One of the U.S. economy's most innovative and productive manufacturing sectors — textiles — “is vanishing from our economic landscape,” says National Cotton Council Vice President Mark Lange.
This decline not only affects the many thousands of employees in the textile industry, but also ancillary industries, cotton growers, and the rural economy, he says.
And the decline in mill demand for cotton has helped drive prices well below the cost of production — in early June, the futures price of cotton was 41 cents, just one-half the value at the time the 1995 farm law was passed.
All this is happening, Lange points out, despite the industry's adoption of high tech systems and procedures, including computer-aided design, sophisticated imagery for shaping and color, scanners and inventory management processes for streamlining just-in-time deliveries, and widely recognized environmental programs for product recycling and air quality control.
“Investment in yarn spinning machinery and technology has made the U.S. textile industry the most efficient in the world,” he says, with productivity gains surprassed only by the electronics and computer sectors. Although the number of active spinning positions has fallen by more than 50 percent over the past 20 years, pounds of cotton used per position increased seven-fold, from 200 pounds in 1980 to an estimated 1,400 pounds by 2000.
“The U.S. has the world's largest retail market for cotton textile and apparel products,” Lange points out, thanks in large part to the promotion campaigns of Cotton Incorporated, which have helped create a domestic retail cotton market currently in excess of 20 million 480-pound bale equivalents, compared to only 13 million 10 years ago.
In 2000, the U.S. had 22.5 percent of the world's cotton textile/apparel market, up from 14.3 percent 10 years earlier.
In spite of all these accomplishment, Lange notes, imports of foreign-manufactured textile/apparel products “are growing at a staggering rate.” From an average 5.6 million bales equivalent during the 1993-96 period, aggressive exports from the Asian sector and a rapid appreciation of the U.S. dollar helped boost them to 10.6 million by 2000.
“This surge in imported cotton products has decimated U.S. textile mills,” Lange says.
In 1997, domestic mill use of cotton was 11.4 million bales; just three years later it had plummeted to just 9.5 million bales, and has continued to decline in 2001 — now estimated at only 8.5 million bales.
“This decline in U.S. mill demand for raw cotton has a direct impact on the economic fortunes of all sectors of the American cotton industry,” Lange says. “Sales to domestic spinning mills provide stability to the level of overall annual offtake of raw cotton.”
Annual export volume varies much more widely than U.S. mill demand and thus is a source of “significant volatility” in prices.
The ongoing decline in mill demand has sharply reduced the overall level of offtake for U.S. cotton and is affecting prices to American growers.
“The U.S. textile industry and the American cotton grower have a mutual economic interest in a strong, vibrant U.S. textile and apparel sector,” Lange says.
“The infrastructure of the U.S. cotton industry is also dependent on the volume of business conducted between these sectors.
“It's imperative that U.S. agricultural and trade policy recognize the fundamental economic relationship between these industries and develop policies that can address the imbalances caused by external economic forces, or distortions in foreign industrial policies that damage U.S. manufacturing and agricultural interests.”