Fashioning the future

During the past decade, North Carolina’s textile and apparel industries have cut more than 100,000 jobs. This is a truly sobering statistic, and it is likely to get worse. The latest U.S. Department of Labor projections predict more textile- and apparel-job losses in the coming decade.

Are North Carolina’s textile and apparel industries doomed? Based on a recent study from the National Bureau of Economic Research, the answer seems to be, “Maybe not!”

The NBER study considers these industries from a national perspective, so we can’t be sure the trends exactly fit North Carolina. But the study certainly confirms the job losses. Nationally, 160,000 textile jobs and 400,000 apparel jobs have been lost since 1990.

But there appear to be different reasons for the changes in these two industries, in part because they do different things. The textile industry takes raw materials and turns them into fabric; the apparel industry takes the fabric and turns it into final products, such as clothing, drapes and carpet.

A major reason for the declining employment in the textile industry is significant investment in technology, which has increased labor productivity. The average capital stock per employee in the textile industry increased by more than 25 percent in the 1980s and early ’90s, and output per worker rose by more than 50 percent. Consequently, fewer workers have been needed to produce the same amount of textile products. These changes are similar to what’s happened in agriculture over the past five decades.

Interestingly, since 1972, U.S. textile exports have actually increased more than twice as much as textile imports into our country. U.S. textile exports increased by 374 percent, compared to a 168 percent increase in U.S. textile imports. And North Carolina’s textile production was greater in 1999 than 20 years earlier.

The apparel industry is a different story. The cut-and-sew tasks have not been as amenable to technological innovation. In fact, the capital stock per employee actually fell during a recent 20-year period.

As a result, job losses in apparel have been due more to employment moving to low-labor-cost countries. This is reflected in the increased gap between apparel imports and exports, which grew by 830 percent between 1972 and 1997.

But the news from the NBER study isn’t all bad. The study also revealed an interesting and important fact: Even as many factories have been closed and jobs cut, new factories have opened and new jobs have been created.

During the 1970s, ’80s and early ’90s, almost one-fourth of the nation’s textile plants and about one-half of the apparel plants had opened within the past five years. Two textile and apparel jobs were created for every three lost.

The net result is still significant job losses in these two industries. But the fact that new plants have opened and new jobs have been created suggests that the textile and apparel industries are changing rather than dying.

Further analysis by the study shows that smaller, less-efficient plants are being closed, while larger, more efficient plants are opening.

So the future of the domestic textile and apparel industries may not be as bleak as many thought. The evidence suggests that these industries are changing in the wake of new competitors and new markets.

The future is in leaner, more productive industries that employ fewer workers and focus on higher-valued products. The textile and apparel industries will continue to be employers in North Carolina, but for more skilled, technical workers operating in an increasingly high-tech environment.

[Michael L. Walden is a William Neal Reynolds distinguished professor in the Department of Agriculture and Resource Economics at N.C. State University and an adjunct scholar with the John Locke Foundation.]