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Fashion, apparel, textile, merchandising, garments
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Industrial Adjustment in the North
Carolina Textile and Clothing Industry
Gary Gereffi, Duke University
Global Apparel/Clothing Europe
Conference at the University of North Carolina, Chapel Hill
October 15, 2004
4 Themes
• Global Context: Apparel Value Chains
• The Impact of Quota Phase Out in 2005
• North Carolina’s Textile & Apparel Industry: What’s Happening to Jobs?
• Industrial Adjustment in North Carolina: Top 10 Trends
Apparel Value Chains:
Dispersion and Consolidation
Apparel Value Chain: Dispersion
• 1970s - Global buyers source from East Asia• Retailers –JC Penney, Kmart, The Limited, Gap• Brands – Liz Claiborne, Nike, Polo, Calvin Klein
• 1980s – U.S. buyers use East Asian firms to source from new locations under quota system
• 1990s – Central and Eastern Europe expand OPT with EU• Mid-1990s – Post-NAFTA: Mexico shifts from assembly
(maquilas) to full-package production for USA• 2000 – AGOA grants tariff preferences to sub-Saharan
Africa • 2005 – Quota phase out … and global consolidation!
Apparel Value Chain: Consolidation
• Buyers-Wal-mart is largest U.S. apparel retailer and buys 14%
of all Bangladesh garment exports
• Suppliers– Li & Fung (Hong Kong trading company) has offices
in 56 countries and 400 factory relationships– Supply chain rationalization: fewer, larger factories
• Countries– Apparel exports from China account for 20% of world
total ($41.2 B in 2001)
Figure 1: Northeast Asia's Apparel Exports to the World (SITC 84), 1985-2001
0
5
10
15
20
25
30
35
40
45
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
South Korea Taiwan Hong Kong China
China
Hong Kong
South Korea
Taiwan
US$ billions
Source: World Trade Analyzer, based on United Nations data for SITC 84 (“Articles of apparel and clothing accessories”).
The Impact of Quota
Phase Out in 2005
In 2005, Multi-Fiber Agreement Ends
Jan. 1, 1995
16% Integration
Jan. 1, 1998
Another 17% Integration
Jan. 1, 2002
Another 18% Integration
Jan. 1, 2005
100% Integration
MFA(1974 – 1994)
ATC(1995 – 2004)
Quota Abolitionfrom 2005
Source: World Trade Organization.
U.S. Integration Schedule Established by CITA (Committee for the Implementation of Textile Agreements)
WTO’s Agreement on Textiles & Clothing (ATC), fourth-stage integration deadline:
January 1, 2005: 49% of total textile & clothing trade
Proportion of U.S. imports still under quota that will not be integrated until 2005:
67% of the total volume of U.S. textile and apparel imports 89% of apparel imports 47% of textile imports
Table 1
Major clothing exporters' share of the US market 2004
Other24%
China16%
Rest of Americas16%
Mexico10%
Hong Kong9%
EU5%
Taiwan4%
Philippines4%
Indonesia4%
India4%
Bangladesh4%
Source: Financial Times, July 19, 2004, p. 11.
Table 2
How U.S. market shares may rank after elimination of MFA quotas
Other12% Bangladesh
2%
Indonesia2%
Philippines2%
Thailand3%
India15%
China50%
Hong Kong6%
Rest of Americas5%
Mexico3%
Source: Financial Times, July 19, 2004, p. 11.
North Carolina’s Textile and
Apparel Industry:
What’s Happening to Jobs?
Table 3
Industry 1993 Percent 1998 Percent 2003 Percent% Change 1993-98
% Change 1998-2003 NAICS
Total Employment 3,207,094 100% 3,703,874 100% 3,720,679 100% 15.5% 0.5%
Total Manufacturing 807,375 25.2% 793,002 21.4% 602,020 16.2% -1.8% -24.1% 31
% mfg. % mfg. % mfg.
Textiles 177,698 22.0% 150,436 19.0% 86,120 14.3% -15.3% -42.8% 313, 314Apparel 90,043 11.2% 57,950 7.3% 30,186 5.0% -35.6% -47.9% 315Tobacco 17,438 2.2% 15,653 2.0% 12,998 2.2% -10.2% -17.0% 3122Furniture 80,873 10.0% 77,407 9.8% 61,029 10.1% -4.3% -21.2% 337Biotechnology 16,650 2.1% 17,920 2.3% 21,141 3.5% 7.6% 18.0% 3254Hog Farming 7,425 0.9% 10,293 1.3% 10,262 1.7% 38.6% -0.3% 311611-13Information Technology 30,871 3.8% 20,608 2.6% 24,423 4.1% -33.2% 18.5% 3341, 3344
Total for 7 industries 52.2% 44.3% 40.9%
Source: Employment Security Commission of North Carolina www.ncesc.com
NAICS: North American Industry Classification System
North Carolina's Manufacturing Employment, Selected Industries
Table 4
NAICS*
1993 1998 2003% change
1993-1998% change
1998-2003
Textile Mills -- Apparel 313 153,976 128,094 71,284 -17% -44%
Fiber Yarn and Thread Mills 31311 42,964 36,391 20,513 -15% -44%Broadwoven Fabric Mills 31321 40,923 33,613 18,691 -18% -44%Narrow Fabric Mills/Schiffli Embroidery 31322 5,124 4,138 2,367 -19% -43%Nonwoven Fabric Mills 31323 2,270 2,663 2,480 17% -7%Knit Fabric Mills 31324 21,223 17,563 8,758 -17% -50%Textile and Fabric Finishing Mills 31331 40,513 32,366 17,268 -20% -47%Fabric Coating Mills 31332 959 1,360 1,207 42% -11%
Textile Mills -- Non-apparel 314 23,722 22,344 14,839 -6% -34%
Carpet and Rug Mills 31411 3,008 3,246 3,586 8% 10%Curtain and Linen Mills 31412 13,451 11,118 5,363 -17% -52%Textile Bag and Canvas Mills 31491 1,377 1,557 1,543 13% -1%All Other Textile Product Mills 31499 5,886 6,423 4,347 9% -32%
Apparel Manufacturing 315 90,043 57,950 30,186 -36% -48%
Hosiery and Sock Mills 31511 31,782 24,598 16,550 -23% -33%Other Apparel Knitting Mills 31519 6,119 4,234 716 -31% -83%Cut and Sew Apparel Contractors 31521 20,277 10,169 3,794 -50% -63%Mens Cut and Sew Apparel Mfg 31522 14,894 9,175 4,951 -38% -46%Womens Cut and Sew Apparel Mfg 31523 6,891 4,921 1,913 -29% -61%Other Cut and Sew Apparel Mfg 31529 7,339 2,171 830 -70% -62%Accessories and Other Apparel Mfg 31599 2,741 2,682 1,432 -2% -47%
*NAICS = North American Industry Classification System.
Source: Employment Security Commission of North Carolina <http://www.ncesc.com>
Annual Average Employment
Employment in North Carolina's Textile and Apparel Industries, 1993-2003
Table 5
Plants in North Carolina, 1990-2003
0
250
500
750
1000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Textile (For Apparel)
Textile (Non-Apparel)
Apparel
Source: The Employment Security Commision of North Carolina, Employment and Wage Data by Industryhttp://eslmi12.esc.state.nc.us/ew/EWYear.asp?Report=1NAICS codes: 313 (Textile Mills -- Apparel), 314 (Textile Mills -- Non-Apparel), 315 (Apparel Manufacturing)
North Carolina in the Global Economy http://www.soc.duke.edu/NC_GlobalEconomyDuke University, Durham, NC - Fall 2004
Table 6
Employees in North Carolina, 1990-2003
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Textile (For Apparel)
Textile (Non-Apparel)
Apparel
Source: The Employment Security Commision of North Carolina, Employment and Wage Data by Industryhttp://eslmi12.esc.state.nc.us/ew/EWYear.asp?Report=1NAICS codes: 313 (Textile Mills -- Apparel), 314 (Textile Mills -- Non-Apparel), 315 (Apparel Manufacturing)
North Carolina in the Global Economy http://www.soc.duke.edu/NC_GlobalEconomyDuke University, Durham, NC - Fall 2004
Table 7
NC Textile and Apparel Layoffs, 1990 - 2003
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Em
ploy
ees
Textiles
Apparel
Source: Employment Security Commission of North Carolina, Announced Business Closings.
SIC codes: Apparel (23) and Textiles (22).
Apparel Employees in North Carolina
Note: NAICS code 315 (Apparel Manufacturing)Source: Employment Security Commission of North Carolina, Employment and Wage Data by Industryhttp://eslmi12.esc.state.nc.us/ew/EWYear.asp?Report=1
Jobs Lost in North Carolina, 1995-2003
Source: Employment Security Commission of North Carolina, Announced Business Closings and Permanent Layoffshttp://eslmi12.esc.state.nc.us/mls/MLSFrame.asp?contentsFrame=5
Table 8
Export Market 1999 2000 2001 2002 2003% change,1999-2003
Honduras 19.4 51.0 125.4 254.6 356.1 1740%Mexico 188.1 344.6 248.7 262.4 249.4 33%Canada 362.0 360.4 306.6 287.8 236.3 -35%El Salvador 15.4 28.8 60.4 78.6 115.7 653%Costa Rica 30.6 44.0 34.4 53.2 58.9 92%Dominican Republic 15.4 33.4 58.5 50.2 53.4 248%Guatemala 3.9 14.5 24.2 37.9 35.0 797%United Kingdom 47.1 71.9 50.3 35.1 30.9 -34%Colombia 8.8 16.7 14.9 11.4 30.0 241%Belgium 17.5 73.1 80.6 56.6 26.3 50%Thailand 1.8 1.8 3.1 4.6 20.2 1017%Hong Kong 22.7 21.4 18.4 17.8 20.0 -12%Netherlands 24.5 12.5 8.9 7.7 10.1 -59%China 5.4 7.2 7.7 8.3 8.7 62%Philippines 4.6 5.3 4.3 7.2 8.4 82%
Total Value 929.6 1,279.0 1,204.7 1,297.0 1,375.9 48%
% of Total Exports, Top 15 82.5% 85.0% 86.9% 90.5% 91.5%
Source: TradeStats Express <http://tse.export.gov/ITA2003_STATES/ITA_MapInfo_portal_page.htm>
* NAICS Code: 313 (Textile Mills -- Apparel)
Top 15 Textile Exports (for Apparel*) from North Carolina, 1999-2003
Value (in millions US$)
Industrial Adjustment in North
Carolina Textile and Clothing:
Top 10 Trends
Top 10 Trends in North Carolina
1. Textiles are king • NC is largest textile producer in USA (>25%)• Textiles most imp’t mfg. industry in NC (14%)
2. NC textile mills have diversified markets• Apparel declining domestically, but still strong in
Mexico and Central America• Non-apparel textiles (home furnishings and
industrial use) are up
3. Textile mills: geographically concentrated• Three counties with >50 plants each; 67% of
employment in 20 counties (out of 98 counties)
4. Job losses have been devastating During the past decade (1993-2003):
• Textile jobs cut in half: 178,000 to 86,000• Apparel jobs drop by two-thirds: 90,000 to 30,000
5. End of MFA quotas will hurt apparel jobs
6. Job losses are spread unevenly • Broadwoven fabric, knit fabric, curtain, and finishing
mills lost nearly 60% of their jobs since 1993 • Nonwoven and fabric coating mills, and carpet and
rug mills employ more people than 10 years ago, and pay relatively good wages
7. Textile mills are consolidating• International Textile Group: merger of two biggest firms
Burlington Industries and Cone Mills
8. Apparel manufacturers are going offshore• VF Corp.: Offshore production was 30% of U.S. sales
in 1995 and 80% today
• Sara Lee: NC’s 2nd largest employer and the largest U.S. underwear maker outsourced 42% of apparel production in 1997 and cut 4,175 jobs (350 in NC) in 2004 to compete with China and other low-wage countries
9. High-tech textiles are most promising• NC firm Nano-Tex is leader in nanotextiles (“smart
fabrics”)• NC also strong in some traditional sectors, like the
hosiery industry
10. Textile workers will need higher skills• The textile jobs that remain or are created will
tend to be better paying and require higher level and different technical skills than current textile jobs