Magazine article Issues in Science and Technology

A Strategy for Modernizing the Apparel Industry

Magazine article Issues in Science and Technology

A Strategy for Modernizing the Apparel Industry

Article excerpt

A model program can demonstrate how small firms can work together to become world-class competitors.

For a dramatic example of how government policy affects industry performance and what global competition means for U.S. workers, one need look no further than the humble apparel industry. Though given little attention in national discussions of manufacturing, the country's more than 10,000 fabric and clothing makers employ more than 1.4 million people--twice as many as work in the motor vehicle industry and three times as many as in steel. Long the country's major beneficiary of protectionist tariffs and quotas, the apparel industry is likely to be the sector most hard hit by the liberalization of trade stemming from the North American Free Trade Agreement (NAFTA) and changes in the General Agreement on Trade and Tariffs (GATT). Having depended heavily on protection to maintain markets, the industry is now in critical need of the modernization that the Clinton administration wants to foster among U.S. manufacturers.

In spite of the fact that the apparel and textile industries account for $16 billion of the extra $19 billion U.S. consumers pay annually for goods to cover tariff costs and quota rents, U.S. companies have been steadily losing ground to foreign competitors. The trade deficit in clothing nearly quintupled from $4.5 billion in 1979 to $21.6 billion in 1990. In the same period, employment in clothing, yarn making, broad woven- and knit-fabric production, and fabric finishing fell by 375,000 jobs. The elimination of tariffs and quotas on Mexican imports and whatever changes result from the GATT negotiations will only worsen conditions.

Although it is tempting to glibly dismiss the plight of the apparel industry as its just reward for failing to modernize sufficiently, the size of the industry and its critical role in the economy of the rural Southeast demand national attention. Employment data indicate that of 771 nonmetropolitan counties in 10 Southeastern states, 209 had 20 percent or more of their 1987 private nonfarm employment in textile and apparel production. The proportion of non-metropolitan counties that had more than 20 percent apparel and textile employment was remarkably high in several states: 56 percent in South Carolina, 46 percent in Alabama, 43 percent in Georgia, and 39 percent in North Carolina.

Another argument for caring about what happens to the industry is that clothing workers who lost their jobs during the 1980s have had a difficult time obtaining other work with equivalent pay, despite the fact that apparel wages are considerably lower than the average manufacturing wage. Part of the problem is that dislocated clothing workers have lower educational levels and are more likely to be older, female, and members of minority groups than the average dislocated worker. Their skills, too, such as sewing-machine operation, are less readily transferable to other occupations. For many workers, a healthy apparel industry is the only safeguard against downward economic mobility.

Although there are numerous examples of companies that have taken the competitive "low road" of steadily relocating production to areas of cheaper, more plentiful labor while paying little attention to quality or worker treatment, the reality is that the industry's technical efficiency has improved much more rapidly than generally believed. During the 1980s, multifactor productivity grew at a rate greater than the median rate for all manufacturing sectors. Some part of this good performance reflects the weeding out of less efficient firms, but many firms have responded to competition by investing in better production equipment and adopting more effective management practices.

Modernization will not be easy because the vast majority of companies are small or medium-sized enterprises (SMEs) that employ fewer than 500 people. They find it difficult to afford the staff to focus on areas such as R&D, customer service, quality control, labor relations, and international marketing--areas that will be increasingly important to success. …

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