Wednesday, July 30, 2003

Yet another textile company closes

Say "good-bye" to Cannon and Fieldcrest towels:
Textile maker Pillowtex Corp. filed for bankruptcy-court protection, saying it will close all 16 of its plants and sell off its assets. The move by the maker of Cannon and Fieldcrest towels and sheets cost thousands of textile workers their jobs and is likely to stir the debate over imports that are whacking U.S. manufacturers. . . .

"Cheap imports are flooding the U.S. market and driving down prices, while global sourcing has created a new business model for textile companies that we are unable to replicate without substantial investments," Pillowtex Chairman and Chief Executive Michael Gannaway said in a letter to employees. . . .

[O]ver the past few years imports have made serious headway. From 1999 to 2002, linen imports -- a category that includes towels and sheets -- more than tripled from Brazil, rose 72% from India, rose 96% from Turkey and rose 36% from China, according to the U.S. Census Bureau.

While China is becoming a target of trade-relief efforts in the U.S., statistics show Chinese-made sheets decreasing, according to IDS, a trade monitoring company. Still, the textile industry is bracing for a new wave of Chinese textiles in 2005, when quotas are lifted on a broad range of products. Thus the loss of jobs is gaining more and more attention in Washington.

From an article by Dan Morse in tomorrow's WSJ (paid subscription required; emphasis mine).

And today's front page WSJ article: "Trade With China Is Heating Up As a Business and Political Issue," by N. King, Jr., B. Davis and K. Leggett.
U.S. manufacturers have shed more than 2.4 million jobs since 2001, a rate of more than 2,600 jobs a day. Lawmakers and many manufacturers pin the blame on China, whose exports to the U.S. have more than doubled in the past five years, topping $110 billion in 2002. U.S. exports to China are also rising at a good clip, but they are likely to tally less than a fifth of what China ships to the U.S. this year.

"China is now the economic villain that Japan was in the 1980s," said Nicholas Lardy, a China specialist at the Institute for International Economics in Washington. In the first five months of this year, the U.S. ran a $43 billion trade deficit with China, compared with a $26 billion deficit with Japan. After Canada and Mexico, China is now the third-largest supplier of goods to the U.S., having displaced Japan last year.

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