During the most recent State of the Union address, President Obama claimed credit for an apparent turnaround in the American economy. Although not perfect by any means, the economy does seem to be improving. Indeed, unemployment is down, corporate profits are strong, and many people feel better about their prospects. Various industries are doing quite well. However, what he failed to note was the quiet revolution taking place in the domestic textile industry, which is a shame as the industry has become quite a success story.
You may remember the big, bad American textile industry — the heavy-handed, anti-trade industry that tried three times to restrict imports via legislation, which fought to maintain quotas via the Multifiber Arrangement, and that struggled to reverse globalization of the textile and apparel business. It was a very large employer and a substantial contributor to the American economy. But it was also an industry whetted to arcane methods of production and management. For sure, the industry had its time, but that time passed quickly as new technology, sophisticated sourcing, and trade liberalization took hold in the 1980s. By the end of the 1990s, the industry was decimated by nimble, cost-effective suppliers in Asia and elsewhere. For many domestic mills, these were the dark days: employment plummeted and companies seemingly went out of business every day while vast swaths of the trade moved offshore. It was grim.
What a contrast compared to the industry of today, an industry that is anything but a basket case. Certainly the business has changed, but for those portions of the industry that found ways of adapting to that change remain in business and enjoy renewed prosperity. It is a smaller industry, but a far more nimble and productive. Instead of pushing trade restrictive policies of the past, the new industry promotes trade within the framework of creative, government-supported initiatives such as the Central American Free Trade Agreement (CAFTA). As a result, investment has increased in the domestic industry; new mills are built, while existing capacity has been modernized. Concurrently, new management has embraced trade as a positive and has positioned domestic producers to take full advantage of opportunities. Today’s industry is export-oriented, with strategies in place to profit from globalized production platforms and new technologies.