2004: A Test For US Textiles

he ability of China, as a nation, to attract investment, build and accommodate new
production, supply labor and move goods strikes a chord that should make any US manufacturing
business leader shudder — not out of fear, but because of the cold reality of having to justify a
US-based bricks-and-mortar presence for any manufacturing industry.

Survive, innovate and prosper — if it were just that easy. This sequence of business
strategies seems to prevail in almost every conversation regarding the future of American industry.
Experts (read: non-industry participants) believe that old-line manufacturing must come of age, get
with the times and seek innovation to compete head-to-head with low-wage markets and prevail in a
global economy.

On the surface, who wouldn’t agree? Innovation is, and has been, key to successful
manufacturing strategies, as have cost reduction, automation, quality focus, customer-driven
programs and value-added manufacturing initiatives.

Few critics of US textiles realize how easy it would be for US textile executives to follow
many pundits’ advice and relocate their operations to China. All of the work by US coalition
partners to force fair trade initiatives never resonates with free-trade-at-all-cost advocates as
an effort by US executives to find an equitable solution to a global economic shift — a shift that
threatens the existence of all US manufacturing. For some reason, the effort is maligned as blatant
self-interest, preserving something antiquated and standing in the way of a free and global

The US textile industry is sliced by a double-edged sword. Neither is it understood as a
high-tech, efficient, strategically important manufacturing base, nor is there a domestic economic
policy in place that values core manufacturing assets. How, then, does a textile executive,
responsible for profitability, avoid domestic plant closure and manufacturing relocation outside US

Solutions to this question will dominate the decisions of 2004. Much energy will be spent on
CAFTA and the 10-year anniversary of NAFTA, but one wonders in 2004 whether the entire strategy of
a Free Trade Area of the Americas is completely superseded by China ‘s new dominance in the WTO.
Even with an active trade policy shift that would forestall the quota removals set for 2005, would
any policy really affect China’s ability to consolidate the world’s manufacturing bases as it
broadens its economic prowess into virtually every sector? Even agribusiness is threatened.

This year’s elections will certainly provide the forum to address the changing state of the
US economy, and hopefully the need for a domestic economic policy that values manufacturing as a
core asset. Innovation, investment, trade policy and the elections will drive the US textile
industry in 2004. It won’t be easy, and it will be the true test for US textiles.

January 2004