Where textile mills thrived, remnants struggle to survive

Where textile mills thrived, remnants struggle to survive

In his 40-year career, William Lucas has seen almost every step of the erosion of the American textile industry. As CEO of Eagle Sportswear, a Middlesex, North Carolina, company that cuts, sews and makes clothing, he hopes to keep what’s left of that industry intact.

Lucas, 59, has invested hundreds of thousands of dollars in training his workers to use more efficient techniques that come with financial bonuses to make employees work faster.

But he fears his investments could be undermined by a U.S. trade rule.

The rule, known as de minimis, allows foreign companies to ship goods worth less than $800 directly to U.S. customers while avoiding tariffs. Lucas and other textile manufacturers in the Carolinas, once a textile hub, argue that the provision (which is nearly a century old but whose use has skyrocketed) encourages retailers to rely even more on foreign producers for keep prices low.

Defenders of the rule say it is not to blame for the United States’ lack of competitiveness. But domestic manufacturers say it benefits China in particular at the expense of American manufacturers and workers.

“It’s hard to compete with that,” Lucas said. “Someone just has to change the law. “Someone just has to change the rules.”

During the pandemic, when e-commerce purchases skyrocketed, so did de minimis use.

In fiscal year 2016, 150 million packages entered the United States tariff-free under this policy, but by 2023, that number has grown to more than one billion, according to Customs and Border Protection. Approximately half are textile and clothing products.

a congressman report in June found that Shein and Temu, fast-fashion retailers founded in China, accounted for nearly 30 percent of packages arriving below the de minimis level. (Shein and Temu have said they are open to reworking the exemption.) But while American manufacturers say the rule is one of their biggest challenges, it’s not the only one.

Clothing sales are coming off pandemic highs and have declined. That means fewer orders for the remaining operators in the Carolinas. Bryan Ashby, president of Carolina Cotton Works of Gaffney, S.C., said that a few years ago he had purchased equipment to handle higher capacity, but that in late summer he noticed that buyers of him were backing away.

Eight textile plants in the southern United States closed between August and December, according to the National Council of Textile Organizations, a lobbying group. In November, a thread installation in North Carolina attributed part of its demise to the increasing use of de minimis measures.

“When you have plants that have been open for so long closing, it’s a canary in the coal mine for how politics and economics are contributing to the economic damage the industry is facing,” said Kim Glas, president of the council.

For most of the 20th century, mills abounded in the region. That began to change in the 1990s, after the North American Free Trade Agreement was signed, which eliminated U.S. tariffs on products from neighboring countries, and large multinational companies began moving clothing production to Mexico. In 2001, when China joined the World Trade Organization, retailers turned to Asia in search of cheap labor to produce their products. Since 1994, employment in garment manufacturing in the United States has declined 65 percent, according to the Bureau of Labor Statistics.

The surviving companies are mostly family-run and privately owned, and they constantly put money back into their businesses to pay for expensive new equipment and automation to remain competitive. Many produce items for the U.S. military, which requires some clothing to be American-made, or for companies whose stated mission is precisely that. In 2022, only 2.9 percent of clothing sold in the United States was made in the country, according to the American Apparel and Footwear Association.

Halsey Cook, CEO of Milliken, a 159-year-old manufacturer in Spartanburg, South Carolina, that makes items such as military clothing, automotive floor coverings and merchandise for Patagonia and Carhartt, said that because of the de minimis, the textile industry “The pain was felt in a new way.”

“That clothing industry had largely already gone overseas,” he said. Surviving American textile manufacturers have adapted to the realities of free trade agreements, Cook said, but the enormous growth in de minimis use “has just completely opened up and undermined that system.”

In the cotton fields, gins, spinning mills, dry cleaners, and cutting and sewing shops of the Carolinas, conversations come alive when business law, which weighs on the work being done, is brought up.

Parkdale Mills, one of the largest yarn manufacturers in the country, has a plant in Gaffney, SC, that processes only cotton. Men transport bales of cotton on forklifts and automated equipment cleans the cotton and transforms it into threads that can be made into fabric. Many Parkdale employees have worked there for decades, and Davis Warlick, the executive vice president, greets his workers on the floor with warm familiarity.

“We’re trying to create more jobs,” Warlick said after a tour of the 400,000-square-foot facility. But he said he and his employees remained fearful. “All of that is threatened daily by a bad and ill-informed decision on Capitol Hill. And all this goes away and they don’t understand it.”

The clothing industry is among the most price sensitive and retailers will take advantage of opportunities to save as much money as they can.

“When any aspect of the supply chain is eroded, it hurts everyone,” said Glas of the National Council of Textile Organizations. That includes American farmers and those who work with them, he added.

Tatum Eason knows this well. She owns Enfield Cotton Ginnery in eastern North Carolina, which cleans hundreds of bales of cotton for farmers in the surrounding community. She removes debris and other impurities from cotton free of charge and makes money by selling the cotton seeds that come out during cleaning. (That cottonseed is later used to make cottonseed oil to feed cattle in the United States and tilapia in Saudi Arabia, she said.)

In 2023, it ginned half as much cotton as the previous year. And with high interest rates making operating loans more expensive for farmers and the price of cotton futures falling, she senses next year could be challenging as well. Her business depends on farmers’ optimism, and the dour environment could lead them to plant less cotton in April.

She had filled her office with a carousel of Miss Vickie’s potato chip bags and a gumball machine—sweet incentives to keep farmers coming back to her so she could encourage them that cotton was worth planting.

“We’re thinking about what we can do in our operation to make sure we know what we’re going to gin each year,” she said, sitting inside her wood-paneled office. “It’s worrying.”

The pandemic-induced e-commerce boom was not the only factor in the proliferation of de minimis shipments. In 2016, Congress increase the de minimis ceiling from $200 to $800 in an effort to reduce costs for importers, speed up delivery times for small and medium-sized businesses, and reduce paperwork for Customs and Border Protection.

The textile and clothing industry wants to curb use of the provision, but has not agreed on a single proposal to send to lawmakers. But there seems to be agreement that manufacturers in China and across Asia are getting a free pass into the U.S. consumer market.

There are bills in Congress that seek to prevent some countries, such as China and Russia, from using this provision, but none call for its elimination.

Supporters of the de minimis regime say eliminating it could lead to higher costs for consumers and companies that import goods. The competitive challenges felt by the textile industry are not caused by the provision, according to John Pickel, senior director of international supply chain policy at the National Foreign Trade Council, a lobbying group that supports the de minimis concept.

“I think it’s kind of a red herring to hang your hat on the de minimis concept as some kind of boogeyman for why certain domestic industries aren’t competitive,” Pickel said.

While details and bills are being discussed in Washington, American manufacturers continue to fulfill orders.

Inside a nondescript one-story building at Eagle Sportswear, a staff of 75 fills orders for hoodies, shorts and sweatpants for customers including the U.S. military and American Giant, a private retailer dedicated to selling domestically made clothing.

Up to five workers stand side by side and share the tasks necessary to complete a garment. It’s a departure from the traditional “batch sewing” approach, in which a person sits down and works on an individual task before putting a garment down the production line. By having multiple pairs of hands and eyes on a piece of material and addressing it immediately, the company aims to increase quality control and provide greater value to customers.

Pay starts at $11 an hour and can increase up to $17, including bonuses for meeting production goals. It used to take an hour to complete a garment, Lucas said, but that time has dropped to 43 minutes.

Lucas says he has had to charge American Giant more over the past year to make some of his garments, in part because of orders requiring smaller batches. Bayard Winthrop, who founded American Giant in 2012 and has put together a national supply chain that can make his company’s $138 cotton hoodies, says that’s fine.

Many retailers in your position have decided to go abroad to produce more for less. Keeping manufacturing (and those jobs) in the United States is more important to him, he said.

“The people here should be celebrated as the heroes of this country, and we’ve lost our way for a long time,” he said, sitting in Mr. Lucas’s office at Eagle Sportswear. “I just don’t know why. “I think it should be celebrated more, celebrated more from a political perspective.”

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John C. Johnson

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