companies.


administrative offices of the same company (table 39). Distribution by sales offices, branches, and administrative offices was mainly to retailers and merchant wholesalers.


Changes in the size and organization of the wool products manufacturing industry are indicated by information on the number of employees, the amount and kind of machinery and equipment used, ownership and operation of establishments, and mergers and acquisitions.

Number of Employees, Spindles, and Looms

The number of wool scouring and combing establishments increased from 56 in 1947 to 81 in 1958, but the total number of employees in these establishments decreased 28 percent during this period. The quantity of tops and noils produced by this industry decreased from 367 million pounds in 1947 to 133 million in 1958. Total shipments of scoured wool for sale decreased from 23 million pounds in 1947 to 11 million in 1954 and then increased to 22 million in 1958, according to census reports.

The number of worsted combs in place in 1962 was about 52 percent less than the number in

67

1949. The number of woolen and worsted spindles in place in 1962 was 81 percent less than that in 1939 and 77 percent less than that in 1949 (table 40). Annual fiber consumption by establishments engaged in woolen spinning and worsted combing, mcluding carpet and rug yarn mills, decreased from 966 million pounds in 1947 to 621 million in 1958 and then increased to 739 million in 1962. A part of the reduction in mill consumption of wool and cotton since 1947 was offset by increases in consumption of manmade fibers (table 52, p. 82). Yarns spun on woolen and worsted systems, except carpet yams, in 1958 totaled about 342 million pounds and were about 42 percent less than the total in 1947. Production of carpet and rug weaving yarns spun on the wool system decreased from about 179 million pounds in 1947 to 130 million in 1958.

The number of looms in woolen and worsted mills decreased from 36,337 in 1950 to 11,407 in 1962. The total number of hours looms were operated decreased from 124,800,000 in 1950 to 51,- 625,000 in 1962. Despite an increase of more than 50 percent in average linear yards of fabrics produced per loom-hour, fabric production decreased from 470,513,000 linear yards in 1950 to 286,883,000 linear yards in 1961, a decrease of 35 percent, and amounted to 309,861,000 linear yards in 1962.

Locations of machinery and equipment used in the manufacture of wool products have changed considerably since 1939 (table 40). The proportion of total woolen spinning spindles located in the South increased from 8.5 percent in 1939 to about 28 percent in 1962. The proportion of total worsted spinning spindles located in the South increased from 2 percent in 1939 to about 62 per-

cent in 1962. Of the total number of worsted combs the proportion increased from 4 percent in Southern and North Central States in 1939 to about 29 percent in Southern States in 1962. That in New England and the Middle Atlantic States decreased markedly (table 40).

Sizes of establishments in the wool manufacturing industry, as indicated by the number of employees, vary widely (table 41). Of the total number of plants, the proportion with 250 or more employees decreased markedly from 1947 to 1958. That with fewer than 50 employees each increased markedly during this period. Average number of employes per establishment decreased about 50 percent from 1947 to 1958.


In 1958, establishments under corporate ownership or control accounted for about 82 percent of the total number of establishments and 96 percent of the total number of employees in the woolen and worsted fabrics manufacturing industry (table 42). These proportions were less than those in 1954 and 1939. The proportion of establishments operated from central administrative offices as multiunits decreased from 39 percent in 1939 to 29 percent in 1954 and then increased to 39 percent in 1958. Of total employees of the industry, the proportion accounted for by employees of multiunits decreased from 64 percent in 1939 to 55 percent in 1954 and then increased to 59 percent in 1958. The average number of employees per plant for each type of ownership decreased markedly from 1939 to 1958.

TABLE 40.—Number of spindles^ combs^ and looms in place in the wool manufacturing industry^ by geographic divisions^ specified years^ 19S9-S2 ^

Item and year New England

Middle Atlantic

North Central

South All other United States

Woolen spinning spindles: 1939

Number 986,253 336,211 301,564 280,970

1,564,044 246,000 224,374 192,192

1,823 924 917 926

34,146 5,817

Number 464,451 132,966 113,125 92,084

484,930 68,482 41,440 43,268

674 189 185 174

9,058 2,136

Number 175,065 55,007 51,433 41,669

40,856 {') (') (')

(') (') {') (?)

2,870 631

Number 154,024 174,584 172,398 167,312

40,448 359,160 375,840 408,184

95 379 438 475

3,095 4,748

Number 31,976 13,104 8,976 8,976

10,780 14.884 15,236 15,021

« 34 35

(^)

510

Number 1,811,769

1959 711,872 1961 647,596 1962 591,011

Worsted spinning spindles: 1939 2,141,058 1959 688,526 1961 656,890 1962 658,665

Worsted combs: 1939 2,592 1959 __ __ __ 1,526 1961 1,575 1962 1,614

Woolen worsted looms : 1939 49,679 1958.__ 13,332

1 Data for 1939 are for May; all other data are for December.

2 Data included in "all other" to avoid disclosing information of individual companies.

3 Included in ''South."

Adapted from Census of Manufactures and Current In- dustrial Reports.

68

TABLE 41.—Number of wool scouring and conibing plants^ wool yarn mills^ except carpet^ and woolen and worsted fabric plants^ by number of employees^ United States^ 194,7 and 1958

Employees per plant

Scouring and

combing plants

Wool yarn mills, except carpet

Woolen and

worsted fabric plants

1947 1958 1947 1958 1947 1958

1,000 and more _ _ _

Num- ber

Num- ber

Num- ber

2 14 29 45 32 30 11 24 13

Num- ber

'~2~ 14 42 28 36 12

5 11

Num- ber 24 27 82

137 66 60 42 22 35

Num- ber

2 500 to 999 5

5 14 11 12 10

6 11

3 5 8 9

21 8 5

22

16 250 to 499___ . 52 100 to 249-_ 89 50 to 99 64 20 to 49-__ - 88 10 to 19 53 5 to 9 _ 41 lto4_- _ 64

Total 74 81 200 150 495 469

TABLE 42.—Number of establishments and average number of employees per establishment for manufacturers of woolen and worsted fabrics^ by type of ownership and organization^ united States, 1939 and 1958



Mergers and acquisitions in the textile industry in recent years, as previously indicated (p. 38), apparently have resulted in changes in organization and management of some operating units in the wool manufacturing industry. In 1958, about 78 percent of the mills with 79 percent of the looms had equipment for both spinning and weaving (table 43). These proportions were slightly greater than those in 1954 (^). A larger proportion of the larger mills than of the smaller ones had both spinning and weaving equipment. Many woolen and worsted mills have equipment for performing all operations from the processing of raw fibers through the finishing of fabrics.

The degree of concentration in wool products manufacturing industries, on a company basis, is indicated by the proportion of the total value of shipments accounted for by specified numbers of the largest companies in these industries. In the scouring and combing industry in 1958, plants operated by four of the largest companies, or about 5 percent of the total, accounted for 58 percent of the value of shipments of the industry (table 44). Twenty of the largest companies, or 26 percent of the total, accounted for 89 percent of total shipments; and 50 of the largest companies, or 64 percent of the total, accounted for 99 percent of total shipments of the industry. The degree of concentration of shipments in specified numbers of the largest companies increased from 1954 to 1958, despite an increase in total number of companies. The proportion of total shipments of products regarded as primary to the industry


Establish- ments 1

Average employees per establishment 2

1939 1958 1939 1958

Ownership: Corporate Partnership.

Number 519

31 32

1

Number 387

38 43

1

Number 362

33

Number 139 40

Individual Other

All 583 469 240 119

Operation: Single Unit:

Corporate. _ 301 57

281 79

157 49

(^) Other___ _ « \ /

All 358 360 140 64

Multiunit: Corporate 218

7 106

3 407 150

(3)

Other.. __ „_ {')

All 225 109 399 301

All 583 469 240 119

1 Data for 1939 relate only to regular factories or jobbers engaging contractors.

2 In 1939 only wage owners are included; in 1958 all employees are included.



increased from 83 percent in 1954 to 92 percent in 1958.

Similar data for wool yam mills, except carpet, show that in 1958 mills operated by 20 of the largest companies, or 16 percent of the total, accounted for 58 percent of total shipments of the industry (table 44). Mills operated by 50 of the largest companies, or 40 percent of the total, accounted for 88 percent of total shipments. The proportion of total shipments accounted for by establishments operated by specified numbers of the largest companies varied irregularly from 1947 to 1958. But the number of companies decreased from 181 in 1947 to 125 in 1958. Consequently, the degree of concentration of shipments by specified proportions of the largest companies decreased from 1947 to 1958.

Data for the woolen and worsted fabrics manufacturing industry show that in 1958 establishments operated by 20 of the largest companies, or less than 8 percent of the total, accounted for 59

69

TABLE 43.—Number of woolen and worsted mills and looms^ hy size of mill and degree of integration^ united States^ 1958

Type of machinery i Looms per mill

All 1-49 50-99 100-499

Fabric mills

Weaving only Spinning and weaving.

Number 44

157

Number 23 78

Number 14 53

Number 7

26

Total 201 101 67 33

Looms operated

Weaving only Spinning and weaving-

2,745 10, 587

684 2,471

965 3,729

1,096 4,387

Total 13, 332 3,155 4,694 5,483

Proportion of total

Percent Percent Percent Percent

Fabric mills


21. 9 78. 1

22.8 77.2

20.9 79. 1

21.2 78.8

Total 100.0 100.0 100.0 100.0

Looms operated


20.6 79.4

21. 7 78.3

20.6 79.4

20.0 80. 0

Total 100.0 100.0 100.0 100.0

1 Degree of integration determined by type of machinery reported. Data for small plants reporting on short form not included.


percent of total shipments of the industry (table 44). Mills operated by 50 of the largest companies, or 19 percent of the total, accounted for 78 percent of total shipments. The proportion of total shipments accounted for by specified numbers of the largest companies increased from 1947 to 1958, but the total number of companies decreased and the degree of concentration in specified proportions of the largest companies decreased.

Of the 703 establishments primarily engaged in manufacturing and finishing broadwoven wool fabrics and yarns in 1958, about 89 percent were operated by companies primarily engaged in this

segment of the textile industry, and 11 percent by companies engaged in other segments of the textile industry or in other industries (table 45).

The size of establishments, as indicated by the number of employees, averaged more than three times as much in 1958 and more than twice as much in 1954 for those operated by multiunit as for those operated by single-unit companies. The number of employees per establishment classified in the wool manufacturing industry averaged more for those operated by companies classified in other industries than for those operated by companies classified in the same industry (table 45).

MANUFACTURING METHODS (723)

Raw wool may be sorted and must be scoured before it is ready for carding on the woolen or worsted systems. Wool used in woolens is blended, carded, and spun into yam. That used in worsteds is carded, combed, made into top, and spun into yarn. Woolen and worsted yarns are woven into cloth, which when finished is ready for fabricators of apparel, household goods, and industrial products.

Wool Sorting

Wools lacking uniformity may be sorted on the basis of the fineness, length, soundness, and color of the fibers, and the amount of vegetable matter included. Manufacturers' requirements, which vary with the type of yarn and cloth to be produced, are used as a guide in sorting. The higher the quality of goods to be produced, the more carefully the sorting is done.

Wool Scouring

Grease wool contains large proportions of impurities, which account for wide variations in shrinkage. These impurities are divided into three categories: (1) natural impurities, including the various oils and fats secreted by the sebaceous glands in the animal skin, referred to as wool fat, and the water-soluble salts from dried perspira- tion, which are designated as suint; (2) acquired impurities, including sand, dirt, burs, pollen, and other forms of vegetable matter picked up by the sheep from its environment; and (3) applied impurities, consisting of tar, pitch, and paint which are used in small quantities for identification purposes, or chemicals used to prevent or treat disease.

Impurities are removed from raw wool by the detergent process of scouring, an intricate and important operation. Many of the difficulties involved in the dyeing, carding, combing, drawing, spinning, and finishing processes are attributable to improperly scoured wool. Most of the wool in this country is scoured with nonionic detergents or soap and soda ash.

70

TABLE U.—Share of total shipments of the wool manufacturing industry accounted for hy largest companies^ united States^ 1958^ 195^^ and 191^7

Industry and year Com- panies ^

Value of shipments ^

Concentration ratio : Proportion of total shipment accounted for by ^— Primary

product

4 largest companies

8 largest companies


specialization *

Scouring and combing plants: ^ 1958 _ --_- --

Number 78 70

125 157 181

263 285 427

1,000 dollars 85, 683 64, 168

262, 823 251, 614 336, 956

770, 884 890, 281

1, 355, 209

Percent 58 53

20 20 21

36 27 28

Percent 73 68

34 32 34

46 38 40

Percent 89 87

58 57 55

59 55 56

Percent 92

1954 __ _ __ 83

Yarn mills, wool, except carpets : ^ 1958 _____ 89

1954 __ - - 93

1947 90

Woolen and worsted fabric mills : ^ 1958 -- w 1954 - - 92

1947 - - 90

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 41. 4 See footnote 4, tablt 14, p. 41.

Bur-Picking and Carbonizing

Wool usually contains varying quantities of vegetable matter, such as burs, seeds, straw, twigs, or leaves, picked up by the sheep in grazing. If these contaminants are not removed, they are broken up into small pieces during processing or manufacturing operations, mainly in carding. When present in large quantities, they cause difficulties in manufacturing processes and reduce the quality of the products. It is highly desirable, therefore, to remove all vegetable matter from wool early in its processing. These removals may be made immediately after scouring and drying by the mechanical or bur-picking method, or by the chemical method. The choice of method depends upon the purpose for which the wool is to be used. If the wool is to be blended with vegetable fibers, such as cotton, rayon, or acetate, the chemical method is used. But if it is to be blended with other wool, it may be sufficient to remove most of the vegetable matter by the mechanical or bur- picking method.

Eemoval of vegetable matter from wool by chemical means is known as carbonizing. Vege- table matter is reduced to carbon by means of acids, such as sulfuric or hydrochloric, or by salts such as aluminum chloride. After it is so reduced, it is removed from the wool by mechanical action. The chemical method is superior to the bur-picking method in removing all vegetable matter, but carbonizing tends to degrade and discolor the wool fibers so that losses in weight of the wool occur during mechanical processing. Furthermore, carbonizing tends to reduce the wear resistance of the final product, and sometimes adversely affects tlie dye receptivity, felting properties, and other useful properties of wool.

5 See footnote 5, table 27, p. 56. 6 See footnote 7, table 14, p. 41.

Adapted from (120).

Blending and Woolen Carding

Virgin wools may be blended with other raw matreials, such as noils, reused and reprocessed wools, manmade staple fibers, and cotton and silk

TABLE 45.—Number of companies and establish' ments^ average number of employees per establishment^ arid average value added per dollar of payroll by manufacturers of wool broadwoven fabrics^ yam and finishing^ except wool^ United States^ 1958

Aver- age Value em- add-

Com- Estab- ployed per Item panies lish- ees dollar

ments 1 per estab-

lishment

of payroll

Number Number Number Number Companies in this industry 2_ 585 623 86 1.66

Single-unit companies 544 544 68 1.60 Multiunit companies 41 79 210 1.79

Single industry 16 31 207 1.90 Multi-industry 25 48 212 1.73

Companies in other industries 34 80 312 1.60

Total or average 619 703 112 1.64

1 Establishments in wool broadwoven fabric, yarn, and fiinishing industry.

2 In 1954 these companies had 48 establishments in other industry categories and 40 central administrative offices, auxiliaries, sales branches, and sales offices. In 1958, the corresponding categories had 46 and 17 respectively.

Adapted from {101).

71

noils, and must be properly prepared for wool carding and spinning operations. These prepara- tions may include such operations as bur-picking for burry wool, opening for tacky wools or other materials, dusting, oiling, mixing or blending, and garnetting for thread waste, depending upon the nature and condition of the stocks. The purpose of blending or mixing is to amalgamate such proportions of the different raw materials used as are required to produce economically satisfactory yarn or cloth. Stocks of wool or mixtures of wool and other fibers are oiled to minimize breakage of the wool fibers in opening processes such as rag- picking and carding; to reduce fly, waste, and static electricity in carding; and to increase the cohesion of the fibers in loose slivers. This increase in the cohesion of fibers facilitates drafting, condensing, and spinning. The purpose of garnetting is to break up hard-twisted waste to be included in woolen mixtures by opening the twist in the thread completely, by blending the fibers perfectly, and by delivering the stock in a fluffy, opened condition ready for mixing.

After these stocks have been thoroughly mixed, cleaned, oiled, garnetted, and otherwise prepared, they are ready for the carding process. The principal functions of woolen carding are to open further the stocks as a whole, disentangle locks and bunches, straighten the individual fibers to the extent required to remove natural impurities, to mix further the stocks and the component parts, and to deliver the stocks in convenient form for transfer to the next card or spinning machine.

Spinning and Woolen Yarn

When wool stocks are converted into roving by the carding processes, they are ready for spinning into yarn of the required nm or cut. Woolen spinning involves three principal operations: drafting, twisting, and winding-on. Drafting, or final drawing-out, is the last reduction or attenua- tion of the roving itself to that weight or thickness required in the final woolen yarn. In the old mule system, this was accomplished by a so-called spindle draft instead of a roller draft, as it is done on the woolen ring spinner or in worsted spinning. Twisting, or insertion of twist in the drafted roving, gives the yarn sufficient strength for use in knitting or in weaving. On the mule, this process is partiV combined with drafting, but it is mainly accomplished by spindle twisting. On the woolen ring frame, twisting is done with a ring or traveler and is termed ring twisting. Winding-on, or packaging, consists of putting the spun yarn into a form, such as cops or bobbins, suitable for weaving or knitting operations.

Worsted Carding

Wlien the wool used in worsted has been graded, sorted, scoured, dried, and otherwise prepared, it is ready for the carding processes. Worsted card-

ing is designed mainly (1) to straighten and separate the fibers and, in general, to make long wool fibers lie parallel; (2) to clean the fibers by removing burs, shives, and other extraneous vegetable matter; (3) to blend, distribute, and mix the different lengths and qualities of fibers harmo- niously into one uniform quality; and (4) to arrange the fibers into a continuous and convenient sliver of definite weight and thickness.

Worsted carding is performed on one long card, as contrasted with the three different cards used in the woolen system. Three types of worsted cards in general use in the United States are (1) the single-cylinder worsted card with four licker- ins for long-staple wool (Bradford system), (2) the double-cylinder worsted card with two licker- ins and dividers for medium crossbred wools (French and Bradford systems), and (3) the double-cylinder worsted cards with bur breast workers and strippers for fine burry wool (French system). Worsted mills in the United States pre- fer the double-cylinder card for fine and crossbred wools, regardless of the system of drawing or spinning used.

Worsted Combing

Card slivers may be backwashed to remove impurities, oiled, and otherwise prepared for the combing operations. The functions of worsted combing are to remove and separate the short wool fibers below a predetermined length, to straighten the retained long wool fibers and make them lie as parallel as possible, and to remove foreign impurities. In such combing, the long fibers are retained and made first into comb slivers and later into worsted top; whereas the shorter fibers are separated out as a fibrous mass known as noils and used as raw material in the manufacture of woolen yarns and fabrics.

Worsted Drawing

Worsted drawing constitutes a series of operations designed to convert top slivers into rovings small enough to be spun conveniently into fine, even yams on spinning machines. Parallelization of the wool fibers is continued in these operations. Drafting operations are used to the extent necessary to reduce the slivers gradually so they can be spun readily into single worsted yarns. Doubling is extensively done to equalize irregularities in thickness or weight of the slivers, which otherwise would result in uneven yarn. Open, cone, and porcupine drawing are systems of drawing generally recognized in the United States. Regard- less of the system used, however, all drawing processes depend upon two or more pairs of drafting rolls and packaging of the reduced sliver.

Worsted Spinning

The types and sequences of operations involved in worsted spinning, regardless of the system em-

72

ployed, include final drawing out or drafting, insertion of twist, and winding on or packaging. The main function of this spinning is the production, from rovings prepared from drawing operations, of uniform yarns of the desired thickness and requisite strength, surface, handling, and appearance, ]3ut up in convenient forms such as bobbins, spools, cops, or packages for later ma- nipulation, inspection, and use for knitting or weaving.

Weaving Woolens and Worsted

Woolen and worsted yarns spun for weaving purposes may require certain preparatory processes, which include rewinding, beam warping, warp slashing and sizing, reeding the warp, twisting in, and drawing in, before they are ready for weaving operations. The function of weaving is the formulation of cloth or fabrics by interlacing, at right angles to each other, of two sets of yarns, one set running lengthwise in the loom and termed the "warp," and the other running crosswise in the loom and termed the "filling" or "weft." These fabrics are made up of weaves in a variety suitable for specified uses, such as men's and women's wear fabrics. To establish and correct any imperfections in woolen fabrics, manufacturers subject them to numbering, perching, picking, burling, and mending before they are dyed and otherwise finished.

Dyeing and Finishing

Wool fibers contain yellowish pigment which is removed by tinting or bleaching. Dyeing may be done at any stage of manufacture—^to loose wool or stock, to slubbing or top, to yarn, or to fabrics or piece goods. Wool may be printed in the form of either yarn or piece goods, but printed wool materials comprise a minor portion of finished wool articles. After woolen and worsted goods leave the loom, they are subjected to various types of finishes, involving wet and dry finishing operations, designed to improve the quality, appearance, and attractiveness of the fabrics {123), In wet finishing, operations include dry cleaning, singeing, crabbing, piece scouring, filling, carbonizing, scutching, beaming, wet decating, blow- ing, and raising. In dry finishing they include extracting, drying or tentering, shearing, brush- ing, dry decating, damping, pressing, steaming, sponging, examining, stamping, measuring, weighing, folding, inspecting, and shipping.

Carpets and Rugs

Wools used in the manufacture of carpets and rugs are imported from countries where the native sheep have coarse, wiry, tough ñeeces. Several grades of this wool are blended to obtain the desired characteristics of the yarn and to keep these characteristics constant from one period to an-

other. Woolen and worsted yarns used in the pile of carpets and rugs are much heavier in size than those used in wearing apparel. Yams made of cotton, wool, jute, and linen are used in the back structure of carpets and rugs. Filling, warp, and "stuffer" yams form the back structure and con- stitute the weave. After weaving, carpets and rugs receive several finishing processes before they are shipped from, the mill.


The number of machines in place in the wool manufacturing industries decreased markedly during the late 1940's and 1950's. Apparently not all of the machinery and equipment in use in the early 1960's was of the most improved types or in good condition. Much of it was overworked during World War II, and the replacement of badly worn and obsolete machinery and equipment wîth new and improved types was delayed by shortages. In the postwar period, considerable improvements have been made. Census reports show that expenditures for plant and equipment by the industry increased from $9,307,000 in 1939 to $51,117,000 in 1947, and amounted to $22,683,000 in 1958 and to $33,677,000 in 1962. A large proportion of these expenditures was for new equipment (table 46).

Eeports indicate that in the late 1940's and 1950's wool mills set the textile pace in constructing modem buildings and installing new machinery {63). This modernization probably resulted in greater changes in worsted spinning than in any other segment of the textile manufacturing industry. Indications are that significant improvements are in prospect for woolen mills. In- troduction and use of the American system of worsted spinning and the long-draft machines have been important developments in recent years. Total worsted spindles in place decreased from about 1,920,000 in 1947 to fewer than 700,000 in 1961, but modern American-system spindles in place rose from less than 118,000 in 1951 to more than 450,000 in 1957 {63). Older Bradford and French systems are still used for some specialty yams and fibers, but more and more worsted mills are swinging over to the American system {63).

Charges or Costs

Gross margins of scouring and combing plants, which averaged only about 37 percent of the value of the products in 1947, increased during the next decade and averaged 49 percent in 1958 (table 47). Proportions of these margins that were accounted for by salaries and wages also increased, averaging 56 percent in 1958.

The relatively small proportion of gross margins accounted for by salaries and wages and the relatively large value added by manufacture per dollar of payroll in 1947 are accounted for largely by narrow gross margins and by the large propor-

73

TABLE 46.—Expenditures for plant mid equipment hy wool scouring and combing plants^ wool yarn mills^ and woolen and worsted fabric mills^ United States, 1H7, 195Jf, and 1958 ^


equipment 1947 1954 1958

Scouring and combing plants :

New equipment New plant _ _ _

1,000 dollars 2,032 1,186

36

1,000 dollars 1,929

462 738

1,000 dollars

1, 136 139

All other (')

Total -- _ 3,254 3,129 3 1, 275

Yarn mills: New equipment New plant __ __

4,922 1,691

337

2,959 343 856

4,138 1,011

All other _ .__ 3, 032

Total- _ 6,950 4, 158 8, 181

Fabric mills: New equipment _ 27, 418

11,831 1,664

8,626 3,087 2,721

7, 853 New plant 1,849 All other 3,525

Total 40, 913 14, 4.34 13, 227

1 In 1958 and 1954 establishments that reported on the short form were asked to show only their total expenditures for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments that reported detail expenditures by type to obtain separate expenditure figures for new plant, new equipment, and used plant and equipment.

2 Less than $500,000. 3 Expenditures for new plant and new equipment only. Adapted from Census of Manufactures.

tion accounted for by contract and commission work. The relatively large proportion of gross margins accounted for by payroll and the relatively small values added by manufacture per dollar of payroll in more recent years are accounted for mainly by substantial increases in costs of salaries and wages.

Selling prices, costs, and margins for wool tops in 1942, the latest date for which such data are available, indicate that manufacturers' gross margins averaged about 31 percent of the average selling price (^7). Almost 70 percent of topmakers' gross margins were accounted for by conversion costs; more than 9 percent by overhead, general, and administrative expenses; and about 21 percent by other items. About 12 percent of conversion costs were accounted for by the cost of sorting, 46 percent by the cost of combing, 22 percent by losses on noils, 16 percent by losses on waste, and 4 percent by losses on offsorts (^7).

Gross margins of manufacturers of wool yarns, which generally ranged between 30 and 40 percent of the value of the products in the late 1940's and the early 1950's, amounted to 36 percent of the value of products in 1958 (table 47).

Gross margins of manufacturers of wool fabrics decreased moderately during this period and amounted to 41 percent in 1958 (table 47).

Costs of manufacturing specified wool products in 1950, as reported by Barnes Textile Associates, Inc., show that materials accounted for 46 percent of the total costs for wool covert and 53 percent of costs for worsted twill (^7). Labor accounted for about 30 percent of the total costs for wool covert and 29 percent of the total costs for

TABLE 47.—Values, costs, and margins for wool Tnills, by function, United States, 1958 ^

Item

Scouring, worsted

combing, tow to

top mills

Weaving and

finishing mills

Yarn mills

Value of products ^

1,000 dollars

82, 734

1,000 dollars

911, 924

1,000 dollars

271, 641

Cost of materials, etc. 3_ _ Gross margin _

42, 217 40, 517

534, 131 377, 793

172, 707 98, 934

Salaries and wages 22, 663 209, 094 54, 202

Salaries 4,759 17, 904

42, 905 166, 189

9 124 Wages 45, 078

Fuel 1,350

932

376 15, 196

8,773

7,233

25, 296 127, 397

1 217 Purchased electric en-

ergy ___ Contract and commis-

sion work

2,342

4, 251 Other* 36, 922


Value of products ^ Percent 100.0

Percent 100. 0

Percent 100.0

Cost of materials, etc. 3„_ Gross margin

51.0 49. 0

58. 6 41. 4

63.6 36. 4

Salaries and wages 27.4 22. 9 20.0

Salaries 5. 8 21. 6

4.7 18. 2

3. 4 Wages 16. 6

Fuel 1. 6

1. 1

.5 18.4

1. 0

.8

2.8 13. 9

. 4 Purchased electric en-

ergy . 9 Contract and commis-

sion work 1. 6 Other* _ _ __ 13. 5

1 Data on manufacturers of woolen and worsted fabrics, include data on finishing wool textiles and on the manufacture of some other products.

2 Excludes products bought for resale without further processing. Figures for 1954 and 1958 adjusted for changes in inventory.

3 Includes supplies, parts, and containers. * Includes depreciation, interest, insurance, rent, taxes,

other expenses, and profits.


wool twill. The corresponding proportions for selling expenses were 7 and 6 percent respectively.

In 1960, costs of producing specified worsted and woolen fabrics per linear yard averaged substantially higher in the United States than they did in the United Kingdom, Japan, and Italy (table 48). For worsted sharkskin, total cost of fabric in the United States averaged 9 percent higher than that in the United Kingdom and 37 percent higher than that in Japan. Net costs for fiber in the United States averaged 35 percent higher than those in the United Kingdom and 15 percent higher than those in Japan. Labor costs in the United States averaged 7 percent higher than those in the United Kingdom and twice as high as those in Japan. Gross margins of manufacturers in the United States, as proportions of total costs, aver-

aged less than those of manufacturers in the United Kingdom and higher than those of manufacturers in Japan.

Manufacturers' costs per linear yard of high- grade finished woolen ñannel averaged 30 percent more for fibers in the United States than for those in the United Kingdom, 8 percent more for labor, and 12 percent more for total fabric costs (table 48). Gross margins of manufacturers in the United States, as proportions of total costs of these fabrics, averaged less than those of manufacturers in the United Kingdom. For lower grade finished woolen flannel, manufacturers' costs per linear yard averaged almost three times as much for fibers in the United States as for those in Italy, 42 percent more for labor, and 148 percent more for total fabric costs. Gross margins of manu-

TABLE ^S,—Average cost per linear yard of producing specified worsted and woolen fairies in the United States, United Kingdom, Japan, and Italy, 1960

Worsted sharkskin Finished woolen ñannel

Item of cost High grade Lower grade

United States

United Kingdom

Japan United States

United Kingdom

United States

Italy

Total cost of fabric -- - Dollars

3.62 Dollars

3.31 Dollars

2.64 Dollars

2. 77 Dollars

2. 48

.98 1. 50

.61

.89

Dollars 1.91

.85 L06

. 47

.59

Dollars 0.77

Net fiber cost _ L42 2.20

L05 2.26

L07 L 19

L23 L41

. 55

.86

L28 L49

. 66

.83

.22 All other costs .55

Labor ^ » _ L 10 1. 10

.33 Other _ .22

Materials, chemicals, and dyes 2.__ Other supplies *

. 08

. 10

. 07

. 11

. 46

.28

. 17

S.89

. 13

.31 r .01

. 15

.04 I . 22

. 13

.08

.08

.05

.09

.24

.29

. 16

.01

.08

.08

.46

. 10

.07

.07

. 04

.06

.21

. 14

.03

.01 Fuel, power and water .05 Depreciation .03 Other overhead * _ _ .06 Sales _ - - .04

Propor tion of total cost

Total cost of fabric - Percent 100.0

Percent 100.0

Percent 100.0

Percent 100.0

Percent 100. 0

Percent 100.0

Percent 100.0

Net fiber cost _ 39.2 60.8

3L 7 68.3

46.6 53.4

46. 2 53.8

39. 5 60. 5

44. 5 55. 5

28.6 All other costs - 7L 4

Labor ^ 30. 4 30. 4

32. 3 36.0

20.8 32. 6

23. 8 30.0

24. 6 35.9

24. 6 30. 9

42.8 Other 28.6

Materials, chemicals, and dyes 2___ Other supplies ^

2.3 2.8 L9 3.0

12. 7 7. 7

5.2

5 26. 9

3.9

n. 7 f • 4

5.8 1. 5

I 8. 3 4.9

2.9 2.9 L8 3.2 8.7

10. 5

6.5 . 4

3.2 3.2

18. 6 4.0

3.7 3. 7 2. 1 3. 1

IL 0 7. 3

3.9 L3

Fuel, power and water __ 6.5 Depreciation 3.9 Other overhead ^ _ 7.8 Sales -.- 5.2

Ï Includes cash wages plus all "fringe" labor costs. 2 Includes materials directly used in fabric manufacture. 3 Includes maintenance and other general supplies. * Includes allowance for seconds, property taxes, interest,

overhead salaries, miscellaneous overhead expenses, and company general operating expenses.

5 More detailed breakdown not available. Adapted from (115).

75

facturers, as proportions of total costs of these fabrics, averaged less in the United States than in Italy.

In 1958, average hourly earnings of textile workers in the united States averaged about 178 percent higher than the earnings of comparable workers in the United Kingdom, 241 percent higher than those in Italy, and about 7 times as high as those in Japan, according to data provided by the Bu- reau of Foreign Labor Conditions, Bureau of La- bor Statistics, U.S. Department of Labor; and the Northern Textile Association.

Large proportions of gross margins of manufacturers of wool products accounted for by wages and increases in wage rates since 1947 emphasize the importance of labor costs in the manufacture of these products. Hourly earnings of laborers in

wool scouring and combing plants increased from an average of $1.20 in 1947 to $1.78 in 1962, according to census reports. Value added by manufacture in this industry per dollar of wages decreased from $2.55 in 1947 to $1.74 in 1954, increased to $2.27 in 1961, and amounted to $2.19 in 1962. Wage rates per hour and value added by manufacture per hour of labor usually were higher in New England and the Middle Atlantic States than in other parts of the United States, but value added per dollar of wages and per dollar of payroll varied irregularly from one geographic area to another (table 49).

Hourly earnings of laborers in wool yarn mills increased from an average of $1.07 in 1947 to $1.68 in 1962, according to census reports. Average value added by manufacturers of wool yam per dollar

TABLE 49.—Value added hy wool processing^ scouring^ and combing plants^ per dollar of payroll^ per dollar of wages^ and per hour of labor^ and average wage rates per hour^ by region^ 1958 ^


Type of plant and region Total


Wage rates per hour

Payroll Wages

SCOUEING AND COMBING PLANTS

New England 1,000 dollars

22, 085 7,915 6,073

Dollars 1.61 1. 48 1.68

Dollars 1. 97 2. 09 2.08

Dollars 3. 24 3.78 2.66

Dollars 1 64

Middle Atlantic _ __ 1 81 All other _ _ 1 28

United States _ _ 36, 073 1.59 2. 01 3. 22 1 60

YARN MILLS

New England _. 43, 048 11,673 22, 083 23, 345 12, 584 19, 526 11,812 5,293

1.63 1.94 1. 50 1. 67 1. 66 1.93 2. 20 1. 43

1. 92 2. 40 1.76 1. 98 2.03 2.32 2.60 2.15

3. 04 3.82 2.80 3.43 3. 61 3.04 3.46 3. 16

1 58 Massachusetts 1. 59 Rhode Island 1 59

Middle Atlantic . _ 1. 74 Pennsylvania 1 77

South ___ 1 31 South CaroHna _ _ _ 1. 33

All other _ _ _ 1 47

United States __ _ _ 91,212 1.68 2.02 3. 14 1 55

WEAVING AND FINISHING MILLS

New England 147, 660 64, 985 12, 017 65, 779 31, 930 22, 718 13, 947

101, 343 19, 381 16,715 27, 451 7,889

1. 68 1.71 1.48 1. 49 1. 57 1. 45 1. 41 1. 71 1. 69 1.81 1. 50 1. 62

2. 01 2. 06 1.84 2.02 2. 34 1.80 1. 94 2. 06 2. 03 2.39 1. 71 2. 01

3.39 3. 62 3. 16 4. 17 5. 12 3.40 3. 13 3. 09 3. 07 3.32 2.68 3. 79

1 68 Massachusetts 1. 76 Rhode Island» _ _ _ 1. 70

Middle Atlantic 2 07 New York _ 2. 19 Pennsylvania. 1. 89

North Central 1. 61 South ___ _ _ _ 1. 50

North Carolina _ 1. 51 South Carolina- 1. 39 Georgia 1. 56

West 1. 88

United States. _ 336, 618 1.63 2.03 3.41 1. 68

1 Value added is adjusted to take into account value added by manufacturing operations and net change during the year in inventories of finished goods and work-in-process.


76

of wages decreased from $1.92 in 1947 to $1.79 in 1954, increased to $2.02 in 1958, and amounted to $2.01 in 1962. Wage rates per hour usually averaged less in the South than in any other geographic area, but value added by manufacture per hour of labor, per dollar of wages, and per dollar of payroll varied irregularly from one State or region to another (table 49).

In wool weaving and finishing mills, average hourly earnings of laborers increased from $1.20 in 1947 to $1.87 in 1962. Average value added per dollar of wages decreased from $2.04 in 1947 to $1.81 in 1954 and then increased to $2.32 in 1962. Wage rates and average value added by manufacture in this industry varied irregularly from one State and region to another (table 49). For the 3 years 1947,1954, and 1958 combined, hourly wage rates and value added by manufacture per hour of labor averaged less and value added by manufacture per dollar of payroll averaged more in the South than in any other major geographic division. Wage rates and value added per hour of labor averaged more in the Middle Atlantic States, and value added per dollar of wages and per dollar of payroll averaged less in the West than in any other major geographic division.

Geographic differences in value added per hour of labor by manufacturers of woolen and worsted fabrics, when related to corresponding differences in average wage rates per hour, gave correlation coefficients that ranged from 0.30 in 1954 to 0.84 in 1958. The regression coefficient for 1958 indicates that a difference of 1 percent in value added per hour of labor from one geographic area to another was associated, on the average, with a corresponding difference of about 0.59 percent in wage rates per hour.

In 1958, values added by scouring and combing plants per hour of labor, per dollar of wages, and per dollar of payroll varied directly with the size of the company, as indicated by the number of employees (120). But similar values added by wool yarn mills and by wool weaving and finishing mills varied irregularly with the size of the company. Average wage rates per hour varied irregularly with the size of the company operating scouring and combing plants, wool yarn mills, and wool weaving and finishing mills {120).

In 1958, value added by wôol yarn mills per dollar of payroll averaged most for plants owned or controlled by individuals (table 50). For wool fabric mills, value added by manufacture per dollar of payroll averaged most for establishments owned or controlled by partnerships. Value added by both wôol yarn and wôol fabric mills per dollar of payroll averaged more for establishments operated as multiunits than for those operated as single units.

Data on degree of specialization show that in 1958 wôol wêaving and finishing establishments with 75 to 89 percent of primary product special-

ization had higher average volume added per dollar of wages and per dollar of payroll than establishments of higher or lowêr degrees of specialization. Value added per dollar of payroll by establishments operated by multiunit companies averaged more in 1958 and less in 1954 than that added by establishments operated by single-unit companies. In 1958, as in 1954, value added per dollar of payroll by establishments operated as multiunits by single-industry companies averaged more than that added by establishments operated as multiunits by multi-industry companies (table 45, p. 71).

Differences in value added by manufacture in the wool products manufacturing industries per hour of labor, per dollar of wages, and per dollar of payroll from one establishment to another, from time to time, and from one State or region to another may be influenced by differences in such factors as kinds and amounts of machinery and equipment used; amounts of commission or contract work ; and wage rates, salaries, and bonuses to managers or operators. Adequate information is not available to indicate how and to what extent the differences shown in value added by manufacture in these industries were influenced by each of these factors.

TABLE 50.—Value added hy %oool yam and fabric TTiills^ hy type of ownership and operation^ United States^ 1958

Type of ownership


and operation Yarn mills

Fabric mills

Yarn mills

Fabric mills

Ownership: Corporate

1,000 dollars

89, 468 1, 377

367 0

1,000 dollars

323, 830 8,687 0) 0)

Dollars 1,68 1. 60 1.77

0

Dollars 1. 62

Partnership Individual _ _

1. 72 0)

Other 0) All 91, 212 336, 618 1. 68 1. 63


Corporate Other -_ _

42, 924 1,744

0) 0)

1. 60 1.63

0) (0

All 44, 668 135, 957 1.60 1.62

Multiunit: Corporate Other. __

46, 544 0

0) 0)

1.77 0

0) 0)

All 46, 544 200, 661 1. 77 1. 64

All 91,212 336, 618 1.68 1. 63



77


Improvements in the manufacture of wool yarns and fabrics, as previously indicated for cotton yarns and fabrics (pp. 45 and 63), can result from the use of qualities of wool that are relatively best adapted, physically and economically, to the production of various products and from other means of increasing the efficiency of the manufacturing operations. Attempts to bring about such improvements would necessitate the evaluation of a number of variables, separately and in combination. These variables may include (1) differences in all important quality elements and costs of wool; (2) type and condition of the manufacturing machinery and equipment used, layout or organizational setup of this machinery and equipment, labor used, operating speeds, settings, and draft organization; (3) class and quality of yarns and fabrics produced; and (4) the interactions among these factors.

ADJUSTMENT IN QUALITY

Better adjustments in the quality of wool used in the manufacture of specified types and qualities of yams and fabrics, as indicated in an earlier section for cotton (p. 46), would need to be based on results of adequate experiments or tests designed to provide accurate evaluations of all significant quality elements of wool. Such evaluations would show the influence of differences in the various combinations of quality elements of wool used on (1) the quantity, quality, and market value of the yams and fabrics produced; and (2) manufacturing costs of the yarns and fabrics, including labor, overhead, and reasonable returns to management and capital. For manufacturing purposes, differences in quality or value of wools that are of different combinations of quality elements but usable in the manufacture of the specified products would be indicated by differences in the spread between the value of the products and manufacturing costs. The quality of wool relatively best adapted to the manufacture of a specified type and quality of yarn and fabric is that with the lowest net cost, adjusted for waste, in relation to its value to mills for that purpose.

In addition to supplying an improved basis for making needed adjustment in the quality of wool used, accurate evaluations of all important quality elements of wool would provide a basis for setting up adequate standards for the various quality elements of wool and pricing wool on the basis of these standards throughout marketing channels, including prices to producers. Such evaluations would require suitable equipment and methods for accurately measuring differences in all important quality elements of wool and the influence of these differences on the processing performance and on the quantity, quality, and value of the products. Considerable progress has been made in develop-

ing techniques and equipment for measuring some quality factors of wool, but at least some of the known quality factors need to be more accurately evaluated and perhaps other important quality elements need to be identified and evaluated.

Apparently one of the quickest and most satisfactory means of relating the various quality elements of wool to processing performance and to the quantity, quality, and value of the resultant products is by carefully controlled pilot plant studies in which commercial equipment for processing the wôol and reliable measures for indicating differences in quality or value of the products are used. The size, equipment, organization, and operation of the pilot plant would need to be such that the results obtained would be readily convertible to the equivalent of similar results obtainable in commercial plans using comparable qualities of wool in the production of comparable products. Any differences between pilot plant and commercial results may be accounted for by the influence of differences in such factors as size of the operating units, type and condition of equipment, layout or organizational setup, labor used, operating speeds, settings, and draft organization. Accurate measures of the influence of these factors would be needed for converting pilot plant results to commercial plant equivalents, and the cooperation of operators of commercial plants would be required for developing these measures. Without such conversions, results of pilot plant operations may be of limited usefulness.

Variations in kinds and combinations of machinery and equipment and in organizational setup of commercial plants, particularly over short periods, may not be feasible for developing all the information needed to show the influence ojE these factors on the value of wool of specified qualities in the manufacture of specified products. But some indications of the influence of such variations may be obtained by comparing results of the use of similar qualities of wool in the manufacture of similar products by different plants at the same time and by the same plant at different times, where differences in equipment, organization, and operations were involved. Manufac- turers of wool products, textile research agencies, and possibly others may have developed information on the influence of these and other factors on differences in values among wools of various combinations of quality factors for use in the manufacture of specified products. This information would need to be assembled and evaluated for dependability and adequacy as a basis for formulating plans for developing additional information needed.

Variations in equipment, operating speeds, settings, and draft organization might well be made in pilot plants, and possibly in some commercial mills, as a means of evaluating the influence of these changes on differences in value among wools of various combinations of quality elements for

78

use in the manufacture of specified products. Measures of differences in value of wool of various combinations of quality elements for use in the manufacture of specified products, based on results from the use of the same kinds of machinery and equipment, operating speeds, settings, and draft organization, may not accurately reflect the differences in potentials of the various quality combinations. One combination of quality elements may give best results when one type of machinery and equipment, operating speeds, setting, and draft organizations is used in the manufacture of specified products. Other combinations of quality elements may give best results when other types of machinery and equipment, operating speeds, settings, and draft organization are used.

A means of minimizing or eliminating such discrepancies and of obtaining more accurate measures of differences in the quality of wool would be, first, to ascertain the optimum kinds of equipment, operating speeds, settings, and draft organization for each quality of wool used in the manufacture of the specified products. Then, differences in quality or value of the wools used for this purpose, under these conditions, would be reflected in differences in the extent to which the value of the products exceeded processing costs, adjusted for the value of waste.

The term "wool products" may refer to the output at au}^ stage of manufacture—from wool tops to fabricated apparel and other products ready for ultimate consumers. Differences in quality or use vahie of intermediate products, as indicated above for wool, are reflected in variations in the spread between the value of the products they are used to produce and costs of manufacturing them under optimum conditions. Ideally, it might be logical to start with the evaluation of differences in quality or value of the finished fabrics used in the manufacture of specified apparel or other consumer goods and to work in reverse order back to the evaluation of differences in quality or value of wool. But because of practical considerations, it may be advisable, first, to measure differences in quality of wool on the basis of differences between the value of tops or yarns produced and costs of processing them, despite the fact that these measures may not accurately reflect differences in potential values of the wool.

Measures of differences in physical characteristics of wool fibers and economic evaluations of these differences Avould supply a basis for setting up uniform standards for the quality factors of wool. Graduations of differences based on physical measurements and on experiences and practices in the industry may need to be adjusted on the basis of ecomonic evaluations, so the graduations would approach as nearly as practical, differences small enough to reflect all significant differences in use value to mills and large enough for reasonably accurate and expeditious determi-

nations for commercial purposes. Such standards would facilitate better adjustments in quality of wool to mill requirements.

Manufacturers of wool and of other textile products presumably have considerable information on the influence of differences in some quality elements of wool on processing costs and on quality of the products. But better adjustments in the quality of wool to mill requirements would need to be based on more nearly complete information showing more sepcifically the influences of differences in the various quality elements of wool on its value for use in the manufacture of specified products, on cost to mills, and on price and costs to producers of wool. This information, if reasonably complete and integrated, would supply a basis for arriving at approximations to the best adjustments in quality of wool to mill requirements. But developments in technology, in animal breeding, and in other areas may result in considerable changes in the qualities of wool relatively best adapted to the production of particular products. Such changes would necessitate réévaluations from time to time on the basis of the changed conditions.

With differences in all important quality elements of wool accurately measured and evaluated in terms of uniform standards, differences in prices of wool to mills as a result of differences in quality, under perfect market conditions, would reflect differences in costs of producing wool of different qualities. But not all important quality elements of wool have been so measured and evaluated. Furthermore, the market mechanism apparently is such that prices to wool producers, especially for the smaller clips, reflect only a part of the differences in value, for mill purposes, attributable to differences in the quality elements that have been measured and evaluated. Under such conditions, price incentives to producers, particularly to the smaller ones, would be at variance with the best adjustments in quality of wool produced to mill requirements, in accordance with the principle of comparative advantage.

Better adjustments in the quality of \yool used and improvements in the quality, suitability, and attractiveness of wool yarns and fabrics may be an important means of expanding outlets for wool products. Special chemical treatments and improved finishes offer great possibilities for improving the quality of wool products so that they may be in a better position to meet the ever- increasing competition of manmade fibers. Im- provements can be made also in mechanical processing of wool into yarns and fabrics. But additional information is needed (1) to show the changes in construction, weight, finishes, and other characteristics required, if yarns and fabrics made of wool are to meet this competition most effectively and (2) to supply a basis for developing suitable equipment and techniques for manufacturing the improved products efficiently.

79

IMPROVEMENTS IN MANUFACTURING OPERATIONS

Problems of increasing the eificiency of manufacturing wool yarns and fabrics, like those for cotton (pp. 48 and 64), involve consideration of such factors as the location, size, organization, and control of the operating units; kind and arrangement of buildings, machinery, and equipment used ; labor used and operating methods and practices ; and kinds and qualities of raw materials used. Integration in recent years has resulted in considerable changes in the organization and control of some manufacturers of wool products, but adequate information is not available to indicate whether or to what extent these changes affect the adequacy and efficiency of wool manufacturing operations, the quality and suitability of the yarns and fabrics produced, or the competition among fibers.

A 1958 report on modernization in the textile industry indicated that the use of improved machinery and equipment, suitably organized and operated, results in substantial improvements (63). Modernization and further expansion of tlie American system of worsted spinning with long- draft machines that eliminate processes would result in fewer machines, fewer workers, and lower costs. Case studies show that pin drafters and high-speed gill reducers, autolevelers to correct variations in sliver thickness, new high-draft roving frames, and modern superdraft spinning frames reduce spinning costs without impairing the quality of yarn (6S). More recent improvements in spinning and weaving, some of which are applicable to wool, are indicated in sections on cotton yarns and fabrics (pp. 48 and 63).

Adequate information is not available to indicate specifically the conditions under which and the extent to which these and other means might feasibly be used to increase the efficiency and reduce costs of manufacturing wool yarns and fabrics. The development of information needed for this purpose might require the assembly and analysis of detailed cost and other data for a representative sample of establishments engaged in the manufacture of typical kinds and qualities of yarns and fabrics. Data for each establishment would need to show detailed unit costs of labor, overhead, and other items at each stage or process in the manufacturing operations involved. Infor- mation would also need to be assembled to show how differences in these costs are related to such factors as location, size, organization, and control of the operating units ; kind and arrangement of the buildings, machinery, and equipment used; labor used and operating methods and practices; kinds and qualities of raw materials used; and number and kinds of products manufactured.

In addition to the information developed for the representative sample of establishments, detailed specifications for low-cost plants for manufacturing specified kinds of yarns and fabrics would need to be developed. These specifications might well be based on cost-engineering data, results of analysis of data for the sample establishments, and other information. They should show the more desirable buildings, machinery and equip- nient ; floor plans ; labor requirements ; raw materials used; operating programs; and production data. Detailed data on unit costs of labor, overhead, and other items at each stage or process in the manufacturing operations involved would also need to be developed for the model plant.

A comparison of data for one sample establishment with that of another and with that specified for the model, low-cost plants would indicate the nature and extent of changes needed to increase efficiency and reduce costs of producing the specified yarns and fabrics. Case studies cited above (pp. 48 and 64) and data on the age of machinery in place indicate that great improvements in efficiency and substantial reductions in costs for some plants could be made through the use of improved machinery and equipment, suitably organized and operated. To be economically feasible, prospective benefits from modernization of individual plants would need to be great enough to equal or exceed costs of new machinery, losses from scrapping the old and obsolete, and expenses of making the changes. Reports indicate that an increasing number of executives in the textile industry find a partial solution to the problem of financing modernization by leasing equipment, which permits them to conserve their working capital (^).

The importance of using labor more efficiently is emphasized by the fact that in 1958 wages accounted for about 44 percent of gross margins of manufacturers of woolen and wôrsted fabrics, according to census reports. Hourly earnings of laborers in this industry in 1962 averaged about 56 percent higher than those in 1947 and about 11 percent higher than those in 1958. Apparently labor might be used more efficiently and unit cost of labor reduced by increased use of improved automatic machinery and equipment and better adjustments in the organization and operation of the manufacturing establishments.

The relative importance of reducing costs of manufacturing woolen and worsted fabrics is indicated by data which show that gross operating margins of manufacturers of these products in 1958 averaged (1) more than 50 percent greater than gross returns to producers for the wool used ; (2) more than six times as much as total costs of merchandising the raw wool used, including transportation; and (3) about 15 percent of cost to consumers of finished apparel and household fífoods made of wool.

80

MANMADE FIBER AND SILK PRODUCTS MANUFACTURING

Industries considered in this section include yarn-throwing, winding, and broadwoven fabric mills. Yarn-throwing and winding mills include establishments primarily engaged in throwing, twisting, winding, or spooling yarn wholly or chiefly of manmade fibers, silk, or cotton. Broad- woven fabric mills, manmade fiber and silk, include establishments primarily engaged in weaving fabrics over 12 inches in width wholly or chiefly of manmade fibers and silk.

Materials for these industries are mainly manmade fibers, but some silk, cotton, and other fibers are used. Consumption of cellulose in the United States in the manufacture of rayon and acetate filament yarns and staple fibers increased rather steadily from less than 200 million pounds in the early 1930's to 1,248 million pounds in 1962 (table 51). The proportion of this cellulose obtained from wood pulp increased from about 60 percent in 1933 to 97 percent in 1962. The remainder was obtained from linters pulp.

Production of rayon and acetate filament yam and staple fiber in the United States also^ rose sharply, increasing from less than 200 million pounds in the early 1930's to 1,272 million pounds in 1962 (table 51). The proportion accounted for by staple fiber increased from less than 1 percent in 1933 to 43 percent in 1962. Production of noncellulosic fibers in the United States increased from about 50 million pounds in 1946 to 1,160 million pounds in 1962.


Yam-throwing and winding mills produce a variety of products. Value of shipments and other receipts of this industry in 1958 totaled $175 million. Of this amount 87 percent was accounted for by thrown and textured yam, 5 percent by shipments of other products, and 8 percent by miscellaneous receipts. Although shipments of thrown and textured yam by the yam-throwing and winding industry accounted for 77 percent of these products shipped by all industries, large quantities of thrown yams are produced for their own use by establishments classified in other industries, principally the broadwoven fabric mill industry. In 1958, approximately half of the throwing and twisting spindles were in mills with machinery for throwing and weaving; spinning, throwing, and weaving ; and spinning or throwing, weaving, and finishing.

Broadwoven fabric mills, manmade fiber and silk, include mainly establishments with machinery for weaving only; spinning, throwing, and weaving; and spinning or throwing, Aveaving, and finishing. Integration is important at the company level as well as at the mill level. Some of the larger companies in the industry operate several fabric mills weaving manmade fibers, along with

TABLE 51.—Oonsumption of cellulose and production of rayon and acetate^ united States^ sj>eci- fted years, 1931-62

Cellulose consumption Rayon and acetate production

Year Wool pulp

Linters pulp Total

Fila- ment yarn

Staple fiber Total

1931 1961 1962

Million pounds

106 1,034 1, 216

Million pounds

62 42 32

Million pounds

168 1,076 1,248

Million pounds

151 642 726

Million pounds

453 546

Million pounds

152 1,095 1,272

Adapted from {9Ï).

finishing plants. Some also operate cotton, woolen and worsted, or knitting mills. The extent of integration, as indicated by the type of machinery reported for cotton, manmade fiber, and related broadwoven fabric mills, was shown in an earlier section of this report (table 25, p. 55).

Yarns consumed by manmade fiber and silk weaving mills incdude spun and filament yarns of manmade fibers, carded and combed cotton yarns, and other yarns made of various fibers, including blends. Most of these yarns were manufactured in establisliments in the same industry for their own use or for transfer to other manufacturmg establishments. Total consumption of yarns in this industry increased from about 575 million pounds in 1947 to 904 in 1962 (table 52). The proportion accounted for by rayon and acetate decreased from about 87 percent in 1947 to 48 percent in 1962. The proportion accounted for by nylon filament increased from less than 1 percent in 1947 to about 6 percent in 1962. Cotton yam consumption increased from less than 4 percent of the total consumed in 1947 to 11 percent in 1962. Consump- tion of other yams, including blends, increased from about 9 percent in 1947 to 34 percent in 1962.

Production of manmade and silk broadwoven fabrics from blended yams or mixtures of two or more fibers increased from about 763 million linear yards in 1958 to 1,117 million in 1962, or about 36 and 48 percent respectively of the total yardage produced. Of the total production of manmade fiber blends in 1962, about 42 percent was manmade fiber and cotton, 3 percent was manmade fiber and wool, and about 55 percent was one manmade fiber blended with another or with two or more fibers, according to census reports.

Value of shipments and other receipts of weaving mills, manmade fiber and silk, in 1958 totaled $1,226 million. Of this total about 83 percent was accounted for by gray and finished manmade fiber fabrics and blankets, 14 percent by secondary products, and 3 percent by miscellaneous receipts,

81

TABLE 52.—Yam consumed by manmade fiber and sUk weaving mills, by type of yam, united States, 19!¡r and 1959-62 / ^ ' >

Type of yarn 1947 1959 1960 1961 1962

Rayon and acetate: Spun

1,000 pounds 161, 988 337, 336

1,000 pounds 193, 975 244, 515

1,000 pounds 154, 911 233, 987

1,000 pounds 161, 232 239, 713

1,000 pounds

Filament 194, 285 243, 532

Total 499, 324 438, 490 388, 898 400, 945 437, 817 Cotton :

Carded 12, 330 11, 223

43, 775 60, 165

41, 128 60, 166

37, 284 63, 305

Combed 34, 890 67, 336

Total 23, 553 103, 940 101, 294 100, 589 102, 226 Nylon filament _ . 3,494 45, 496 48, 214 44, 663 54, 325 All other: i

Cotton 2___ _ 2,312 25, 612 13, 666 (^)

« 7,467

3,247 66, 675 13, 344 5,689

53, 776 4, 771

102,311

4,395 54, 624 21, 682

6, 130 63, 781 5,037

108, 452

2,595 55, 549 24, 488 4,856

64, 664 4,329

113, 702

Rayon and acetate 2 3, 793 71, 395 Wool 3

Silk 11, 988

Glass __ __ 5, 873 78, 277 Plastic _

Others 4, 095 134, 144

Total 49, 057 249, 813 264, 101 270, 183 309, 565

Total all types 575, 428 837, 739 802, 507 816, 380 903, 933

^ Includes blends and mixtures. 2 Used as part of blends or mixtures. 3 Includes wool, alpaca, mohair yarn, and content in

blends and mixtures. * Not available.

mainly for contract work on materials owned by others. This industry's shipments of gray and finished manmade fiber fabrics and blankets in 1958 represented 85 percent of its total product shipments and 88 percent of these products shipped by all industries, according to census reports.

In 1958 these products were distributed mainly to merchant wholesalers, sales offices and branches of the same company, other manufacturers, and other plants of the same company (table 53). Main outlets for manufacturers of carpets and rugs were retailers, merchant wholesalers, and sales offices and branches of the same company. Sales offices and branches distributed broadwoven gray goods mainly to merchant wholesalers and to other manufacturers. Carpets and rugs were redistrib- uted by sales offices and branches mainly to retailers and merchant wholesalers.


Changes in size and organization of yarn-throwing and winding mills and of broadwoven fabric plants may be indicated by the number of spindles, looms, and employes; ownership and operation of plants ; and mergers and acquisitions.

Number of Spindles, Looms and Employees

The number of throwing and twisting spindles in the cotton, manmade fiber, and related manu-

5 Includes acrylic fibers, polyester fibers, paper, saran, olefin, and others.


facturing industries increased from 1,884,000 in 1947 to 2,629,000 in 1954 and then decreased to about 1,729,000 in 1958, about half of which were in plants with weaving equipment (table 15, p. 43). Thrown filament yams produced increased from 144,111,000 pounds in 1947 to 176,111,000 pounds in 1958, according to census reports.

The average number of employees per yam- throwing mill decreased from 122 in 1947 to 60 in 1958. The proportion of mills with 100 or more employees decreased from 43 in 1947 to 17 percent in 1958 (table 54). The proportion with less than 20 employees increased from 14 percent in 1947 to 39 in 1958.

In 1958, about 13 percent of the yarn-throwing mills and 9 percent of the employees were in New England ; 63 percent of the mills and 55 percent of the employees were in the Middle Atlantic States ; and 24 percent of the mills and 36 percent of the employees were in other States, mainly those in the Southeast. From 1947 to 1958, the proportion of mills and employees in the Middle Atlantic States decreased, but the corresponding proportions in New England and in all other States combined increased. The proportion of total value added by manufacture accounted for by mills in New England and the Middle Atlantic States decreased from about 73 percent in 1947 to 61 percent in 1958; whereas the proportion

82

TABLE 53.—Distribution of manufacturers'^ shipments of manmade hroadwoven gray goods and carpets and rugs^ except wool^ hy class of customer and outlet^ united States^ 1958

TABLE 54.—Number of yarn-throwing arid synthetic broadwoven fabric mills^ by number of employees^ united States^ 191^1 arid 1958

Broadwoven gray goods

Carpets and rugs

Customer outlet



Manufacturers to— Sales offices, branches, etc- Other wholesalers, same

campany

Million dollars

214

96

142 184 289

45 21

Percent 2L6

9.7

14. 3 18.6 29.2 4.5 2. 1

Million dollars

57

« C) 87

139 22

Percent 18.7

0) Other plants, same com-

pany _ __ 0) Other manufacturers Merchant wholesalers Retailers, not owned All other. _ .. .

28.5 45. 6 7.2

Total - -- 991 100.0 305 100.0


Other manufacturers 72 159

6 6

29.6 65.4 2.5 2.5

Merchant wholesalers Retailers, not owned All other

18 41

2

29. 5 67.2 3.3

Total 243 100.0 61 100.0



accounted for by mills in other States, mainly those in the Southeast, increased from 27 percent in 1947 to 39 in 1958, according to census reports.

The number of looms in place in the manmade fiber broadwoven fabric industry increased from 106,695 in 1947 to 118,523 in 1951 and then decreased to 92,783 in 1962, according to census reports. Manmade fiber broadwoven fabrics produced increased from 2,038 million linear yards in 1947 to 2,627 million in 1955, and amounted to 2,755 million in 1962. The average number of employees per establishment decreased from 193 in 1947 to 188 in 1954 and then increased to 204 in 1958. From 1947 to 1958 the proportion of establishments wîth 250 or more employees increased and the proportion with less than 50 employees decreased (table 54).

The number of manmade fiber broadwoven fabric mills in New England decreased from 91 in 1947 to 79 in 1958, and the average number of employees per mill decreased from 295 in 1947 to 127 in 1958. In the Middle Atlantic States, the number of mills decreased from 325 in 1947 to 177 decreased from 73 in 1947 to 72 in 1958. In all other States, mainly those in the Southeast, the total number of mills increased from 91 in 1947 to 145 in 1958, and the average number of em-

Employees per plant

Yarn- throwing

mills

Broadwoven fabric mills

1947 1958 1947 1958

1 000 and more Number Number Number

20 39 48 74 97 85 52 45 47

Number 11

500 to 999 4 9

39 32 21

8 5 4

______ 22 35 51 25 20 31

40 250 to 499 _____ 56 100 to 249 - _ _ _ _- 75 50 to 99 _ _- 61 20 to 49 - 67 10 to 19 -- - 36 5 to 9 13 lto4 _ ___-- 42

Total ____ 122 195 507 401


ployees per mill decreased from 517 in 1947 to 406 in 1958. The proportion of total value added by manufacture in this industry that was accounted for by mills in New England and the Middle Atlantic States decreased from about 49 percent in 1947 to 27 percent percent in 1958; that accounted for by mills in other States, mainly those in the Southeast, increased from 51 percent in 1947 to 73 percent in 1958, according to census reports.


Type of ownership and the operation of some mills that manufacture broadwoven fabrics made of manmade fibers and silk have changed in recent years (table 55). The proportion of these mills that were under corporate ownership or control increased from 78 percent in 1939 to 89 percent in 1958. The proportion operated by partnerships, individuals, and other agencies each decreased during this period. The number of employees per establishment averaged substantially more for those operated by corporations than for those operated by other agencies. The proportion of total employees accounted for by establishments operated by corporations increased from about 95 percent in 1939 to about 99 percent in 1958.

Of these mills the proportion operated from central administrative offices as multiunits decreased from 44 percent in 1939 to 38 percent in 1954 and then increased to 43 percent in 1958 (table 55). The number of employees per establishment averaged much more for multiunits than for single units. The proportion of total number of employees in the industry accounted for by multiunits increased from 63 percent in 1939 to 82 percent in 1958.

83

TABLE 55.—Number of establishments and average number of employees per establishment for manufacturers of synthetic broadwoven fabrics^ by type of ownership and operation, united States, 1939, 195^, and 1958


Establishments Average

employees per establishment ^

1939 1954 1958 1939 1954 1958

Ownership: Corporate ___

Num- ber

307 34 50

3

Num- ber

411 30 35

2

Num- ber

357 22 21

1

Num- ber

248 {') 23

Num- ber

214 59 (')

Num- ber 226

31 (') /'2^

Partnership Individual Other ^ ;

All 394 478 401 202 188 204


Corporate. __ _ Other

150 71

232 65

184 43

181 29

(2)

All 221 297 227 132 74 68


157 16

179 2

173 1

311 95

(2)

All 173 181 174 291 375 381

All 394 478 401 202 188 204

^ In 1939 only wage earners are included; in 1954 and 1958 all employees are included.




Mergers and acquisitions in the textile industry in recent years, as indicated in a preceding section of this report (p. 38), apparently have resulted in changes in organization and management of operating units in the manmade fiber and silk products nianufacturing industry. Data on the degree of integration in cotton, manmade fiber, and related broadwoven fabric mills in 1958, as indicated by the types of machinery reported, show a substantial amount of vertical integration (table 25, p. 55). About two-thirds of the mills were integrated, and in 1958 the number of looms per mill in integrated plants averaged more than four times as many as in plants with weaving equipment only.

The degree of concentration in the manmade fiber and silk manufacturing industry, on a company basis, may be indicated by proportions of total value of shipments accounted for by specified numbers of the largest companies in the industry. In 1958, yarn-throwing and winding mills operated by 20 of the largest of the 106 companies accounted for 69 percent of the total value of

shipments of the industry (table 56). Fifty of the largest companies accounted for 92 percent of total shipments of the industry. The proportion of total shipments of the industry accounted for by 4, 8, and 20 of the largest companies increased from 1947 to 1954 and then decreased to 1958.

Similar data for broadwoven fabrics, manmade fiber and silk, show that in 1958 mills operated by 20 of the largest companies, or about 6 percent of the total number, accounted for 62 percent of the shipments of the industry (table 56). Fifty of the largest companies, or about 15 percent of the total number, accounted for 78 percent of total shipments of the industry. The proportions of the total value of shipments accounted for by 4, 8, and 20 of the largest companies in 1958 were greater than those in 1947 and 1954, but the total number of companies wâs less.

Information on number of establishments, average number of employees per establishment, and average value added by manufacture per dollar of payroll for yarns and fabrics, including those made of manmade fibers, is presented in an earlier section of this report (p. 57). Similar information on manufacturers of floor coverings, some of which are made of manmade fibers, shows that of the 282 establishments in this industry in 1958, about 80 percent were operated by sincrle-unit companies (table 57). The average number of employees per establishment was substantially greater for multiunit than for single-unit companies, and the average number of employees per establishment was greater for multi-industry than for single-industry companies. Similar differences are indicated for 1954.

MANUFACTURING METHODS

Manmade staple fibers are processed on the cotton, worsted, and woolen systems, and the methods employed were outlined in earlier sections of this report (pp. 56 and 70). Differences in uniformity of staple, in content of foreign matter, and in other characteristics of manmade fiber as compared with natural fibers require, for best results, some differences in manufacturing methods. Further- more, throwing operations for continuous filament, involving doubling and twisting of these filaments into yarns of various sizes in preparation for looms, also differ from operations in processing cotton and wool products. Detailed information on processes involved in the manufacture of manmade fibers and on other developments in the manmade fiber industrj^ is presented in a report on "The Rayon Industry" by the United States Tariff Commission (12£) and m "Eayon Technology— A. Handbook for Textile Mills" {9£).


As indicated earlier (pp. 43 and 58), the number of cards, combs, spindles, looms, and other machinery and equipment used in the cotton, man-

84

TABLE 56.—Share of total shipments of manmade fiber manufacturing industry accounted for hy largest companies^ united States^ 1958^ 195Jf^ and 19^7


panies 1 Value of

shipments 2

Concentration ratio: Proportion of total shipments accounted for by 3—

Primary product

specializa-

4 largest companies

8 largest companies


tion **

Yarn-throwing mills: ^ 1958

Number 106 118 96

328 396 432

IfiOO dollars 112,180 99,227 64,173

1,230,724 1,142,629 1,002,923

Percent 35 39 30

34 30 31

Percent 48 52 43

44 39 39

Percent 69 73 66

62 55 56

Percent

1954 - - -- 93 1947 __ e)

Synthetic broadwoven fabric mills: 1958 85 1954 _-__ _- --- 87 1947 85

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 41. * See footnote 4, table 14, p. 41.

TABLE 57.—Numiher of companies and establishments^ average number of employees per establishment^ and average value added per dollar of payroll by manufacturers of floor covering^ united States^ 1958

Aver- age Value

Estab- em- added Item Com- lish- ployees per

panies ments 1 per estab-

lishment

dollar of

payroll

Number Number Number Dollars Companies in this industry 2_ 250 271 109 2. 06

Single-unit companies._ 225 225 53 2. 18 Multiunit companies 25

11

46 384 2.00

Single-industry 15 156 1. 75 Multi-industry 14 31 494 2.04

Companies in other industries. _ - _ 9 11 380 2. 52

Total or average 259 282 119 2. 11

1 Establishments in floor covering category. 2 In 1954, these companies had 45 establishments in

other industry categories and 166 central administrative offices, auxiliaries, and sales branches and offices. In 1958 the corresponding categories had 25 and 171 respectively.

Adapted from Bureau of Census report, Enterprise Statistics (101).

made fiber, and related manufacturing industries has changed considerably in recent years. The proportion of roving spindles accounted for by improved long-draft spindles increased from about 23 percent in 1942 to 75 percent in 1958. Corre- sponding proportions of ring-spinning spindles accounted for by improved long-draft spindles were 51 and 93 percent respectively. The number of ring-spinning spindles larger than 1.75 inches in

^ See footnote 7, table 14, p. 41. ^ Data not available.

Adapted from (IW).

diameter increased 49 percent and the number of those 1.75 inches and shorter decreased 56 percent from 1942 to 1958. The number of doubling and twisting ring spindles larger than 3.5 inches increased markedly from 1942 to 1958, but the number of smaller spindles decreased during this period.

In 1947 the number of looms in place in manmade fiber and silk fabric mills totaled 106,965, in the early 1950's it increased and then decreased to 92,783 in 1962 (table 58). From 1947 to 1962, the number of plain and box looms decreased markedly, that of jacquard increased, and that of dobby varied irregularly. During this period, substantial proportions of these looms were active at the end of the second and third shifts. The total number of loom hours operated ranged from 518 million in 1957 to 606 million in 1951, and amounted to 567 million in 1962.

In recent years, substantial im_provements have been made in machinery and equipment used in the manufacture of manmade fiber and related products. Total expenditures for plant and equipment for yarn-throwing and manmade broadwoven fabric mills increased from $9.5 million in 1939 to $49.9 million in 1947, and amounted to $36.6 million in 1962. Expenditures for new machinery and equipment increased from $6.5 million in 1939 to $32.5 million in 1947, and amounted to $18.2 million in 1958 (table 59). Expenditures for new capital equipment by broadwoven fabric mills in 1962 totaled $33.4 million and was 157 percent greater than expenditures in 1958 and 78 percent greater than those in 1947, according to census reports.


Gross margins of manufacturers of yams, mainly thrown, and broadwoven fabrics composed mainly of manmade fibers vary considerably from

85

TABLE 58.—Number of looms in place and nuTrîber active at end of year^^ hy shifts^ and total loom hours operated^ iy kind of loom^ for manufacturers of manmade fabrics^ United States^ sped- ßed years, 19Ifl-62

Year

Kind of loom

All Plain Dobby Box Jac- quard

1947 1959 1961 1962

1947 1959 1961, 1962.

1947. 1959. 1961. 1962.

1947 1959. 1961. 1962.

Total looms in place

Number Number Number Number 106, 695 32, 086 35, 892 34, 727 94, 266 18, 284 47, 397 21, 460 93, 088 20, 322 46, 595 18, 843 92, 783 20, 869 46, 528 18, 263

Number 3, 990 7,125 7,328 7, 123

Active at end of year, first shift

101, 038 30, 575 34, 755 32, 470 86, 814 16, 972 46, 898 17, 049 87, 951 15,910 49, 259 16, 935 80, 930 17, 790 41,917 15, 462

3,238 5,895 5,847 5,761

Active at end of year, second shift

1947. 1959. 1961. 1962.

94, 346 29, 191 34, 145 28, 998 85, 333 16, 779 46, 869 16, 376 86, 220 15, 678 49, 238 15, 926 79, 616 17, 747 41, 829 14, 780

2,012 5, 309 5,378 5,260

Active at end of year, third shift

66, 648 19, 377 28, 862 17, 689 79, 333 16, 262 45, 625 14, 121 81, 947 15, 122 49, 205 13, 790 75, 493 17,261 41, 721 12, 669

720 3,325 3,830 3,842

Total loom hours operated (in thousands)

542, 464 544, 673 536, 483 566, 587

155, 098 102,683 121,769 130, 270

210, 334 302, 390 290, 917 308, 756

164, 271 111,266 94, 710 97, 698

12, 761 28, 334 29, 087 29, 863


product to product and from one time to another. In 1958 gross margins of manufacturers of yam, mainly thrown, averaged 44 percent of the total value of products (table 60). This represented a sharp decline from the high level of the late 1940's. The proportion of gross margins accounted for by salaries and wages decreased from 58 percent in 1947 to 52 percent in 1958. "Other" expenses, including depreciation, interest, rent, taxes, profits, and other items, increased from 36 percent of gross margins in 1947 to 43 percent in 1958.

TABLE 59.—Expenditures for plant and equipment iy yarri'throwing mills and manufacturers of synthetic iroadwoven fahrics, united States. 1939,1947,1964, and 1958 ^

Industry, plant, and equipment

Yarn-throwing mills: New equipment New plant All other

Total

Broadwoven fabric mills New equipment New plant All other

Total

Expenditures

1939

1,000 dollars 1, 192

270 522

1,984

5,270 1, 142 1, 130

7,542

1947

1,000 dollars 2, 840 1, 819

786

5,445

29, 655 13, 226 1,619

44, 500

1954

1,000 dollars 2, 694

516 588

3,798

10, 369 2, 626 4, 396

17, 391

1958

1,000 dollars 2, 746

418 710

3,874

12, 952 2,091 3,429

18, 472

1 In 1958 and 1954 establishments that reported on the short form were asked to show only their total expenditures for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments that reported detail expenditures by type to obtain separate expenditure figures for new plant, new equipment, and used plant and equipment.


Value added by manufacture per dollar of payroll increased from $1.62 in 1947 to $1.92 in 1962.

Gross margins of manufacturers of broadwoven fabrics composed mainly of manmade fibers also declined in the late 1940's and 1950's, amounting to only 42 percent of the value of products in 1958 (table 60). The proportion of gross margins accounted for by salaries and wages increased from 44 percent in 1947 to 61 percent in 1954 and then decreased to 54 percent in 1958. That accounted for by "other" expenses, including depreciation, interest, rent, taxes, profits, and other items, decreased from about 47 percent in 1947 to 30 percent in 1954 and then increased to 37 percent in 1958. Value added by manufacture per dollar of payroll decreased from $2.10 in 1947 to $1.50 in 1954, and amounted to $1.90 in 1962.

The distribution of costs to manufacturers of typical rayon-twill fabrics, based on average costs in profitable mills in the United States, shows that in 1950, materials accounted for 68 percent, labor 15 percent, selling 3 percent, defectives 1 percent, and all other expenses 12 percent of the total cost of 29 cents a yard {15).

In 1960, total cost per linear yard of producing spun rayon challis in the United States averaged less than total costs in Italy, but substantially more than those in Japan (taíble 61). Fiber costs averaged more in the United States than in either Italy or Japan, but the total for all other costs in the United States averaged less than that in Italy and more than that in Japan.

TABLE 60.—Values^ costs^ and margins for manufacturers of synthetic hroadwoven fabrics and throiaing and winding mills^ United States^ 1958^

TABLE 61.—Average cost per linear yard of producing spun rayon challis in the united States^ Italy^ and Japan^ 1960

Item Synthetic

broadwoven mills

Throwing and

winding mills

Value of products ^ _ 1,000 dollars 163, 332

1,000 dollars 1, 209, 240

Cost of materials, etc.^ Gross marsin __ __

91, 060 72, 272

697, 298 511, 942

Salaries and wages 37, 580 276, 655

Salaries __ _ 8, 881 28, 699

42, 690 Wages _ 233, 965

Fuel _- - __--- 658 2,428

1, 723 29, 883

5,357 Purchased electric energy. _ Contract and commission

work _____ _ _

12, 650

27, 756 Other * _ 189, 524

Proportio of pre

n of value )ducts

Value of products 2 Percent 100.0

Percent 100.0

Cost of materials, etc.^ Gross margin

55. 8 44. 2

57.7 42.3

Salaries and wages 23.0 22.8

Salaries _ 5.4 17.6

3. 5 Wages 19.3

Fuel .4 1.5

1. 1 18.2

. 4 Purchased electric energy._ Contract and commission

work

1.0

2.3 Other ^ - 15.8

1 As a result of revisions introduced in the 1957 Standard Industrial Classification, the data for 1958 are not comparable to those for earlier years.

2 Excludes products bought for resale without further manufacture. Data are adjusted for change in inventory.

3 Includes supplies, parts, and containers. * Includes depreciation, interest, insurance, rent, taxes,

other expenses, and profits. Adapted from Census of Manufactures.

Large proportions of gross margins of manuf ac- Lurers of manmade fiber and related products that are accounted for by labor costs and recent increases in wage rates emphasize the importance of labor in the manufacture of these products. Hourly earnmgs of laborers in yarn-throwing mills increased from 91 cents in 1947 to $1.53 in 1962. Average value added per hour of labor by yarn-throwing mills increased from $1.71 in 1947 to $3.31 in 1958, and amounted to $3.33 in 1962. Value added per dollar of wages increased from

Production cost in—

Item United States

Italy Japan

Total cost 1 Cents 21. 88

Cents 23.81

Cents 14. 82

Fiber cost _ _ __ 8.35 13.53

7.39 16,42

6. 81 All other costs 8.01

Spinning ^ __ _ _ 3.49 8. 13 1.91

5. 90 7.61 2.91

s 2.20 Weaving ^ 5 5. 81 Other 4 __

Proportion of total

Total cost 1 _ _ - _ Percent 100.0

Percent 100. 0

Percent 100.0

Fiber cost __ 38. 2 61.8

31.0 69. 0

46. 0 All other costs 54. 0

Spinning ^ __ 16.0 37. 1 8.7

24. 8 32.0 12. 2

5 14. 8 Weaving^ » 39. 2 Other 4 _ _

1 Challis-width, 45 inches; construction, 54 x 54; weight, 3.8 yards per pound; 30's single warp; 20's single filling; gray.

2 From rayon staple through yarn stage. Includes labor, overhead, and any materials, chemicals, and dyes.

3 From yarn through gray cloth. Includes labor, overhead, and any materials, chemicals, and dyes.

* Includes ''general operating expenses," allowance for seconds, and sales costs, none of which is allocable to stages of processing.

Ö Includes all items specified in footnote 4. Cannot be segregated.

Adapted from (115).

$1.89 in 1947 to $2.36 in 1958, and amounted to $2.46 in 1962.

During the 3 years, 1947, 1954, and 1958, wage rates usually averaged lowest in Southeastern States and highest in New England. Value added per hour of labor averaged highest in New Eng- land and lowest in the Middle Atlantic States. Value added per dollar of wâges averaged highest in Southeastern States and lowest in the Middle Atlantic States (table 62).

Average hourly earnings of workers in manmade fiber broad woven fabric mills increased from $1.05 in 1947 to $1.76 in 1962. Average value added by these mills per hour of labor increased from $2.51 in 1947 to $3.72 in 1960, and amounted to $3.99 in 1962, according to census reports. Average value added per dollar of wages decreased from $2.38 in 1947 to $1.80 in 1954 and then increased to $2.28 in 1962.

During the 3 years, 1947,1954, and 1958, hourly earnin^-s of laborers avera^red less in the South-

87

TABLE ^l.—Value added hy processing inanmade ßhers, per dollar of payroll, per dollar of wages, and per iiour of labor, and average wage rate per hour, hy region and State, United States, 1968 ^

Type of processor and area

Value added by manufacture—

Total

YARN-THROWING MILLS

New England Middle Atlantic

Pennsylvania South Atlantic

North Carolina All other

United States

WEAVING MILLS New England

Massachusetts Rhode Island

Middle Atlantic New Jersey Pennsylvania

South North Carolina South Carolina

All other

United States

Per dollar of-

Payroll

1,000 dollars 6,783

34, 673 23, 867 23, 228 15, 866 2,964

67, 648

56, 973 25, 079 12, 692 79, 899 17, 181 52, 897

327, 695 158, 587 103, 886

4,016

468, 583

Dollars 1.83 1.66 1.60 2. 05 2. 14 1. 73

1.80

1. 63 1. 63 1.83 1. 67 1. 96 1. 57 1. 71 1.61 1 78 1.72

Dollars 2.58 2. 27 1. 98 2. 49 2. 77 2. 07

2.36

1. 92 1. 82 2. 25 2. 02 2. 45 1. 84 2. 01 1. 91 2.08 2.07

1. 69 2. 00

Per hour of labor

Dollars 4. 14 3.25 2.82 3.39 3.74 2. 73

3. 34

3.05 2.87 3. 64 3.44 5. 07 2.98 3. 04 2. 90 3. 17 3. 82

Wage rates

per hour

Dollars 1. 60 1.43 1.42 1.36 1. 35 1. 32

1. 42

1. 59 1.58 1. 62 1. 70 2. 07 1. 62 1. 51 1. 52 1. 52 1. 85

3. 11 1. 55

1 Value added is adjusted by taking into account value added by merchandising operations and net change during the year m mventories of finished goods and work-in-process.


eastern States than in any other geographic division. Vakie added by manufacture per hour of labor, per dollar of wages, and per dollar of payroll varied irregularly from one State or region to another (table 62). Geographic differences in value added per hour of labor by manufacturers of broadwoven fabrics composed of manmade fibers, when related to corresponding differences in average wage rates per hour, gave correlation coefficients that ranged from 0.52 in 1947 to 0.94 in 1958. The regression coefficient for 1958 indicates that a geographic difference of 1 percent in value added per hour of labor was associated, on the average, with a corresponding difference in wage rates per hour of about 0.49 percent.

In 1958, value added per dollar of payroll, per dollar of wages, and per hour of labor by manufacture of yarns and fabrics composed mainly of manmade fibers and wage rates per hour varied irregularly with the size of the company as indicated by the number of employees (120), Similar data for 1947 and 1954, on an establishment basis, show that wage rates per hour, and values added per dollar of wages and per hour of labor varied irregularly with the size of the establishment, as indicated by the number of employees (44)-

Value added by yarn-throwing and winding mills per dollar of payroll averaged highest for

establishments owned or controlled by corporations, whereas that for weaving mills averaged highest for establishments owned or controlled by partnerships (table 63). For yarn-throwing and winding mills, value added per dollar of payroll averaged higher for establishments operated as multiunits than for those operated as single units, whereas for weaving mills, value added per dollar of payroll was about the same for establishments operated as multiunits as for those operated as single units (table 63).

in 1958, value added per dollar of wages and per dollar of payroll by manufacturers of broadwoven fabrics composed of manmade fibers averaged more for establishments with 75 to 89 percent primary product specialization than for those with a lower or higher degree of specialization. Sub- divisions of these manufacturers, on the basis of the fabrics produced, show considerable irregularities in the relationship between degree of specialization and value added per dollar of wages and per dollar of payroll. For throwing and winding mills, value added per dollar of wages and per dollar of payroll averaged less for establishments with 75 to 89 percent specialization than for establishments wîth higher or lower degree of specialization.

TABLE 63.—Value added hy yam-throwing^ and winding mills^ and weaving ndlls^ synthetic^ hy type of ownership and operation^ United States^ 1958


Type of ownership and operation Yarn-

throwing

mills

Weaving mills

Yarn- throw-

ing mills

Weav- ing

mills

Ownership: Corporate

1,000 dollars

65, 459 888

1, 301 0

1,000 dollars

460, 657 4,878 Q) 0)

Dollars 1. 80 1.74 1. 75

0

Dollars 1.69

Partnership Individual

2.06 0)

Other (')

All __- 67, 648 468, 583 1. 80 1.69

Operation : Single unit:

Corporate Other. _ _ _

25, 753 2, 189

0) 0)

1.63 1. 75

0)

All 27, 942 94, 217 1.63 1.71


39, 706 0

0) 0)

1.94 0

0) (0

All -- _-- 39, 706 374, 366 1.94 1.69

All 67, 648 468, 583 1. 80 1.69




As manmade fibers are processed on cotton, woolen, and worsted systems, many of the suggestions for improving the manufacture of cotton yarns (p. 45), cotton fabrics (p. 63), and wool products (p. 78) would apply also to the manufacture of manmade fibers and need not be re- peated here. As pointed out earlier (p. 49), the possibility of modernization was indicated by reports that during the 10 years ended with 1957 the

textile industry spent $4.4 billion for new plant and equipment, and productivity per man-hour increased 67 percent {6S). Yet it was pointed out that fully 65 percent of the textile manufacturing equipment in place in 1957 was obsolete {6S).

A study of the textile industry, department by department, was made to obtain information on possible further reductions in labor costs. Re- sults of case studies reported in 1958 show that, through the use of improved machinery and equipment and of improved methods of operation, labor costs can be reduced 10 to 33 percent in carding, 75 to 80 percent in drawing, 60 to 70 percent in roving, 40 to 60 percent in spinning, 65 to 70 percent in slashing, and up to 30 percent in weaving (63). A foUowup report in 1961 indicated the possibility of further improvements (1).

New machines and methods for treating manmade fibers were said to be opening up vast possibilities for throwers who have felt the technological impact of newer fibers more than most processors of textile fibers. Modernization of throwing mills has been directed toward the installation of machinery to make stretch and bulk yarn. The new single-process, stretch-yarn machines have eliminated four processes and reduced man-hours 36 percent. Other improved machines were being developed in 1958 {6S),

A report in 1962 indicated that in earlier years the accepted standard speed for sizing high- shrunk polyester and acrylic blend yams was 9 yards per minute. In 1961, the speed was increased to 13 yards per minute. Running quality in slashing was not affected and running quality in weaving was improved. Labor, overhead, and total cost per yard were reduced about 24 percent as a result of this increase. A proposed additional increase to 15 yards per minute would reduce further the total cost per yard by about 9 percent (79),

The importance of further improvements in the manufacture of products of manmade fibers is indicated by data which show that gross margins of manufacturers of these products in 1958 averaged about 42 percent of the value of the yarns and fabrics at mills and about 12 percent of the retail value of apparel and household goods made of these fibers.

DYEING AND FINISHING

Information presented in this section relates mainly to nonintegrated finishing plants, except wool finishing plants, which are included in the section on weaving and finishing mills, wool (p. 66) ; and plants for finishing knit products, which are included in the section on the manufacture of knit goods (p. 95). In the classification of textile establishments, as shown in census reports, preference was given to spinning, weaving, knitting, or fabricating as opposed to finish-

ing. Thus, integrated mills producing yarns or fabrics are classed as yarn or fabric mills, even though a large part or all of their shipments consist of finished products. Similarly, nonweaving plants finishing fabrics and fabricating them into sheets and pillowcases are classed as manufacturers of housef urnishings.

Total quantity of finished broadwoven goods made of cotton, manmade fibers, and silk, which had apparently been high in the mid-1950's.

736-806—64- 89

amounted to 9,918 million linear yards in 1962 (table 64). Of the total finished in 1962, about 37 percent was bleached and white finished, 43 percent was plain dyed and finished, and 20 percent was printed and finished. These proportions varied considerably from one year to another. In 1958, establishments in the finishing industry accounted for about 58 percent of the value (about $1,361 million) of finished cotton, manmade fiber, and silk fabrics shipped by all industries. Most of the remainder of these products were shipped by weaving mills. In addition, weaving mills and other plants finished large quantities of these products for their own use.

TABLE 64.—Cotton^ silh, and manmade -fiber hr o ad- woven goods finished^ hy type of fabric and finish^ United States^ specified years^ 19^7-62

Type of fabric and finish

1947 1959 1961 1962

Bleached and white finished:

Cotton _

Million yards

3,616 199

Million yards

3,337 254

Million yards

3, 171 325

Million yards 3, 371

Manmade and silk 318

Total 3, 815 3, 591 3,496 3, 689

Plain dyed and finished: Cotton __ 1, 757

1,419 2, 650 1,650

2,613 1,491

2 662 Manmade and silk 1, 549

Total 3, 176 4,300 4, 104 4, 211

Printed and finished: ^ Cotton Manmade and silk

1,571 353

1,903 318

1,693 284

1,702 316

Total- 1,924 2,221 1, 977 2, 018

All finished: Cotton__ 6,944

1,971 7,891 2, 221

7,477 2, 100

7, 735 Manmade and silk 2, 183

Total 8,915 10, 112 9,577 9, 918

^ Includes roller, screen, flock, and block printed. Adapted from Current Industrial Reports.


The dyeing and finishing textile industry includes finishers of broadwoven fabrics of cotton; finishers of broadwoven fabrics of manmade fibers and silk; and dyers and finishers of textiles not elsewhere classified, such as raw stocks, yarn, braided goods, and narrow fabrics, except wool. The finishing operations include bleaching, dyeing, printing, and other mechanical finishing such as preshrinking, calendering, and napping. In addition, chemical finishings for water repellency, fire resistance, and mildew proofing also are included. Textiles may be dyed during the formation of fibers (manmade fibers only) as staple fibers before being spun into yarn, as yarn, and as fab-

rics. Dyeing is most commonly performed, and printing is almost invariably performed in the fabric stage.

In 1958, the value of shipments and other receipts of the finishing plant, cotton, industry totaled $686 million. Of this amount, about 83 percent was accounted for by finished cotton fabrics ; 14 percent by finished manmade fiber and silk fabrics and other secondary products; and 3 percent by miscellaneous receipts. The primary product specialization ratio wâs 85 percent. Ship- ments of finished cotton fabrics by this industry in 1958, valued at $1,008 million, represented 57 percent of these products shipped by all industries.

In 1958, the value of shipments and other receipts of the finishing, manmade fiber and silk, industry totaled $211 million. Of this amount 91 percent was accounted for by finished manmade fiber and silk fabrics and commission receipts for such finishing, 7 percent by shipments of secondary products, and 2 percent by miscellaneous receipts. This industry's primary product specialization ratio was 93 percent. Shipments of finished manmade fiber and silk fabrics by this industry in 1958, valued at $353 million, represented 54 percent of these products shipped by all industries.

The industry dyeing and finishing textiles not elsewhere classified comprises establishments primarily engaged in bleaching; dyeing; printing; and finishing raw stock, yarn, braided goods, and narrow fabrics, except wool. These establishments perform finishing operations on purchased textiles or on a commission basis. The value of shipments and other receipts of this industry in 1958 totaled $158 million, of which 74 percent was accounted for by finished yarn, raw stock, and narrow fabrics, 4 percent by secondary products ; and 22 percent by miscellaneous receipts, mainly from commission finishing of yarn, raw stock, and so forth. This industry's primary product specialization ratio was 95 percent. Shipments of finished yarn, raw stock, and narrow fabrics by this industry in 1958, valued at $160 million, represented 73 percent of these products shipped by all industries.

Some establishments finish, on a commission basis, fabrics, yarns, and raw stocks owned by others ; the rest finish their own materials. A substantial amount of fabrics, particularly those made of cotton and manmade fibers, is finished on commission for converters who buy gray goods from weaving mills, arrange to have them finished, and sell the finished cloth. Styling and finishing the cloth are controlled mainly by converters or mills, with or without collaboration of manufacturing users. Converters occupy a key position in this connection. They have gray goods finished to their order in many designs, styles, and finishes. A large percentage is bleached in various finishes from soft to hard: some goods are dyed in various colors, tints, and shades; and substantial proportions, particularly print cloth, are finished in

90

many colors or designs. Converters keep in close touch with the fluctuating requirements of the market and, within the limits of changes in fashion, they influence the seasonal drift of style goods {121).

Distribution of finished yarns and fabrics, except wool, in 1958 was mainly from finishers to sales offices, sales branches, and administrative offices of the same company ; other manufacturers ; and merchant wholesalers (table 65). The largest outlet for other finished textile products was to other manufacturers ; but considerable proportions were distributed to retailers, merchant wholesalers, other plants, and sales offices and branches of the same company (table 65). Sales offices and branches, in turn, distributed these products mainly to other manufacturers, but considerable proportions were distributed to merchant wholesalers, retailers, and others.


Changes in size and organization of the finishing textile industry are indicated by the number of employees and establishments, ownership and operation of plants, and mergers and acquisitions.

TABLE 65.—Distribution of manufacturers'^ shipments of finished hroadiooven fairies^ yarns^ and other items^ except wool^ and other textile products., hy class of customer and outlet^ united States^ 1958

Finished Other fabrics, yarns. textile

except wool products Customer outlet

Pro- Pro- Value por-

tion Value por-

tion

Million Million Manufacturer to— dollars Percent dollars Percent

Sales offices, branches, etc_ 396 43.1 292 13.8 Other wholesalers, same

company 20 2. 2 0) 0) Other plants, same com-

pany. 74 273

8.0 29. 7

217 640

10.3 Other manufacturers 30.3 Merchant wholesalers 96 10.5 318 15.1 Retailers, not owned 7 .8 337 15.9 All other __ 52 5. 7 309 14.6

Total 918 100.0 2,113 100.0

Sales offices, branches, etc. to-

other manufacturers 449 72. 5 198 65.6 Merchant wholesalers 69 11. 1 20 6.6 Retailers, not owned 33 5.3 47 15.6 All other-_ ___ _ _ _- 69 11. 1 37 12.2

Total - - 620 100.0 302 100.0

Employees and Establishments

According to census reports, establishments primarily engaged in finishing textiles, except wool, totaled 809 in 1958, compared with 641 in 1947. The 1957 edition of the Standard Industrial Clas- sification split out three separate finishing industries from the old industry, finishing textiles, except wool. The 1958 data show that 798 establishments in the three new industries were operated by 760 companies (table 66). The proportion of the establishments with 100 or more employees decreased from about 30 percent in 1947 to 20 percent in 1958. The proportion with less than 10 employees increased from 21 percent in 1947 to 35 percent in 1958.

In 1958, about 60 percent of these finishing plants were in the Middle Atlantic States, 16 percent in New England, 15 percent in the South, 5 percent in the North Central States, and about 4 percent in the West (table 67). From 1947 to 1958, the number of establishments in each region increased, but decreases in proportions of the plants in New England and the Middle Atlantic States were offset by increases in the Southern, North Central, and Western States. Size of plant, as indicated by the number of employees, averaged much more in the Southern and New England States than in other areas. Average number of employees per establishment decreased from about 122 to 1947 to 92 in 1958.


Types of ownership and operation and average number of employees for establishments finishing textiles, except wool, have changed somewhat in recent years. The proportion of all establishments that were under corporate ownership or control decreased from 86 percent in 1954 to 84 percent in 1958 (table 68 ). The average number of employees

TABLE 66.—Number of establishments finishing textiles.^ except wool and hnit goods^ by number of employees^ united States^ 19I¿1 and 1958



Employees

Establish- ments

Proportion of total

1947 1958 1947 1958

.^00 or more - Number

37 44

109 87

131 97 84 52

Number 34 38 89 97

127 133 115 165

Percent 5.8 6.9

17. 0 13. 6 20.4 15. 1 13. 1

8. 1

Percent 4.3

250 to 499 4.8 100 to 249 - 11. 1 50 to 99 --- 12. 1 20 to 49 - - - 15. 9 10 to 19 -- - 16.7 5 to 9 -- - --- 14. 4 lto4 -- --- 20. 7

All _ __ - - 641 798 100. 0 100.0


91

TABLE 67.—Number of establishments and average^ number of employees per establishment for finishers of textiles^^ except wool and knit goods, by geographic region, United States, 1947 and Ih/OO

TABLE %S,—Number of establishments and average number of employees per establishment for finishers of textiles, except wool and knit goods, by type of ownership and operation. United States, 1939 and 1958

Region

Establish- ments

Employees per establishment

1947 1958 1947 1958

New England-_ Nwmber

111 423

22 68 17

Number 131 474

40 123 30

Number 205

69 60

354 32

Number 121 43 26

289 17

Middle Atlantic North Central.._ _ _ South West

United States 641 798 122 92


per establishment under corporate ownership or control decreased from 149 in 1939 to 123 in 1954 and to 107 in 1958. The number of establishments and the average number of employees per establishment were substantially less each year for plants operated by partnerships and by individuals than for those operated by corporations.

The proportion of the establishments operated from central administrative offices as multiunits decreased from 26 percent in 1939 to 19 percent in 1954 and 1958. The average number of employees per multiunit establishment decreased from 360 in 1954 to 327 in 1958. For single-unit establishments, the average number of employees per plant decreased from 52 in 1954 to 36 in 1958. In 1958, the number of employees per multiunit plant averaged most for finishers of cotton textiles, and those for single-unit plants averaged most for finishers of manmade fiber textiles (table 68).


Mergers and acquisitions in the textile industry in recent years, as indicated previously (p. 38), apparently resulted in some changes in the organization and management of operating units in finishing textile industries. The degree of vertical integration in industries finishing textiles, except wool and knit goods, is indicated by census data showing that in 1958 about 42 percent of finished textiles shipped, plus large quantities of the products finished for their own use, were finished by other establishments manufacturing yams, fabrics, and fabricated products. These establishments are classified as yarn mills, fabric mills, or fabricators of apparel and related products. Data for cotton, manmade fiber, and related broadwoven fabric mills show that in 1958 about 13 percent of the weaving mills, operating 16 percent of the looms, had machinery and equipment for spin-

Ownership and operation

Establish- ments

Average employees per establishment 1

1939 1958 1939 1958

Ownership : Corporate

Number 399

29 39

1

Number 670

52 75

1

Number 149

11

Number 107

19

(2\

Partnership. Individual Other __

All 468 798 129 92

Operation : Single unit :

Corporate _ _ 281 66

519 125 (2)

Other \ ) All 347

118 3

644 80 36

Multiunit: Corporate _ 151

3 (2)

(2) (2) Other

All 121 154 268 327

All 468 798 126 92

1 Tn 1939, only wage earners were included; in 1958 all employees were included.

2 Withheld to avoid disclosing figures of individual companies.


ning, weaving, and finishing, or for weaving and finishing (table 25, p. 55). Establishments with 17 percent of the spindles in cotton and manmade fiber weaving mills had spimiing, weaving, and finishing machinery and equipment.

The degree of concentration in industries finishing textiles, except wool and knit goods, on a company basis may be indicated by data showing that in 1958 plants operated by 20 of the largest companies, or less than 3 percent of the total, accounted for 51 percent of total shipments of the industry (table 69). Plants operated by 50 of the largest companies, or less than 7 percent of the total, accounted for 66 percent of total shipments of the industry. The proportions of the value of shipments accounted for by plants operated by 4, 8, and 20 of the largest companies increased markedly from 1947 to 1958, despite substantial increases in the total number of companies.

In 1958, finishers of wool textiles operated by four of the largest companies, or about 6 percent of the total, accounted for about 75 percent of the total shipments. Plants operated by 20 of the

92

largest companies, or about 28 percent of the total, accounted for 93 percent of total shipments (table 69).

METHODS AND PRACTICES (7 79)

All treatments or processing received by textiles to fit them for consumer use, after their mechanical structure has been completed, are included in the general field of finishing. Although details of the processing may vary somewhat for different products and plants and are necessarily inñuenced by the different construction and physical characteristics of the textiles handled, the common purpose of all finishing operations is to convert the raw material represented by manufactured yarns or fabrics into products suitable for specific end uses. This usually involves a preliminary cleaning to remove both natural and extraneous impurities. A preliminary cleaning is followed by special treatments, such as mercerizing, dyeing, printing, and starching, which are designed to improve both the attractiveness and the usefulness of the final products.

Most yarns and fabrics are given some degree of finishing before they are sold to consumers. For yams, the treatments involved are relatively simple. Little more than cleaning and dyeing is required for yarn that is to be a component in goods woven of colored yam, although some additional handling, such as mercerizing, polishing, and spooling, may be required for the part sold as sewing thread.

TABLE 69.—Share of shipments of finishing textile industries accounted for hy largest companies^ United States^ 1958^ 195%^ and WJpï

Industry and Com- pa-

nies Ï

Value of ship-

ments 2

Concentration ratio : Proportion of total

shipments accounted for by 3—

year 4 larg-

est com-

panies

8 largest

companies

20 largest

companies

Finishing textiles, except wool:

1958 1954 1947

Finishing wool textiles : ^

1958

Number 758 680 599

71

1,000 dollars 1, 058, 411

998, 144 531, 400

143, 271

Percent 26 24 14

75

Percent 36 32 22

85

Percent 51 48 37

93

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 41. 4 Data for 1954 and 1947 not comparable to 1958. Adapted from {120).

Finishing fabrics, however, is a rather complicated process, particularly for fabrics intended for wearing apparel. An outline of the more important treatments usually given to a representative woven garment fabric, such as a broadcloth or high-grade print cloth, in coverting it from the loom to the finished state, is given here for illustrative purposes.

When gray goods are received at the finishing plant, they are made up into lots of perhaps 40,000 yards by sewing together the individual pieces or cuts shipped from the mill. The cloth is then passed in open width at high speed over gas flames to burn off loose fiber ends. It then goes through a quenching bath, which contains an enzyme solution that converts to water-soluble products the starch used in warp sizing. After steeping for a few hours in the enzyme solution, the cloth is washed and run into large cylindrical steel tanks or kiers, in which it is boiled under pressure with a caustic alkali solution. Next, the cloth is thoroughly washed and then bleached white by treatment with an oxidizing agent, usually sodium hypochlorite or hydrogen peroxide. At this stage, purification is completed, and the goods, after being dried, are ready for the final finishing operation.

If the goods are to be mercerized to increase their luster and dye affinity, the cloth is passed in open width through a concentrated solution of caustic soda and held briefly under tension to complete the mercerizing reaction. Then the caustic soda is removed by washing and neutrali- zation.

If intended for sale in the white state, the cloth is next lightly starched or softened, calendered, sanforized to reduce residual shrinkage, folded, inspected, and packed. If it is to be dyed or printed, these operations usually follow merceriza- tion. After that, the handling is substantially the same as for white goods.

Modern finishing practice has tended toward continuous processing by eliminating intermittent or batch treatments wherever possible. Along with this development has gone a more complete mechanization of plants, with the substitution of mechanical operations for manual ones. Although much progress has been made in this direction, with resulting improvement in uniformity of treatment and speed of production, the many types of processing required by the widely varied demand apparently will not permit the adoption of straight production-line methods throughout the finishing industry.

Several special finishes or finishing processes developed since World War II are of interest because of their importance in improving quality and extending the utility of textiles. Sanforizing is particularly important in the field of garment fabrics. It is a process by which uneven tensions in the yarns of woven fabrics are mechanically corrected and the shrinkage of garments when they

93

are laundered is practically eliminated. Durable finishes of a modified cellulose type improve the appearance and handling qualities of fabrics. At the same time they increase their resistance to abrasion and washings. Resistance to mussing or creasing may be increased by the use of synthetic resin finishes which slightly stiffen the cloth so that it tends to maintain or regain its original shape instead of creasing {17). Water-repellent finishes that wñll resist many launderings are widely used, and a finish that, by a chemical modi- fication of the fabric, renders it resistant both to flame and to biological rotting has appeared on the market. Additional useful products may be expected as the result oí research by many organizations.

Application of color to yarns and fabrics is a complex and highly developed business, wliicli requires special equipment and techniques. Several classes of dyes are commonly used. They range from the ordinary direct colors to the very fast vats and azoics. Each class requires special methods of application. A recent development in color technique is the application to fabrics of insoluble but finely dispersed pigments by the use of film-forming resins as the binding medium which attaches the color particles to the fibers. This method of mechanically applying color in dyeing or printing avoids problems of dye aíRnity and promises to be increasingly important in the textile industry. Yarns are dyed in skeins, in package form, on beams, or continuously as chain warps; while knitted or woven fabrics may be dyed in the rope or in open width, with the use of a considerable variety of dyeing machines. The tendency has been to develop continuous dyeing methods, with resulting savings in material and labor costs.


Improvements in machinery and equipment, as well as in methods and practices, for finishing textile products continued in the early 1960's (7). Total expenditures for plant and equipment by

TABLE 70.—Expenditures for plant and equipment hy finishers of textiles^ except loool and knit goods^ united States.^ 1939^ 191^7^ and 1958

Item Expenditures in—

1939 1947 1958

New equipment. _ 1,000 dollars

4,922 1, 431

706

1,000 dollars 22, 068 7,600 1,047

1,000 dollars 17, 573

New plant _ _ 3,823 All other 1 3, 524

Total. __ _ 7,059 30, 715 24, 920

1 Expenditures for used plant and equipment. Adapted from Census of Manufactures.

finishers of textile products, except wool, increased from $7.1 million in 1939 to $30.7 million in 1947, and amounted to $33 million in 1962, according to census reports. In 1958, expenditures of the industry dyeing and finishing textiles, except wool fabrics and knit goods, totaled $24.9 million, of which about 86 percent was for new plant and equipment (table 70).


Census reports on manufacturers in 1947 and in 1954, as they relate to finishing textiles, show neither the value of gray goods finished during the year nor the value of the products finished by establishments included in finishing industries. Consequently, census data for these years are not adequate for calculating the finisher's gross margins or the spread between the value of materials used and the value of the finished products.

In census reports for 1958, the value of the fibers, yarns, or fabrics processed by commission finishers was not included in the cost of materials or in the value of products shipped. Total cost of materials reported for the finishing industry, therefore, includes the cost of the goods finished only for establishments finishing for their own account. Total value of shipments includes receipts for finishing by commission finishers and value of the finished goods shipped or sold by^ independent finishers. Consequently, costs, margins, and value added by finishers of textiles other than wool and knit goods, based on census reports, are not strictly comparable to those shown for other segments of the textile industry.

In 1946, gross margins of commission finishers of cotton fabrics ranged from 9 percent of the value of gray goods for plain white print cloth and sheeting to 49 percent for heavy twill (^7). During the 3 years ended with 1944, converters' gross margins for cotton fabrics averaged 29 percent of the selling price for bleached fabrics, 35 percent for dyed, and 43 percent for printed (^7). Costs of finishing operations averaged 35 percent of the gross margins for bleached fabrics, 49 percent for dyed, and 65 percent for printed. Dur- ing the same 3-year period, converters' gross margins for rayon and acetate fabrics averaged 37 percent of the selling price for dyed fabrics and 51 percent for printed (|7). Cost of finishing operations averaged 37 percent of converters' gross margins for dyed fabrics and 50 percent for printed.

As indicated in preceding sections of this report, hourly earnings of laborers in the textile industry have increased markedly since 1939, and wages account for large proportions of gross margins of manufacturers of textile products. Wage rates per hour of production in textile finishing, except wool, plants increased from $1.19 in 1947 to $1.96 in 1962, according to census reports. Value added by these finishers per dollar of wages increased

94

from $2.04 in 1947 to $2.32 in 1962, according to census reports. Average wage rates per hour and average value added per dollar of wages varied irregularly with the size of the plant as indicated by the number of employees. Wage rates per hour and value added per hour of labor averaged less in the South than in any other geographic region, but value added per dollar of wages varied irregularly from State to State and from one region to another, according to census reports.

Median profits to converters of cotton goods, after reserves for Federal income and excess- profit taxes and for renegotiation in the case of war contracts, increased early in the 1940's. They reached a high point of 4 percent of net sales in 1946, declined to less than 1 percent of sales in 1953, advanced to 1.6 percent of sales in 1956, and then declined to less than 1 percent in 1959, 1960, and 1961 (33). These profits, as proportions of tangible net worth, declined from 8.2 percent in 1948 to 4.2 percent in 1961 (33),


Operating efíiciency in the dyeing and finishing industry could be increased most effectively through the perfection and expansion of continuous processing methods. In bleaching cotton piece goods, for example, it is possible to move gray cloth steadily forward through specially designed machines that complete the cleaning and bleaching processes within a few hours, as compared with the several days usually required. Similar advances have been made in dyeing with the fast vat colors, the installation of special equipment making it possible to dye fabrics by a continuous method. The results are more uniform shades and reduction in costs of materials and labor. Improved processing methods of this kind

should eventually mean more uniform products and probably lower costs.

Progress has been made in developing finishes designed to impart increased attractiveness and utility to textiles, and considerable improvements in standards of quality may reasonably be expected. Better mercerizing and calendering techniques are being employed to improve the luster and other qualities of fine-grade fabrics. The development and increased use of practical and effective crease-resistant finishes for piece goods improve the appearance and usefulness of the fabrics, particularly in the garment field. Finishes that provide wash-and-wear qualities in fabrics used in men's shirts and in other apparel are an example of a development that has greatly strengthened the competitive position of cotton (9). Specific suggestions regarding the most effective means by which, and the extent to which, it would be feasible to increase the efficiency and to reduce the costs of these services probably would need to be based on detailed data relating to costs, as indicated for other segments of the textile industry {105),

Results of modernization since World War II indicate that some mills have cut unit labor costs in dyeing operations by 50 percent. Others have sharply reduced warehousing and materials- handling costs. Improved continuous bleaching methods save up to 50 percent in costs of materials. Automation in color control, coupled with continuous dyeing, improves quality and reduces costs {63), A report in 1963 indicates that, in addition to automatic machinery to provide benefits from feeding to the finishing of quality textiles, a suitable system for ventilation protects the health and safety of workers, promotes production efficiency, improves the quality of the products, reduces fire and explosion hazards, and improves plant housekeeping {8),

KNIT-GOODS MANUFACTURING

The knit-goods manufacturing industry is composed of establishments primarily engaged in knitting, dyeing, and finishing textile products. These establishments consume yarns made from basic materials such as cotton, wool, and manmade fibers. Census data for 1958, for example, show that machine knitting yarns amounted to about 499 million pounds, or about 10 percent of the total produced on the cotton system and 14 percent of the wool yarn, other than carpet. In addition, machine knitting yarn that year included about 10 percent of the thrown filament yarn, except that which is textured.

Principal products of the knit-goods industry are hosiery, knit fabric, knit outerwear, and knit underwear. In 1958, the value of products shipped by this industry, excluding full-fashioned hosiery for which data are not available, totaled about $2,220 million. Of this shipment, about 27

percent was accounted for by seamless hosiery, 21 percent by knit fabrics, 37 percent by knit outerwear, 13 percent by knit underwear, and 1 percent by other products.


Knitting industries include establishments primarily engaged in (1) knitting products from yarn owned by the knitting establishment or in dyeing and finishing knit products for their own use; (2) knitting fabrics from yarns owned by others or dyeing and finishing knit products owned by others; and (3) purchasing yarns or gray goods and employing contract knitters or dyers to process the materials. Some establishments operate as both manufacturers and converters or as both manufacturers and contractors.

Hosiery mills engage in knitting, dyeing, and

95

finishing, but in 1958 about a third of their products were shipped in the gray. Data on the value of total shipments of full-fashioned hosiery are not available, but the value of shipments and other receipts of seamless hosiery mills in 1958 totaled $597 million, of which about 89 percent was seamless hosiery, 7 percent secondary products, and 4 percent miscellaneous receipts. This industry's shipment of seamless hosiery in 1958 represented 93 percent of its total shipments and 90 percent of these products shipped by all industries. These products were distributed mainly to retailers and merchant wholesalers. About 11 percent were distributed through manufacturers' sales offices and branches to retailers and merchant wholesalers (table 71). Hosiery, valued at $161 million, was shipped unfinished mainly to other plants of the same company or to other manufacturers, according to census reports.

Knit outerwear mills comprise establishments primarily engaged in knitting outerwear or in manufacturing outerwear from knit fabrics produced in the same establishment. Important products of this industry include sweaters, knit jackets, jerseys, shirts, and other outerwear. The value of shipments and other receipts of knit outerwear mills in 1958 totaled $814 million. Of total shipments and other receipts, about 75 percent were knit outerwear, 7 percent were secondary products, and 18 percent were miscellaneous receipts, mainly from contract work. This industry's shipments of knit outerwear in 1958 repre-

TABLE 71.—Distribution of manufacturers' shipments of finished full-fashioned and seamless hosiery and knit fairies^ hy class of customer and outlet^ united States^ 1958

Hosiery Knit fabrics

Customer outlet



Manufacturer to— Sales offices, branches, etc_ Other plants, same com-

pany. _

Million dollars

86

4 2

243 359

38

Percent 11.7

. 5

.3 33.2 49. 1

5. 2

Million dollars

54

29 181 143

11 44

Percent 11. 7

6. 3 39. 1 31.0

2. 4 Q ^

Other manufacturers Merchant wholesalers Retailers, not owned All other _ _

Total 732 100. 0 462 100.0


Other manufacturers- 52 3

94 5 Merchant wholesalers Retailers, not owned

15 72

2

16. 9 80.9 2.2

5. 5

Another

Total 89 100. 0 bb 100 0


sented 91 percent of its total shipments and 74 percent of these products shipped by all industries.

Knit underwear mills knit underwear and nightwear, or manufacture these products from knit fabrics produced in the same establishment. The value of shipments and other receipts of these mills in 1958 totaled $292 million. Of total shipments and receipts, about 82 percent were primary products, 11 percent were secondary products, and 7 percent were miscellaneous receipts. This industry's shipments of knit underwear in 1958 represented 88 percent of its total shipments and 35 percent of these products shipped by all industries.

Knit fabric mills knit tubular or flat fabrics, and dye or finish these products. The value of shipments of this industry in 1958 totaled $487 million. Of total shipments, about 86 percent were knit fabrics, 5 percent were secondary products, and 9 percent were miscellaneous receipts, mainly from contract work. This industry's shipments of knit fabrics in 1958 represented 94 percent of its total shipments and 90 percent of these products shipped by all industries. These products were distributed in 1958 mainly to other manufacturers and to merchant wholesalers (table 71). About 12 percent were distributed through the manufacturers' sales oiSces and branches mainly to other manufacturers.


Changes in size and organization of knit-goods manufacturing industries may be indicated by number of employees, ownership and operation, and mergers and acquisitions.

Number of Employees

Average sizes of establishments in knit-goods industries vary greatly from one industry to another and from one time to another. The number of employees per full-fashioned hosiery mills decreased from an average of 95 in 1947 to 78 in 1958; whereas the average for seamless hosiery mills remained practically unchanged at 105. The average number of employees per knit outerwear mills increased from 29 in 1947 to 54 in 1958. The average number of employees per knit underwear mill decreased from 236 to 199 and that for knit fabric mills increased from 44 to 51.

Within each industry in the knit-goods manufacturing group, size of individual mills, as indicated by the number of employees, varied widely, and the proportion in the various size groups changed considerably from 1947 to 1958. Eeflect- ng the shift in size of establishments, plants with less than 250 employees dominated both the full- fashioned and seamless hosiery segments of the industry in 1958 (table 72).

In the 10-year period before 1958, the proportion of knit outerwear and knit fabric mills with 100 or more employees increased but that of knit underwear and other knit-goods mills decreased.

TABLE n.—Number of specified types of knitting mills, hy number of employees per plant, united States, 1958

Employees per plant

500 or more. 250 to 499.- 100 to 249-- 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4

Total

Full- fashioned

hosiery- mills

13 17 52 62 97 68 64 59

432

Seamless hosiery

mills

20 44

128 143 154 70 46 54

659

Knit outerwear mills

12 34 90 160 337 204 145 141

1, 123

Knit underwear mills

11 17 38 33 23

7 2 9

140

Knit fabric mills

3 9

40 40 89 70 47 59

357

Other knit

goods mills

1 0 5

11 21 17 9

11

75

During this period, the proportion of knit outerwear and knit fabric mills with fewer than 20 employees decreased and that of knit underwear and other knit-goods mills not elsewhere classified

Geographic distribution of knit-goods mills shows that in 1958 a large proportion were in the Middle Atlantic, Southern, and Western States (tables 73). Knit outerwear and knit fabric mills were concentrated particularly in Middle Atlantic States, whereas seamless hosiery mills were concentrated mainly in the Southern and Western States. The number of full-fashioned hosiery mills decreased markedly from 1954 to 1958, particularly in Middle Atlantic States. The number of seamless hosiery mills increased from 1954 to 1958, particularly in the South and West. In 1958, the average number of production workers per mill ranged from 44 in knit fabric mills to 176 in knit underwear mills ( table 73 ). In knit underwear mills, for example, it ranged from 48 in New England to 371 in the South and West. The number of mills and the average number of production workers per mill changed considerably from 1947 to 1958 (table 73). For most of the knit- goods industries in most of the geographic divisions, the number of establishments and the average number of production workers per establishment decreased from 1947 to 1958. An outstanding exception is knit outerwear mills in the South. They increased markedly in number of plants and in average number of production workers per plant.


The proportion of full-fashioned hosiery mills that were under corporate ownership or control decreased from 80 percent in 1939 to 67 percent in 1958 (table 94). The proportion operated by partnerships and individual owners increased during this period. The average number of employees per mill operated by corporations and the proportion of total employees of the industry accounted

7 36-806—64 8

for by these mills decreased during this period. The proportion of the mills that were operated from central administrative ofläces as multiunits decreased markedly, but the proportion of total employees in the industry that was accounted for by multiunits decreased to 1954, and then increased to 1958.

Of seamless hosiery mills, the proportion operated by corporations decreased from 70 percent in 1939 to 65 percent in 1958 (table 74). The proportion operated by partnerships and individuals mcreased. The average number of employees per mill was much greater for those operated by corporations than for those operated by partnership and by individual owners. The proportion of the mills that were operated as multiunits and the proportion of total employees of the industry that were accounted for by multiunits decreased during this period.

The proportion of knit underwear mills operated by corporations averaged 83 percent in 1939 and 86 percent in 1958 (table 74). The proportion of mills operated as multiunits decreased slightly from 1939 to 1958 ; whereas the proportion of total employees of the industry that was accounted for by multiunit mills increased.

The number of knit outerwear mills, in contrast to those of other segments of the knit-goods industry, increased markedly from 1939 to 1958. The proportion accounted for by mills operated by corporations increased from 47 percent in 1939 to about 71 percent in 1958 (table 74). That for mills operated by partnerships and individual owners decreased. Average number of employees per mill operated by corporations, and the proportion of total employees of the industry accounted for by these mills increased markedly from 1939 to 1958. The proportion of knit outerwear mills operated as multiunits increased from about 3 percent in 1939 to 6 percent in 1958 and the number of employees per mill averaged more than for those operated as single units.

97

TABLE 73.—Number of establishments and average number of production workers per plant for manufacturers of^ knit goods^ by industry and geographic division^ united States, 1917 and 1958

Industry and geographic division

Establish- ments

Average production

workers

1947 1958 1947 1958

Full-fashioned hosiery : New England __"

Number 11

437 35

249 6

Number 6

189 11

215 11

Number 119 62

212 116

64

Number 86 30 71

106 28

Middle Atlantic. _ North Central___ _ South Pacific


Seamless hosiery: New England __ 21

103 27

466

20 89 17

533

71 72

128 105

4-7 Middle Atlantic ___ _ __ 57

165 104

North Central _ South and West.


Knit outerwear: New England . _ _ 56

982 71 21 71

49 912

45 52 65

54 21 51 47 31

107 Middle Atlantic __ •^Q North Central 71 South _ . _ 130

26 West

United States 1,201 1, 123 25 47

Knit underwear: New England 15

99 24 34

7 89

9 35

183 163 242 378

48 Mi ddle Atlantic _ 103 North Central. __ 23*^ South and West . 371


Knit fabric: New England _ _ _ _ 39

210 10 49

38 247

10 62

37 28 42 96

69 Middle Atlantic _ _ 28 North Central 65 South and West __ _ 89




Integration in the textile industry, as indicated previously (p. 38), apparently lias resulted in some changes in the size, organization, and management of operating units in the knit-goods manufacturing industry. The degree of vertical integration of knitting mills, on an establishment basis, may be indicated by these facts: Some knitting mills manufacture the yarns used in knitting; some hosiery mills knit, dye and finish hosiery, and sell a substantial proportion of the finished products to wholesalers and retailers. Some knit outerwear and underwear mills knit outerwear, underwear,

and nightwear and manufacture these garments from knit fabrics produced in the same establishments. Some mills knit fabrics and dye or finish them.

The degree of horizontal integration of knitting mills, on a company basis, may be indicated by proportions of total shipments of the industry accounted^ for by specified numbers of the largest companies. In 1958, seamless hosiery mills operated by 20 of the largest companies, or about 3 percent of the total, accounted for 42 percent of the value of total shipments of the industry, a marked increase from 32 percent in 1947; and 50 of the largest companies, or 8 percent of the total, accounted for 57 percent of the value of total ship^ ments (table 75).

In 1958, knit outerwear mills operated by 20 of the largest companies, or less than 2 percent oí thQ> total, accounted for 20 percent of total shipments of the industry, a smaller percentage than m 1947 (table 75). Mills operated by 50 of the largest companies, or less than 5 percent of the total, accounted for 35 percent of total shipments.

In 1958, knit undervrear mills operated by 20 of the largest companies, or 15 percent of the total, accounted for 63 percent of total shipments of th^ industry, an increase from 57 percent in 1947 (table 75). Mills operated by 50 of th^ largest companies, or about 38 percent of the total, accounted for 87 percent of total shipments.

In the same year, knit fabric mills operated by 20 of the largest companies, or 6 percent of the total, accounted for 51 percent of total shipments of the industry (table 75). Mills operated by 50 of the largest companies, or 15 percent of the total, accounted for 72 percent of total shipments.

Of the establishments primarily engaged in the manufacture of knit goods in 1954 and 1958, about 97 percent were operated by companies chiefly engaged in this industry and 3 percent were operated by companies primarily engaged in other industries {101). Single-unit companies accounted for 88 percent of the establishments in 1954 and in 1958. They accounted for about 60 percent of the value added by manufacture in 1954 and 57 percent in 1958. The number of employees per establishment averaged substantially greater for those operated by multiunit than for those operated by single-unit companies. Employees per establish- nient averaged greater for those operated by multi- industry companies than for those operated by single-industry companies.

Of the total number of establishments operated by companies classified in the knit-goods manufacturing category, 13 percent were classified in other categories in 1958 and 7 percent were classified in other categories in 1954. Data on distribution of employees of establishments operated by companies classified in the knitting mills category show that in 1958 about 72 percent were in establishments classified in the knitting mills category, 7 percent in establishments classified in the textile

98

TABLE n^.-NumUr of establishments ard average number of ^t^î'^XLTîCf äT^Ä"' facturers of hnit clothing, ly type of ownersUf and oyeratton, united States, 1939 and Wbii


Average employees Establishments per establish-

ment 1

Average employees Establishments per establish-

ment ^

1939 1958 1939 1958 1939 1958 1939 1958

Full-fashioned hosiery mills Knit underwear mills

Ownership: Number 402

45 50

2

Number 289

49 93

1

Number 231

34

Number 109

18

Number 165

14 19

1

Number 119

10 11

0

Number 223

^^^39

Number 227

57 30

TnHiviHnfll n Other -

All 499 432

201 140

195 78 199 140 194 199


Cînrnorate - -- 242 83

161 44

113 30

83 20

197 54

Other.

All 325 341

88 3

131

337 46

39 143 103

36 1

167

279 39

128

Multiunit: rôTTiorii te 160

14 52

4 Other

{)

All 174 91

432

314 225 56 37

140

262

194

398

All ____--- 499 195 78 199 199 1

Seamless hosiery mills Knit outerwear mills

Ownership : 305

52 76

0

428 96

135 0

182 58 42

0

145 44 24

0

334 141 234

0

793 182 148

0

43 32 16

0

66 34 14 0

T^fl rt.npr^hir) - TnHivîrlniîl - Other

All 433 659 143 105 709 1,123 32 54


dornorate 219 121

317 226

157 49

95 32

i

314 374

728 328

Other

All -- 340 543 118 69

288 47

688

20 1

1,056

65 2

30 41

Multiunit: ("^nrDorate 86

7 111

5 248

48 Í2\

Other ir)

All 93

433

116

659

233

143

278 21 67

1,123

97

32

253

All 105 709 54

1 In 1939 only wage earners are included; in 1958 all employees are included. 2 Witheld to avoid disclosing figures for individual companies.


TABLE 1^.—Shave of shipments of hmt^goods rrmnufactuHng industry accounted for ly largest com^ pames^ TJmted States^ 1958 amd 19J^7


panies 1

Seamless hosiery: 1958 1947

Knit outerwear : ^ 1958 1947

Knit underwear : ^ 1958 1947

Knit fabric : 1958 1947

Number 611 565

1, 111 1, 196

132 140

336 297

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 4L * See footnote 4, table 14, p. 41. 5 Value of production shown for this industry rather than

mill products category, 13 percent in the apparel and related products industry, almost 2 percent in retailing, 3 percent in wholesaling, and small proportions in service and other categories {101).

MANUFACTURÍNG METHODS

Machine knitting is the process of constructing a fabric or article from yam by the formation of connected loops produced on a series of needles. New loops or "stitches" are drawn through those already formed on the neddles until the desired length of knit material has been attained. In knit fabric (of simple stitch) the rows of loops running lengthwise and having the appearance of chains of loops are called "wales." Eows formed by the same loops across the fabric, at right angles to the wales, are called "courses." In plain knitting, each active needle in the machine forms a wale, and every complete action of all the needles forms a course. The number of wales determines the width of the fabric, the number of courses determines its length.

Knit fabrics are generally classified according to type, such as weft knit or warp knit. The terms "nylon tricot" and "rayon jersey" are becoming more widely used when referring to certain warp- knit fabrics. The weft knit is tiiQ more common. Fabrics are also described as latch-needle or spring-needle knit, depending upon the type of needles employed in the knitting machines. Al- though spring-needle fabrics are usually considered slightly superior to latch-needle fabrics, needles of the latter type have been widely used m this country, especially in the manufacture of

Value of shipments 2

1,000 dollars 584, 396 327, 007

774, 251 330, 474

280, 541 295,411

486,116 197, 454

Concentration ratio: Proportion of total shipments accounted for by 3—

4 largest companies

Percent 23 13

29 21

18 27

8 largest companies

Percent 31 19

10 13

41 34

30 37


Percent 42 32

20 24

63 57

51 56

Primary product

specialization^

Percent 93 96

91 91

87

94 93

value of shipments. Includes value of primary and secondary products made and miscellaneous receipts, such as those for contract and commission work on materials owned by others, scrap, and other salable refuse.

Adapted from {120).

coarser fabrics. Because of its inherent nature, the latch-type needle, with its positive action in forming loops, in some instances may damage deli- cate yams.

Either weft-knitting or warp-knitting machines equipped with two sets of needles can make fabrics in which some of the wales appear on the front and some on the back to form ribbed fabrics. Cer- tain types of flat machines having two sets of needles can be equipped to knit plain-stick tubular fabric instead of ribbed fabric.

As knit fabrics are made of one yarn or a series of yarns, the extensive intermingling effect of yarns that tend to cover up irregularities in woven goods is not present. It is, therefore, necessary to have high-quality yarn of uniform construction to prevent readily apparent irregularities in knit fabrics. A common practice in production of quality knit goods is to use ply yarns. Plying partially compensates for the irregularities that occur m single yarns, and makes a stronger yarn with greater resistance to wear.

Lisle is an example of plied yarn that is widely used for knitting hosiery. It is made of relatively long-staple combed cotton and spun into fine counts that are plied and frequently mercerized. Two-ply mercerized yarn made from long-staple cotton IS another example of plied yarns used in manufacturing knit goods.

In addition to uniformity or evenness of yarns, knitting requires flexible yarn that will readily conform to the serpentine shape required to form the ^ series of loops. Harsh-fibered cottons are avoided, except for coarse fabrics, as they do not readily form into loops and tend to kink and form

100

distorted loops of irregular size. Flexibility in knitting yarus is obtained by using relatively flexible raw cotton and inserting a soft twist at the spinning frame. A twist multiplier of 2.75 is widely used for manufacturing knitting yarns. This results in 16.5 turns per inch in 36s yarn, whereas approximately 25 turns per inch might be required to spin the same cotton into the same yarn count having maximum strength. Although this lower twist sacrifices some strength, it results in a more pliable and, within certain limits, a more elastic knit fabric. The better grades of knitting yarns are spun from combed stock and may be gassed and mercerized to give a more attractive appearance.

A survey of cotton mills by the U.S. Department of Agriculture to learn the grade and staple length of cotton used in the 1944^5 season showed the proportions of knitting yam and of all yarns made of cotton of specified grades and lengths of staple (65), The survey included more than 300 mills having an annual consumption of about 4.5 million bales, and the results from one phase showed that manufacturers of knitting yarns use better grades of raw cotton than the average used for all types of yarn. Only 4 percent of the raw cotton used in carded knitting yarns graded Low Middling and below^, and all raw cotton consumed in combed knitting yarns graded above Low Middling. But 8 percent of the cotton consumed in all types of yarn graded Low Middling or below. Raw cotton that graded Strict Middling or above accounted for 36 percent of the total consumption for knitting yarn, but only 8 percent of the yarns spun for all purposes were made from cotton which graded that high.

Cotton consumed in the manufacture of knitting yarns, especially combed yams, averaged longer in staple than that used in other yarns. None of the combed yarns was made of cotton shorter than 1 inch, and about two-thirds of this yam was made of cotton longer than l^^ inches. About a fifth of the carded yams were made of cotton shorter than 1 inch, and small proportions were made of cotton longer than ly^g inches. A study of market outlets for cotton in knit goods showed that from 1948 to 1950 about 97 percent of the cotton used by manufacturers of carded knitting yarn was of staples 1 inch and longer. Seventy-one percent of the cotton used in the manufacture of combed knitting yarn was of staples 1%2 inches and longer (65),


Classified according to arrangement of needles, the types of knitting machines employed in the U.S. knitting industry are circular machines, straight-bar machines, and flat machines. Circu- lar machines, with needles set in the circumfer- ence of a cylinder, knit tubular fabrics which vary in width according to the diameter of the cylinder.

Some circular machines knit seamless hosiery; others knit wide fabric for overcoating. Straight-bar machines (for example, full-fashioned hosiery machines) and flat machines, with needles arranged in a straight line, usually produce a flat fabric with selvages. Certain types of flat machines, however, are sometimes used to produce tubular fabric. Needles on a straight-bar machine operate simultaneously ; those on circular or flat machines operate individually.

Gage is the term usually employed by the knit- goods industry to indicate the number of needles in a given length of the needle bed or bar. When applied to full-fashioned hosiery machines, gage indicates the number of needles in 1.5 inches of the needle bar and rmis in multiples of 3, such as 45, and 51. When the term "gage^' is applied to most other types of knitting machines, it is used to designate the number of needles per inch. Unfortu- nately, a uniform system for designating gage has not yet been adopted.

Two fundamentally different principles of machine knitting are weft knitting and warp knitting. Weft knitting, the oldest form, is not usually identified by special designation. In principle, a weft-knitting machine can produce fabric from a single end of yam fed to the different needles in the machine. Actually, for purposes of speed or decoration, weft-knitting machines are usually built to utilize numerous ends of yarn simultaneously. For example, a circular machine 20 inches in diameter is made to knit 64 ends of yam into 64 courses at every revolution of the machine.

Warp-knitting machines (of many types) are straight-bar machines on which gage designates the number of needles to the inch. Production of warp-knit fabrics requires multiple yam ends. A plain single-bar fabric knit on a machine 80 inches wide, with 28 needles to an inch, requires 2,240 ends of yam. Only one course is knit at each revolution of the machine. If each needle operated always on the same yam end, the machine would produce 2,240 separate chains. Fabric is formed, however, by moving all the warp ends over at each course for two or three needles in one direction and back in the other direction. Two sets of warps (4,480 ends on this machine) can be used to make a practically run-proof fabric. One set of warps uses one guide bar to direct the yarn to the needles, and the resultant fabric is called "single bar' fabric. Two guide bars are necessary to utilize two sets of warps for two-bar fabric.

Considerable improvements in plant and equipment have been made in recent years and further progress is anticipated. Total expenditures for plant and equipment by knitting mills increased from $25 million in 1939 to $85 million in 1947, and amounted to S66 million in 1962. Expendi- tures for new equipment increased from $19 million in 1939 to $65 million in 1947, and amounted

101

to $36 million in 1958. Expenditures for new plants increased from $4 million in 1939 to $17 in 1947, and amounted to $7 million in 1958. All segments of the knitting industry participated in these expenditures (table 76).

TABLE 76.—Expenditures for plant and equipment hy 7nanu facturer s of knit goods^ hy industry groups, 1939,19Ii7,195^, and 1958


equipment 1939 1947 1954 1958

All industries: ^ New equipment New plant

1,000 dollars

18, 838 4, 326 1, 977

1,000 dollars

64, 808 16,957 3,218

1,000 dollars

34, 350 5,632 7,040

1,000 dollars

36, 336 7, 282

All other i 6,484

Total 25, 141 84, 983 47, 022 50, 102

1 Expenditures for used plant and equipment 2 Other knitting mills not elsewhere classified. Adapted from Census of Manufactures.


Gross margins of knitting mills, or the spread between the value of the products and the cost of materials, supplies, parts and containers, have changed considerably over the years, according to census reports. Data on costs for full-fashioned hosiery mills are incomplete. For seamless hosiery mills, gross margins varied by only 2 percentage points in earlier available census periods from the 53 percent of value of products prevail- ing in 1958 (table 77). The proportion of these margins accounted for by payrolls decreased from 65 percent in 1939 to 58 percent in 1958. A part of this increase may be accounted for by improvements in machinery and equipment used.

Gross margins of knit outerwear mills, which rose during the 1940's and early 1950's, averaged 56 percent of the value of products in 1958 (table 77). The proportion of these margins accounted for by payrolls decreased from about 50 percent in 1939 to 45 percent in 1947, and then increased to 48 percent in 1958. The^ decrease from 1939 is accounted for mainly by increases in contract

TABLE 77.—Valves, costs, and margins of 7namifacturers of knit goods. United States, 1958

Item Knit outerwear

mills

Knit underwear

mills

Knit fabric mills

Seamless hosiery

mills

Viîlnp of nrndnnts l IfiOO dollars

769, 868 IfiOO dollars

280, 151 i,000 dollars

482, 385 1,000 dollars

584, 480

rînst nf matprinls p.tn ^ 342, 959 426, 909

130, 037 150, 114

313, 835 168, 550

277, 150 Gross margin 307, 330

Snliirip« ur\r\ WîICTPH 203, 998 81, 183 73, 871 177, 104 ^*W»*^W,^ ^ »^Q

?líílflríps 49, 194 154, 804

16, 735 64, 448

18, 178 55, 693

25, 342 Wages 151, 762

Fuel - 2,006 2,579

91, 090 127, 236

1,104 910

15, 985 50, 932

2,579 2,420

16, 251 73, 429

2,734 Purchased electric enerev 2,578 Oontract and commission work 11,213 Ot.hpr 3 113, 701

P roportion of v alue of produc ts

Value of products i Percent

100. 0 Percent

100. 0 Percent

100. 0 Percent

100.0

Cîocit of materials etc.^ - - - - 44. 5 55.5

46.4 53.6

65. 1 34.9

47.4

Gross margin 52.6

Salaries and wages 26. 5 29. 0 15. 3 30.3

Salaries 6. 4 20. 1

6. 0 23. 0

3.8 11. 5

4.3

Wages 26.0

Fuel .3 .4

11.8 16. 5

.4

.3 5. 7

18.2

.5

.5 3. 4

15.2

.5 Purchased electric enerffv - _ -- . 4 Contract and commission work _ 1.9

Other 2 -- -- 19. 5

1 Excludes products bought for resale without further processing. Data are adjusted for changes in inventory.

2 Includes supplies, parts, and containers.

3 Includes depreciation, interest, insurance, rent, taxes, other expenses, and profits.


102

and commission work. The increase from 1947 occurred despite a substantial increase in contract and commission work.

For knit underwear mills, gross margins also increased, averaging almost 54 percent in 1958 (table 77). This change was accompanied by substantial increases in other expenses and profits as well as increases in commission and contract work. The proportion of gross margins accounted for by payrolls increased from 56 percent in 1947 to 69 percent in 1954 and then decreased to 54 percent in 1958. These changes varied inversely with proportions accounted for by overhead expenses and profits.

In contrast, gross margins of manufacturers of knit fabrics decreased during the 1940's and early 1950's and averaged only 35 percent in 1958 (table 77). The proportion of these margins accounted for by payrolls decreased from about 52 percent in 1939 to 44 percent in 1958. This reduction may be accounted for mainly by improvements in equipment used.

Adequate information is not available to show the influence of the degree of specialization on gross margins of knitting mills. Census data on value added by manufacture, payrolls, and wages show that value added by these mills per dollar of payroll for establishments with 75 to 89 percent of primary product specialization averaged more than that for establishments with higher or lower degrees of specialization. Value added by full-fashioned hosiery, knit outerwear, and knit underwear mills per dollar of wages averaged greatest for establishments with 75 to 89 percent primary product specialization. Value added by seamless hosiery and knit fabric mills per dollar of wages averaged greatest for establishments with less tiian 75 percent primary product specialization.

Large proportions of gross margins of manufacturers of knit goods accounted for by payroll and increases in wage rates in recent years emphasize the importance of labor in the manufacture of these products. Increases in average hourly earnings of production workers in knit- goods" plants from 1947 to 1958 ranged from 24 percent in full-fashioned hosiery mills to 79 percent in knit fabric mills. From 1947 to 1954, average hourly earnings of production workers increased relatively more than average value added by manufacture per hour of lahor, and average value added per dollar of wages and per dollar of payroll decreased. But from 1954 to 1962 average hourly earnings of production workers increased relatively less than average value added per hour of labor, and average value added per dollar of wages and per dollar of payroll increased.

Average hourly earnings of production workers and average value added per hour of labor, per dollar of wages, and per dollar of payroll by manufacturers of knit goods varied considerably

from year to year, from one segment of the industry to another, and from one geographic division to another (table 78). Average wage rates per hour in 1962 ranged from $1.50 in knit underwear mills to $1.89 in knit fabric mills. In 1947, they ranged from 80 cents in seamless hosiery mills to $1.24 in full-fashion hosiery mills.

In 1958, average wâge rates per hour in full- fashioned hosiery mills ranged from $1.31 in New England to $1.68 in Pacific States. Wage rates in knit outerwear mills ranged from $1.28 in Southern to $1.66 in Middle Atlantic States. Considerable variations are indicated in other segments of the knit-goods industry and in other years (table 78).

These variations in wage rates, when related to corresponding variations in value added by manufacture per hour of labor, gave correlation coeiR- cients that ranged from 0.52 for 1958 data to 0.70 for 1954 data. These variations also gave correlation coefficients ranging from 0.40 for full-fashioned hosiery mills to 0.73 for seamless hosiery mills, and averaged 0.59 for all years and all knit- goods mills combined. An increase of 1 percent in value added per hour of labor from one geographic division to another was associated, on the average, with increases in wage rates per hour. These rates decreased from 0.34 percent in 1947 to 0.21 percent in 1958 for all mills combined ; ranged from 0.17 percent for full-fashioned hosiery mills to 0.34 percent for seamless hosiery mills for 1947, 1954, and 1958 combined ; and averaged 0.29 percent for all mills combined for all years.

Variations in wage rates, w^hen related to corresponding variations in value added per dollar of wages, show considerable irregularities, but for all years and all mills taken as a group, value added per dollar of wages averaged higher in geographic divisions with the higher average wage rates than in those wîth the lower ones. This relationship may be accounted for in part by the use of more improved machinery and equipment in areas where wage rates are relatively highest. Value added per dollar of payroll varied irregularly from one geographic division to another (table 78).

In 1958, wage rates per hour and value added by manufacture per hour of labor, per dollar of wages, and per dollar of payroll varied irregularly with the size of the knitting company, as indicated by the number of employees {120), Despite considerable irregiüarities, wage rates per hour and value added per hour of labor, per dollar of wages, and per dollar of payroll in hosiery mills and in knit underwear and' knit fabric mills averaged more for companies with 500 or more employees than for the smaller companies. For knit outerwear mills, the reverse was true. Similar data for 1954, on an establishment basis, show that value added by knit-goods manufacturers per dollar of wages, per hour of labor, and wage rates per hour also varied irregularly with size of establishment, as indicated by number of employees (^^).

103

TABLE 78.—Vdlioe added hy manufacturers of knit goods^ per dollar of payroll^ per dollar of wages^ per hour of Idbor^ and average wage rates per hour^ hy geographic division^ united States, 1958 "^


Processor and geographic area Total


Wage rates per hour

Payroll Wages

FULL-FASHIONED HOSIERY MILLS

New England 1,000 dollars

2,830 32, 212 8,941

126, 888 2, 125

Dollars 1.67 1.53 1.79 1.69 1.72

Dollars 2. 18 1.98 3.63 1.94 2.45

Dollars 2.86 3.02 5. 94 2. 99 4.12

Dollars 1.31 1.53 1.64 1.54 1.68

Middle Atlantic North Central _ South Pacific».

United States 172, 996 1.66 2.01 3.08 1.54

SEAMLESS HOSIERY MILLS

New England 4,210 24, 534 19, 148

242, 933

1.41 1.53 1. 97 1.64

1. 82 1.86 2. 59 1.88

2.53 2. 60 3.71 2. 51

1.39 1.40 1.43 1.33

Middle Atlantic North Central South

United States 290, 825 1.64 1.92 2.58 1.34

KNIT OUTERWEAR MILLS

New England 31, 843 247, 541

19, 439 33, 164 7,927

1. 64 1.75 1.51 1.64 .82

2. 20 2. 27 2.02 2.03 1.48

3.30 3.77 3. 12 2.60 2.44

1. 50 1.66 1. 55 1.28 1. 64

Middle Atlantic North Central South West

United States 339, 914 1.67 2. 20 3.48 1.59

KNIT UNDERWEAR MILLS

New England 3,340 47, 219 18,016 67, 128

2.35 1.64 1. 57 1.70

3.36 2.04 2.68 2.00

5.71 2.85 4.39 2.78

1.70 1.40 1.64 1.39

Middle Atlantic North Central South and West

United States 135, 703 1.67 2. 11 2.99 1.42

KNIT FABRIC MILLS

New England _ 27, 687 70, 744 7,976

40, 987

2.13 1.92 2.07 2.04

2.81 2.61 3. 31 2.51

5.08 4.89 6.07 3. 71

1.81 1. 87 1.83 1.48

Middle Atlantic __ North Centrai South and West _

United States 147, 394 2.00 2. 65 4.56 1 79

1 Value added is adjusted by taking into account value added by merchandising operations and net changes during the year in inventories of finished goods and work-in-process.



The large part of manufacturers' gross margins accounted for by wages emphasizes the importance of the most effective utilization of labor to increase efficiency and to reduce costs in the knit-goods industry. From 1947 to 1962, increases in average hourly wage rates in the knit-goods industry amounted to about 22 percent for full-fashioned

hosiery mills, 90 percent for seamless hosiery mills, 70 percent for knit outerwear mills, 63 percent for knit underwear mills, and 82 percent for knit fabric mills. Labor may be more efficiently utilized and costs of labor reduced by increased use of improved machinery with more automatic controls.

Reports indicate that considerable progress has been made in the development of high-speed, auto-

104

matic knitting machines. Introduction of high- speed machines has focused attention upon the need for research designed to develop yarns of improved knitting qualities required for most efficient use of this equipment. Research designed to indicate fiber properties relatively best adapted for use in the various types of yam might well be carried on in connection with that relating to manufacturing techniques. The combined results would then indicate the most desirable combinations of fiber properties and construction of yarn for use by improved machines in the manufacture of speci- j&ed products. Improved yarns, relatively trouble free, developed to minimize stoppages attributable to such factors as excessive accumulations of lint on machines and tangled and broken yarns are necessary for the most effective utilization of labor and high-speed machines.

Reports in 1958 indicated that modernization of knittmg mills could reduce labor costs by more than 60 percent in full-fashioned knitting, 50 percent in warp knitting, and 75 percent in sweater knitting (63). Other advantages of using modern equipment are wider style ranges that put mills in stronger competitive positions. Case reports indicated that a full-fashioned hosiery mill, for example, added two 30-section, 60-gage automatic machines in 1956 and increased production per knitter by more than 100 percent (63), A knit outerwear manufacturer increased the scope of his patterned knit fabrics with 32-feed, pattern-wheel machines equipped with 4-color stripers at each feed, with the result that production per machine was increased 75 percent as compared with production on the old 16-feed machines (63). A report in 1961 indicated that 35 autoboard machines were leased to 9 hosiery mills in recent years, that each machine was estimated to increase production per employee by 35 to 50 percent, and that they would pay for themselves in less than 2 years (^).

As indicated above (p. 95), manufacturers of knit goods usually sell large proportions of their products as finished apparel, and substantial proportions are sold directly to retailers. Develop- ments in recent years indicate that further integration may result in more economical operations. A report in 1962 indicated that a mill producing fine ladies full-fashioned sweaters, by consolidat-

ing knitting and finishing operations under one roof, increased production by 40 percent, reduced overhead costs by 10 percent, and improved the quality of the products. A report in 1961 indicated that a knitting mill integrated by erecting its own dye house and spinning plant so that wool tops were received at one end of the plant and beautiful, high-quality, double knit dresses were shipped out at the other end. Results were that dresses which formerly sold at $19.75 to $32.75 could be sold after integration at $14.75 to $22.75 (^).

In some instances, groups of small manufacturers of knit goods might find it advantageous to form federations to consume the entire output of a spinning mill. Economies in the purchase of yams would be favorable to such federations, but perhaps more important would be advantages of greater efficiency in sales organization. In- creased sales might be expected to result from increased promotional advertising by such a fed- eration. Combinations might also be made in such a way that the centralized agency could offer retailers a greater variety of products.

Developments in the 1950's and early 1960's indicate that substantial improvements in plant efficiency and reductions in costs for at least some manufacturers of knit goods could be made through the use of improved machinery and equipment suitably organized and operated. The conditions under which and the extent to which modernization and other means can be most feasibly utilized in increasing the efficiency and reducing costs of individual plants may need to be based on information of the types indicated for manufacturers of yarns and fabrics (p. 48). For modernization to be economically feasible, prospective benefits, as indicated by this information, would need to be great enough to equal or exceed cost of the new equipment, losses from scrapping the old and obsolete equipment, and expenses of making the changes.

The relative importance of increasing efficiency and reducing costs of manufacturing faiits goods is indicated by the fact that in 1958 gross margins of these manufacturers averaged more than twice as much as the farm value of the cotton and wool used and many times more than the total cost of merchandising^ the raw fibers.

MANUFACTURING FABRICATED PRODUCTS

Textile mill products, the output of industries considered in earlier sections of this report, may be grouped, on the basis of the uses made of them, into three main classes: consumers' goods, industrial goods, and cutters' goods. Distinctions among them are based more upon differences in users than upon the characteristics of the goods themselves. The same kind of goods may be included in all three groups. It has been estimated that drills, for example, are used for no fewer

than 40 purposes, and that they may be classed as consumer, industrial, or cutter goods, depending on who uses them (£7).

Mill products classed as consumers' goods come from manufacturing establishments ready for sale to ultimate consumers. They include piece goods, sheets and pillowcases, bedspreads and blankets, tablecloths and napkins, rugs, towels, bath mats, washcloths, and diapers. In addition, many knit goods, such as hosiery and knit outerwear and

105

underwear, leave the mill as completed consumers' goods.

Textile products classed as industrial goods come from manufacturing establishments ready for use by business houses outside the textile industry. Most of these products are woven fabrics. They include many types of ducks, osnaburgs, so-called multiple fabrics, and leno fabrics; a considerable part of the output of sheeting, twills, drills, and sateen; and small proportions of fine goods such as voiles, organdies, lawns, broadcloths, and print cloths. Industrial fabrics are incorporated directly into finished products such as sails, tarpau- lins, tents, awnings, bags, and upholsteries. They are consumed in products of various kinds, such as filters and screens, and buffing-wheel devices for inking, moistening, pressing, and steaming. In addition, they are combined with other materials to make new products, such as hose, tires, rubber footwear, imitation leather, and abrasives (^7).

Cutters' goods, which are the principal materials used in the manufacture of apparel and related products, are mainly finished fabrics. Industries making apparel and related products include establishments that produce clothing and related fabricated textile products by cutting and sewing purchased woven or knit textile fabrics and related materials such as leather, rubberized fabrics, plastics, and furs. Excluded from these industries are knitting mills primarily engaged in manufacturing apparel from yarns knitted in the same establishment, custom tailors and dressmakers who manufacture and sell apparel in the same retail establishments, and establishments which are primarily wholesalers or dealers.


Types of establishments which operate in apparel and related product industries include regular factories or manufacturers, apparel jobbers, and contract factories or contractors. Manufac- turers purchase fabrics, employ production workers in their own plant to cut and sew the material into apparel, and sell the finished products, thus performing all the usual manufacturing functions within their own establ Ishment. Jobbers mainly perform entrepreneural functions of a manufacturing company, such as buying raw materials, designing and preparing samples, arranging for the manufacture of garments from materials, and selling the finished products. The actual processing, such as cutting and sewing, usually is performed on contract by apparel contractors, although many jobbers perform cutting operations in their own establishments.

Census data for manufacturers show figures on employment, cost of raw materials, and value of products made. Apparel jobbers report data comparable to that of manufacturers on cost of raw materials and on value of products, but most labor costs are included in the cost of contract work.

Contractors report their employment and receipts for contract work instead of the value of the finished products, and. they report the cost of their own operating supplies instead of cost of raw materials which they process. Consequently, the ratio of wages and salaries to value added by manufacturers averaged more for jobbers tlian for contractors. But many of the establishments engage in more than one type of operation.

JMost apparel and related products apparently are distributed directly by manufacturers or indirectly through wholesalers to retailers. Census reports of manufacturers for 1958 do not show the distribution of manufacturers' sales of these products, but census reports on class of customers of wholesalers in 1958 show that most of the apparel and related products and general-line dry goods were distributed to retailers.


Changes in size and organization of manufacturers of fabricated products may be indicated by the number of employees, ownership and operation of plants, and mergers and acquisitions.

Number of Employees

Fabricators of apparel and related products range from small family shops to large companies operating several establishments, as is common in the manufacture of men's shirts. Census reports show that the proportion of all establishments in the apparel and related products industry wîth fewer than 10 employees decreased from about 41 percent in 1947 to 39 percent in 1958 (table 79). The proportion with fewer than 10 employees averaged more for manufacturers of men's and boys' wear than for manufacturers of women's, misses*, and children's vrear, but less for manufacturers of men's and boys' wear than for manufacturers of other fabricated textile products. The proportion with 100 or more employees increased from about 7 percent in 1947 to 9 percent in 1958, Of all establishments, the proportion with 100 or more employees was larger for manufacturers of men's and boys' wear than for manufacturers of women's, misses', and children's wear and of other fabricated textile products.

Proportions of establishments with specified numbers of employees varied widely from one industry or product to another. In'l958, the proportion of establishments with fewer than 20 employees ranged from about 20 percent for manufacturers of men's and boys' underwear to 85 percent for canvas products, and averaged about 47 percent for all industries and products combined (96). The proportion with 100 or more employees ranged from less than 2 percent for establishments manufacturing canvas products to 42 percent for those manufacturing men's and boys' underwear, and averaged about 11 percent for all establishments combined. The average number of employees per establishment for all industries

106

TABLE 7^,—Number of establishments manufacturing apparel and related products and proportion of total, by number of employees and by type of products, United States, 19Ii7, 195^, and 1958

Employees per plant

500 or more_ 250 to 499-_ 100 to 249 __ 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4

AIL

500 or more. _. 250 to 499 100 to 249 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4

AIL

500 or more_ 250 to 499 _ 100 to 249-- 50 to 99 20 to 49 lOto 19 5to 9 1 to 4

AIL...

500 or more.. 250to499_.. 100 to 249_- 50 to 99 20 to 49 lOto 19 5to 9 1 to 4

AIL

Establishments

1947 1954 1958

Proportion of total

1947 1954 1858

Apparel and related products

Number 140 422

1,700 2, 979

219 5,826 5, 327

347

30, 960

Number 166 502

1, 920 3,408 7, 283 5; 249 4, 535 8, 309

31,372

Number 175 543

1, 941 3, 307 7, 042 4,938 4,221 7, 130

29, 297

Per- cent 0.5 1.4 5. 5 9. 6

23.3 18. 8 17.2 23. 7

100. 0

Per- cent 0.5 1.6 6. 1

10.9 23.2 16. 7 14. 5 26.5

100.0

Per- cent

.6 1.9 6.6

11.3 24. 0 16.9 14.4 24.3

100.0

Men's and boy's wear

94 247 755 854

1,124 738 720

1,080

5, 612

111 274 747 770 875 544 525

1, 003

4,849

109 293 732 699 807 552 495 798

4,485

L7 4.4

13. 5 15.2 20. 0 13.2 12. 8 19.2

100. 0

2.3 5.7

15. 4 15. 9 18. 0 11.2 10. 8 20. 7

100. 0

2.4 6.5

16.3 15.6 18.0 12.3 11. 1 17. 8

100. 0

Women's, misses', and children's wear

32 116

_ 638 1, 539 4, 398 2, 925 2, 034 2, 141

13, 823

40 167 857

1,991 4,669 2, 724 1,712 1,964

14, 124

46 183 875

1, 985 4, 521 2,493 1,538 1, 683

13, 324

. 2 '. 9

4.6 11. 1 31.8 21.2 14.7 15.5

100.0

.3 1.2 6. 1

14. 1 33. 0 19. 3 12. 1 13.9

100.0

. 4 1.4 6.6

14.9 33.9 18.7 11.5 12.6

100. 0

Other fabricated textile products

14 59

307 586

1,697 2, 163 2, 573 4, 126

11,525

15 61

316 647

1,739 1,981 2,298 5,342

12, 399

20 67

334 623

1,714 1,893 2, 188 4,649

11, 488

. 1

. 5 2.7 5.1

14.7 18.8 22.3 35.8

100.0

. 1

. 5 2.6 5.2

14. 0 16. 0 18.5 43. 1

100. 0

.2

.6 2.9 5.4

14.9 16. 5 19.0 40. 5

100. 0


combined increased from 42 in 1917 to 49 m 1958 (96). In 1958, the average number of employees per plant ranged from 12 for manufacturers of canvas products to 135 for manufacturers of men's and boys'underwear. .

A large proportion of establishments primarily engaged in the manufacture of apparel and related products are in the Middle Atlantic States. Cen- sus reports for 1958 show that about 51 percent of the manufacturers of men's and boys' wear; 72 percent of manufacturers of women's, misses', and children's wear ; 40 percent of the manufacturers of other apparel and related products; and 63 percent of all manufacturers in this industry were m the Middle Atlantic States (table 80). Smaller proportions are located in New England, North Central, Southern, and other States. Changes from 1954 to 1958 varied considerably from one industry to another. But for all apparel and related industries combined, the proportion of establishments in the Middle Atlantic and North Central States decreased and those m Southern, New England, and other States increased.

The size of establisliments, as indicated by the number of employees, varies widely from one geographic division to another. In 1958, the average number of employees per establishment ranged from about 26 in the Pacific to 178 in East South Central States. Averages for other regions were 49 for New England, 30 for Middle Atlantic, 48 for East North Central, 58 for West North Cen- tral, 91 for South Atlantic, 68 for West South Central, and 27 for Mountain States.


Data on the type of ownership or control of establishments making apparel and related products show that the proportion of the total number operated by corporations increased from 45 percent in 1947 to 57 percent in 1958 (table 81). The proportion oi)erated by partnerships decreased from 29 percent in 1947 to 18 percent in 1958. That operated by individuals decreased from 31 percent in 1939 to 25 percent in 1958. The average number of employees per establishment usually was more for establishments operated by corporations than for those operated by individuals or partnerships.

The proportion of establishments operated from central administrative offices as multiunits decreased from 7 percent in 1947 to 6 percent in 1954 and then increased to 8 percent in 1958 (table 81). Multiunits had, on the average, about five times as maiiy employees per establishment in 1947 and six times as many in 1954 and 1958 as single units. The proportion of total number of employees in the industry accounted for by multiunits increased from 23 percent in 1947 to 33 percent in 1958.

107

TABLE ^^.-ProfOTÜon of apparel and reUted products manufacturing establishments, hy geogravhic division and hy industry, united States, 1958 ^ y y y y

Industry Estab- lishment

New England

Middle Atlantic

North Central

South All others

Men's and boys' wear: Suits and coats Number

1,365 880

91 748

1,039 362

Percent 8.9 4. 2 2. 2 5.3 6.8 6.4

Percent 61. 8 46. 8 43. 9 49. 7 34.2 67.7

Percent 11.9 6.3

13.2 13.8 18. 1

Percent 11.6 30.9 39. 6 23.7 31. 5 6.3

Percent Dress shirts and nightwear 5.^ Underwear 11.8 Separate trousers. 1. 1 Work clothing 7.5 Neckwear 9.4

All 10.8

All 4,485 6.6 50.6 12.3 22. 1 8.4 Women's and misses' wear:

Blouses 1,260 4,653 2,683 1, 155

5.6 6. 2 7.6 8.1

71. 9 72. 9 73.0 54.3

3.7 5.7 5.7

10.1

6.0 6.0 3.0

12.0

Dresses 12. 8 Suits, coats, and skirts _ 9.2 Other outerwear 10. 7

A n 15.5

All 9,751 6.8 70.6 5. 9 5.9 10.8 Women's and children's wear:

Underwear 1, 231 414 446 802 370

1,559

5. 6 8.7 9.6 4. 2 3.0 4.9

73.8 64. 3 56. 1 73.5 87. 3 73.3

4. 9 8.9

20.4 3.6 3.2 7. 2

11.6 9. 2 9.0

11.5 2. 4 8.7

Corsets and allied garments 4. 1 Hats and caps__> _ _ 8.9 Children's dresses___ 4. 9 Children's coats. 7.2 Other 4. 1

5.9 All 4,822 5.6 72. 1 7. 1 9.5 5.7

Miscellaneous products: Fabric gloves 228

278 277 783 237 851

3. 1 7.6

15.5 9. 2 6.3 8.2

45. 2 75. 5 65.0 35.6 31.7 26. 1

32.0 3.2 7.2

20.1 25.7 31. 1

14.9 9.4 4.3

11.0 26.6 19.9

Robes and dressing gowns 4.8 Waterproof garments 4. 3 Curtains and draperies. _ 8.0 Textile bags 24. 1 Canvas products 9.7

14. 7 All 2,654 8.6 40.3 22.0 14.7 14.4 Grand total 21, 712 6.7 63. 1 9.5 11. 1 9.6

Adapted from Census of Manufactures


Mergers and acquisitions in the textile industry, as indicated earlier in this report (p. 38), may have resulted in changes in organization and management of operating units in industries making apparel and related products. The degree of vertical integration of manufacturers of apparel and related products, on an establishment basis, may be mdicated by census data showing that in 1954 (the most recent year for which such data are available) sales through sales branches and offices owned by manufacturers accounted for about one- fifth of the value of the apparel and related products manufactured. More than 70 percent of these sales were to retailers and more than one-fifth were to wholesale organizations. Merchandise agents and brokers primarily engaged in market- mg merchandise at wholesale for others accounted for sales of more than two-fifths of the total. More than three-fourths of their sales were made to retailers.

Census data on manufacturers' sales branches and offices in 1954 are not strictly comparable with data for 1948. These data indicate that the proportion of total sales of apparel and related products accounted for by manufacturers' sales branches and offices did not change much from 1948 to 1954. The proportion of these sales that were made to retailers decreased from about 86 percent in 1948 to 72 percent in 1954. The proportion of total sales of these products that were made through agents and brokers increased from about 45 percent in 1948 to 47 percent in 1954. The proportion of sales of these agents and brokers that were made to retailers decreased from about 84 percent in 1948 to 79 percent in 1954.

Changes in degree of horizontal integration of manufacturers of apparel and related products, on an establishment basis, may be indicated by census data on number of employees and value added by manufacture by type of organization of the establishments. These data show that the proportion of total number of employees in this in-

108

TABLE 81.—Nurnher of establishments and average number of employees per plant for manufacturers of apparel and related products^ by type of ownership and operation^ united States^ m7, 196J^, and 1958

Ownership and operation

EstabHshments Average

employees per plant

1947 1954 1958 1947 1954 1958

Ownership: Corporate Partnership Individual Other -- _

Number 14, 031 8,941 7,913

75

Number 16, 559

6, 569 8,158

86

Number 16, 727

5, 135 7,421

14

Num- ber

54 23 14 31

Num- ber

55 26 14 36

Num- ber

57 26 13 68

All 30, 960 31, 372 29, 297 35 38 40


Corporate Other

12, 362 16, 527

14, 772 14, 662

14, 498 12, 370

41 18

39 19

39 18

All 28, 889 29, 434 26, 869 28 29 2q


1, 669 402

1,787 151

2,228 200

152 52

179 84

170 67

All 2,071 1,938 2,428 133 172 161

All 30, 960 31, 372 29, 297 35 38 40


dustry accounted for by establishments operated from central administrative offices as multiunits increased from 25 percent in 1947 to 33 percent in 1958. The proportion of the value added by manufacture by these establishments increased from 22 percent in 1947 to about 34 percent in 1958.

The data on the proportion of the value of total shipments accounted for by specified numbers of the largest fabrication companies (in these industries) show a wide range in changes in the number of companies per industry and in the proportion of total sales accounted for by 4, 8, 20, and 50 of the largest companies (table 82). In 1958, establishments operated by 20 of the largest companies engaged in manufacturing unit-price dresses, the industry with the largest number of companies, or less than 0.6 percent of the total, accounted for 12 percent of the value of shipments of the industry. Establishments operated by 50 of the largest companies, or about 1.4 percent of the total, accounted for 20 percent of the value of shipments. At the other extreme, establishments operated by 20 of the largest companies engaged in the manufacture of work shirts, the industry with the smallest number of companies, or about 46 percent of the total, accounted for 88 percent of the value of shipments of the industry. Proportions for other industries

engaged in the manufacture of apparel and related products fall within this range in number of companies, and show wide variations in the proportion of total shipments accounted for by specified numbers of the largest companies.

The proportion of total shipments accounted for by 20 of the largest companies increased for 12 industries with total sales in 1958 of $5,769 million, decreased for 6 industries with total sales of $1,913 million, and remained unchanged for 3 industries with total sales of $570 million. Primary product specialization in 1958, as indicated by the proportion of the value of shipments accounted for by products regarded as primary to the industry, ranged from 78 percent for work shirts to 97 percent for corsets and allied garments. From 1947 to 1954, primary product specialization increased in 10 industries, decreased in 7, and remained unchanged in 4. For two industries, data for 1947 were not reported. From 1954 to 1958, primary- product specialization increased in eight industries, decreased in four, and remained unchanged in two. In nine of them data for 1958 were not reported (table 82).

Employees per establishment averaged substantially less for single-unit than for multiunit companies. For multiunit companies, employees per establishment averaged less for single-industry than for multi-industry companies. In 1958 the proportion of the number of establishments accounted for by single-unit companies ranged from 90 percent for manufacturers of men's and boys' clothing to 97 percent for manufacturers of women's and children's clothing. Similarly, the proportion of number of employees accounted for by single-unit companies ranged from 53 percent for manufacturers of men's and boys' clothing to 79 percent for manufacturers of women's and children's clothing {101).

About 99 percent of the establishments classified in the apparel and related products manufacturing category in 1958 were operated by companies classified in that category. Of the establishments operated by companies in that category, the proportion classed in other categories ranged from about 2 percent for companies in the fabricated products (not elsewhere classified) category to 16 percent for companies in the men's and boys' clothing category. It averaged about 5 percent for the combined apparel and related products category.

Multi-industry companies classified in the apparel and related products manufacturing industry showed a wide range of vertical integration. They had about 78 percent of their employees in establishments in the same category as the company, 4 percent in other categories of the apparel and related products manufacturing industry, 4 percent in textile mill products manufacturing categories, 4 percent in retailing, 4 percent in wholesaling, and small proportions in service and other categories.

109

TABLE 82.—Share of shipments of apparel and other fahricated textile products accounted for hy largest companies^ United States^ 1958 and 19%7


panies ^ Value of

shipments ^

Concentration ratio: Proportion of total shipments accounted for

by3— Primary product

specializa-

4 largest companies

8 largest companies


tion ^

Men's and boys' suits and coats: 1958

Number 1,275 1,761

737 922

80 94

720 956

43 60

1,222 1,356

3,606 4, 165

1,137 828

1, 170 1,467

363 493

747 627

278 370

757 379

217 198

1,000 dollars 1, 260, 920 1, 412, 782

942, 073 731, 277

119, 203 49, 753

442, 058 334, 039

49, 157 95, 378

414, 649 276, 575

1, 626, 612 1, 359, 030

505, 322 348, 785

804, 870 575, 679

462, 235 277, 791

336, 583 174, 827

132, 548 103, 024

206, 459 109, 640

186, 340 355, 981

Percent 11

9

16 19

41 47

9 12

52 52

10 7

4 3

12 13

8 6

29 16

13 15

14 10

26 18

40 53

Percent 19 15

26 29

55 59

17 18

68 68

14 11

7 5

20 21

13 11

43 30

20 22

23 19

34 29

51 63

Percent 32 26

41 43

82 80

30 29

88 88

24 20

12 9

35 35

24 19

59 47

34 37

43 38

45 49

66 77

Percent 91

1947. ___ _______ _ _ _ 92 Men's dress shirts and nightwear:^

1958_ 88 1947_ _ 94

Men's and boys' underwear: ^ 1958 1947__ 95

Separate trousers : ^ 1958 89 1947_ ______ 86

Work shirts : ^ 1958_ ___ __ ___ _ _ 78 1947 _ 77

Blouses: ^ 1958 _ e) 1947_ ___ __ 93

Dresses, price per unit: ^ 1958 {') 1947 95

Dresses, price per dozen: ^ 1958 _ 96 1947 89

Women's and children's underwear:5 1958 . _ 96 1947 95

Corsets and allied garments: ^ 1958___ _.. 97 1947 _ 94

Children's dresses: ^ 1958 __ 96 1947 93

Robes and dressing gowns : ^ 1958 ._ 94 1947 __ ___ . 89

Curtains and draperies: 1958 __ {') 1947 __ _- 97

Textile bags: 1958___ __ ___ __ 86 1947 __ __ 93

1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. 3 See footnote 3, table 14, p. 41. * See footnote 4, table 14, p. 41.

MANUFACTURING METHODS (72, 87, 102)

Methods employed in fabricating textile products vary with the nature of these products. Methods employed in the manufacture of men's dress (business) shirts are outlined here briefly for illustrative purposes. The processes involved include cutting the shirt parts from purchased yard goods, sewing or joining the parts into the complete shirt, folding and pressing, and boxing the shirts for shipping {102), Fully integrated shirt plants usually are organized into four departments on the basis of these processes or fmictions,

5 See footnote 5, table 75, p. 100. 6 Data not available. Adapted from {120).

but in many establishments the pressing and boxing operations are performed in one combined department.

CutHng Department

After the cloth is inspected, sorted, and matched for color, it is spread on cutting tables which are about 4 feet wide and range from 100 to 200 feet long. The cloth is spread in layers by hand or by some type of machine spreader. The number of layers depends upon the thickness of the cloth and whether hand or machine cutting is used. The maximum number of layers for hand cutting is

110

about 48, but for machine cutting the usual number is from 250 to 400 and in some establishments the number may be as great as 500 layers. Different types and colors of cloth may be included in the lay, with each type separated by tissue paper or markers or stamped for identification purposes.

When the cloth is spread on the cutting tables, patterns are marked or stenciled on the top ply. Traced-paper top layers or brass-bound fiber patterns are used as a guide to cutters. The cloth is cut either with a short hand knife or with an elec- trically driven cutting machine. Hand cutting is confined mainly to high-grade shirts and to small- lot wôrk. Electric knife cutters are used for large- ply lays. Many plants employ a combination of hand and macliine cutting, utilizing hand knives when only a few shirts of a particular type are required. Small parts, such as collars, yokes, and cuffs, are cut with hand knives, with die-stamping machines which cut up to 60-ply lays, or with small rapid-action "clicker" presses which handle up to 25-ply lays.

The lot number, size, type, and other identifying marks are customarily stamped on the shirt parts after they are cut with either power-driven or hand-operated machines. In plants that use the bundle system for all or part of the sewing operations, tlie shirt parts are sorted, classified, and tied into bundles containing parts for as many as 50 shirts. Each bundle is marked as to size, lot, and style, and then taken by handcart or sent through chutes to the sewing department. In some esta}3- lishments, regular bundles are not made up for the parts of the shirt which are to be sewed on a line-assembly basis, but the shirt parts are classified according to lot, size, and type.

Sewing Department

Shirt parts from the cutting room are joined together in the sewing department to form the finished shirts. Large and small parts are sewed together, linings (when used) are sewed together, linings are sewed in, buttonholes are made, and buttons attached. These operations, which involve an extended series of separate steps, are usually organized into a number of major shirt- assembly sections, such as those for collars, cuffs, yokes, sleeves, and backs and fronts. These sections are joined in a sequence of final assembly operations.

The mimber of individual sewing operations into which the manufacture of shirts is divided varies considerably from one plant to another, and depends upon considerations which include size of plant, type of shirt, physical facilities, and production system in use. Usually the number of operations is somewhat greater in establishments which use the straight-line system for all or a major part of their production sequence than in those which use some form of the bundle system.

Four principal systems or methods of produc-

tion organization are in use in sewing departments. These are the bundle, the progressive bundle, the straight-line, and the combination systems. The particular system in use determines almost entirely the layout of the physical facilities of the sewing department and the flow of work.

The bundle system is the oldest production method, and until recently it was the most popular. Bundles, composed of groups of parts of a number of shirts bundled together and identified, serve as work units. Each operator performs a designated number of operations in the assembly of the shirts. The number of operations into which the work of the sewing department is divided ranges from 20 to 35. Sewing machines are not necessarily arranged in the order of flow of work, but, in most of the establishments that use this system, the machines are set up side by side on long benches which run the entire length or width of the sewing room. This arrangement—the only practicable one for machines powered from a central shaft— is not necessarily followed with individually powered machines.

Methods of supplying bundles to operators vary widely. In some plants, the girls go to a central location to pick up bundles; in others, they pick them up from the operators who precede them in the sequence of assembly operations. Some establishments employ boys to move bundles to operators, and in some instances the supervisors, or floor ladies, supply the bundles to the proper operators. In establishments that use the bundle system, bundles must make from 20 to 40 separate moves, and they rarely travel in accordance with any predetermined flow of work. In many establishments, operators are required to move about the plant to procure their own bundles in order to provide a break in the steady routine of the sewing operations.

The bundle system requires more handling of materials than any other, both in the moving of bundles and on the part of operators in taking shirt sections out of the bundles, in positioning them for work, in removing work tickets, and in replacing parts in the bundle. The system is flexible, so changes in production organization and in type of work performed can be readily made. Temporary shortages of materials or employees affect the average efficiency very little. Individ- ual operators are not limited in their output by the slowness of others in the shop and, under an incentive pay system, they tend to work rapidly.

The progressive bundle system is, in effect, an adaptation of the bundle system to straight-line production principles. The unit of Avork is the bundle, which moves from one operator to another in accordance with the sequence of work. Each operator performs only one or two assigned tasks on the units included in the bundle, which is then routed to the next operator in the work sequence. Machines are grouped or alined to permit the flow of the bundles from each operator to the next sue-

Ill

cessive one. This arrangement necessitates the use of individually powered machines.

This system shares to a considerable extent in the saving of man-hours inherent in the line system, since the bundles flow smoothly from one operation to another, traveling the smallest possible distance. It is often possible to utilize labor- saving troughs or chutes down which the bundles travel from one operator to another. But both the progressive bundle system and the bundle system require that operators withdraw parts from the large bundle, position them at the machines, and then replace them in the bundle. It shares with ^ the line system the disadvantages of rigidity and the reliance of each operator upon completion of work by the preceding operator in the sequence. Balancing the operations to provide a steady, smooth flow of work from one operator to another is important.

The straight-line system, which was developed in 1932, substitutes a single garment for the bundle as the basic unit of work. Under this system, the sewing machines, individually driven, are arranged in groups of from one to four in accordance with a carefully predetermined sequence of operations, and the units of work move along troughs or chutes from one work station to the next. Assembly of the shirts is usually sub- divided into a greater number of operations under the straight-line than under the bundle or progressive bundle systems. The work flows in the single units to a designated station beside each operator's machine table and the operator picks up the unit, performs her operations, then shoves it along a chute or on to the next operator's work space.

Reductions in the movement of work within the plant, and greater division of labor are the major factors that lead to savings in man-hour requirements under the line system. The rigidity of the straight-line system, which makes it difficult to adjust or to balance the time requirements for all operators in squence, has prevented this system from developing the savings in man- hour requirements which were expected of it. Productivity in the line system depends chiefly upon the smooth flow of materials and the regular attendance of all operators. The balance of the line may be upset and many of the operators may have periods of idleness enforced by a temporary shortage of materials or by the absence of an operator. Each operator in the line depends upon the individual eíBciency of all the others. The slowest worker serves as a bottleneck and limits the possible output of the entire line, regardless of the potential efficiency of the other workers.

The combination system, as generally applied, involves the manufacture of parts such as cuffs, collars, yokes, and bodies by either the bundle or progressive bundle method and the final assembly of these parts into the shirt by the straight-line method. Considerable variations exist in the

proportion of the total operations allotted to the line and to the bundle systems.

Many believe that the combination system, when properly implemented, provides many of the benefits inherent in the line system and avoids most of its limitations. The combination system is more flexible than the line organization and is more readily adapted to changes in style or type of shirt produced. The introduction of inexperi- enced employees does not present as severe a problem as the line system, since these employees can be assigned to and can gain experience in the area of production that uses the bundle systems. As only a small proportion of the total operations and employees are under straight-line methods, substitute employee assignments may readily be made.

Processing and Boxing

When shirts have been completed, assembled, and inspected in the sewing room, they are moved by truck, chute, or conveyor to the "laundry," where they are pressed, folded, given a final inspection, and boxed. Methods of operation and machinery used vary widely. In some of the smaller establishments, all pressing and folding operations are performed by hand by one operator. In the larger plants, pressing and boxing are divided into several operations, with a number of workers performing each task. Machines are widely used to press collars and cuffs and, to a more limited extent, the body of the shirt as well. In some establishments, the shirts move through the sequence of pressing operations on conveyors.

In the simplest and most widely used form of team specialization, one worker machine-presses collar and cuffs, another presses the shirt body by hand, a third buttons and folds the shirt, and a fourth gives it the final inspection. In most establishments, all of these operations, except machine pressing of collars and cuffs, are performed on a bench, with the work passing from one worker to another along the bench. After the final stages of folding and inspection, the shirts are moved to the boxing section, either by hand, by mobile carts or trucks, or by conveyors. They are then sorted, classified, and boxed. From one to six shirts are packed in each box.


Spreading, cutting, and sewing machines and supplementary facilities make up the basic equipment used in the manufacture of men's shirts and other apparel. In the 1950's, spreading machines were more widely employed than other machines, and the trend toward increased use of electric knifes and the replacement of some types of hand cutters with dies or clickers for small pieces has continued. Overhead rails are more generally employed over cutting tables to increase the flexibility of the cutting machines and to permit the use of more cutting machines at the same time.

112

In the sewing department, basic equipment consists of sewing machines of various types, mounted either on individual tables or on long benches placed in parallel rows the length of the sewing room. These are supplemented by special-purpose equipment, which includes collar and cuff trim- mers, collar turners, inspection tables, and marking devices. Specialization of machines for production in the sewing department has reached high levels. Many machines are designed especially for one type of operation. Typical examples are devices for sewing on buttons, making buttonholes, attaching labels, and for making center pleats. In addition, many special attachments employed for particular operations, are used on standard production machines.

Operators, not machines, largely determine the volume of output in the sewing department. The necessity for exact positioning of work in the sewing machine and frequent stopping during the operations to make adjustments in the position of the cloth means that the machines are run less than a third of the total working time. Con- sequently, improvements in the speed of machines may inflluence output per man-hour much less than changes in methods of handling and positioning the cloth and improvement in the moving of work from one operator to another.

No revolutionary changes in machinery and equipment in the sewing department occurred in the 1950's, but a number of mechanical improvements have been widely adopted in the industry. Use of the self-oiling, high-speed sewing machines capable of running up to 5,000 revolutions per minute has increased, and the use of double-needle machines has been extended. Automatic or man- ually controlled thread-cutting and clipping machines have been used in many cases as replacements for cruder methods of cutting thread.

Special guides and attachments have been widely introduced throughout the industry to sim- plify and speed up the sewing operations. Turn- ing and folding machines have been improved, use of automatic ruffling machines has increased, and the practice of using buttonhole or button-sewing machines in tandem has become more general in recent years. Other improvements which have been expanded include the use of glass tabletops with fluorescent lighting underneath to facilitate inspection, the more frequent use of chutes and bins to improve work and reduce handling, improvements in interior lighting to eliminate shad- ows, and provision of more electrical outlets to make the arrangement of machines more flexible.

Relatively few changes in pressing and boxing equipment were made during the 1950's. Pressing machines have been more widely utilized and conveyor systems have been introduced in a few plants. Attention has been given in many plants

to improvement of plant layout and to flow of work in the pressing and boxing operations.

Some indication of the extent of improvement in machinery and equipment used in the manufacture of apparel and related products may be obtained from census data showing that total expenditures for plant and equipment by these manufacturers increased from about $14 million in 1939 to about $98 million in 1958 (table 83) and then decreased to $95 million in 1962. Most of the increases in expenditures were for new equipment, but substantial increases were made in expenditures for new plants. Expenditures by manufacturers of apparel and related products in 1958 for new plant and equipment totaled more than $89 million, of which $64 million were for new machinery and equipment and $25 million were for new structures and additions to plants (table 83).

TABLE 83.—Expenditures for plant and equipment hy manufacturers of apparel and related products^ hy industry^ United States^ 191^7 and 1958

Industry

Men's and boys' suits and coats

Men's and boys' furnishings. Women's and misses' outer-

wear Women's undergarments— Children's outerwear Other apparel and acces-

sories Other fabricated textiles

Total

Men's and boys' suits and coats

Men's and boys' furnishings- Women's and misses' outer-

wear Women's undergarments._> Children's outerwear Other apparel and acces-

sories Other fabricated textiles—

Expenditures for-

Total New equipment

New plant

All other

1947

1,000 dollars

12, 066 19, 275

20, 064 10, 893 3,678

6, 555 19, 054

91, 585

1,000 dollars 7,898

12, 913

15, 466 7,853 2,567

4, 366 10, 768

61,831

1,000 dollars 3,063 4,953

3, 141 2, 581

866

1,453 6,057

22, 114

1,000 dollars 1, 105 1,409

1,457 459 245

736 2,229

7, 640

1958

Total-

4,906 18, 032

3,609 12, 203

1,297 4,757

24, 432 8,821 5,014

15, 513 5,910 4, 174

6,744 2,233

840

10, 324 26, 009

7,226 15, 365

1, 508 8,071

97, 538 64, 000 25, 450

(0 1,072

2, 175 67

0) 8

1,590 2,573

,088

1 Less than $500,000.


113


Gross margins of manufacturers of apparel and related products are indicated by the spread between costs of materials, supplies, parts, and con- tamers used and the value of the products manufactured. These margins vary with the kinds of materials used and the products fabricated, from one mdustry to another, from one establishment to another in the same industry, and from one time to another. Census reports show that, for apparel and related products as a whole, manufacturers' gross margins increased from about 48 percent of the value of the products in 1939 to almost 57 percent in 1958 (table 84).

The proportion of the value of the products that was accounted for by salaries and wages decreased from more than 25 percent in 1939 to less than 24 percent in 1947, and then increased to almost 27 percent in 1954 and 1958. Cost of contract and commission work increased from about 7 percent of the value of the products in 1939 to 12 percent in 1958.

These results are based on the combined totals of manufacturers, jobbers, and contractors, as reported in Census of Manufactures. Data presented in this way tend to increase total amounts shown for value of products, gross margins of manufacturers, value added by manufacture, cost of contract and commission work, "other" costs, and proportion of gross margins accounted for by salaries and wages. These increases result from including in total value of products, receipts of contractors for contract work done for jobbers and from including in cost of contract work most of the labor costs of manufacturing products reported by jobbers (p. 106). Information available is not adequate for making accurate adjustments for the influences of these inclusions.

Gross margins of all manufacturers of men's and boys' apparel combined increased from about 50 percent of the value of the products in 1939 to 57 percent in 1958. The proportion of the value of these products accounted for by salaries and wages decreased from more than 27 percent in 1939 to about 25 percent in 1947, increased to 29

TABLE 84.—Values^ costs, and margins of manufacturers of apparel and related products. United States, 1939, m7, 1954, and 1958

Item

Value of products ^


Salaries and wages

Salaries Wages

Fuel Purchased electric energy Contract and commission work Other 3

Value of products ^


Salaries and wages

Salaries Wages

Fuel Purchased electric energy Contract and commission work Other 3

1939

1,000 dollars 3, 107, 622

1, 605, 714 1, 501, 908

789, 969

186, 294 603, 675

3, 003 10, 576

224, 141 474, 219

1947

1,000 dollars 9, 480, 727

4, 511, 104 4, 969, 623

2, 257, 739

462, 686 1, 795, 053

8, 362 18, 459

972, 881 1, 712, 182

1954

1,000 dollars 10, 926, 022

5, 018, 027 5, 907, 995

2, 931, 877

620, 294 2, 311, 583

3, 070 21, 713

1, 214, 594 1, 736, 741

1958

1,000 dollars 12, 156, 594

5, 260, 615 6, 895, 979

3, 262, 505

710, 408 2, 552, 097

13, 448 29, 394

1, 461, 495 2, 129, 137


Percent 100. 0

51.7 48. 3

25. 4

6. 0 19. 4

. 1

.3 7.2

15. 3

1 Excludes products bought for resale without further manufacture. Data for 1954 and 1958 are adjusted for changes in inventory. Schiffli machine embroideries, trimmings and stitching, and fabricated textile products not elsewhere classified are not included.

Percent 100. 0

47. 6 52. 4

23. 8

4.9 18. 9

. 1

. 2 10. 3 18. 0

Percent 100.0

Percent 100. 0

45. 9 54. 1

43. 3 56. 7

26. 8

5. 7 21. 1

(') . 2

11. 2 15. 9

26.8

5.8 21. 0

. 1

. 3 12. 0 17.5

2 Includes supplies, parts, and containers. 3 Includes depreciation, interest, insurance, rent, taxes,

other expenses, and profits. * Less than 0.05 percent.


114

percent in 1954, and amounted to almost 29 percent in 1958. Costs of contract and commission work increased from 7 percent of the value of the products in 1939 to almost 12 percent in 1958. Fuel and purchased electric energy were relatively small items of cost, but costs of unidentified items, including depreciation, interest, insurance, rent, taxes, other expenses, and profits ranged from about 14 percent of the value of the products in 1954 to 18 percent in 1947, and amounted to more than 16 percent in 1958.

The proportion of gross margins of manufacturers of men^s and boys' apparel accounted for by salaries and wages decreased from about 55 percent in 1939 to 47 percent in 1947, increased to 53 percent in 1954, and amounted to 50 percent in 1958. The decrease from 1939 to 1947 was associated with substantial increases in the proportion accounted for by cost of contract and commission work and by costs of unidentified items. The increase from 1947 to 1954 and the decrease from 1954 to 1958 were about offset by decreases and increases respectively in proportions accounted for by costs of unidentified items, while the proportions accounted for by costs of contract and commission work remained about the same.

In 1958, gross margins of manufacturers of men's and boys' apparel, by industries, ranged from 47 percent of the value of the products for men's and boys' underwear to almost 64 percent for men's and boys' suits, coats, and overcoats (96). The proportion in 1958 averaged greater than that in 1939 and 1954 in all industries and greater than that in 1947 in all industries, except men's and boys' underwear. Salaries and wages in 1958 ranged from an average of 24.5 percent of the value of men's and boys' wôrk clothing, sport garments, and other apparel not elsewhere classified to almost 33 percent of that for men's and boys' suits, coats, and overcoats. The proportion for each industry averaged substantially greater in 1958 than in 1947, despite improvements in machinery and equipment.

Costs of contract and commission wôrk on men's and boys' apparel in 1958 ranged from less than 4 percent of the value of underwear to about 14 percent of that for dress shirts and nightwear. In 1958 the proportion for all industries, except men's and boys' underwear, was greater than that in 1939 and 1947. Costs of unidentified items in 1958 ranged from about 15 percent of the value of work clothing, sport garments, and other men's and boys' apparel not elsewiiere classified to 20 percent for neckwear. For most of these industries, the proportion in 1958 was less than that in 1947, but greater than that in 1939 and 1954 (96).

Gross margins of manufacturers of women's, misses', and children's apparel increased from about 52 percent of the value of the products in 1939 to 61 percent in 1958 (96). Salaries and wages increased from about 25 percent of the value of the products in 1947 to 27 percent in 1958. Costs of

contract and commission work increased from 10 percent of the value of the products in 1939 to 15 percent in 1958. Fuel and purchased electric energy were relatively small items of cost, but costs of unspecified items, including depreciation, interest, insurance, rent, taxes, other expenses, and profits ranged from 15.5 percent of the value of the products in 1939 to about 19 percent in 1947, and amounted to 18.5 percent in 1958.

The proportion of gross margins of manufacturers of women's, misses', and children's apparel accounted for by salaries and wâges decreased from about 50 percent in 1939 to 44 percent in 1947, increased to 47 percent in 1954, and amounted to 44 percent in 1958. Decreases in these proportions from 1939 to 1947 and from 1954 to 1958 were associated with increases in proportions accounted for by costs of contract and commission wôrk and by costs of unspecified items, including depreciation, interest, insurance, rent, taxes, other expenses, and profits. The increase from 1947 to 1954 wâs associated with a decrease in costs of the unspecified items, which occurred despite improvements in machinery and equipment used.

In 1958, gross "margins of manufacturers of women's, misses', and children's apparel, by industry, ranged from about 52 percent of the value of the products for women's and children's underwear to 66 pei-cent for women's and misses' dresses (96), In that year, the proportion for each industry, except women's and misses' dresses, averaged higher than that in 1939,1947, and 1954. Salaries and wages in 1958 ranged from about 25 percent of the value of the products for manufacturers of women's and children's underwear to 28 percent for manufacturers of women's and misses' blouses. For most of the industries, the proportion in 1958 averaged as high or higher than that in 1939,1947, and 1954.

Costs of contract and commission work on women's, misses', and children's apparel in 1958 ranged from about 9 pei'cent of the value of women's and children's underwear produced to almost 19 percent of that of women's and misses' blouses. For each industry, the proportion in 1958 was greater than that in 1939, 1947, and 1954. Costs of unspecified items in 1958 ranged from 15 percent of the value of suits and coats to more than 27 percent of the value of women's corsets and allied garments. In 1958, the proportion for all industries, except for women's corsets and allied garments, was greater than that in 1939. It was the same or less than that in 1947, except for women's and misses' suits, coats, and skirts; it was the same or larger than that in 1954, except for women's and misses' blouses and for suits and coats (96),

Gross margins of manufacturers of miscellaneous apparel, accessories, and other fabricated products increased from about 36 percent of the value of the products in 1939 and 1947 to almost 43 percent in 1958 (96). The proportion of the value of the products accounted for by costs of

115

salaries and wages decreased from about 20 percent m 1939 to less than 18 percent in 1947 and then increased to about 23 percent in 1954 and 1958. Costs of contract and commission work increased from 1.5 percent of the value of the products in 1939 to 3.6 percent in 1954 and then decreased slightly to 1958. Costs of unidentified items, including depreciation, interest, insurance, rent, taxes, other expenses, and profits increased from about 15 percent of the value of the products in 1939 to 16 percent in 1947, decreased to 15 percent in 1954, and amounted to more than 16 percent in 1958. ^

The proportion of gross margins of manufacturers of miscellaneous apparel, accessories, and other fabricated products accounted for by salaries and wages decreased from about 50 percent in 1939 to 48 percent in 1947, increased to 55 percent in 1954, and amounted to 53 percent in 1958. The decrease from 1939 to 1947 was associated with increases in proportions accounted for by costs of contracts and commission work and of unidentified items. The increase from 1947 to 1954 was associated with an increase in the proportion accounted for by costs of contract and commission work and by a decrease in the proportion accounted for by costs of unidentified items. The decrease from 1954 to 1958 was associated with a decrease in the proportion accounted for by costs of contract and commission work and by an increase in the proportion accounted for by costs of unidentified items.

In 1958, gross margins of manufacturers of miscellaneous apparel, accessories, and other fabricated textile products, by industry, ranged from about 27 percent of the value of the products for textile bags to 60 percent for waterproof outer garments {96), The 1958 proportions equaled or exceeded those in 1939 for 80 percent of the industries, those in 1947 for 90 percent of the industries, and those in 1954 for 60 percent of the industries. Salaries and wages in 1958 ranged from 16 percent of the value of the products for manufacturers of textile bags to 30.5 percent for manufacturers of fabric and dress gloves. The 1958 proportions for salaries and wages equaled or exceeded those in 1939 for 60 percent of the industries, those in 1947 for 80 percent of the industries, and those in 1954 for 40 percent of the industries.

Costs of contract and commission work on miscellaneous apparel, accessories, and other fabricated products ranged from less than 1 percent of the value of textile bags to more than 11 percent of the value of robes and dressing gowns. The 1958 proportions equaled or exceeded those in 1939 for all the industries, those in 1947 for 60 percent of the industries, and those for 1954 for 40 percent of the industries. Costs of unidentified items in 1958 ranged from about 10 percent of the value of textile bags to more than 20 percent of the value of waterproof outer garments. The proportions in 1958 were greater than those in 1939 for ^0 percent of the industries, greater than those in 1947

for 50 percent of the industries, and greater than those m 1954 for 80 percent of the industries.

Large proportions of gross margins of manufacturers of apparel and related products accounted for by wages and increases in wage rates emphasize the importance of labor in the manufacture of these products. Hourly earnings of laborers in the apparel and related products industries increased from an average of about 53 cents in 1939 to $1.65 in 1962. Average value added by manufacture per dollar of wages paid increased from $2.07 in 1939 to $2.20 in 1947, decreased to $2.04 m 1954, increased to $2.24 in 1961, and amounted to $2.21 in 1962. The decrease from 1947 to 1954 occurred despite improvements in machinery and equipment used, and the increase from 1954 to 1961 may be accounted for in part by further improvements in machinery and equipment used. Value added per hour of labor increased from $2.45 in 1947 to $3.27 in 1958 and to $3.64 in 1962, but value added per dollar of payroll decreased from $1.76 m 1947 to $1.61 in 1954, increased to $1.78 in 1961, and amounted to $1.71 in 1962.

Average wage rates per hour and average value added by manufacturers of apparel and related products per hour of labor, per dollar of wages, and per dollar of payroll varied considerably from one geographic division to another (table 85). In 1947, 1954, and 1958, wage rates per hour and value added per hour of labor averaged lowest in Southern and highest in Middle Atlantic, North Central, and Pacific Coast States. Value added per dollar of wages and per dollar of payroll varied irregularly from one geographic division to another (table 85).

Geographic variations in wage rates per hour, when related to corresponding variations in value added by manufacture per hour of labor, gave a correlation coefficient of 0.97 for each of the years 1947, 1954, and 1958. An increase of 1 percent in value added per hour of labor from one geographic division to another was associated, on the average, with an increase in wage rates per hour of 1.1 percent in 1947, about 0.8 percent in 1954, about 0.6 percent m 1958, and 0.9 percent for all 3 years combined. Apparently the relationship between wage rates and value added per hour of labor largely account for the irregular variations in value added by manufacture per dollar of wages and per dollar of payroll from one geographic division to another (table 85).

In 1958, wage rates per hour paid by manufacturers of apparel and related products and value added per hour of labor, per dollar of wages, and per dollar of payroll varied irregularly with the number of employees per company. The averages were lower for companies with 250 to 499 employees than for companies with smaller and larger numbers of employees {96), Similar data on establishments in 1947 and 1954 show like relationships {U). The relatively high average values added by the smaller establishments may be ac-

116

counted for by larger proportions of active proprietors to employees for the smaller than for the larger establishments.

In 1947, 1954, and 1958, value added by manufacturers per dollar of payroll varied considerably from one kind of product to another {96), In the men's and boys' wear industry, average value added per dollar of payroll in 1958 ranged from $1.56 for separate trousers to $1.82 for neck-

wear. Similar data for women's and children's wear show a range from $1.54 for hats and caps to $2.04 for corsets and allied garments. For miscellaneous products, value added per dollar of payroll ranged from $1.53 for canvas products to $1.85 for robes and dressing gowns. Similar variations in value added per dollar of payroll are indicated for other apparel and related product industries and for other years {96).

TABLE 85.—Value added iy manufacturers of apparel and related products per dollar of payroll^ per dollar of wages^ per hour of labor,, and wage rates per hour,, iy geographic division,, 19Jf7, 1964, and 1958 ^

New England Middle Atlantic East North CentraL West North Central. South Atlantic East South CentraL, West South Central. Mountain Pacific

United States

New England Middle Atlantic East North CentraL West North CentraL South Atlantic East South CentraL. West South CentraL Mountain Pacific

United States

New England Middle Atlantic East North CentraL West North Central- South Atlantic East South CentraL. West South CentraL Mountain Pacific

United States

1947

1,000 dollars 279, 981

2, 695, 194 505, 872 187, 519 327, 314 132, 696 98, 203 9,824

206, 770

4, 443, 373

Dollars L77 L74 1.74 L75 L87 1. 80 1. 96 1. 82 1.70

1.76

Dollars 2. 21 2. 18 2. 29 2. 31 2.25 2. 12 2.53 2. 34 2. 11

2. 20

Dollars 2. 23 2.74 2.39 2.07 L91 1.50 L76 1. 86 2. 65

2. 45

1954

362, 163 2, 879, 632

495, 060 212, 260 468, 739 256, 962 143, 844 16, 539

312, 172

5, 147, 371

1.60 1. 61 1. 56 1. 58 1.60 1. 62 1. 61 1. 62 L71

1. 61 2. 04

1.96 2.56 1. 30 2.05 2. 99 L46 2. 14 2.93 L37 2.08 2. 54 1. 22 L93 2. 07 L07 L87 L82 .97 2. 03 2.04 L 00 2. 14 2. 31 L08 2.23 3.25 1. 46

2. 71

1958

429, 129 3, 207, 276

526, 863 234, 363 640, 955 373, 604 203, 411 24, 896

363, 356

6, 003, 853

1.63 1. 70 L63 L67 1.66 1. 59 1.61 1.63 L74

1. 67

2.08 2. 23 2. 25 2. 20 2. 05 1. 82 1. 99 2. 17 2. 33

2. 17

3. 14 3.67 3. 60 3.09 2.60 2. 20 2. 45 2.93 3. 79

3. 21

Dollars LOI 1. 26 L04 .90 .85 .71 .70 .80

1. 26

L 11

L 33

1. 51 1. 64 L 60 1. 40 1. 27 L 21 1. 23 1. 35 1. 62

L51

A...^Î?l ^^^^' ^""^^^ ^"^^^^ '^fâ^'"^^^^^ ^^ taking into account value added by manufacturing operations and changes during the year m inventories of finished goods and work-in-process. Data for 1954 and 1947 are unadjusted.


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Value added per dollar of payroll in 1947,1954, and 1958 by establishments owned and operated by corporations averaged less than that for establishments owned by partnerships and more than that for those owned by individuals (table 86). Simi- larly, value added per dollar of payroll averaged more for establishments operated as multiunits than for those operated as single units.

In 1958, value added by manufacturers of apparel and related products per dollar of wages and per dollar of payroll varied irregularly with the degree of primary product specialization, according to census reports. Establishments \yith 75 to 89 percent of primary product specialization apparently added somewhat more value per dollar of wages and per dollar of payroll than those \yith a higher or lower degree of product specialization.

Value added by these manufacturers per dollar of payroll in 1954 and 1958 varied irregularly with the degree of integration (96), For manufacturers of clothing, value added per dollar of payroll varied directly with degree of integration, but for manufacturers of other apparel and related products, the reverse apparently was true.

Median profits of manufacturers of apparel and household textiles, after Federal income and excess-profit tax deductions, increased to 1.4 percent of net sales in 1962, but continued to be substantially lower than those in the late 1940's (table

87). In 1962, these profits increased to about 7 percent of tangible net worth, but they also continued to be relatively lower than median profits in the late 1940's.


Gross margins of manufacturers of apparel and related textile products increased from about 48 percent of the value of the products in 1939 to almost 57 percent in 1958. The proportion of these margins accounted for by salaries and wages increased from 45 percent in 1947 to 50 percent in 1954 and amounted to 47 percent in 1958.^ Aver- age hourly earnings of wage workers in this industry in 1962 were about 24 percent higher than those in 1954 and about 49 percent higher than those in 1947. These changes emphasize the importance of making full use of technological developments and of improving organization and operation so as to increase the efficiency and reduce the costs of manufacturing apparel and household textiles.

Time studies may be useful in making improvements. Other means might include further development of mutual understanding and cooperation on the part of labor and management in formulating and carrying out plans for the modernization and improvement of plant operations. Modernization might include the installation of

TABLE Sñ.—Value added hy manufacturers of apparel and related products, hy type of ownership and operation, united States, 191^7,195Ji,, and 1958 ^


Type of ownership and operation Total Per dollar of payroll

1947 1954 1958 1947 1954 1958

Ownership : OoT'nOT'fl't'iP - - - -

1000, dollars 3, 225, 947

857, 078 350, 208

10, 140

1,000 dollars 4, 006, 547

743, 775 382, 299

14, 751

1,000 dollars 4, 936, 120

669, 856 395, 287

2,590

Dollars 1. 77 1. 80 1. 59 2. 05

Dollars 1. 60 1.69 1.50 1.63

Dollars 1.67

PartnershiD - - - 1. 75 TnHividiial - - - - - - 1. 61

Other 1. 12

AU 4, 443, 373 5, 147, 372 6, 003, 853 1. 76 1.61 1. 67


r^nmorat/e - 2,311,625 1, 152, 089

2, 632, 649 1, 090, 687

2, 981, 458 1, 008, 619

1. 73 1. 73

1. 56 1. 62

1. 62

Other 1. 69

All 3, 463, 714 3, 723, 336 3, 990, 077 1. 73 1. 57 1. 64

Multiunit: CorDorate 914, 322

65, 337 1, 373, 899

50, 137 1, 954, 662

59, 114 1. 86 1. 75

1. 70 1.71

1.75

Other 1. 76

All 979, 659 1, 424, 036 2, 013, 776 1. 85 1. 70 1. 75

All 4, 443, 373 5, 147, 372 6, 003, 853 1.76 1. 61 1. 67

1 For 1958 value added is adjusted by taking into account value added by merchandising operations and changes during the year in inventories of finished goods and work-in-process. Data for 1954 and 1947 are unadjusted.


118

TABLE 87.—Median net profits of manufacturers of apparel and household textiles as proportions of net sales and of tangible net worthy hy kind of products^ united States^ specified years^ 1933-62

Product N et profits ^ as proportion of net sales '

1935-39 1941 1945 1948 1953 1958 1959 1960 1961 1962

Women's coats and suits Dresses, rayon and silk Men's and boys' clothing Men's shirts, underwear, and pajamas Overalls and work clothing Knit outerwear Hosiery

Women's coats and suits Dresses, rayon and silk Men's and boys' clothing Men's shirts, underwear, and pajamas Overalls and work clothing Knit outerwear Hosiery

Percent 0. 14

. 37

. 61

. 71 1. 04

. 79 1. 65

Percent 1. 42

. 74 2. 04 1. 79 3. 84 2. 18 3.35

Percent 4. 00 3. 27 4. 05 2. 26 3. 56 3. 96 3. 42

Percent 3. 13 1. 29 2. 47

. 56

Percent 0. 36

2. 06 6. 65

04 03 62 94 14 87

Percent 1. 07

. 26

. 70 1. 42 2. 01

. 96 1. 11

Percent 0. 69

. 36 1. 05 1. 48 1. 78

. 97 2. 83

Percent 1. 13

. 41 1. 05 1. 50 1.08 .84

1. 46

Percent 1. 32

. 63

. 65 1. 64 1. 85

. 90 2. 91

Net profits as proportion of tangible net worth ^

1. 15 2. 75

93 35 14 99 04

Percent 1.37 1. 11

. 80 2. 23 1. 69 1. 20 1. 56

9. 56 21.96 13. 00 3.52 8.95 6. 65 8. 98 9. 71 8. 57 17. 85 10. 50 9. 04 2. 92 4. 26 4.20 6. 26

10. 79 16. 04 10. 10 4. 81 2. 81 5. 06 5.35 3.49 9. 68 10. 73 2. 81 7. 29 6. 00 7. 70 8. 15 9. 10

14. 49 11. 80 7. 16 5. 88 5. 79 5. 18 7.35 10. 70 17. 41 8. 51 8.62 5. 27 4. 52 4. 69 6. 44 11.90 10. 75 10. 41 3. 63 3.95 5.93 4. 25 6. 97

11.80 8. 53 5. 49 6.96 6. 57 7. 25 5. 05

1 Profit after full depreciation on buildings, machinery, equipment, furniture, and other assets of a fixed nature; after reserves for federal income and excess-profit taxes; after reductions in the value of inventory to cost or market, whichever is lower; after charge-offs for bad debts; after all miscellaneous reserves and adjustments, but before dividends or withdrawals.

2 The dollar volume of business transacted for 365 days net after deductions for returns, allowances, and discounts from gross sales.

2 The sum of all outstanding preferred or preference stocks (if any) and outstanding common stocks, surplus, and undivided profits, less any intangible items in the assets, such as goodwill, trademarks, patents, copyrights, leaseholds, mailing lists, treasury stock, organization expenses, and underwriting discounts and expenses.

Adapted from {S3).

more improved macliinery and equipment, organization of the plant so as to utilize the machinery and equipment to best advantage, and development of improved working conditions so as to at- tract and hold competent workers. Moderniza- tion of plants might well be supplemented by in-service training programs to improve the skill of employees and by the assignment of the right men to the right jobs so as to utilize fully the natural capacities and developed skills of the employees. It may also be supplemented by sys- tematic advancements in accordance with ability and demonstrated performance to encourage ini- tiative and eíRciency and by prompt and effective means for locating and removing causes of labor turnover and costly slowups in production. Mod- ernization of plants and utilization of workers to their full potentialities, to the mutual benefit of workers and management, are apparently important means of reducing the cost of manufacturing apparel and household textiles.

A report from the research department of the Amalgamated Clothing Workers of America indicates that improvements in management represent the easiest road to increased efficiency, since the garment industry is not highly mechanized {119). The training and maintenance of an adequate staff of "utility" operators who are skilled in a

numJDer of operations was suggested as one of the improvements needed. Through the use of such operators, a high rate of production can be maintained despite the high rate of turnover of employees and the specialized training needed.

Many manufacturing establishments apparently are too small to make full use of the more efficient operating methods and equipment. Census reports show that in 1958 about 24 percent of the establishments in the apparel and related products industry had fewer than 5 employees, more than 39 percent had fewer than 10 employees, about 56 percent had fewer than 20 employees, and about 72 percent had fewer than 50 employees. It is apparent from these data that the size of many of the establishments would have to be increased before they could fully utilize improvements in technology and methods. But large mechanized factories operated on a mass production basis are limited by the demands of fashion, particularly for women's wear, which require wide ranges in and frequent changes of styles.

Some indication of the effects of styling on cost of women's dresses, for example, may be obtained from the following situation. From 1940 to 1942, average gross margins of manufacturers ranged from about 42 percent of the value of the products for price lines up to $3.75, for which styling was

119

of relatively small importance, to more than 60 percent for price lines $29.76 and above, for which styling was of relatively great importance {Jf7), Style is an important consideration also in connection with men's and boys' clothing, girls' and children's wêar, and other apparel and household textiles. Designers and manufacturers constantly create new styles, but it is reported that only about 15 to 25 percent of the new designs in women's garments sell in quantity and that fully half represent pure waste {2Ji). Manufacturers are said to defend this waste as a variety of research that is necessary to find out what consumers want. If consumers were willing to use products made by the same or similar pattern in large quantities and to change styles only at infrequent intervals, substantial reductions in costs of manufacturing would be possible.

Information available indicates the possibility of reducing some costs through integration. Cen- sus data for 1954 and 1958 show that the value added by manufacture of women's and children's clothing, except millinery and fur goods, per dollar of payroll, averaged about 13 percent more for multiunit than for single-unit companies. For multiunit companies, value added per dollar of payroll averaged about 17 percent more for multi- industry companies than for single-industry companies. Similar data for manufacturers of men's and boys' clothing show smaller proportions in favor of multiunit and multi-industry companies.

Apparently opportunities for integration in the women's ready-to-wear industries are limited by the pyramiding of style risks and the inability to provide the variety demanded by retailers {31). lEven in making housedresses, which are made on a relatively large scale, integration of the converters and fabricators is difficult because the degree to which any one fabric design is used seldom justifies the garment manufacturer's entrance into the converting field.

Manufacturers of shirts have had more success in combining converting with cutting than have manufacturers of dresses. Variety in styles and patterns of shirts is less important, and the converting of plain and bleached fabrics has been imdertaken with relatively small risk. Large cutters of branded shirts particularly have been able to control both cost and quality by converting their own gray goods. Mills producing fabrics have had less success in their attempts in forward integration, as competition in the market is keen and margins are small. However, a few textile companies that sell a variety of fabrics have gone into shirtmaking as a sideline. The most difficult problems reported thus far have been in distribution rather than in manufacture.

In the overalls manufacturing industry, integration has seldom been successful {31), Widely different scales of operations must be held to in producing the fabric and in cutting the garments. To produce denim at low cost, mills must

be of considerable size—too large to establish plants that would be able to use the fabric produced. An additional problem is faced by the cutter, since, because of the nature of denim, integration cannot be limited to converting, as in the shirt industry, but must include both weaving and spinning facilities. Apparently this problem is not insurmountable, but a substantial additional investment is required, as well as sufficient man- agerial skill to cover the wide range of operations iî)- ...

Vertical integration has been infrequent in the garment industry, but it does exist in many household textile manufacturing industries {31), Whether the firm is integrated or specialized depends mainly upon the importance of variety in the product and how this variety is obtained. Integration is common in the sheet industry, as variety is of little importance and no distinctive features are added in the fabrication. The jacquard bedspread industry is almost entirely integrated at the mill. Jacquard spreads are varied, but this is not a result of fabricating. The variety is obtained during preceding processes. Other household textiles of which this is true are blankets, towels, table linens, and lace curtains {31).

A different situation is found in firms manufacturing a few household textiles, such as novelty curtains, tailored bedspreads, and draperies. Lit- tle integration is found in these firms, as the distinctive features desired are added after the weaving and converting processes {31 ).

It is evident from the foregoing that effective information is not adequate to indicate specifically the most effective means to increase the efficiency and to reduce the cost of manufacturing apparel and household textiles. Detailed analyses of cost data for a representative sample of the establishments in each important segment of the industry are needed to show the influence of the various factors on the costs of labor, overhead, and other items at each stage or process of manufacturing specified kinds of products. Detailed specifications also are needed, on the basis of cost-engineering data and other information^ for model, low-cost establishments manuf acturnig typical kinds of apparel and household textiles. These specifications would show the most desirable buildings, machinery and equipment ; floor plans ; labor requirements ; operating programs; and production data. Detailed cost data for the processes and operations involved also are needed.

As this information is mainly for the use of operators in the particular segment of the industry involved, their advice and assistance in planning and developing the research may be used to advantage. The nature of the industry manufacturing apparel and household textiles is such that the research would require the services of personnel with broad training and experience in cost engineering relating to the particular segment of the industry under consideration. The approach

120

proposed was used in research relating to the manufacture of carded cotton yarn {105), Eesults indicate that the methods and techniques developed, with appropriate modifications, may be applicable to other segments of the textile industry.

From the viewpoint of costs, the relative importance of increasing efficiency and of reducing the cost of manufacturing apparel and household textiles may be indicated by data on manufacturers' gross margins. In the early 1950's and 1960's, these margins averaged about 29 percent of the

consumer's dollar paid for the finished products, about 21/^ times the returns to growers for production of the cotton and wool used, and more than 12 times total costs of merchandising the raw fibers. A reduction of 10 percent, for example, in these margins would exceed an increase of 25 percent in returns to growers for farm production of the cotton and wool used, and would also exceed the total cost of merchandising the raw cotton and wool, including the ginning and baling of cotton but not the scouring of wool.

WHOLESALING TEXTILE PRODUCTS

Textile products are distributed to consumers through several combinations of agencies. They are sent from spinning and weaving mills, dyers and finishers, manufacturers of knit goods, and manufacturers of apparel and related products. An important channel of distribution, particularly in earlier years, was from manufacturers to wholesalers to retailers to consumers. In recent years, the manufacture and distribution of textile products have been integrated to a considerable extent. Price and production regulations during World War II apparently favored the extension of unified control (ö"^), and mergers in the textile industry reached a high rate in 1947. From 1948 through the early 1950's th^, rate declined. Following this decline in rate of mergers, another wave of mergers started in 1953 and, except for some letup in 1957 and 1958, continued to the early 1960's.

Wholesale distribution of textile products applies to intermediate or partially manufactured products as well as to finished products to ultimate consumers. Information on wholesaling methods, practices, charges, and costs is presented separately for partially manufactured products and for products ready for ultimate consumption. This grouping is not entirely satisfactory because the same wholesalers may handle both kinds of products, and in many instances adequate information is not available to indicate differences in methods, practices, charges, and costs for different kinds of products.

Partially Manufactured Products

Intermediate or partially manufactured products include yarns and fabrics, but some yams and fabrics are ready for distribution to ultimate consumers when they leave the mill. In- formation presented here on partially manufactured products is limited mainly to wholesale distribution services of manufacturers, finishers or converters, and merchant wholesalers. Most of these agencies also handle products ready for distribution to ultimate consumers, and any differences in methods, practices, charges, and costs in distributing the two kinds of products are not always clearly indicated.

METHODS AND PRACTICES

Information on methods and practices in distributing yarns and fabrics as intermediate products is presented here.

Yarn

As indicated earlier (p. 35), about three-fourths of the yam produced on the cotton system is retained by producers for weaving into fabrics. The yarns shipped in 1958 were distributed by the manufacturer mainly to other plants of the same company or to other manufacturers. Less than 10 percent were distributed to merchant wholesalers and to others (table 8, p. 35).

Integrated weaving mills try to maintain a balance in their manufacturing operations by buying yarns needed in addition to their spinning capacity or^ by selling surplus yarns produced. Knitting mills apparently can operate economically when they are too small to use all the yarn turned out by an efficient spinning mill. Con- sequently, most knitters find that they can buy yarn more cheaply than they can make it. In addition, some types of yarn require specialized skills {27).

Yarns of uniform quality usually are manufactured in larger quantities than are required by individual customers. A basic problem in marketing this yam is to break up these large lots into smaller lots needed by customers and to distribute to users small quantities of the types and grades needed. To make such distribution economically, substantial stocks of yarn, made up of a great many different types and grades, are brought together under the control of one marketing agency. This arrangement tends to reduce the customer's trouble and expense by enabling him to obtain his requirements from one or a few sellers. It also benefits sellers, in that it reduces the cost of selling by enabling one seller to handle yarns from many spinners.

Producers of yam for sale usually do not limit themselves to any one basis of operation in selling their products. They use different agencies and processes in dealing with different purchasers. Procedures and agencies involved in distributing sales yam include: (1) direct sales of yam by

736-806—^64- 121

Spinners through their own sales staJïs and offices, with or without the services of brokers; (2) sales to merchants or dealers, who in turn resell to consumers; (3) sales b}^ spinners exclusively through agents who maintain offices and sales staffs in central marketing centers; and (4) distribution through a combination of sales through agents and direct sales to users.

Fabrics

A large proportion of fabrics, as they leave the mill, represent intermediate products ready for converters, fabricators, or industrial users. Some, however, are fabricated by mills into such items as sheets, pillowcases, towels, and bedspreads ; and some are sold as finished piece goods ready for sale to ultimate consumers. Manufacturers sell textile fabrics largely to converters, fabricators, industrial users, and wholesalers and jobbers; but considerable proportions, particularly of piece goods and fabricated products, are sold to retailers, including chains, and through manufacturer owned and operated outlets.

Substantial proportions of broadwoven fabrics made of cotton and manmade fibers are sold in the gray to converters, but usually woolen and worsted fabrics are finished before they are sold by the manufacturer. The marketing of gray cloth to converters is concentrated mostly in the hands of a few selling agents and brokers whose main offices are in New York City. Sales to converters usually are made by selling agents or mill selling offices through cloth brokers. The function of these brokers is to bring converters and mill selling representatives together. Mill sales of gray goods to industrial users usually are made directly by mills or through agents, on the basis of specifications.

Census data show that in 1958 the value of cotton broadwoven gray goods distributed by manufacturers totaled $1,973 million. Of the total amoimt distributed, about 25 percent went to other manufacturers, 22 percent to other plants of the same company, 21 percent to merchant wholesalers, 8 percent to other wholesalers of the same company, and 18 percent was sold through manufacturers' sales offices and branches, mainly to other manufacturers and merchant wholesalers. Small proportions went to retailers and other buyers. The value of broadwoven gray goods made of manmade fibers totaled $991 million. Of the total amount, 29 percent went to merchant wholesalers, 19 percent to other manufacturers, 24 percent to other plants and wholesalers of the same company, and 22 percent was sold through manufacturers' sales offices and branches, mainly to merchant wholesalers and other manufacturers. Small proportions went to retailers and other buyers.

Gray goods usually are bleached, mercerized, dyed, printed, or finished in other ways before they are used by cutters and others. A large part of the finishing is done by or for the manufacturer before

the fabric is sold. But considerable quantities of gray goods made of cotton and manmade fibers, and some woolen and worsted fabrics, are finished by establishments primarily engaged in finishing operations. Manufacturers' sales of finished fabrics usually are made directly or through their sales offices and branches to other manufacturers, mainly cutters.

Gray-goods markets for knit goods are relatively unimportant, as most knit goods are finished by mills before they are sold. Piece dyeing was developed for full-fashioned hosiery as early as 1918, but a gray-goods market for these products was not developed until the early 1930's. In more recent years, considerable proportions of full- fashioned hosiery have been finished by mills other than those that do the knitting, but only a small part of the finishing is done through converters. Most of the unfinished hosiery is sold to or knit on commission for other mill operators who usually finish it in their own plant, but some hosiery is sold unfinished to converters and others, v/ho have it finished on commission. Gray-goods markets for seamless hosiery are limited to relatively small quantities that are knit on commission for hosiery mills. Some knit underwear fabrics are sold in the gray, but the volume is relatively small.

CHARGES OR COSTS INVOLVED

Information relating to charges and costs involved in the wholesale distribution of yarns and fabrics as intermediate textile products is presented here.

Yarn

Charges or costs involved in wholesale distribution of yarns usually cover selling expenses of yarn manufacturers, including commissions for selling agents, brokers, and commission merchants, as well as margins for wholesalers, including wholesale merchants, manufacturers' sales offices and branches, and other intermediaries.

Data on wholesale distribution of yarn in 1958 are not available, but commissions received in 1954 for tlie sale of yarns, valued at $263 million, sold through merchandise agents and brokers averaged 2.5 percent of the selling price. Most of this yarn was sold to industrial users and to retailers, but 4.5 percent was sold to wholesale organizations for further distribution. Operating expenses of merchant wholesalers for selling industrial yarns, valued at $192 million in 1954, averaged 6.9 percent of sales, according to census reports. Almost 10 percent of these sales were made to other wholesalers (4^^).

Census data on merchant wholesalers show that operating expenses decreased from 8.3 percent of the value of the yam sold in 1939 to 6.9 percent in 1948 and 1954. These expenses varied inversely with the size of the establishment as indicated by annual volume of sales. In 1954, they ranged from an average of 3.5 percent of sales for estab-

122

lishments with annual sales of $5 million and over to 30.4 percent for establishments with annual sales of less than $50,000. These operating expenses include no compensation for active proprietors of unincorporated businesses or for profits (^-^).

Payrolls accounted for about 48 percent of total operating expenses of merchant wholesalers in 1954, about the same as in 1939 and slightly less than in 1948. The ratio of the number of active proprietors to paid employees decreased and proportions of total operating expenses that were accounted for by payrolls increased with increases in the size of the establishments, as indicated by volume of sales (^4) •

Fabrics

Any evaluation of the charges or costs of distributing textile products involves consideration of the marketing agencies involved, the kinds of goods distributed, and the marketing services performed. Selling expenses of textile manufacturers include those for selling gray goods to converters, industrial users, wholesalers, and others ; those for selling finished fabrics to fabricators, industrial users, wîolesalers, retailers, and others; and those for selling fabricated products to wholesalers, retailers, and others.

Data on operating expenses of manufacturers' sales offices and branches for selling textile mill products in 1958 are not available. In 1954, these expenses, valued at $1,810 million, averaged 5.8 percent of total sales. Operating expenses for selling broadwoven fabrics, valued at $475 million, averaged 5 percent of total sales. About 45 percent of the sales of fabrics and 27 percent of the sales of all textile mill products combined were made to merchant wholesalers. Brokerage, or commissions, received by merchandise agents and brokers for sale of piece goods in 1954, valued at $2,521 million, averaged 3.1 percent of sales. About 35 percent of these sales were made to wholesalers (^|).

Operating expenses of converter wholesalers of piece goods increased moderately up to 1958, when they represented 10.2 percent of total sales (table 88). These expenses varied inversely with the size of the operating units, as indicated by volume of sales. In 1958, they ranged from 8.8 percent for establishments with sales of $5 million or more to 26.6 percent for establishments with sales of less than $50,000. The proportion of expenses accounted for by payrolls decreased from about 52 percent in 1948 to 47 percent in 1958. In 1958, piece good converters sold about 31 percent of their products to wholesale organizations, 31 percent to retailers, 25 percent to industrial and commercial users, and smaller proportions to exporters and other customers.

Similar data for merchant wholesalers of piece goods show that their operating expenses also increased moderately, amounting to 12.8 percent in 1958 (table 88). They varied inversely with the

size of the operating unit, ranging in 1958 from 9.7 percent for establishments with sales of $5 million or more to about 26 percent for establishments with sales of less than $100,000. Payrolls accounted for about 48 percent of total expenses in 1958, about the same as in 1948. In 1958, wholesalers distributed about 56 percent of their piece goods to wholesale organizations, 22 percent to retailers, 14 percent to industrial and commercial users, and smaller proportions to exporters and others.

TABLE 88.—Number of establishments^ value of sales^ operating expenses^ and payroll for converter wholesalers and merchant wholesalers of piece goods^ hy size group^ united States^ 1958 ^

Type of wholesaler and size group by

volume of sales (1,000 dollars)

Es- tab- lish-

ments

Total sales

Oper- ating ex-

penses as pro-

portion of sales

Pay- roll as

propor-

tion of sales

CONVERTER WHOLESALERS

All Number

679 1,000 dollars

1, 294, 007 Percent 10. 2

Percent 4.8

5,000 or more 43 85

123 161 86 56 73 25 27

667, 090 268, 925 177, 395 117,810 34, 699 14, 080 11, 308 1,836

864

8.8 11.0 10.7 13. 2 13. 1 14. 6 17.6 22.4 26.6

4.2 2,000 to 4,999 5. 1 1,000 to 1,999 4.9 500 to 999 6. 6 300 to 499 6.3 200 to 299 -- - --- 7.0 100 to 199 50 to 99 -

8.9 9. 1

Less than 50__ 11.9

MERCHANT WHOLESALERS

All -_- 1,891 1, 257, 738 12.8 6.2

5,000 or more _ _ 29 93

195 304 246 221 334 231 238

272, 499 269, 546 273, 101 218, 629

97, 147 54, 711 48, 649 17, 493 5,963

9.7 11. 2 12. 2 14.4 16. 0 16. 8 17.8 26. 0 25. 8

4.5 2,000 to 4,999 _ __ _ 5. 5 1,000 to 1,999_ _ - _ 6.0 500 to 999_ _____ 7.0 300 to 499 -_ 7.8 200 to 299 __ 8.2 100 to 199__ 8.3 50 to 99 - 11.0 Less than 50 11. 1

1 Operating expenses include no compensation for active proprietors of unincorporated businesses.

Adapted from Census of Business, Wholesale Trade.

Administrative and selling expenses are the principal items in total operating expenses of wholesalers of piece goods. Census data for 1948 (data for more recent years are not available) show that these two items accounted for about 80 percent of total operating expenses for converter wholesalers and 77 percent of these for jobber wholesalers. Operating expenses of corporate wholesalers, as proportions of sales, averaged sub-

123

stantially more than those of noncorporate wholesalers, particularly for the medium and smaller establishments. These differences may be accounted for in part by the fact that these expenses do not include compensation for active proprietors of unincorporated businesses.

Ratios of operating expenses to sales of piece goods by converter wholesalers varied widely, according to census reports. In 1958, operating expenses of about 16 percent of these wholesalers amounted to less than 7 percent of sales, whereas operating expenses of more than 9 percent of the wholesalers amounted to 25 percent or more of sales. Of the establishments with annual sales of $1 million or more, about 27 percent had operating expenses of less than 7 percent of sales and about 3 percent had operating expenses of 25 percent or more of sales. For establishments with annual sales of less than $200,000, about 5 percent had operating expenses of less than 7 percent of sales and 29 percent had operating expenses of 25 percent or more of sales (table 93, p. 129).

Of the merchant wholesalers of piece goods, about 8 percent had operating expenses of less than 7 percent of sales in 1958 and 21 percent had expenses of 25 percent or more. Of establishments with annual sales totaling $1 million or more, about 23 percent had operating expenses of less than 7 percent, and about 5 percent had operating expenses of 25 percent or more of total sales (table 93, p. 129).

Most of the establishments operated by converter wholesalers, merchant wholesalers, and agents and brokers of piece goods are operated as single units, according to census reports. In 1954, the average value of annual sales per establishment and operating expenses, as proportions of total sales, for each type of selling agency were less for establishments operated as single units than for those operated as multiunits (^4).

MEANS AND IMPORTANCE OF IMPROVEMENT

Means of improving the efficiency and of reducing the cost of distributing partially manufactured or intermediate textile products include increases in the general efficiency of individual agencies and concentration of services in the hands of the agencies that are best adapted to perform them. Increasing the general efficiency of individual establishments would involve consideration of such problems as the organization and operation of the establishments, selection and management of personnel, location of place of business, selection and arrangement of facilities and equipment, kinds of services performed, volume of operation, and purchase and sales policies. Detailed information on the influence of each important factor on efficiency and costs would be needed to indicate the most effective means of bringing about improvements. Only a part of this information is now available.

The fact that operating expenses represent a

smaller proportion of total sales of the larger wholesalers than of the smaller ones indicates that the cost of distributing intermediate textile pjrod- ucts might be reduced if the volume of business of many wholesalers were increased. Census reports show that in 1954, for example, total operating expenses of wholesale yarn merchants ranged from an average of 3.5 percent of total sales for concerns with annual sales of $5 million or more to 30 percent for concerns with annual sales of less than $50,000. Similar data for piece goods in 1958 show that operating expenses of converter wholesalers ranged from less than 9 percent of total sales for concerns with annual sales of $5 million and more to 26 percent for concerns with annual sales of less than $50,000. For merchant wholesalers of piece goods, these proportions ranged from less than 9 percent of total sales for concerns with annual sales of $5 million or more to 26 percent for those with annual sales of less than $100,000. But it is not known to what extent these differences in operating expenses may be accounted for by differences in services performed or in other factors.

A comparison of expenses of wholesaling piece goods through different agencies indicates the possibility of some reductions in costs of wholesale distribution through integration of the manufacturing and distributing functions. Operating expenses of wholesaling piece goods in 1958 averaged 12.8 percent of net sales for merchant wholesalers, 10.2 percent for converter wholesalers, 9.1 percent for manufacturers' sales branches, 4.5 percent for manufacturers' sales offices, and 1.6 percent for merchandise agents and brokers, according to census reports. But information is not available to show the extent to which these differences may be accounted for by differences in services performed.

The possibility of improvements through reductions in unnecessary handling of products, the development and use of quality standards as a basis for sales on description, vertical^ and horizontal integration, and the modernization of equipment and methods need to be explored and evaluated as means of increasing efficiency and reducing costs of distributing intermediate textile products. Additional information is needed to show the influence of the various factors on the adequacy and costs of each important process or service involved. Some means that might be used in obtaining such information are presented in another section of this report (p. 132).

The relative importance of increasing efficiency and reducing costs of wholesale distribution of intermediate textile products may be indicated by the fact that gross margins of wholesalers of piece goods may average as great or greater than total costs of merchandising the raw cotton and wool used. But gross margins of these wholesalers averaged substantially less than those for manufacturing and retailing the fiinished products.

124

Products for Ultimate Consumers

Textile products for ultimate consumers include sewing thread and a wide variety of knitting, crocheting, and other yarns used by household consumers ; gray goods, yarn-dyed goods, and finished goods for sale in the piece to consumers, such as print cloth, sheeting, drill, chambray, and shirt- ing; household furnishings, such as sheets and pillowcases, bedspreads and blankets, towels and bath mats, rugs, tablecloths, and napkins; and wearing apparel for men, women and children. Most of the thread, yarn, piece goods, and household furnishings are ready for consumers when they leave the manufacturing establishments. In addition, most knit products of hosiery and underwear factories leave the mill as completed goods for consumers.

Apparel for men, women, and children is mainly the product of the cutting trade. The terms "cutters" and "cutting-up trade" may be applied to all branches of the textile industry that charac- teristically perform cut-and-sew operations on purchased fabrics (69). The cutting-up trade includes several thousand manufacturers of many kinds. They range from very large companies that operate several factories, as is common in the manufacture of men's shirts and work clothing, to small family shops, which are common in the manufacture of mattresses and some other household products. These establishments are scattered throughout the industrial districts of the country, although in some instances manufacturers of particular products are concentrated in relatively small areas.

Data on the distribution of apparel and other fabricated products made of cotton, wool, and manmade fibers usually are not reported separately.

Many fabricated products are made of two or more kinds of fabrics, and many fabrics are made of two or more kinds of fibers. Consequently, most of the data on distribution of products are not segregated to show those made of cotton, wool, silk, manmade fibers, or some combination of these fibers.


Wholesale distribution of textile products for ultimate consumers involves the services of merchant wholesalers, manufacturers' sales branches and offices, and merchandise agents and brokers. Merchant wholesalers buy and sell merchandise on their own account. They sell principally to retailers, wholesale organizations, or to industrial, commercial, or professional users. Usually they carry stocks assembled in large lots and redistrib- ute them through salesmen. They extend credit to customers, make deliveries, service merchandise sold, and give advice to the trade. Manufacturers' sales branches and offices are establishments owned by manufacturers and maintained apart from manufacturing plants primarily for selling their products at Avholesale. Merchandise agents and brokers are operators in business for themselves, and primarily engaged in selling or buying goods for others.

In 1958 textile products valued at $5,294 million were distributed by 7,968 merchant wholesalers to retailers, wholesale orginazations, industrial users, and others (table 89). The proportion of total sales that wênt to retailers averaged 46 percent, and ranged from about 12 percent for other specialty line dry goods to 92 percent for men's and boys' apparel and accessories. The proportion that went to wholesale organizations averaged 31 percent and the proportion that went to indus-

TABLE 89.—Number of merchant icholesalers of textile products^ total sales^ and proportion of sales to specified customers^ hy kind of product^ united States^ 1958

Establish- ments Total sales

Proportion of sales to—

Kind of product Industrial

users Whole- salers

Retailers All other

Dry goods Number

4, 410 i,000 dollars 3, 368, 771

Percent 21.3

Percent 49.2

Percent 22. 6

Percent 6. 9

General line _ 105 1, 926

785 912 682

153, 203 1, 269, 673

396, 442 252, 819

1, 296, 634

3.3 14. 1 24. 8 25. 4 32. 7

1.8 55. 8 30. 7 34. 8 52. 1

90. 6 21. 5 30. 9 38. 3 11. 6

4.3 8.6

13. 6 1. 5 3.6

Piece goods (wholesalers) _ _ Piece goods (converters) Notions Other specialty lines

Apparel, accessories, etc 3,558 1, 925, 171 1.8 7. 9 85. 4 4.9

Men's and women's 462 1, 025 1, 373

518 180

370, 483 482, 502 749, 729 249, 242

73, 215

1. 6 1. 4

. 2

. 4 26.8

2.9 1. 7

15. 3 6. 1 4. 5

90. 6 92. 1 79. 6 88. 1 65. 2

4. 9 4. 8 4. 9 5.4 3. 5

Men's and bovs' Women's and'children's Hosiery and underwear Work clothing


125

trial and commercial users averaged 13 percent. Changes from 1948 to 1958 in proportions of sales that went to specified outlets varied irregularly from one kind of product to another. But, on the average, the proportions that went to other wholesalers for further distribution increased and the proportions to other outlets decreased (table 89).

Similar data for manufacturers' sales branches and offices and for merchandise agents and brokers in 1958 are not available. Data for 1954 and 1948

yiven in {JÎi)» are The degree of specialization of merchant whole-

salers of textile products may be indicated by census data showing proportions of total sales that were accounted for by specified commodity lines. In 1958, the proportion of these sales accounted for by sales of specified commodity lines ranged from less than 6 percent for men's and boys' hosiery, underwear, and other garments not specified to about 92 percent for yard goods (table 90).

TABLE 90.—Proportion of total sales of merchant wholesalers of textile products accounted for hy specified commodity lineSj united States, 19J¡S and 1968

Commodity line 1948 1958

Clothing and furnishings : Men's and boys'

Percent 72. 6

Percent 53.2

Hosiery, underwear, etc 36. 6 56. 1 31. 6 47.7

20.3 Suits, coats, and overcoats Work clothing

29.8 28.2

Other- _- - -- -_ 19. 7

Women's and children's 82.7 64.2

Dresses, skirts, and blouses Suits, and coats (except furs) Hosiery, underwear, etc _

48. 6 51, 2 22. 9 39.1

42.1 19. 1 34.4

Children's and infants' wear 25.0

Piece goods, domestic 12.9 7.1

Specialty line dry goods: Men's and boys' 17.5 14.8

Hosiery, underwear, etc _ 16. 8 13.0 8.9 6.2

5.6 Suits, coats, and overcoats Work clothing

9.4 9.3

All other ._ .____ 5.5

Women's and children's 62.2 17.6

Dresses, skirts, and blouses Suits and coats (except furs) Hosiery and underwear, etc Children's and infants' wear

12.4 2.8

65.2 8. 3

13.5 10.6 11.3 6.2

Piece goods, domestic _ 85.4 87.0

Yard goods 88.3 45.6 25.9 20.0

91.9 Curtains and draperies - 6.8 Sheets and pillowcases 7. 9 Bedspreads and blankets, etc 6.0


In more than two-thirds of the instances, sales of specified commodity lines averaged 25 percent or less of total sales of all commodity lines. In most instances, the degree of specialization decreased considerably from 1948 to 1958 (table 90).

The size of establishment, as indicated by the vatue of annual sales, varies considerably from one type of wholesaler to another and also from one establishment to another among wholesalers of the same type. In 1958, sales of textile products per establishment averaged $664,000 for merchant wholesalers, $4,288,000 for manufacturers' sales branches and offices, and $2,226,000 for merchandise agents and brokers. The average volume of sales for merchant wholesalers ranged from $383,000 for dry goods not specified to $1,901,000 for piece goods. That for manufacturers' sales branches and offices ranged from $2,769,000 for apparel, accessories, and hosiery to $6,763,000 for dry goods and piece goods. Average sales of merchandise agents and brokers ranged from $1,094,- 000 for apparel not specified to $3,480,000 for piece goods (table 91). The annual volume of sales of each type of wholesaler averaged substantially more in 1958 than in 1948.

Census reports show that in 1958 about 43 percent of the wholesalers of textile products had fewer than 4 paid employees and only 9 percent had 20 or more paid employees. The corresponding proportions for merchant wholesalers were 50 and 8 percent; for manufacturers' sales branches and offices, 32 and 25 percent ; and for merchandise agents and brokers, 67 and 5 percent respectively. The proportion of wholesalers with fewer than 4 paid employees increased from 1948 to 1958 and the proportion with 20 or more paid employees decreased, according to census reports.

Data on legal form of orginzation of wholesalers of textile products show that in 1958 about 59 percent of the total number were corporations, 25 percent were individual proprietorships, 15 percent were partnerships, and about 1 percent were cooperative associations or some other type. From 1954 to 1958, the proportion accounted for by corporations increased and the proportion accounted for by every other form of organization decreased. Of the total sales of textile

Çroducts by merchant wholesalers in 1958, about 9 percent were accounted for by corporations,

11 percent by partnerships, 9 percent by individual Eroprietorships, and only a small proportion y cooperative associations and other forms of

organization, according to census reports. Most of the sales of textile products by mer-

chant wholesalers are made on credit. Census reports show that in 1954 about 97 percent of the sales of these products by merchant wholesalers who reported credit sales were made on credit. Similar data for more recent years are not available. End-of-year receivables averaged about 12 percent of sales in 1954 and in 1958. Losses from bad debts averaged less than 0.2 percent of sales each year.

126

TABLE 91.—Average annual sales per establishment and operating expenses as proportion of sales^ hy type of wholesaler and iy hind of product sold^ United States^ 19I¡8 and 1958

Kind of product

Average sales per establish-

ment

Operating expense as proportion

of sales

1948 1958 1948 1958

Merchant wholesalers

Dry goods, piece goods, and notions

1,000 dollars

672

1,000 dollars

764 Percent 10.9

Percent 12 4

General line Piece goods (whole-

salers) -

2,512

464

1, 556

283

1,459

659

1,901

383

13.0

10. 2

8.9

16. 3

13. 8

12 8 Piece goods (con-

verters) 10 2 Other dry goods and

notions 15 8

Apparel, accessories, and hosiery 302 541 13. 9 14 7

General line 473 277

296 297 219

802 471

546 481 407

13. 8 14.2

15.3 10. 8 11.4

12 3 Men's and boys' Women's and chil-

dren's

15. 7

15. 1 Hosiery and underwear. Work clothing.

15.2 14 2

Manufacturers' and sales

sales branches offices

Dry goods, piece goods, and notions 4, 145 6,007 4. 7 5 8

Sales branches 5,403 3,204

4,677 6,763

4.9 4. 4

9 1 Sales offices 4 5

Apparel, accessories, and hosiery 1, 552 2,749 8.8 12 8

Sales branches 1,619 1, 514

2, 769 2,731

9.8 8.2

18 5 Sales offices 7 8

Merchandise agents and brokers

Dry goods, piece goods, and notions 2 Q47 ^ 4.f^f; 3.0 2. 1 ' '

Piece goods 3, 579 1, 596

3,480 3,401

3.2 2. 3

1. 6 Dry goods and notions _ 3.3

Apparel, accessories, and hosiery 1,017 1,590 3.3 4.0

Men's and boys' Women's and chil-

dren's _ _

603

876 994

2, 121

1, 740

1,573 1,765 1,094

4.3

3.3 4. 6 2. 2

4. 5

3. 8 Hosiery and underwear. Other

4.2 3 4


Most of the merchant wholesalers and merchandise agents and brokers for textile products operate single-unit establishments, but the average annual volume of sales in 1954 was less for single-unit than for multiunit establishments, according to census reports. Most of the establishments operated by manufacturers' sales branches and offices were multiunits, and the annual volume of sales in 1954 averaged more for multiunits than for single units (^^). Similar data for more recent years are not available.

Wholesalers supply a ready market outlet to manufacturers for products in rather large volume and relieve the manufacturer of making the many contacts necessary to sell directly to retailers. The large-lot purchases made by wholesalers and the assembly services they perform make possible a reduction in transporation costs by per- mitting large-lot shipments over long distances. Wholesalers reduce storage costs and the credit risks of manufacturers by advance buying, particularly for goods of seasonal demand. Occa- sionally, wholesalers may help finance manufacturers by advancing funds. They also relieve them of some of the financial risks which arise in dealing with retailers whose rate of failure is relatively high.

Wholesalers also perform important services for retailers. The assembly services they render enable retailers to obtain their supplies from relatively few sources. The readily accessible supplies made available by wholesalers to retailers enable them to reduce their overhead costs by the use of small stocks and more rapid turnover. Total costs of storage are reduced because large-scale storage in a wholesaler's warehouse is cheaper than storage on the relatively high-rent shelves of retailers. In addition, wholesalers provide credit and other services to retailers.

It has been suggested that wholesalers could relieve manufacturers of much of their storage burdens and their price risks by ordering greater quantities in advance. They might reduce transportation and selling costs if they bought in larger lots at less frequent intervals. They might help in the work of assembling by carrying larger lines of merchandise, and they miglit give more aid in the introduction of new products by manufacturers. Extra care in granting credit might avoid keeping in business many incompetent retailers who give no real indication of developing into competent storekeepers {27).

CHARGES OR COSTS INVOLVED

Gross margins involved in taking finished textile products from manufacturers and delivering them to ultimate consumers include charges or costs for distribution services of manufacturers, wholesalers, and retailers. But information on the kind and extent of distribution services performed by the different agencies and the charges made for these services is incomplete. In many instances,

127

data on costs of ditsribution services to manufacturers and to wholesalers are not complete enough to show costs for finished consumer goods separate from those for intermediate products.

Charges or costs involved in the wholesale distribution of finished textile products vary with the type of wholesaler, size of the operating unit, kind of product, and from one period to another. Census data show that in 1958 operating expenses averaged 13.2 percent of net sales for merchant wholesalers, 8 percent for manufacturers' sales branches and oifices, and 2.7 percent for merchandise agents and brokers (table 92). These proportions varied considerably from one kind of product to another as well as among types of wholesalers. Operating expenses, as proportions of sales in 1958, averaged more than in 1948 for merchant wholesalers and for manufacturers' sales branches and offices. They averaged less than in 19-48 for merchandise agents and brokers.

Data on wholesalers of textile products by single-unit and multiunit firms show that in 1954 operating expenses, as proportions of sales and of operating expenses that were accounted for by payrolls, varied irregularly with the number of establishments operated per firm (4^). Annual volume of sales per establishment averaged substantially less for single-unit than for multiunit firms. Similar data for more recent years are not available.

As proportions of sales for merchant wholesalers of men's and boys' clothing and furnishings (table 92), women's and children's clothing and accessories (table 92), and hosiery and underwear (table 92), operating expenses vary inversely with the size of establishments, as measured by^ annual volume of sales. In 1958, these proportions for wholesalers of men's and boys' clothing and furnishings averaged 15.6 percent and ranged from about 14 percent for establishments with annual sales of $1 to $5 million to 25 percent for establishments with annual sales of less than $50,000. Similar proportions for women's and children's clothing and accessories averaged 15.2 percent and ranged from about 12 percent for establishments with annual sales of $5 million or more to 24.5 percent for establishments with annual sales of less than $50,000. The proportions for hosiery and underwear averaged 15.4 percent and ranged from about 13 percent for establishments with annual sales of $300,000 to $500,000 to more than 25 percent for establishments with annual sales of less than $50,000. The proportions in 1958 averaged more than in 1948 for men's and boys' clothing and furnishings, and for hosiery and underwear; but they averaged less than in 1948 for women's and children's clothing and accessories.

On the average, payrolls accounted for less than half of total operating expenses of wholesalers in 1958—slightly less than the proportion reported a decade earlier (table 92). The proportions of

total operating expenses that were accounted for by payrolls usually were greater for the larger establishments than for the smaller ones. This difference may be accounted for, at least in part, by larger ratios of active proprietors of unincorporated businesses to total employees for the smaller than for the larger establishments.

TABLE 92.—Number of establishments^ value of sales^ operating expenses^ and payroll for merchant loholesalers^ iy size group^ United States^ 1958^

Op- erat- Pay- ing roll ex- as

Size group by value of Estab- Total penses pro- sales (1,000 dollars) lish- sales as por-

ments propor- tion of

sales

tion of

sales

MEN'S AND BOYS' CLOTHING

Number 1,000 dollars Percent Percent

All 1,001 475, 598 15.6 7.3

5,000 or more 11 87, 561 15. 0 6.4 2,000 to 4,999 20 55, 872 14. 2 7.0 1,000 to 1,999 - _- 67 96, 019 14.1 6.4 500 to 999__ . 153

145 110 194 154 147

107, 653 57, 159 27, 190 29, 176 11,570 3,398

15.9 16. 6 16.3 17. 6 22. 3 25.3

8. 1 300 to 499 8.0 200 to 299 7. 9 100 to 199 --_ -_ 8. 0 50 to 99__ 8.8 Less than 50 IL 1

WOMEN'S AND CHILDREN'S CLOTHING

All 1,335 733, 202 15. 2 6.9

5,000 or more 12 99, 271 12. 2 6.2 2,000 to 4,999 47 146, 718 13. 7 6.2 1,000 to 1,999 126 176, 824 15. 6 7.0 500 to 999 __ 205

186 159 248 143 209

145, 858 73, 647 39, 245 36, 002 10, 768 4,869

15. 6 16. 3 17.5 17.6 23.6 24. 5

6.7 300 to 499 - 7.8 200 to 299 _ _ 8.3 100 to 199 _ - __- 7. 5 50to99__ __ -_ 9. 5 Less than 50 _ 11.7

HOSIERY AND UNDERWEAR

All 505 243, 529 15.4 7. 4

2,000 or more _ _ 22 78, 614 16.3 8.2 1,000 to 1,999_ _-_ _- 47 63, 965 14. 4 6.8 500 to 999 54

61 56 99 78 88

39, 895 24, 211 13, 963 14, 872 5,781 2, 228

13. 8 13. 1 17. 6 18. 1 19. 0 25.7

6.9 300to498__ 6.2 200 to 299 ___ 7. 9 100 to 199 8.3 50 to 99 7.8 Less than 50 __ _ _ 12.6

^ Operating expenses include no compensation for active proprietors of unincorporated businesses.


128

Frequency distributions of operating expenses of merchant wholesalers of dry goods and apparel by size groups show that in 1958 operating expenses as proportions of net sales, varied widely within size groups as well as from one group to another (table 93). Operating expenses ranged from less than 7 percent of sales to more than 35 percent. The proportion of establishments with operating expenses of less than 11 percent of sales usually was substantially greater for the medium and larger size groups than for the smaller ones. The proportion of establishments with operating expenses of 25 percent or more of sales usually was greater for the smaller than for the medium and larger size groups.

Operating expenses of wîolesalers of textile products, as proportions of sales, varied somewhat from one geographic division to another. The proportion of net sales of wholesalers of textile products accounted for by payrolls also varied considerably from one region to another (table 94).

As indicated by reports of the National Associa- tion of Textile and Apparel Wholesalers, average gross margins of textile and apparel wholesalers, which since 1939 had ranged between 15 and 18 percent of total sales, amounted to about 17 percent of sales in 1962 (table 95). Total operatmg expenses decreased from more than 14 percent of sales in 1939 to less than 12 percent in 1947, and amounted to about 15 percent in 1961 and 1962.

Gross margins and operating expenses usually average less for establishments with large volumes of sales than for those with small volumes (table 95). During the 3 years 1960-62, for example, median gross margins for wholesalers of textiles and apparel with annual sales of less than $500,000 averaged 17.6 percent of net sales and those with annual sales of $2 million or more averaged 16.2 percent of sales. During this 3-year period, median operating expenses of these wholesalers averaged 15.3 percent of net sales for those with annual sales of less than $500,000 and 14.6 percent for those with annual sales of $2 million or more.

During the same period, median profit, before federal income tax deductions, averaged 2.46 percent of net sales for wholesalers with annual sales of less than $500,000 and 1.47 percent of sales for wholesalers with annual sales of $2 million or more.

Principal items of cost included in gross margms of wholesalers of textile products are selling and administrative expenses (table 95). During 1960- 62, selling expenses accounted for about 6.7 percent of net sales, or 40 percent of gross margins, and 44 percent of total operating expenses. Ad- ministrative expenses durmg this period accounted for 4.6 percent of net sales, or 27 percent of gross margins, and 30 percent of total operating expenses. The proportion of net sales accounted for by administrative expenses averaged less, and that accounted for by selling expenses averaged more for the larger than for the smaller establishments. Buying, receiving and shipping, and occupancy were relatively small items of expense.

Operating expenses and payrolls of wholesalers of textile products accounted, on the average, for larger proportions of net sales for establishments operated by corporations than for those operated by partnerships or by individual proprietorships, according to census reports. These differences may be accounted for, at least in part, by the fact that operating expenses include no compensation for active proprietors of unincorporated businesses. These reports also show that operating expenses and payrolls of wholesalers of textile products averaged smaller proportions of net sales for the larger than for the smaller establishments.

As proportions of net sales and of tangible net worth, median profits of wholesalers of apparel and household textiles, after federal income taxes and excess-profit taxes, decreased markedly in the post-World War II period (table 96). In 1961, these profits ranged from 0.86 percent of sales for hosiery and underwear to 2.47 percent for men's furnishings, and averaged 1.47 percent for all products combined. They ranged from 2.81 per-

TABLE 93.—Frequency distribution hy hind of product and operating expense ratios of merchant wholesalers of dry goods and apparel^ United States^ 1958

Kind of product

Dry goods: Piece goods (wholesalers) Piece goods (converters) General line, notions, and other_

Apparel, accessories, and hosiery: Men's and boys' clothing Women's and children's clothing Hosiery and underwear

Estab- lish-

ments

Number 1,891

679 1,731

1,001 1,335

505

Proportion of establishments having ratios of operating expense to sales of—

than 7.0

Percent 8. 1

16. 2 4.2

6. 1 5.8 7. 5

7.0 to 10.9

Percent 30.9 34. 8 6.6

11. 9 9. 5

13. 3

11.0 to 16.9

Percent 21. 1 25. 6 33.5

43. 4 47. 3 44. 5

17.0 to 24.9

Percent 18.9 14. 1 29. 1

18. 7 18.4 13.9

25.0 to 34.9

Percent 12. 2 6.2

14. 0

11. 5 10. 2 13. 9

35.0 or more

Percent 8.8 3. 1

12. 6

8. 4 8. 8 6. 9


129

cent of tangible net worth for hosiery and underwear to 5.91 percent for dry goods, and averaged 4.24 percent for all products combined. In 1962, these proportions averaged less than those in 1961, but they were higher than those in 1960.

TABLE 94.—Nvmber of merchant loholesale establishments^ average volume of sales^ operating expenses^ and payroll as proportion of sales^ hy type of product and region, united States, 1958-^ '

Oper- ating Pay-

Estab- Average ex- roll as Product and region lish- sales per penses pro-

ment establish- as propor- ment por-

tion of sales

tion of sales

Piece goods: Number 1.000

dollars Percent Percent New England 98 530, 765 12. 8 6. 3 Middle Atlantic 1,407 717, 207 11. 9 5. 7 East North Central. _ 102 408, 176 22. 3 10. 5 West North Central.. 38 631, 105 17. 2 9. 6 South Atlantic 79 407, 911 14.4 7. 9 East South Central-, 23 715,217 14. 8 7. 6 West South Central. _ 42 660, 762 12. 6 6. 0 Mountain 8 458, 375 15. 0 9. 1 Pacific 129 487, 116 16.7 8.4

United States 1,926 659, 228 12.8 6.2

Men's and boys' clothing, etc.:

New England 67 348, 239 15. 6 8.4 Middle Atlantic 515 462, 647 15. 6 6. 9 East North Central. _ 127 432, 055 16. 0 8. 2 West North Central.. 54 413, 741 15. 0 8. 2 South Atlantic 98 527, 408 15.2 8. 0 East South Central. . 27 576, 815 18.4 9. 0 West South Central.. 24 1, 090, 125 13. 1 3. 9 Mountain. __ 11

102 475, 818 441, 539

14.5 17. 1

7 2 Pacific 7 Q

United States 1,025 470, 734 15.6 7. 3

Women's and children's clothing:

New England.. _ 86 618, 163 15.4 7. 2 Middle Atlantic 826 552, 753 15. 1 6. 6 East North Central.. 117 630, 274 15. 2 8. 4 West North Central.. 59 393, 695 18. 1 7.9 South Atlantic 82 475, 512 14. 1 6. 6 East South Central.. 25 411, 320 10. 2 4. 1 West South Central.. 39 399, 641 15.6 7.2 Mountain 12

127 921, 500 528, 378

16. 2 15. 1

9 6 Pacific 7 0

United States... 1,373 546, 052 15. 2 6.9

1 Operating expenses and payrolls include no compensation for active proprietors of unincorporated businesses.


MEANS AND IMPORTANCE OF IMPROVEMENT

Most of the factors involved in increasing efficiency and reducing costs of distributing intermediate textile products (p. 124) are also important in connection with improvements in the wholesale

distribution of finished textile products. Infor- mation on operating expenses of existing agencies indicates that costs of wholesale distribution of finished textile products might be reduced by concentrating larger proportions of the services in the hands of the larger and more efficient concerns.

TABLE 95.—Medians of gross margins, operating expenses, and profits for textile and apparel wholesalers, United States, 1939, 1959S2 ^

Item

SALES UNDER $500,000

Gross margin 2

Total operating expense-

Administrative Buying Selling Receiving and ship-

ping Occupancy

Profits

SALES $500,000 TO $1 MILLION

Gross margin 2



ping Occupancy

Profit 3

SALES $1 TO $2 MILLION

Gross margin 2



ping Occupancy

1939

Per- cent

17. 68

15.70

4. 69 1. 50 7. 70

1. 10 1. 27

1. 17

1959

Per- cent

17. 55

15. 75

4.80 1. 00 5.95

2. 15 1. 20

1.85

16. 64 17. 35

15. 52

Profit 3_

SALES $2 MILLION AND OVER

Gross margin 2



ping Occupancy

Profits

See footnotes at end of table.

4. 34 1.35 6. 62

1. 06 1. 39

1. 56

15. 15

13. 44

4. 29 .92

7.05

. 94

.90

1. 69

15. 40

14. 29

3.27 1. 05 7. 41

1. 17 .99

1. 50

15. 00

4.80 . 50

6.40

1.05 1. 15

1960

Per- cent

18. 50

16.80

5. 80 . 60

7. 10

1. 30 1.30

2. 30

1961

Per- cent

17.30

13.90

5. 10 . 50

5. 80

1. 10 1. 50

2. 60

17. 30 17. 70

15. 65

2. 50

16. 90

14. 20

4.70 . 70

6. 10

1.35 1. 10

1. 90

16. 05

14. 05

4. 20 .85

6. 70

1. 05 1. 05

1.40

5.00 . 40 6.20

1. 20 1. 30

1. 80

17. 20

15.30

5.20 .90

6. 50

1.60 1. 40

1. 60

16. 20

15.00

4. 15 1. 20 7. 20

1. 10 1. 15

1. 35

15. 80

5.40 .40

6. 30

1. 60 1. 20

1962

Per- cent

16. 96

15. 24

4. 60 . 86

6. 10

1. 96 .85

2. 48

17. 74

15. 10

2.00

17.40

14. 50

4. 80 1. 50 6. 20

1. 90 1. 40

1. 50

16. 00

14. 40

4. 10 . 90

6. 70

1. 00 1. 10

1. 50

5.80 .50

7. 15

1. 70 1. 10

2. 40

16. 10

15. 24

5.00 .45

7. 90

1. 55 1. 28

. 78

16. 50

14. 57

4. 20 1. 30 6. 76

1.06 .93

1. 55

130

TABLE 95.—Medians of gross ^nargins^ operating expenses^ and profits for textile and apparel wholesalers^ united States^ 1939,1959-62''—Con,

Item

ALL STORES

Gross margin 2

Total operating expense.


ping Occupancy

Profit 3

1939

Per- cent

16. 25

14. 61

4. 18 1. 29 6.89

1. 10 1. 14

1. 55

1959

Per- cent

16. 80

14. 40

4. 50 .70

6.40

1. 30 1. 10

1. 90

1960

Per- cent

16. 80

15. 30

4. 80 .80

6. 50

1. 20 1.20

1. 70

1961

Per- cent

17. 10

14. 90

4. 50 . 80

6. 50

1. 40 1. 40

1. 80

1962

Per- cent

16. 80

15. 20

4. 46 1. 05 7. 16

1.35 1. 10

1. 90

1 These data are based on annual reports of from 40 to 64 wholesalers, not selected at random, made to National Association of Textile and Apparel Wholesalers.

2 Gross margins for 1956 and 1957 are the sum of net operating profit and total operating expense.

3 As reported by textile and apparel wholesalers, some before and after federal income tax deductions. After 1950, profits are before federal income tax deductions.

Derived from unpublished reports of National association of Textile and apparel Wholesalers.

The possibility of reducing operating expenses of wholesalers of finished textile products by increasing the volume of business appears to be supported by census data. In 1958, for example, op-

erating expenses of merchant wholesalers of men's and boys' clothing and furnishings ranged from an average of less than 15 percent of net sales for concerns with annual sales of $1 million or more to more than 25 percent for those with annual sales of less than $50,000. Operating expenses of wholesalers of women's and children's clothing and furnishings ranged from about 12 percent for wholesalers with annual sales of $5 million or more to about 24 percent for those with annual sales of less than $50,000. For merchant wholesalers of hosiery and underwear, operating expenses ranged from an average of about 13 percent of sales for concerns with annual sales of $300,000 to $400,000 to about 26 percent for those with annual sales of less than $50,000.

From 1939 to 1961, median operating expenses per dollar of sale for textile and apparel wholesalers averaged about 13 percent more for houses with annual sales of less than $500,000 than for houses with annual sales of $2 million and more. This difference has decreased in recent years. Al- though factors other than differences in size may also be involved, it appears reasonable to assume that at least some of the differences in operating expenses may be attributed to differences in efficiency arising from differences in volume of sales. If this assumption is valid, apparently per unit costs might be reduced by increasing the proportion of the total volume of finished textiles handled by the larger wholesalers or by increasing the volume handled by the smaller ones.

TABLE 96.—Median net profits, after tax deductions, of toholesalers of apparel and household textiles, as proportions of net sales and of tangible net worth, by kind of product, united States, specified years, 1935-62

Type of business Net profits ^ as proportion of net sales ^

1935-39 1941 1948 1959 1960 1961 1962

Dry goods Men's furnishings Hosiery and underwear_ Women's wear ^

Percent 108

,74 ,56

Percent 2.95 2.68 3. 97 2. 50

Percent 1.47 1. 26 3.07 2. 84

Percent 0.78 1. 59 .71

1. 30

Percent 0. 84 .80 . 14

1. 54

Percent 1.34 2.47 .86

1. 22

Percent 0.98 1.63

Net profits as proportion of tangible net worth *

Dry goods Men's furnishings Hosiery and underwear. Women's wear ^

4. 24

3.02 3.57

13.08 7.63 3.61 3.30 5. 91 11. 77 4. 57 6. 41 3.93 4.89 14.67 9.59 3.43 .81 2. 81 13.59 13. 46 5. 68 4. 26 3.35

4. 23 5.64

1 Profits after full depreciation on buildings, machinery, equipment, furniture, and other assets of a fixed nature; after reserves for federal income taxes and excess-profit taxes; after reduction in the value of inventory to cost or market, whichever is lower; after charge-offs for bad debts; after all miscellaneous reserves and adjustments but before dividends or withdrawals.

2 The dollar volume of business transacted for 365 days net after deductions for returns, allowances, and discounts from gross sales.

3 Includes coats, suits, and dresses. ^ The sum of all outstanding preferred or preference

stocks (if any) and outstanding common stocks, surplus, and undivided profits, less any intangible items in assets such as goodwill, trademarks, patents, copyrights, leaseholds, mailing lists, treasury stock, organization expenses, and underwriting discounts and expenses.

Adapted from (33).

131

Comparisons of operating expenses for wholesalers of different kinds indicate that reductions in costs might be made, in some instances at least, by the integration of manufacturing and distributing functions. In 1958, according to census reports, operating expenses for wholesaling apparel, accessories, and hosiery, for example, averaged 14.7 percent of net sales for merchant wholesalers, 12.8 percent for manufacturers' sales branches and offices, and 4 percent for merchandise agents and brokers. Operating expenses for wholesaling dry goods, piece goods, and notions averaged 12.4 percent of net sales for merchant wholesalers, 5.8 percent for manufacturers' sales branches and offices, and 2.1 percent for merchandise agents and brokers (table 91, p. 127). Information is not adequate to show the extent to which these differences are accounted for by differences in services rendered.

An adequate appraisal of the most effective means of increasing efficiency and reducing costs of wholesale distribution of finished textile products would need to be based on additional information showing the influences of the various factors on costs. Detailed cost data for a representative sample of each type of wholesaler would be needed to show, under actual operating conditions, the nature and extent of the services rendered, the influence of the various factors on the efficiency and cost of performing each important service, and the items of cost included. In addition, it might be helpful to have detailed specifications for model.

low-cost operating establishments for handling specified products developed on the basis of cost- engineering and other information. These specifications would need to show the kinds, amounts, and costs of facilities and equipment needed; the organization and operation of the concern; and detailed costs, along with the cost items included, for each major service performed (105),

Such information should supply a basis for indicating the more feasible means of improvement. But such analyses may require specialized training and experience relating to the particular kinds of operations involved. Well-informed operators in the business could suggest the kinds of information that would be of greatest usefulness to them in reducing their costs, and their advice and assistance might be used to advantage in planning and developing the required research.

The relative importance of increasing the efficiency and reducing the costs of wholesaling textile products may be indicated by data showing that in recent years gross margins for wholesaling cotton products averaged about 8 percent of the retail value of the finished apparel and household goods, almost two-thirds of the returns to growers for farm production of the cotton used, and more than twice as much as total costs of ginning and merchandising the raw cotton. Gross margins for wholesaling finished products made of wool were relatively greater than those indicated for cotton products.

RETAILING TEXTILE PRODUCTS

Eetailers of textile products bring together, at places convenient to consumers, varied stocks of goods which satisfy the needs and tastes of the community. They also pass back to wholesalers and to manufacturers information as to the demands of consumers for use as a guide to further production. Eetailers perform some of the services of storage, assume some of the risks involved in holding goods until they are needed by consumers, and extend credit to consumers who cannot afford or do not wish to pay cash. In addition, they render delivery and other services to consumers.


In 1958 the number of general merchandise retailers ^ in the United States was 82,419 (table 97). According to census reports, the number had increased more than one-fifth during the decade before 1958. Total value of sales increased 29 percent, and average volume of sales per establishment increased from $251,000 in 1948 to $258,000

® Includes department and variety stores, other establishments primarily selling household linens and dry goods, and either apparel and accessories or furniture and homefurnishings.

in 1958. Stores with annual volume of sales of $1 million or more accomited for 3.6 percent of the total number of stores and 67 percent of the total value of sales in 1958, compared with 3 and 64 percent respectively in 1948. Payrolls, as proportions of sales, increased from 14 percent in 1948 to 15 percent in 1958, and varied directly with the size of the store, as indicated by annual volume of sales.

In 1958, department stores accounted for less than 4 percent of the total number of the general merchandise group, 71 percent of the stores with annual sales of $1 million or more, and 62 percent of total sales. These stores combine under one roof and one management several divisions, each equivalent to a specialized store. They take over some, but not all, of the functions of wholesalers in that they buy some of their products directly from producers. Although the volume of sales per store averaged $4,260,000 in 1958, orders received by manufacturers from department stores usually average less than those from wholesalers and cutters. This is accounted for in part by the fact that the number of items handled usually is large and the volume of sales of specific items may be no larger than that of other independent retailers with whom they compete.

132

TABLE 97.—Number of specified types of retail stores^ volume of sales^ and payroll as proportion of sales^ hy size group^ united States^ 1958 ^

Type of store and size group by volume of Stores 2 Sales Payroll as

proportion sales (1,000 dollars)

Total Proportion Total Proportion of sales

GENERAL MERCHANDISE All _

Number 82, 419

Percent 100.0

1,000 dollars

21, 278 Percent 100.0

PercetiTût 14.8

1.000 or more 2,997 5,698

11, 481 13, 239 14, 336 24, 161 10, 507

3.7 6.9

13.9 16. 1 17.4 29.3 12. 7

14, 302 3,038 1,949

924 551 451

63

67. 2 14.3

9. 2 4. 3 2.6 2. 1 .3

16. 5 300 to 999 --- -- 14. 5 100 to 299 --- -_ _- 12. 3 50 to 99 --- - --- -- 8. 3 30 to 49 - -_ - - 4. 7 10 to 29 - --- _ ___ _ 3. 1 Less than 10- - - - 2. 1

APPAREL AND ACCESSORY All 113,041 100. 0 12, 075, 471 100.0 13. 7

1,000 or more __ ___ 968 5,495

23, 644 29, 339 20, 379 23, 837 9,379

.9 4.9

20. 9 25.9 18. 0 21. 1 8.3

2, 191, 599 2, 688, 227 3, 800, 291 2, 081, 393

796, 190 463, 243

54, 528

18. 1 22. 3 3L5 17. 2 6.6 3. 8 .5

17. 1 300 to 999 -- - 14. 9 100 to 299 -- --- - 13. 6 50 to 99 _ _____ -_ 11. 7 30 to 49 ___ - __ 9. 5 10 to 29 _ _ __ _ _ - 7. 8 Less than 10 _ _ _ _ _ 5. 8

MEN'S AND BOYS' APPAREL All _-_ _-- _ 21, 050 100. 0 2, 361, 841 100.0 13 9

1,000 or more 170 1, 136 5,312 6,077 3, 555 3,403 1,397

.8 5. 4

25.2 28. 9 16. 9 16. 2 6.6

310, 539 549, 095 852, 145 434, 804 139, 728 67, 563 7,967

13.2 23. 2 36. 1 18.4 5.9 2.9 .3

18 2 300 to 999 _ ___ 16 5 100 to 299 - -_ --- 13. 8 50 to 99 _ _ _ _ _ - 10 9 30 to 49 _ __ - 8 4 10 to 29 _ __ 6 6 Less than 10 ___ 4 8

WOMEN'S READY-TO-WEAR All 25, 224 100. 0 3, 877, 858 100.0 14 8

1,000 or more 477 1,843 6,312 7,246 4,678 4,103

565

1.9 7. 3

25.0 28.7 18.6 16.3

2. 2

1, 134, 056 930, 308

1, 029, 025 512, 631 183, 567 84, 850 3,421

29.3 24. 0 26. 5 13. 2

4. 7 2.2

. 1

17 7 300 to 999 14 9 100 to 299 _ _ _ 13 7 50 to 99 12 0 30 to 49_ _ _ _ 10 9 10 to 29 __ 11 3 Less than 10 __ _ _ _ 20 4

FAMILY CLOTHING All 13, 036 100.0 2, 290, 363 100.0 13.3

1,000 or more__ _ _______ __ 259 1,327 3,663 3,758 2, 150 1,636

243

2.0 10.2 28. 1 28.8 16. 5 12.5 1.9

638, 194 662, 935 601, 300 267, 926

84, 642 33, 945

1,421

27.9 28. 9 26. 2 11. 7

3. 7 1. 5

. 1

15 7 300 to 999___ 13 0 100 to 299 ___ __ 12 7 50 to 99___ _ __ ___ 10.6

9.9 11 2

30 to 49_ _ 10 to 29 Less than 10 _ 24. 8

1 Payrolls include no compensation for active proprietors of unincorporated businesses.

Limited-price variety stores accounted for 24 percent of the general merchandise stores, 14 percent of the stores with annual sales of $1 million or more, 17 percent of those with annual sales of less than $50,000, and about 16 percent of total sales, according to census reports.

The number of retail apparel and accessory

2 Establishments operated entire year. Adapted from Census of Business, Retail Trade.

stores increased about 10 percent from 1948 to 1958, and the average volume of sales per store increased from $85,000 in 1948 to $106,800 in 1958. Apparel^ and accessory stores with annual sales of $1 million or more accounted for less than 1 percent of the number of stores in 1948 and in 1958, but the proportion of total sales accounted

133

for by these stores decreased from 20 percent m 1948 to 18 percent in 1958. Payrolls, as proportions of sales, increased from about 12 percent in 1948 to almost 14 percent in 1958, and varied directly with the size of the store, as indicated by volume of sales.

Data on legal form of organization of retailers of textile products show that in 1958 about 57 percent of the stores were operated as individual proprietorships, 27 percent by corporations, and almost 16 percent as partnerships (table 98). From 1948 to 1958, the proportion of general merchandise stores operated as individual proprietors increased, whereas the proportion of apparel and accessory stores that were operated as corporations increased. Average annual sales per store \yere much greater for stores operated as corporations than for other stores, and the proportions of total sales of general merchandise and apparel and accessories stores that were accounted for by corporations increased from 73 percent in 1948 to 77 percent in 1958. Only small proportions of the number of stores and of the total sales were accounted for by stores operated as "other" legal forms, including cooperatives, but the proportions increased from 1948 to 1958.

Large proportions of retail distributors of textile products operate single-unit stores, according to census reports. Of the total number of general merchandise stores, the proportion operated as single units increased from about 77 percent in 1948 to 80 percent in 1958. During this period.

tne average value of annual sales per single-unit store decreased 31 percent and that for multiunit stores increased 33 percent. The proportion of the value of total sales accounted for by multiunits increased from about 61 percent in 1948 to 75 percent in 1958 (table 99).

For apparel and accessory retail stores, the proportion operated as single units decreased from about 80 percent in 1948 to 75 percent in 1958, and the proportion of the value of total sales accounted for by single-unit stores decreased from 61 percent in 1948 to 56 percent in 1958. During this period, the average value of annual sales per store increased for both single-unit and multiunit stores. These data for all apparel and accessory stores combined are fairly typical of those for men's and boys' apparel retail stores and for women's ready- to-wear retail stores.

The number of mail-order houses with payrolls engaged in selling general merchandise increased from 60 in 1948 to 128 in 1958, according to census reports. These houses accounted for about 7 percent of total sales of general merchandise stores each year. Most of the sales of these mail-order houses are accounted for by department stores. The number of mail-order houses handling apparel and accessories increased from 92 in 1948 to 127 in 1958, and the proportion of total sales of these products accounted for by these houses amounted to less than one percent each year.

TABLE 98.—Number of retail stores^ average annual sales per store^ and payroll as proportion of sales^ hy hind of business and legal form of organization^ united States^ lOJiß and 1958

Kind of business and legal form of organization

Establishments

1948 1958

Average annual sales per store

1948 1958

Payroll as proportion of sales

1948 1958

General merchandise: Individual proprietorships Partnerships Corporations Other legal forms

All

Apparel and accessories: Individual proprietorships Partnerships Corporations Other legal forms

All

Both: Individual proprietorships Partnerships Corporations Other legal forms

All

Number 27,801 9,120

15,536 87

Number 56,299 11,115 18,962

268

Dollars 34,000 80,700

919,400 115,600

Dollars 37,700 86,700

990,100 220,300

Percent 7. 1 8.5

15. 2 10. 9

52,544 86,644 304,000 252,500

65,303 23,365 26,423

155

60,324 20,757 37,502

176

37,500 76,300

210,300 104,400

47,400 89,200

208,100 75,300

115,246 118,759 85,100 105,500

93,104 32,485 41,959

242

116,623 31,872 56,464

444

36,400 77,600

472,800 108,400

42,700 88,300

470,000 162,800

167,790 205,403 153,600 167,500

14.4

8. 4 8.7

14. 7 13. 0

12. 0

8.0 8. 7

15. 1 12. 2

13. 5

Percent 5.6 8.7

16. 1 12. 7

14. 8

9. 6 10. 7 15.7 16. 1

13. 6

7.9 10. 0 16. 0 13. 3

14.3

Adapted from Census of Business, Retail Trade.

134

TABLE ^^,—Number of specified types of stores, volume of sales, and payroll as proportion of sales, hy number of store units, united States, 1958 ^

Stores Sales Payroll as

Type of store and store units Total Proportion Total Average per

store

proportion of sales

GENERAL MERCHANDISE All _ - - -

Number 86, 644

Percent 100. 0

1,000 dollars 21, 879, 106

Dollars 252, 529

Percent 14.8

Single unit 68, 943 17, 701

79.6 20. 4

5, 518, 481 16, 360, 625

80, 044 924, 329

11. 2 Multiunit 16. 0

2 or 3 3, 557 1, 151 1,010 1,377 1,009 1, 103 8,494

4. 1 1. 3 1. 2 1.6 1. 1 1. 3 9.8

1, 730, 996 1, 134, 844 1, 168, 797 1, 083, 322 2,430, 114

946, 432 7, 866, 120

486, 645 985, 964

1, 157, 225 786, 726

2, 408, 438 858, 053 926, 080

18. 0 4 or 5 17. 5 6 to 10 16. 7 11 to 25 15. 1 26 to 50 17. 2 51 to 100 16. 4 101 or more 14. 9

APPAREL AND ACCESSORY All 118, 759 100. 0 12, 525, 451 105, 469 13. 6

Sinefle unit 88, 634 30, 125

74.6 25. 4

6, 960, 136 5, 565, 315

78, 527 184, 741

12.9 Multiunit 14.5

2 or 3 10, 711 2, 587 2,079 3,086 2, 156 2, 199 7,307

9. 0 2. 2 1.8 2. 6 1.8 1.8 6. 2

1, 561, 629 506, 802 524, 687 596, 215 399, 196 459, 938

1, 516, 848

145, 797 195, 903 252, 375 193, 200 185, 156 209, 158 207, 588

16. 0 4 or 5 15. 9 6 to 10 - - 16. 4 11 to 25 14. 7 26 to 50 12. 8 51 to 100 14. 5 101 or more 12. 3

MEN'S AND BOYS' APPAREL All -- - 21, 954 100. 0 2, 459, 484 112, 029 9.8

Siniïle unit 18, 108 3,846

82. 5 17. 5

1, 687, 674 771,810

93, 200 200, 679

12. 9 Multiunit 15.9

2 or 3 _ _ _ 1,892 347 327 505 775

8.6 1. 6 1.5 2. 3 3. 5

288, 543 77, 995 91, 928

119, 427 193, 917

152, 507 224, 769 281, 125 236, 489 250, 215

16. 0 4 or 5 16. 5 6 to 10 18. 2 11 to 25 14. 4 26 or more 15. 4

AVOMEN'S READY-TO-WEAR All 26, 559 100. 0 4, 009, 098 150, 951 14. 7

Single unit 18,411 8,148

69.3 30. 7

2, 019, 777 1, 989, 321

109, 705 244, 148

14.6 Multiunit 14.8

2 or 3 3,249 748 606 763 829

1,953

12. 2 2.8 2.3 2. 9 3. 1 7.4

557, 420 217, 221 194, 334 222, 587 210, 525 587, 234

171, 567 290, 402 320, 683 291, 726 253, 951 300, 683

16. 8 4 or 5 _ _ _ 15. 9 6 to 10 16. 0 11 to 25 __ _ 16.4 26 to 50 - _ 12.3 51 or more _ _ _ _ 7.5

1 Payrolls include no compensation for active proprietors of unincorporated businesses.

Adapted from Census of Business, Retail Trade.

Much of the aggregate business done by mail- order houses is accounted for by a few large companies that do a nationwide business of selling to consumers by mail {27), These are large-scale buyers and apparently they do most of their buying direct from manufacturers. The smaller mail- order houses buy larger proportions of their requirements from wholesalers.


Gross retail margins, or the spread between merchandise costs and net sales for department stores, ranged from 35.4 percent of net sales in 1947 to 36.4 percent in 1959 and 1960, and amounted to 36.13 percent in 1962 (table 100). These margins represent typical performance of department

135

Stores, as reported by the National Retail Mer- chants Association. In arriving at these margins, the Association made adjustments in the cumulative mark-on to allow for markdowns for stock shortages, workroom costs, and cash discounts. In 1962, typical gross margins by departments ranged from about 28 percent of net sales for bed- ding and domestics to 45 percent for corsets and brassieres (table 101).

TABLE 100.—Merchandising expense^ profits and sales data^ expressed as percentage of sales^ showing typical performance of department stores, United States^ 19^7 and 1959-ß2

Item

Merchandising data: Cumulative mark-on Markdown at retail ^ Stock shortage Workroom net cost Cash discount

Gross margin

Expense data: Total payroll Total real estate costs _ _ Total advertising All other expense. _

Total expense

Accounts receivable ^

1947 1959 1960 1961 1962

Percent 38.2

6. 6 1. 3

. 6 2.7

35. 4

16. 85 2. 2 2. 45 8. 6

Net earnings from merchandising

Net other income Net gain before taxes— Federal taxes

Net gain after taxes. .

Sales by terms of sale: Cash C.O.D. and layaway Regular charge Installment and other

term accounts

Percent 38. 95 6.5 1.20

. 55 2. 70

36. 40

17. 80 3. 00 2. 70

11. 30

30. 1 34. 80

e)

5.3 2.0 7. 3 2. 75

4. 55

42. 0 8.0

43. 5

6.5

Percent 39. 3

6. 9 1.4 .6

2.8

36. 4

18. 25 3.25 2. 7

11. 75

35. 95

1. 75 1. 75

3.35 2. 40 5. 75 2.9

2.85

37.0 4. 0

41. 5

17. 5

Percent 39. 05

6. 90 1. 30

. 60 2.80

36. 25

18. 05 3. 25 2. 75

11. 80

35. 85

1. 90

2. 20 2. 40 4. 6 2.3

2.3

39. 5 4. 5

38.0

18.0

2.30 2. 65 4.95 2. 45

Percent 39. 13

6. 83 1. 32

. 63 2. 81

36. 13

18. 10 3.20 2. 58

12. 14

36. 02

1. 96

2. 07 2. 60 5. 14 2.73

2. 50 2. 64

* 39.45 ^39.59

60. 55 60. 41

1 Include employee discounts. 2 From handling and delivery services only. 3 Data not available. * Cash and c.o.d. 5 All credit accounts, including layaways.

Adapted from {71).

Data on operating results of department stores, as reported by the Harvard Bureau of Business Eesearch, show that gross margins increased from 33.1 percent of sales in 1932 to more than 38 percent during World War II, decreased to 35.2 percent in 1949, increased to 36.4 percent in 1956, and amounted to 36.13 percent in 1962 (table 102). Total operating expenses decreased from 39.5 percent of sales in 1932, which was 6.4 percentage points above gross margins, to 27.8 percent in 1945,

increased to 35.95 percent in 1960, and amounted to 35.99 percent in 1962.

Payroll expenses (salaries, wages, and bonuses for all employees, including executives), excluding pensions and payroll taxes, were by far the largest single item of expense for department stores. The proportion of net sales accounted for by payroll expenses, which ranged between 15 and 19 percent since the 1930's, amounted to 18.10 percent in 1962 (table 102). Keal estate costs, advertising, and other expenses, as proportions of net sales, increased after World War II, and totaled 17.9 percent in 1962. Net operating results show improvement from losses of more than 6 percent of net sales in 1932 to profits before tax deduction of almost 10 percent of net sales in 1945. In the postwar period, operating profits decreased. In 1962, profits before tax deductions amounted to 5.14 percent of net sales and profits after Federal income tax deductions amounted to 2.6 percent of net sales.

In 1950 and in 1957, gross operating margins for department stores usually were relatively greater for stores with the larger than for those with the smaller volume of annual sales {^^ Jf7). In 1962, average gross margins of these stores varied irregularly with annual volume of sales, but stores with the smallest annual volume of sales had the smallest average gross margin (table 103).

Data on typical operating ratios of 240 dry goods and general merchandise stores, as reported by Dun and Bradstreet, Inc., show that in 1957 retailers' gross operating margins averaged 29.5 percent of net sales, compared with 27.5 percent in 1949, and ranged from about 28 percent for unprofitable stores to almost 32 percent for stores with profits of 6 percent or more of net sales (.^4) • These margins varied irregularly with annual volume of sales and with proportions of sales on credit and directly with profitableness of the business. Owners' compensation, wages, and occupancy costs were the main items of expense. Net profits before income tax deductions averaged less than 2 percent of net sales.

Typical operating results for 302 children's and infants' wear stores show that in 1957 gross margins averaged 32.5 percent of net sales, the same as in 1950, and ranged from 30.3 percent for unprofitable and neighborhood stores to 35.7 percent for stores with net profits of 7 percent or more of net sales {H), These margins varied directly with proportions of sales made on credit and with annual volume of sales. Owners' compensation, wages, and occupancy expenses accounted for a large proportion of total expenses. Expressed as proportions of sales, owners' compensation and occupancy expenses varied directly and wages varied inversely with volume of annual sales and with the proportion of sales made on credit. Net profits before income tax deductions averaged 1.7 percent of net sales and varied directly with volume of annual sales.

136

TABLE 101.—Merchandising da ta for t ypical performance of States, 1962^

depart ment st ores, by depart ments, United

Department Cumu- lative mark-

on

Mark- down

at retail

Stock shortage at retail

Work- room net cost

Cash dis-

count Gross

margin

News- paper space cost

Salary (sales per-

sonnel)

De- livery expense

Other expense

and profit

Piece goods, household: Textiles:

Piece goods. _. Percent

41. 9 34. 9 36.0

40.5 42.4 42.9 40. 6 39.6 39.5 40. 1

40.8 41.5 40.0 38.7 39.4 32. 5

40.8 42. 1 41.6 41. 6 39.0

42.8 43.0

Percent 8.6 .6

5.3

7.2 4.4 2. 7 2.8 4.8 4. 5 6.6

13.4 14.8 10.9 6.8 9.6 6.0

4.8 8.8 7.0 7.4 6.7

7.3 6.0

Percent 2.2

. 1

. 7

1.4 1. 1 .5 .3 .8 .7

1.2

1.0 1.7 2.0 .9 .9 .6

1.2 1.2 2.0 1.7 1. 1

1. 1 .8

Percent 0.2

Percent 1.2

Percent 37.0 33. 9 34.0

39.8 42.2 45.2 39. 1 39.3 39.3 40.2

36.3 35.5 37.4 36.8 38. 1 31. 3

38.6 33. 1 36.2 37.0 35.2

38.7 37.7

Percent 2.2 .8

2.8

1.9 1.9 1. 6 1.8 2.0 1.9 2.5

2. 9 3. 1 2.5 2.4 3.3 4.2

2. 1 2.7 2.7 2.6 2.5

3.3 2.9

Percent 9. 1

13.8 6.3

9.6 8.2 7.0 7.4 7.0 7.0 6.6

5.6 6.7 7.2 7.8 6.7 5.0

6.8 7.0 6.6 6.4 7. 1

7.8 8.3

Percent 0.6 .8

1.6

.5

.3

.6

. 9

. 7

.7

.9

.4

.5

.4 1. 1 1.3

. 1

.6

.4

.5

.7

.8

1.7 3.2

Percent 25. 1

Patterns 18. 5 Household textiles

Ready-to-wear accessories : Neckwear and accessories Women's and children's gloves_ Corsets and brassieres Hosiery -

. 1

. 1

. 1

.3

.2

. 1

. 1

. 1

.8 1.0 .2 . 1 .2 .7

. 1 4.5 1.2 2.0 .8

. 1 1.9

1.7

4.0 3.0 4.5 .4

2.9 2.6 5.0

5.3 5.4 5.2 3.4 5.3 5.7

1.8 . 6

1.4 1.9 1.5

1.8 1.5

23.3

27.8 31.8 36.0 29.0

Underwear and negligees Lingerie _ _

29.6 29.7

Negligees and robes 30.2 Women's and children's outer

apparel: Coats and suits 27.4 Dresses _ _ 25.2 Blouses and sportswear Infants' apparel, etc

27.3 25.5

Aprons and housedresses, etc_- Furs -

26.8 22.0

Men's and boys' wear: Men's furnishings 29. 1 Men's clothing 23.0 Men's sport clothing, casual___ Sportswear

26.4 27.4

Boys' wear 24. 8 Home furnishings:

Curtains _ 25.9 Draperies, etc _ 23. 3

1 Cumulative mark-on is the ratio of difference between accumulated merchandise costs and accumulated merchandise retails, expressed in terms of the retail amount. Other items are expressed as percentages of sales.

Adapted from {71).

Data for 265 men's furnishing stores show that in 1952 retailers' gross margins averaged 32.8 percent of net sales and ranged within relatively narrow limits {JfJt). Salaries averaged 9.8 percent of net sales and varied inversely with volume of annual sales, with proportion of credit sales, and with the price range of the commodities. Wages averaged 6.5 percent of net sales and varied directly with the volume of annual sales, with the proportion of sales on credit, and with the price range of the commodities. They varied inversely with profits as proportions of sales. Occupancy expenses averaged 6.4 percent of net sales, and varied directly with the volume of annual sales and irregularly with most other factors. Profits before tax deductions averaged 3.5 percent of net sales and ranged from an average loss for some groups to an average gain of 11 percent for others.

Typical operating ratios for 269 women's ready- to-wear retail stores show that in 1953 gross margins averaged 32.3 percent of net sales and ranged from 30.1 percent for a group of 65 unprofitable ones to 36 percent for the 43 stores in the Far West group (^-4) • Salaries averaged 8.2 percent of net

sales, varied inversely with the volume of annual sales and with the proportion of credit sales, varied irregularly with most other factors, and averaged highest for 46 stores which were open 60 or more hours per week. Wages averaged 8.8 percent of net sales, varied directly with the volume of annual sales and with the prooprtion of credit sales, and varied irregularly with most other factors. Profits before income tax deductions averaged 2.9 percent of net sales, averaged higher in the Far West than in any other geographic division, and ranged from an average loss of 2 percent of net sales for 65 unprofitable stores to almost 10 percent for stores with profits of 7 percent or more of net sales.

Eeports for 213 women's accessory and specialty stores show that in 1954 gross margins averaged 33.7 percent of net sales and ranged from 31.5 percent for 65 stores with annual sales of $25,000 to $50,000 to 36.7 percent for 73 stores that sold mostly underwear and nightwear, including foundation garments {U). Data for 168 women's accessory and specialty stores show that in 1949 gross margins averaged 32.4 percent of net sales (^7).

7316-806—64- -10 137

TABLE 102.—Average costs^ margins^ and profits for department stores^ expressed as proportions of net sales^ united States^ 1939^ 19^7^ and 1959-62 ^

Item 1939 1947 1959 1960 1961 1962

Net sales __ Percent 100.0

Percent 100.0

Percent 100.0

Percent 100.0

Percent 100.0

Percent 100 0

Merchandise cost_ 63.1 36.9

64. 6 35.4

63.6 36.4

63.6 36.4

63.80 36. 20

63 87 Gross margin 36 13

Total expense 35.4 30. 1 34.8 35.95 35.83 35 99

Payroll 17. 8 4.4 3.6 9.6

16.9 2.2 2.4 8.6

17.8 3.0 2.7

11.3

18.25 3.25 2.7

11.75

17. 92 3.23 2. 72

11.96

18 10 Real estate cost ____ 3 20 Advertising 2 58 Another 12 11

Accounts receivable 2_ 1.5 2.5 4.0 .6

3.4

5.3 2.0 7.3 2.8 4.5

1. 68 3.34 2.34 5.66 2.93 2.83

1.80 2.36 2.37 4.64 2.47 2.49

1. 9 2.63 2. 54 5.05 2. 52 2.53

1 96 Operating profit _ 2 46 Other income 2. 60 Gain before tax deductions * 5 14 Federal income taxes _ __ 2. 73 Gain after tax deductions _ _ 2 64

Reporting firms Number

428 Number

383 Number

296 Number

285 Number

216 Number

213

1 Data for 1961 and 1962 are typical figures for stores with sales of $1 million or more. Data for other years include stores with sales of less than $1 million. Data on profits and other income in 1959 and 1960, are adjusted on the basis of data reported in 1963.

2 Handling charges and delivery service charges collected from customers. 3 Data not available. * Figures for these items were revised for the year 1939 for comparability with results for subsequent years in order

to reñect uniformly the 4 percent interest rate charges on selected assets. Adapted from (66),

Salaries in 1954 averaged 11.2 percent of net sales and varied inversely with the annual volume of sales, hours per week the stores were open, and the percentage of sales on credit. Wages averaged 5.8 percent of sales and varied directly with the annual volume of sales and with the percent of sales on credit. Occupancy expenses averaged 7.5 percent of net sales, and were highest for stores with annual sales of less than $25,000. Net profits before income tax was deducted averaged 2.2 percent of net sales and ranged from an average loss of 3.9 percent of net sales for 64 unprofitable stores to 8.6 percent for 47 stores with profits of 6 percent or more of net sales.

Data for 192 family clothing stores show that in 1956 retailers' gross margins averaged 30.6 percent of net sales and ranged from 24.8 percent for 50 stores with gross margins of less than 28 percent of net sales to 37.7 percent for a group of 60 stores with gross margins of 33 percent or more of net sales (^^). These margins varied directly with the percentage of credit sales. Salaries averaged 9.4 percent of net sales and varied inversely with the annual volume of sales and with profits. They varied directly with gross margins earned. Wages averaged 7.7 percent of net sales and varied directly with the annual volume of sales, the percent of credit sales, and gross margins earned. Occupancy expenses averaged 4.2 percent of net

sales, and varied directly with gross margins but inversely with net profits. Net profits before taxes were taken averaged 2.7 percent of net sales and ranged from an average loss of 1.5 percent of net sales to an average profit of 8.7 percent for 40 stores with pjrofits of 6 percent or more of net sales.

A comparison of the operating results for women's accessory and specialty stores reported for 1954 and for 1949 {44-) shows that the proportion of net sales accounted for by gross margins, total operating expenses, salaries, occupancy expenses, and some other expenses increased, but the proportion accounted for by wages and profits decreased. A comparison of operating results for family clothing stores for 1956 and those for 1951 (44) shows similar results, except that for family clothing stores, the proportion of net sales accounted for by wages was unchanged and the proportion accounted for by occupancy expenses decreased. Advertising expenses, as proportions of net sales, were unchanged for women's accessory and specialty stores, but they increased for family clothing stores.

As indicated for department stores and for other kinds of stores (p. 136), salaries and wages are two of the chief items included in gross retail margins for textile products. Salaries and wages for 240 dry goods and general merchandise stores in 1958 averaged about 17 percent of net sales, 58 percent

138

TABLE 103.—Typical costs^ margins^ expenses^ and profits of department stores^ as proportions of net sales, hy volume of sales, United States, 1962

Item

Net sales

Merchandise cost Gross margin

Total expense

Payroll Real estate Advertising Taxes ^ Imputed interest Supplies Services purchased». Unclassified Traveling Communication Pensions Insurance ^ D epreciation ^ Professional services. Donations Loss from bad debts. Equipment rental- _.

Accounts receivable 2 Net expense

Earning on operation Other income Gain before taxes Federal income taxes Gain after taxes

Reporting firms

Less than 1

Percent 100. 00

65.77 34.23

33.24

18.08 2.65 2.11 1.26 2.11 1.99 .68 .36 .33 .38

0 .60 .68 .13 .05 .13

0

.12 32.79

1.30 2.16 3.58

Number

Total net sales per store in millions of dollars

1 to 2

Percent 100. 00

64.50 35.50

36.04

35.06

.32 2.13 2.25 .86

1.53

Number 32

2 to 5

Percent 100. 00

63.62 36.38

36.32

1.06 35.29

1.05 2.38 3.48 1.42 1.88

Number 47

5 to 10

Percent 100. 00

64.07 35.93

36.49

1.01 35.24

1.00 2. 24 3.28 1.67 1.81

Number 32

10 to 20

Percent 100. 00

64.89 35.11

36.76

1.50 35.04

.52 2.70 3.61 1.78 1.77

Number 40

20 to 50

Percent 100. 00

64.07 35.93

36.61

18.35 3.59 2.79 1.52 2.40 2.15 1.98 .60 .27 .63 .32 .37 .75 .15 .09 .30 .04

1.84 34.70

1.06 2.64 3.63 1.77 1.95

Number 35

50 or more

Percent 100. 00

63.56 36.44

35.52

17.92 3.01 2.27 1.60 2.43 1.94 2. 12 .67 .21 .57 .38 .50 .76 .16 .09 .34 .05

2.27 33.40

3.68 2.61 6.39 3.52 3.24

Number 27

1 Except on real estate. 2 Handling charges and delivery service charges collected

from customers.

^ Data not available.

Adapted from {66),

of retailers' gross margins, and 62 percent of total expenses. For 302 children's and infants' wear stores in 1957, wages and salaries averaged almost 17 percent of net sales, 51 percent of gross margins, and 54 percent of total expenses. For 192 family clothing stores in 1956, salaries and wages averaged about 17 percent of net sales, 56 percent of gross margins, and 61 percent of total operating expenses. For 265 men's furnishing stores in 1952, salaries and wages averaged 16.3 percent of net sales, 50 percent of the retailers' gross margins, and 56 percent of total operating expenses. These results are fairly typical of those for other kinds of retail stores, including women's ready-to-wear and women's accessory and specialty stores (4-i)«

Payrolls, as proportions of sales, vary from one geographic division to another. In 1958, payrolls for operators of general merchandise stores ranged from 12.3 percent of sales in East South Central

States to 15.9 percent in Middle Atlantic States, and averaged 14.8 percent for the United States (table 104). For apparel and accessory stores, these proportions ranged from 12.5 percent in East South Central States to 14.3 percent in New Eng- land, and averaged 13.6 percent for the United States. Substantial proportions of these differences in payrolls may be accounted for by differences in wage rates.

Census reports show that for the week ended nearest November 15, 1958, the average weekly wage rate for the group of retailers handling general merchandise ranged from $48.22 in East South Central States to $69.45 in Pacific States, and averaged $57.00 for the United States. For apparel and accessory stores, these rates ranged from $46.32 in East South Central States to $65.38 in Pacific States, and averaged $57.57 for the United States. The ratio of active proprietors

139

of unincorporated businesses to full-time employees and average annual volume of sales per establishment also varied considerably from one geographic division to another (table 104). These variations also may have had some influence on the ratio of payrolls to sales. In 1958, general merchandise retailers in East South Central States, for example, had the lowest ratio of payrolls to sales, the lowest volume of sales per plant, the lowest average weekly wage rate, and the highest ratio of active proprietors to regular employees. Similar data for other regions show considerable irregularity.

Median profits of retailers of apparel and household textiles, after federal income and excess- profit tax deductions, as proportions of net sales and of net worth, decreased in the late 1940's and early 1950's, reached a low point in 1958, and then increased in the early 1960's (table 105). Simple averages show that median profits of 1.8 percent of sales in 1962 were lower than those in 1961, higher than those for any other year since 1958, and substantially lower than those in the 1940's and early 1950's. As proportions of net worth, average median profits of 4.8 percent of sales in 1962 were somewhat lower than those in 1961, higher than those in 1958, and substantially lower than those in the 1940's and early 1950's.


A reduction in cost of retailing textile products may involve increasing the general efficiency of existing agencies, concentrating services in the hands of agencies or combinations of agencies that can perform them most efficiently, and reducing unnecessary services. A determination of the most feasible means of improving existing agencies would involve consideration of the facilities and equipment used, organization and operation of the business units, selection and management of personnel, location of places of business, number and kinds of commodities handled, volume of operation, and purchase and sales policies, among other factors. But the information available is not complete enough to indicate all of the more effective means of improving the efficiency and of reducing the cost of these agencies.

Large retail distribution organizations, such as mail-order houses, department store chains, and large specialty retail chains, are said to have demonstrated their ability to handle large-volume items on relatively small margins (64,), Some economies may result from buying large volumes directly from manufacturers. In 1958, according to census reports, textile mill products valued at more than $1,350 million were sold through manufacturers' sales branches and offices to retailers. Retailers usually buy large quantities of apparel and related products directly from manufacturers. Economies of large retailers may be attributed in part to savings from handling large volumes and

in part to advantages of direct purchases from manufacturers.

Various types of cooperative plans have been worked out by retailers and wholesalers in an effort to improve efficiency in buying and selling (69). One phase of this development is said to be group or syndicate buying, under which department stores and other retailers with relatively small individual purchases of individual commodities combine to establish a buying organization that buys for them directly from manufacturers, rather than through wholesalers. Some wholesalers also have formed such buying syndicates. But adequate information is not available to show to what extent the "traditional" channel, from producers to wholesalers to retailers, has been affected by these developments.

The efficiency of the smaller retailers might be increased through expansion of the activities of large organizations which provide purchasing and merchandising services to the smaller independ- ently owned and operated stores (6^). These services, by helping smaller operators to obtain better selections of merchandise, better control of stocks, and increased rate of turnover, may enable the small stores to approximate the merchandising efficiency of the larger distribution outlets. Such increased efficiency would tend to affect favorably returns to retailers, costs to consumers, and returns to farm producers of cotton and wool.

A combination of two or more of the successive links in the chain of manufacture and distribution of textile products may be an effective means of achieving economies in production and distribution, and a closer linkage between production planning and ultimate consumer demands (64), Such integration may afford better control of the qualities of finished goods made available to consumers. It may facilitate sales through standardization of products, branding or informative labeling, and educational advertising. Experiences before World War II indicated both the possibility and the limitation of integration in the textile industry (SI), Price and production regulations during the war apparently were favorable at certain points to the extension of unified control (64)^ and developments after the war indicate continuing and perhaps growing interest in the possibility of further combinations (6ß).

Considerable savings in cost of retailing might be made if such services as credit, free delivery, return privileges, and perhaps others were limited to those willinng to pay the costs of performing them. This would necessitate a differential pricing system which might be difficult to operate, especially if competing stores did not adopt a similar policy. Some progress has been made in this direction by some stores that concentrate on cash- and-carry sales while others sell on credit and make deliveries. Retailers have experimented with differential pricing on the basis of the services performed, but available information is not com-

140

TABLE \^^,—Number of retail stores, average volume of sales, payroll as proportion of sales, "ffeMj/ wage rate, and ratio of active proprietors to regular employees, hy kind of store and region. United States, 1958 ^

Kind of store and region

General merchandise group: New England Middle Atlantic East North Central West North Central. __ South Atlantic East South Central West South Central-__ Mountain Pacific

United States.

Establish- ments

Average sales per

establishment

Number 4,658

13, 395 12, 305

8, 180 17, 687 10, 261 10, 306 3,300 6, 552

Dollars 270, 944 323, 680 383, 063 227, 142 170, 958 115, 983 188, 207 250, 656 416, 526

Apparel and accessory stores: New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific

United States.

86, 644

8,339 32, 123 22, 331 9,280

15, 028 6,048 9,234 3, 684

12, 692

118, 759

252, 529

102, 943 104. 708 107, 146 100, 920 103, 645

96, 655 112, 169 103, 382 111, 525

Payroll as proportion

of sales 2

Percent 15. 3 15. 9 15.7 14.9 13.9 12.3 13. 5 12. 9 14.6

105, 469

14.8

14.3 13.0 14.0 13.1 13.2 12. 5 13.0 12.9 13.9

Weekly wage rate

Ratio of active proprietors to total employees

Dollars 51.93 60.47 60.05 54.72 49. 36 48.22 51. 33 57. 13 69.45

13.6

57.00

59.24 62. 60 59. 50 53.72 51.14 46.32 50. 21 57.79 65. 38

Percent 6.2 6.1 5.1 8.8

11.0 19.9 11.0 8.6 5.7

16.9 20.7 19.6 21.3 17. 2 21.4 17.3 22.5 22.7

57.57 19.8

1 Retail stores with payrolls. 2 Payrolls include no compensation for active proprietors

of unincorporated businesses. Adapted from Census of Business, Retail Trade.

TABLE 105,—Median net profits of retailers of apparel and household textiles as proportion of net sales and of net worth, hy hind of products, United States, specified years, 1989-62

Type of business Net profits ^ as proportion of net sales 2

Department stores Men's and boys' clothing Men's and women's clothing ^ Men's furnishings Women's specialty shops

Department stores Men's and boys' clothing Men's and women's clothing ^ Men's furnishings Women's specialty shops

1939

Percent 2.03 2.39 3.89 2.70 1.31

1948

Percent 4. 12 4.06 4. 19 2.42 3. 58

1958

Percent 1.91 1. 94 2. 10 1.09 1.53

1959

Percent 2.03 1.96 2.39 1.59 2.42

1960

Percent 1.73 1.71 1.15 2.95 1.69

1961

Percent 2.00 2.60 2.03 2. 26 2.26

1962

Percent 1.30 2.78 1.28 1.98 1.83

Net profits as proportion of tangible net worth *

57 67 77 00 64

12.40 10.47 12.80 5. 29

14.45

5.27 4.11 5. 16 2.83 4.81

5.84 4.38 4. 61 3.57 7. 23

4.89 3.71 3.80 4.55 6. 21

5.30 5.75 6.39 4.48 6. 15

4.65 5.74 3.66 4.99 5.05

1 Profits after depreciation on buildings, machinery, equipment, furniture, and other assets of a fixed nature; after reserves for Federal income and excess-profit taxes; after reductions in the value of inventory to cost or market, whichever is lower ; after charge-off for bad debts ; after all miscellaneous reserves and adjustments, but before dividends or withdrawals.

2 Dollar volume of business transactions for 365 days net after deductions for returns, allowances, and discounts from gross sales.

3 Prior to 1947 classified in the ''clothing, installment" category.

4 The sum of all outstanding preferred or preference stocks (if any) and outstanding common stocks, surplus, and undivided profits, less any tangible items in the assets such as goodwill, trademarks, patents, copyrights, leaseholds, mailing lists, treasury stocks, organization expenses, and underwriting discounts and expenses.

Adapted from {33).

141

píete enough for an appraisal of the results. Progress has been made in reducing costs by setting up minimum sizes of packages that will be delivered and by limiting the return for credit of products purchased. But if restrictions on these services are to be feasible, all competing retailers in the same city probably would have to follow similar practices.

^ Advertising is generally recognized as an effective means of expanding market outlets for particular makes or brands, as well as the total market outlets for all textile products. Any increases in volume as a result of advertising may make possible some reductions in average per unit costs of distribution. If advertising were made more informative and were placed on a more efficient basis, it probably would be more effective in expanding market outlets and in reducing costs of distribution {116).

Style and changes in fashion are important elements in the cost of distributing textile products as well as of manufacturing them. The large number of styles and frequent changes in fashion increase the costs of retailing by necessitating frequent purchases of relatively small lots of the styles m fashion at the time. The alternative is to bear the risks of substantial losses on stocks of out-of-fashion goods on hand. Data relating to distributors' margins for women's dresses by price lines show that retailers' margins per dollar of sales for handling the higher priced dresses, for which style was an important consideration, were m some instances more than 25 percent greater than those for handling lower priced lines for which style and changes m fashion were relatively unimportant {27, 119), These data, along with other information, indicate that retailers margins might be reduced considerably if the number of styles and the frequency of changes in fashion were greatly reduced. But an adequate variety of styles and changes in fashion stimulate increases in consumer demand.

Developments in recent years indicate that retailers' margins for textile products might be considerably reduced by simplification of the selling process to permit and encourage self-selection and self-service by consumers. These services may be facilitated by open display of merchandise, arrangement on the basis of the consumer's primary interests, and an arrangement for completing the transaction by making payment at a convenient desk set up for that purpose {41). The feasibility of simplifying the selling process for textile products has been demonstrated in actual practice. Self-service grocery stores freed the consumer from the slow process of depending upon the clerk to assemble his purchases and variety stores demonstrated the expandability of consumer demand as a result of merchandise display. De- partment store chains extended the principle of open display to many commodities not heretofore

sold in this way, and ready-to-wear specialty stores simplified shopping by displaying merchandise by size.

Keports indicate that self-service, soft goods supermarkets emerged as identifiable institutions in the middle 1950's {90). Kesults of a survey mdicated that by the end of 1960, the number of these supermarkets in New England had increased to 140 and annual sales to $400 million, or about 30 gercent of total department store sales in that area,

ither estimates of sales by these self-service supermarkets, for the United States as a whole, range from $1.5 billio^ to over $4 billion {89). The two main characteristics of these stores are said to be their emphasis on soft goods, especially apparel for women and children, and operation on a completely self-service basis with check-out stands {89).

Self-service makes possible a reduction of retail margins mainly by reducing payroll costs, which average about half of the total operating expenses of retailers. Keports indicate that markups of self-service, soft goods supermarkets range from 20 to 30 percent of sales, as compared with department and specialty apparel store markups of 35 to 40 percent {89). Stock turnover is said to be two or three times that of department stores and many of their smaller competitiors. New, standard goods are handled rather than the closeout and distress merchandise. The range in price lines is typically narrow and is chosen to reach low- income and lower middle income families, but the depth and assortment of merchandise within lines is great {89). Accurate labeling to show the quality and size of the products on the basis of adequate standards would facilitate self-service and tend to reduce costs of retailing.

Additional information is needed to indicate more specifically the conditions under which and the most effective means by which to reduce the costs and to improve the adequacy and efficiency of retailing textile products. Meeting this need would involve analysis of detailed cost data for a representative sample of retailers to ascertain the influence of the various factors under actual operating conditions on the unit costs of labor, overhead, and other items for each important service rendered. Detailed specifications for model, low-cost units for retailers of specified types and sizes, based on cost-engineering data and other information, would be helpful as a guide. Such models would show the more desirable buildings and equipment, floor plans and arrangements for display, purchase and sales policies, operating methods and labor requirements, kinds of products handled, and detailed costs for each major process or service.

Such information should supply at least a fairly adequate basis for ascertaining the nature and extent of any improvements needed. But the nature of the retailing business is such that any studies

142

needed to develop this information would require the services of personnel having specialized training and experience in this kind of business. Well- intormed operators could suggest the kinds of information that would be of greatest usefulness to them in improving their adequacy and reducing their costs. Their advice and cooperation in planning and developing research to supply the needed information would be helpful.

Some indications of the importance of reducing the costs of retail distribution of textile products may be obtained from data showing that during recent years gross margins for retailing apparel

and household textiles averaged almost a third of the cost of the products to consumers, about 10 times as much as the total costs of merchandising the raw cotton and wool used, and almost three times as much as total returns to groovers for the cotton and wool used. A reduction of 10 percent in retailers' gross margins would result in savings about as great as total costs of merchandising the raw cotton and wool used, including ginning and baling the cotton but excluding scouring of wool. Such savings would amount to more than a fourth of the total returns to growers for production of the cotton and wool used.

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