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U.S. Textiles Lost More Ground in '04

Washington — In another wrenching year of contraction, the American textiles industry continued to lose ground during 2004. The year was marked by continued plant closings, lower employment, weakening profits and soaring imports of low-cost product, most notably from China, where imports, measured in square yards, shot up by more than 48 percent, the National Council of Textile Organizations (NCTO) reported in its annual report on the state of the industry.

Not all the news was bad, the textiles trade group reported, and reversing a drop of almost 6 percent during 2003, corporate sales improved by 5.7 percent last year, climbing to $37.2 billion from $35.2 billion. But after-tax profits were marginal and hard to come by, and slipped two-tenths of a percent to $685 million from $700 million the preceding year.

Looked at another way, profits amounted to a skimpy 1.8 percent of sales, down from 2 percent in 2003. That's far worse, less than a third, of the 7 percent recorded for all of U.S. manufacturing last year.

Constantly moving production offshore and streamlining U.S. operations, the American industry shut down 30 plants last year, the NCTO reported. Still, that's something of an improvement over the 50 plants shuttered during 2003. As American producers stepped up their sourcing of offshore product, textiles and apparel employment fell to 676,500, a loss of more than 32,000 jobs.

At the mercy of an ever-more powerful, increasingly hard-nosed customer base, and the victim of persistent price deflation in many key categories, the producer price index for textiles products edged up just 0.9 percent last year, to a reading of 123.3 from 122.2 the prior year. That's far behind the 6.2 percent increase recorded for all commodity products, to a level of 146.6 from 138.1.

Putting a battered American manufacturing industry increasingly in jeopardy is the swell of low-cost imports, most notably from China, said the NCTO. According to Commerce Department figures, during the last year, imports of textiles and apparel from China into the U.S. market rose by 43.4 percent, to 11.5 billion square meter equivalents for the 12-month period ending November 2004. And focusing on textiles products, excluding apparel, China looms even larger, imports increasing by 48.3 percent, to 8.6 billion square meter equivalents, up from 5.8 billion during 2003.

Putting Chinese imports into perspective, the textiles and apparel trade deficit with China increased by 25.9 percent last year, to $14.2 billion — more than three times as fast as the 7.6 percent increase in the textiles and apparel trade deficit with the entire world.

As a result, said the textiles trade group, “China now has captured approximately 25 percent of the U.S. textile and apparel import market. Assuming China continues to behave in a predictable fashion ... China is expected to increase its total U.S. market share in textiles to approximately 70 percent if action is not taken on the industry's safeguard petitions and if the U.S. does not force China to cease its unfair and predatory trade practices.”

AN INDUSTRY INCREASINGLY HAMMERED BY IMPORTS: U.S. TEXTILE INDUSTRY BENCHMARKS 2003–2004

2004 2003 % change
a. NICS 313 fabric, yarn, finishing ( ): denotes loss
Source: National Council of Textile Organizations
All 2004 data was estimated from latest year-to-date information supplied by the U.S. Department of Commerce and the Bureau of Labor Statistics.
Shipmentsa ($billions) 34.3 36.5 -6.0
Corporate sales ($billions) 37.2 35.2 5.7
After-tax profits ($billions) 0.69 0.70 -0.2
Earnings on sales (percentage of sales)
Textiles 1.8 2.0
All U.S. manufacturing 7.0 5.2
Employment (year end)
Textiles 406,900 413,500 -1.6
Apparel 269,600 295,100 -0.1
All U.S. manufacturing 14,407,000 14,340,000 0.5
Average workweek in hours 40.1 39.1 2.6
Hourly earnings (annual average $) 12.14 12.00 1.2
Weekly earnings (annual average $) 487.43 469.47 3.8
Index of hours worked (2002=100)
Textiles 78.4 85.9 -8.7
All U.S. manufacturing 94.7 94.6 0.1
Producer price index (1982=100)
Textiles 123.3 122.2 0.9
All commodities 146.6 138.1 6.2
Textile/apparel imports (billion sq. yards)
(year ended November) 46.429 41.949 10.7
Textiles only 26.862 23.107 16.3
Textile & apparel imports from China
(year ended November) 11.525 8.038 43.4
Textiles only 8.580 5.785 48.3
Textiles/apparel trade deficit ($millions) (66,313) (61,655) 7.6
Textiles/apparel trade deficit with China (14,153) (11,244) 25.9 ($millions)


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