How can that be? Just four years ago, U.S. textile mill shipments hit a record $83.9 billion and raw material usage was at an all-time high of 16.9 billion pounds.
Since then, the industry has been forced into a massive overhaul in its struggle for survival.
How did this once-proud American enterprise sink to such unprecedented lows? Will it be able to climb out of this abyss?
The causes and effects of and solutions to its problems are multi-faceted.
We examine them here.
The problem is rooted in the Asian financial crisis, which began in 1997. With it, the currencies of nearly every major textile exporting countries of Asia collapsed and, in effect, brought a flood of cheap textile and apparel products into the U.S.
According to a recent report by the Washington, DC-based American Textile Manufacturers Institute (ATMI), “Crisis in U.S. Textiles,” textile imports from Asian jumped 80 percent during the past four years as Far East currencies fell by an average of 40 percent. Pressures from these imports have caused prices of U.S. textile products — and, therefore, company profits — to plummet. The drop has been steep over the last year.
“The Asian governments caused this crisis by devaluing their currencies,” said Carlos Moore, executive vice president of ATMI. “This is not a problem that our industry has really brought upon itself. The big percentage cost advantage of Asia is because of their currencies, not because they’re working harder or they have some magical machine or something that gives them an advantage. It’s a currency advantage.”
Meanwhile, other major textile exporting countries, such as India and Pakistan, have seen sharp drops in their currencies over the last two year, adding more pressure to U.S. products, according to the ATMI report.
Compounding the problem is the strong U.S. dollar, which has remained the strongest currency in the world, and competing against devalued currencies has made domestically produced go