The ailing U.S. cotton industry will not get healthy again until textile manufacturing recovers from an economic malaise that already has forced more than 100 mills to close and cost 185,000 jobs — 30 percent of the textile industry workforce.
“The U.S. textile industry is in horrible shape,” Van May, president of the Textile Manufacturers Institute, told farmers and other industry representatives at the recent Southwest Crops Production Conference and Expo in Lubbock.
May said the last 12 months have been devastating to the industry, with 100 mill closings and others on the verge of bankruptcy. “We lost 66,000 jobs just in the last 12 months,” he said.
Textiles remained a strong force in the U.S. economy until 1997, May said. “We were doing great in the mid-90s.
He said the NAFTA model was working as the textile industry shipped yarn across the border into Mexico for manufacturing into finished goods with cheaper labor.
“Then the Asian financial crisis hit.”
Asian textile imports had been flat for 10 years, but the financial collapse devalued their currencies. “They had no money to buy products and their textiles began pouring into the United States,” May said. “The trend line went up by 50 percent in four years.”
Asian textile manufacturers enjoyed a 40 percent currency advantage over the dollar. “They still have that advantage. We can overcome high labor and production costs, but that 40 percent currency advantage is difficult to beat.”
Until the Asian invasion, U.S. mills were spinning 11.3 million bales of cotton a year. “U.S. domestic use this year will range from 7 to 7.5 million bales, a 35 percent reduction in the U.S. cotton market.”
May said cotton farmers need a favorable farm bill desperately. “But that's not enough. A safety net does not imply prosperity. The government has already spent billions putting oxygen into a tank just to keep the industry alive. We need renewed prosperity.”
May said an economic recovery depends on a “combination of trade policy and farm policy. We have to do a better job of communicating our needs in trade,” he said. “If we don't and the dollar stays strong, we will lose 150 years of industry infrastructure in four or five years.”
May said current U.S. trade policy is “more about social policy and politics” than it is about trade. “For example, when India entered the World Trade Organization they got a deal that the blue denim they shipped into the United States would be levied an 8.5 percent tariff.
“Even if India followed trade rules, sending denim into India would be (nearly impossible). We can't export denim into India without an import license. With the license and other fees, we pay a nearly 50 percent tariff, compared to 8.5 percent.
“We should not lower our tariffs one more cent until other countries lower their tariffs to our level. That's just common sense. Our trade policy is one-sided. That's why we had a $400 billion trade deficit last year.”
May said the textile industry did a good job the past year in bringing attention to the problems facing cotton and other textiles. “And the president has pledged that textiles will not be short-changed in trade policy.”
He also said the industry needs an income loss carry-back option in tax policy, seven years or beyond. “And Congress must follow through on commitments made to the textile industry.”
With a better trade policy, the industry “can develop a model for success.”
The Southwest Crops Production Conference and Expo is a joint effort of Southwest Farm Press, Plains Cotton Growers, Inc., the Texas Cooperative Extension Service, the Texas Agricultural Experiment Station, Texas Tech University, and USDA-ARS.