Spending on automation spurs productivity
To get an idea of how some U.S. textile mills can compete with developing-world rivals who pay far lower wages, roll a bowling ball down one of the production lines at Parkdale Mills' Walnut Cove yarn plant.
Chances are you won't hit anybody, though you may have to foot the bill for some pricey equipment repairs.
The 200,000-square-foot (18,580-sq-metre) plant runs 24 hours a day, seven days a week, turning out 1.5 mln pounds (680,400 kg) of cotton yarn every week with a staff of just 71 people spread over three shifts. On the overnight shift, just 11 people run the plant, which sprawls over an area about the size of four football fields.
What's the secret? Constant investment in automation equipment that allows the highly profitable plant to make more yarn with fewer skilled workers at a price low enough that it can export it to Honduras and the Dominican Republic, where it is knit into T-shirts to be sold by customers including Canada's Gildan Activewear Inc.
The environment, where hundreds of machines churn away with little human intervention, is worlds away from what plant manager B.B. McGuire saw when he started his first, part-time job in a textile factory in 1973.
"We used to have people running all over each other," recalled McGuire, 53.
The latest new equipment at the 19-year-old plant, located in a town of 1,465 people near North Carolina's rural northern border, automates a process of moving rough yarn into the final round of spinning, allowing the four workers to do a job that needed 15 to 20 people with the old gear.
"It wasn't bad equipment, it's just that the technology has been updated," said McGuire. "We couldn't be competitive without this type of technology."
The factory has reduced its staff by about 40 percent over the past five years, while boosting production, McGuire said.
While productivity improvement is a goal for pretty much every American manager, the drive is particularly zealous at textile companies like Parkdale, and with good reason. Mills have been falling likes flies in this country. According to industry lobbying group the National Council of Textile Organizations, more than 200 have closed since 2005, when the nations of the World Trade Organization agreed to drop the quotas that once regulated the global trade in fabric and clothing.
But if the industry has declined, it hasn't disappeared. About 410,000 Americans still worked in textile and apparel manufacturing as of May — more than worked in broadcasting or making electric appliances — according to government data. Still, that represents about one-quarter of the 1.6 million people who worked in apparel and textile factories back in 1990.
The common theme among the companies that have survived and thrived is technology: run high-speed, highly automated equipment or make specialized, highly engineered fabrics that cannot easily be copied at a lower cost.
The industry has long railed against what it describes as unfair Chinese trade practices and even with Beijing's recent move to allow the yuan to float more freely versus the U.S. dollar, it regards China as a major competitive threat.
"LET THEM HAVE THE BUSINESS"
A decade ago, Allen Gant looked at Glen Raven mills and realized the company his grandfather founded in 1880 after serving in the U.S. Civil War had a problem.
About 90% of the fabric it produced was basic cotton twill and denim used in clothing, which could easily be produced at a lower price outside the United States. An even bigger problem was that his customers — apparel factories — were fleeing his home country and setting up shop in Mexico and China, where costs were far lower.
It was time for a change, Gant realized.
"We just said, 'I'm sorry, we're going to use our resources and assets only for markets in which we have an opportunity to compete on a global basis, and we're not going to follow cost as a competitive strategy. If somebody can do it cheaper somewhere else, then for gosh sakes, let them have the business,'" said Gant, 63, who serves as president of the Glen Raven, North Carolina-based mill.
The company turned its focus to its Sunbrella line, fabrics designed to stand up to prolonged exposure to sunshine or bleach without fading. It can cost about four times as much as some of its less highly engineered rivals, but lasts far longer when used in an awning, as the roof of a convertible car or on patio furniture that's exposed to the elements.
Today, Glen Raven ships fabric made at its Anderson, South Carolina factory to Chinese furniture manufacturers, who use it to cover sofas and lawn chairs that they then ship back to the United States. Recognizing that nation's growing importance as a furniture manufacturing center, Glen Raven in 2006 opened a factory in Suzhou, outside Shanghai, where it makes some of the fabric it sells in China. About half of its 2,500-plus employees are based outside the United States, mainly at plants in China and France.
It sells the Chinese-made fabrics at prices comparable to what it charges for U.S.-produced goods.
It also makes a range of engineered fabrics used in everything from lining the ceilings of cars to producing camouflage netting the U.S. military uses to hide troops and vehicles from enemy radar.
The common theme among all these products, Gant said, is that they cannot be easily copied, which means the company faces little direct competition from rivals in low-wage nations. Apparel fabrics today represent about 1 percent of production.
"Costs are important — don't get me wrong, we work hard on our costs — but it's really the innovation that makes a difference," Gant said. "Would we like to find a penny (of cost savings) a yard somewhere? Yeah, absolutely. Does that keep us from doing business? Absolutely not. And quite frankly, if a penny a yard keeps you from doing business, you're in the wrong business." (Reuters)
