Gary Gereffi Nc Clothing & Textiles 15 16 Oct 04


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Fashion, apparel, textile, merchandising, garments

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Gary Gereffi Nc Clothing & Textiles 15 16 Oct 04

  1. 1. 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
  2. 2. 4 Themes <ul><li>Global Context: Apparel Value Chains </li></ul><ul><li>The Impact of Quota Phase Out in 2005 </li></ul><ul><li>North Carolina’s Textile & Apparel Industry: What’s Happening to Jobs? </li></ul><ul><li>Industrial Adjustment in North Carolina: Top 10 Trends </li></ul>
  3. 3. <ul><li>Apparel Value Chains: </li></ul><ul><li>Dispersion and Consolidation </li></ul>
  4. 4. Apparel Value Chain: Dispersion <ul><li>1970s - Global buyers source from East Asia </li></ul><ul><ul><ul><li>Retailers –JC Penney, Kmart, The Limited, Gap </li></ul></ul></ul><ul><ul><ul><li>Brands – Liz Claiborne, Nike, Polo, Calvin Klein </li></ul></ul></ul><ul><li>1980s – U.S. buyers use East Asian firms to source from new location s under quota system </li></ul><ul><li>1990s – Central and Eastern Europe expand OPT with EU </li></ul><ul><li>Mid-1990s – Post-NAFTA: Mexico shifts from assembly (maquilas) to full-package production for USA </li></ul><ul><li>2000 – AGOA grants tariff preferences to sub-Saharan Africa </li></ul><ul><li>2005 – Quota phase out … and global consolidation! </li></ul>
  5. 5. Apparel Value Chain: Consolidation <ul><li>Buyers </li></ul><ul><ul><li>- Wal-mart is largest U.S. apparel retailer and buys 14% of all Bangladesh garment exports </li></ul></ul><ul><li>Suppliers </li></ul><ul><ul><li>Li & Fung (Hong Kong trading company) has offices in 56 countries and 400 factory relationships </li></ul></ul><ul><ul><li>Supply chain rationalization: fewer, larger factories </li></ul></ul><ul><li>Countries </li></ul><ul><ul><li>Apparel exports from China account for 20% of world total ($41.2 B in 2001) </li></ul></ul>
  6. 6. 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”).
  7. 7. <ul><li>The Impact of Quota </li></ul><ul><li>Phase Out in 2005 </li></ul>
  8. 8. 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.
  9. 9. U.S. Integration Schedule Established by CITA   (Committee for the Implementation of Textile Agreements)
  10. 10. Table 1 Source: Financial Times , July 19, 2004, p. 11.
  11. 11. Table 2 Source: Financial Times , July 19, 2004, p. 11.
  12. 12. North Carolina’s Textile and Apparel Industry: What’s Happening to Jobs?
  13. 13. Table 3
  14. 14. Table 4
  15. 15. Table 5
  16. 16. Table 6
  17. 17. Table 7 Source: Employment Security Commission of North Carolina, Announced Business Closings. SIC codes: Apparel (23) and Textiles (22).
  18. 18. Apparel Employees in North Carolina Note: NAICS code 315 (Apparel Manufacturing) Source: Employment Security Commission of North Carolina, Employment and Wage Data by Industry
  19. 19. Jobs Lost in North Carolina, 1995-2003 Source: Employment Security Commission of North Carolina, Announced Business Closings and Permanent Layoffs
  20. 20. Table 8
  21. 21. Industrial Adjustment in North Carolina Textile and Clothing: Top 10 Trends
  22. 22. Top 10 Trends in North Carolina <ul><li>Textiles are king </li></ul><ul><ul><ul><li>NC is largest textile producer in USA (>25%) </li></ul></ul></ul><ul><ul><ul><li>Textiles most imp’t mfg. industry in NC (14%) </li></ul></ul></ul><ul><li>NC textile mills have diversified markets </li></ul><ul><ul><ul><li>Apparel declining domestically, but still strong in Mexico and Central America </li></ul></ul></ul><ul><ul><ul><li>Non-apparel textiles (home furnishings and industrial use) are up </li></ul></ul></ul><ul><li>Textile mills: geographically concentrated </li></ul><ul><ul><ul><li>Three counties with >50 plants each; 67% of employment in 20 counties (out of 98 counties) </li></ul></ul></ul>
  23. 23. <ul><li>Job losses have been devastating </li></ul><ul><li>During the past decade (1993-2003): </li></ul><ul><ul><li>Textile jobs cut in half: 178,000 to 86,000 </li></ul></ul><ul><ul><li>Apparel jobs drop by two-thirds: 90,000 to 30,000 </li></ul></ul><ul><li>5. End of MFA quotas will hurt apparel jobs </li></ul><ul><li>Job losses are spread unevenly </li></ul><ul><ul><li>Broadwoven fabric, knit fabric, curtain, and finishing mills lost nearly 60% of their jobs since 1993 </li></ul></ul><ul><ul><li>Nonwoven and fabric coating mills, and carpet and rug mills employ more people than 10 years ago, and pay relatively good wages </li></ul></ul>
  24. 24. <ul><li>Textile mills are consolidating </li></ul><ul><ul><li>International Textile Group: merger of two biggest firms Burlington Industries and Cone Mills </li></ul></ul><ul><li>Apparel manufacturers are going offshore </li></ul><ul><ul><li>VF Corp.: Offshore production was 30% of U.S. sales in 1995 and 80% today </li></ul></ul><ul><ul><li>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 </li></ul></ul>
  25. 25. <ul><li>High-tech textiles are most promising </li></ul><ul><ul><li>NC firm Nano-Tex is leader in nanotextiles (“smart fabrics”) </li></ul></ul><ul><ul><li>NC also strong in some traditional sectors, like the hosiery industry </li></ul></ul><ul><li>Textile workers will need higher skills </li></ul><ul><ul><li>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 </li></ul></ul>