Gary Gereffi Nc Clothing & TextilePresentation Transcript
Industrial Adjustment in the North Carolina Textile and Clothing Industry Gary Gereffi, Duke University Global Apparel/Clothing Europe Conference at the University of North Carolina, Chapel Hill October 15, 2004
Global Context: Apparel Value Chains
The Impact of Quota Phase Out in 2005
North Carolina’s Textile & Apparel Industry: What’s Happening to Jobs?
Industrial Adjustment in North Carolina: Top 10 Trends
Apparel Value Chains:
Dispersion and Consolidation
Apparel Value Chain: Dispersion
1970s - Global buyers source from East Asia
Retailers –JC Penney, Kmart, The Limited, Gap
Brands – Liz Claiborne, Nike, Polo, Calvin Klein
1980s – U.S. buyers use East Asian firms to source from new location s under quota system
1990s – Central and Eastern Europe expand OPT with EU
Mid-1990s – Post-NAFTA: Mexico shifts from assembly (maquilas) to full-package production for USA
2000 – AGOA grants tariff preferences to sub-Saharan Africa
2005 – Quota phase out … and global consolidation!
Apparel Value Chain: Consolidation
- Wal-mart is largest U.S. apparel retailer and buys 14% of all Bangladesh garment exports
Li & Fung (Hong Kong trading company) has offices in 56 countries and 400 factory relationships
Apparel exports from China account for 20% of world total ($41.2 B in 2001)
Figure 1: Northeast Asia's Apparel Exports to the World (SITC 84), 1985-2001 Source: World Trade Analyzer, based on United Nations data for SITC 84 (“Articles of apparel and clothing accessories”).
The Impact of Quota
Phase Out in 2005
In 2005, Multi-Fiber Agreement Ends Jan. 1, 1995 16% Integration Jan. 1, 1998 Another 17% Integration Jan. 1, 2002 Another 18% Integration Jan. 1, 2005 100% Integration MFA (1974 – 1994) ATC (1995 – 2004) Quota Abolition from 2005 Source: World Trade Organization.
U.S. Integration Schedule Established by CITA (Committee for the Implementation of Textile Agreements)
Table 1 Source: Financial Times , July 19, 2004, p. 11.
Table 2 Source: Financial Times , July 19, 2004, p. 11.
North Carolina’s Textile and Apparel Industry: What’s Happening to Jobs?
Table 7 Source: Employment Security Commission of North Carolina, Announced Business Closings. SIC codes: Apparel (23) and Textiles (22).
Apparel Employees in North Carolina Note: NAICS code 315 (Apparel Manufacturing) Source: Employment Security Commission of North Carolina, Employment and Wage Data by Industry http://eslmi12.esc.state.nc.us/ew/EWYear.asp?Report=1
Jobs Lost in North Carolina, 1995-2003 Source: Employment Security Commission of North Carolina, Announced Business Closings and Permanent Layoffs http://eslmi12.esc.state.nc.us/mls/MLSFrame.asp?contentsFrame=5
Industrial Adjustment in North Carolina Textile and Clothing: Top 10 Trends
Top 10 Trends in North Carolina
Textiles are king
NC is largest textile producer in USA (>25%)
Textiles most imp’t mfg. industry in NC (14%)
NC textile mills have diversified markets
Apparel declining domestically, but still strong in Mexico and Central America
Non-apparel textiles (home furnishings and industrial use) are up
Textile mills: geographically concentrated
Three counties with >50 plants each; 67% of employment in 20 counties (out of 98 counties)
Job losses have been devastating
During the past decade (1993-2003):
Textile jobs cut in half: 178,000 to 86,000
Apparel jobs drop by two-thirds: 90,000 to 30,000
5. End of MFA quotas will hurt apparel jobs
Job losses are spread unevenly
Broadwoven fabric, knit fabric, curtain, and finishing mills lost nearly 60% of their jobs since 1993
Nonwoven and fabric coating mills, and carpet and rug mills employ more people than 10 years ago, and pay relatively good wages
Textile mills are consolidating
International Textile Group: merger of two biggest firms Burlington Industries and Cone Mills
Apparel manufacturers are going offshore
VF Corp.: Offshore production was 30% of U.S. sales in 1995 and 80% today
Sara Lee: NC’s 2 nd largest employer and the largest U.S. underwear maker outsourced 42% of apparel production in 1997 and cut 4,175 jobs (350 in NC) in 2004 to compete with China and other low-wage countries
High-tech textiles are most promising
NC firm Nano-Tex is leader in nanotextiles (“smart fabrics”)
NC also strong in some traditional sectors, like the hosiery industry
Textile workers will need higher skills
The textile jobs that remain or are created will tend to be better paying and require higher level and different technical skills than current textile jobs