Fewer And Smaller Declines Ahead
By Robert S. Reichard, Economics Editor
Much of this change can be credited to the industry itself — as consolidations, management reorganizations and changing business strategies all make for a tighter, more efficient and more globally oriented industry that embraces the entire textile and apparel supply chain, from basic fibers all the way up to clothing manufacturers and retailers.
Some pretty savvy business people are also betting that the industry isn’t about to disappear. Witness Wilbur L. Ross’ $614 million acquisition of bankrupt Burlington Industries and his hoped-for $90 million purchase of Cone Mills. He’s betting big on the industry’s survival — and people with his track record don’t usually make many mistakes.
Spotlight On Imports
Moreover, to buttress his investment, Ross is in Washington almost every week to argue his view on trade and the need to protect American jobs. Nor is he alone in an intensifying effort to blunt the huge textile and apparel import tide.
The American Textile Manufacturers Institute and a host of other interested organizations are also ratcheting up pressure on lawmakers, and this, too, may be bearing some fruit. Examples: the recent imposition of quotas on knit goods and a few other categories that make up about 4.7 percent of US imports; more efforts to halt illegal transshipments; and added pressure on the Chinese to reduce subsidies given to their own producers.
The fact that 2004 is an election year also helps, as lawmakers move to mollify angry voters in big textile and apparel states. Bottom line: Look for some modest slowdown in overall US import gains — from last year’s double-digit levels to something in the order of 6 to 8 percent.
Other Upbeat Factors
Relatively good clothing and home furnishing sales during the just-concluded holiday season also should be seen as a sign of an improving textile business climate. There are many other positives going for the industry as well — all of which are examined more closely in Textile World ’s annual review and forecast (See “Textiles 2004,” TW, January 2004). These would certainly have to include the seemingly unending spate of new niche products that continue to hit the market; still rising industry productivity; the lack of any big inflationary push on the cost front; and stronger US and world economies, which will increase demand for both textiles and apparel.
Note, too, that the US outlook should be further bolstered over the coming months by benefits from this past summer’s tax cut. Because the cut was retroactive to early 2003, tax filers will be rewarded with refund checks to compensate them for the first half of 2003.
A Summing Up
Given all the above, TW editors anticipate a meaningful drop in market erosion for 2004, with no repeat of this past year’s big decline. This prediction for somewhat better industry performance is seconded by analysts at Global Insight, an economic consulting firm, who put the basic mill shipment decline in real or deflated terms at only around 2.5 percent. When it comes to mill products, they’re even more upbeat, actually seeing a fractional 0.4-percent gain. Apparel losses also should shrink, to only around 1.6 percent.
Still further confirmation comes from top purchasing executives responding to the latest annual Institute of Supply Management survey. These people, who are in the forefront in planning for 2004 material, labor and equipment needs, list textiles as one of the industries expected to see a greater-than-3-percent nominal growth in revenues during the upcoming year. This could be a bit optimistic, but this is the first time in many years that these industrial buyers are putting textiles back into the plus column.
Download Current US Textile And Economic Indicators.