Protectionist Fears

s businesses around the globe battle with difficult economic conditions, it is
interesting to observe the relationship between government and industry. It is clear countries like
China and India see the importance of their manufacturing bases, and it makes one wonder why the
U.S. government doesn’t – with the exception of the auto sector.

A recent Bureau of Labor Statistics (BLS) report, “Career Guide to Industries, 2010-11
Edition,” states that  “wage and salary employment in the textile, textile product, and
apparel manufacturing industries is expected to decline by 48 percent through 2018, compared with a
projected increase of 11 percent for all industries combined.” In every category within the
industry, from accountants to truckers, BLS forecasts close to 50-percent employment reductions
from a total of 497,100 jobs in 2008.

The report softens the blow by discussing increased productivity and specialization in
high-value products, and even touts industrial fabrics. Keep in mind that the author is BLS, so the
report is focused on jobs, not industrial output. But it is hard to visualize 250,000 workers
representing the entire U.S. textile industrial complex in 2018.

There was a time when U.S. textiles were considered an essential industry. It is always
striking when delving into the history of some of the U.S. industry’s key players to see what a
significant part of their history concerns stepping forward to supply the war effort during World
War I and World War II, as well as more recent conflicts. But those are uncomfortable things to
consider when discussing industrial policy. The United States prefers a kinder, gentler, global
vision of the world, one in which the concept of an essential industry is easily abandoned — or
outsourced, particularly if it means offering access to U.S. consumers in trade for a false sense
of security and influence in the world. The Berry Amendment, which focuses on domestic supply to
the armed forces, helps support domestic production, but there is more to the story.

Textile, textile product and apparel manufacturing — the three sectors the BLS considers —
present great business opportunities regardless of where they are located around the world. Global
demand for textile products generally increases annually. Within that framework, why do U.S. policy
makers choose to make the conditions for doing these businesses in the U.S. less advantageous?
There are domestic producers that remain strong in every sector, but the U.S. government doesn’t
make that easy. Whether it be tax policy, healthcare costs, pending cap-and-trade legislation or
the need for textile executives to become masters of U.S. trade law, the feeling is that the
government is a wild card. What ever happened to a government that supports policies that provide
incentives for capitalists to invest in what the U.S. could mine, grow or make? In an era of huge
trade deficits, promoting U.S. manufacturing seems like a no-brainer, but there are smarter brains
a work. Fear of being called protectionist, quiet reminiscences of the Smoot-Hawley Tariff Act,
fear of starting trade wars – these fears would not apply if the U.S. weren’t overly dependent on
imported everything.

March/April 2010