An Increasingly Uncertain 2008
Robert S. Reichard, Economics Editor
Encouraging Price News
On a somewhat rosier note, our domestic industry’s competitiveness seems to be improving. One sign: The price differentials between US-made and imported goods is beginning to narrow a bit. China, our biggest competitor, for example, has begun to post some significant textile and apparel price increases as that nation’s production and transportation costs begin to take off. Further evidence of a narrowing US-overseas price gap can be gleaned from latest official government price reports. Looking at domestic quotes first, Uncle Sam’s producer textile price index for basic textiles is up less than 3 percent vis-à-vis a year ago. That’s considerably under the near-6-percent jump noted for comparable imported items. And the picture is pretty much the same in the apparel sector. Thus, while US domestic clothing tags have remained pretty much unchanged over the past 12 months, imports of these products over the same period have gone up around 2 percent. More significant: All indications suggest this drift toward a narrowing US-foreign price gap will continue through the remainder of the year and into 2009. And it’s all beginning to have some impact on our imports. One especially encouraging sign: First-quarter 2008 incoming shipments of textiles and apparel on a square-meters-equivalent basis — from China as well as other overseas sources — have actually slipped from comparable year-earlier levels. Bottom line: With incoming totals down a surprising 4.6 percent over this three-month period, our huge market share losses of the past few years may finally be ending.
Productivity Is Another Plus
Improving mill efficiency is also helping to buoy the industry outlook. Latest figures, for example, suggest that output per worker in the basic mill sector (fibers, fabrics and so forth) has advanced at a near-4.5-percent annual rate over the nine-year period ending in 2006. And for the more highly fabricated textile product area (rugs, home furnishings, industrial products, and so forth) the efficiency increase, while smaller, is still put in the respectable 2.25-percent range. The fact that hourly pay rates have been rising at roughly the same pace also suggests that mill unit labor costs have held relatively stable. That’s not an insignificant development in this labor-intensive industry. It’s all in marked contrast to the rapidly rising labor costs now being experienced by many of our overseas textile and apparel competitors. Moreover, these upbeat domestic labor cost trends are likely to persist as our mills continue to invest in new, more efficient facilities. One result of this better handle on costs: American mills are becoming increasingly confident of both surviving and prospering. True, this year’s demand — hurt by the business slowdown — will take another hit, with perhaps another 4 to 5 percent being shaved off overall textile activity. But after that, things should begin to look up. Upshot: Our projections beyond 2008 aren’t all that gloomy — with production and shipment totals expected to fall at only a relatively small 1- to 2-percent annual rate by late next year or early 2010. Not bad for an industry that had been virtually written off as recently as one year ago.
June 10, 2008
Download current US textile and economic indicators.