Globalization Hits Home
The story of Virginia Apparel Corp. is short and sad. Sid Mason
has told it so many times that he's condensed a lifetime dream into a
few clipped sentences. Mason, who had always wanted his own business,
bought a jeans plant in Rocky Mount in 1971 just as common work-pants
were turning into a popular fashion staple. His production quickly grew
from merely assembling jeans for clothing companies to buying fabrics,
creating patterns and producing private-label jeans, plus skirts and
shorts, for mail-order giants like Land's End and L.L. Bean.
How Global Trade and NAFTA Hit a Vital Virginia Business
• South of the Border, an Eager Work Force Waits for Jobs
• Hard-Working Mexican-Americans Flock to the Old Dominion
• Don't Blame NAFTA: Virginia Must Retrain
By Page Boinest Melton
But after 27 years, even as demand for Mason's products grew,
the company's margins were squeezed to nearly nothing by a flood of
cheaper-made clothing from foreign countries. The company that at one
time employed up to 600 people at plants in Rocky Mount, Ferrum and
Blackstone became a casualty of what Mason blames largely on trade
policies. Son Tim Mason let go the last 150 employees in late 1998.
The company's rise and fall marks Virginia's spot on a global
Darwinian dilemma. U.S. textile and apparel manufacturers see plenty of
demand for products. Yet, profit margins are tighter than ever thanks
to competition from foreign-made clothing which are produced at a
fraction of the U.S. cost. Only the fittest companies survive by
combining a U.S. presence with foreign production. "Some of our
customers kept encouraging us to go South to Mexico and we explored
it," says Mason. "But we figured if our people are going to lose their
jobs, let's let it be because the industry deserted us - not because we
Indeed, Mason and many others in Virginia's dying apparel industry are
running smack into a brick wall - the rising globalization of the
economy and the free trade policies that go along with it. The roaring
success of high technology may be masking the impact, but the effect of
free trade on U.S. companies is becoming a hot issue. Witness the riots
and demonstrations during World Trade Organization (WTO) meetings in
Seattle and Washington, DC, to bitter debates in Congress over
permanent trade status for China.
Globalization is no simple issue. Supporters say free trade
boosts U.S. exports of higher value-added products and services, and
allows producing countries to take care of themselves. Detractors paint
a stark picture where the biggest loser is the U.S. factory worker. A
longtime U.S. textile worker feeding a household on less than $10 an
hour loses his job to a Mexican or Caribbean earning far less - all so
that companies can compete with a flood of Asian imports. Critics blame
trade policies, like the 1994 implementation of the North American Free
Trade Agreement (NAFTA), for piling on the already stressed textile and
The jobs at stake have been mainstays in Virginia and other
Southern states for decades. Apparel work first shifted from Europe to
America in the 19th century and from New England to the South in the
early 1900s. Since the 1960s, it has been steadily moved from the
southern part of the U.S. even farther South, to Mexico and the
Caribbean. Its flight from the U.S. has only accelerated under NAFTA,
which eased tariffs between the United States, Canada and Mexico. The
Caribbean Basin Initiative means duty-free, quota-free goods can flow
between the United States and the Caribbean and, like NAFTA, employers
are likely to shift work to cheaper labor there.
Today, facing stiffer competition from Asian manufacturers,
major textile and apparel makers - many with Virginia operations - are
closing or downsizing U.S. plants. They are investing in their own
Mexican operations or joining competitors in funding "textile cities,"
industrial parks of textile and apparel production. Fabric and garment
pieces made in the United States are shipped to Mexico or the Caribbean
The tireless quest: ever lower production costs, some of it
captured through lower wages. Last year Virginia apparel workers, who
cut and sew fabric into finished products, made $8.31 an hour, or $310
a week, while textile workers, who weave threads and fabrics, made
$10.50 an hour, or $437 a week. That's compared with Mexico or the
Caribbean, where hourly wages may be less than a dollar. "It's not as
expensive to produce products outside of this country. We have so many
costs here and they're increasing," says Mason.
Opinions over trade policies are as varied as the treaties
themselves. Labor leaders say broader trade will cost even more jobs:
150,000 jobs estimated lost in textiles alone with permanent trade
status for China. Manufacturers believe U.S. companies always will have
a future producing specialty items, with the nearby U.S. market
counting on higher-end products that demand the expertise of skilled
American workers. Industry boosters believe domestic employment might
shift from production to staffing warehouses and managing supplies
traveling to and from foreign operations. And free-traders have a
message for those nostalgic for the textile and apparel industries: get
over it. "We have a tight labor market right now and we should be
employing people in the industries we are best at," said Aaron Schavey,
a Heritage Foundation trade policy analyst.
Apparel workers who lose their jobs can expect to get better
jobs paying one-third more, Schavey says, adding that nationally, close
to 90 percent of laid-off apparel and textile workers find new jobs.
"Protect the textile and apparel industry and you hurt the U.S.
economy," he says, suggesting that laid-off workers look for jobs in
growing industries like computers and technology.
That free trade message, however, doesn't fly in Virginia
communities hustling to recover from significant job losses in recent
years. The state's textile and apparel employment hit its peak 27 years
ago and has been dropping ever since: from 46,600 textile and 40,500
apparel jobs in 1973 to 27,900 textile and 12,900 apparel jobs in the
first quarter of 2000.
The roll call of lost jobs is concentrated in Southside although
it reaches into every corner of Virginia. Heaviest hit are cities such
as Danville and Martinsville but apparel job losses also have touched
the Northern Neck, Shenandoah Valley and Central Virginia. Virginia
remains the nation's fifth-largest textile employment state, probably
because capital-intensive plants represent more of a long-term
investment for textile companies.
As for the apparel industry, no other major Virginia industry
lost a larger portion of jobs than apparel's 61 percent employment
decline since 1973. Apparel companies, by contrast, are less
capital-intensive, less dependent on expensive technology and a lot
easier to move. Not so their workers. Retrained workers could find jobs
in other fields, but not necessarily in the same communities where they
live and have extensive personal ties. High-tech jobs are dribbling,
not flooding to Southside and many communities there don't have the
attributes high-tech companies look for.
When the jobs go, employees usually know where their positions
will end up, from Levi Strauss' decision last year to close its Warsaw
plant and shift production to foreign operations to Crest Uniform's
decision to close its Salem fabric-cutting plant while shifting some
production to Mexico. When Bassett-Walker scaled back its U.S.
production last year, closing plants in Chatham, Hillsville and Stuart,
there was more work for Mexico; likewise Burlington Industries, which
closed seven domestic plants including one in Hillsville, while
investing $300 million in new Mexican operations.
For some companies, 2000 marked the end of all U.S. production:
Cross Creek Apparel closed the last of its domestic sewing operations,
including a Hillsville plant, while Donnkenny clothing manufacturer
shut down U.S. manufacturing by closing plants in Floyd and
Independence, two years after closing Christiansburg and Lee County
operations. And the casualties are not limited to textile and apparel
production: AMF Reece says it will stop making industrial sewing
machines in the Richmond area this year and shift production to its
plant in the Czech Republic.
The closures and layoffs seem cruelest in what Virginia
Employment Commission economist Tim Kestner calls "company towns" -
places where textile or apparel plants are a major part of the
community's economy and image. Martinsville drew national attention
when Tultex Corp., battered by management and production problems that
went well beyond NAFTA, declared bankruptcy and plunged the community
into double-digit unemployment last December. With earlier closings at
DuPont, Pluma and Ashmore Sportswear plants, the Tultex layoffs drove
the area's total number of out-of-work textile and apparel employees to
more than 4,000.
Companies with capital-intensive operations - like the
118-year-old Dan River Inc., which invests heavily in high-tech
equipment and employee training - have been slower to move South. But
that could change as trade pressures favor lower-cost producers. Dan
River plans to close its nearly 500-employee Schoolfield plant next
year. In a joint venture with a Mexican partner, Grupo Industrial Zaga,
Dan River will shift 275 Schoolfield looms to a weaving plant north of
Mexico City. A second joint venture includes a Mexican apparel plant
that will make sportswear products to compete with Asian imports.
"We're doing what we need to do to remain competitive and to continue
to generate value to our shareholders," said Denise Laussade, Dan River
vice president for finance. The decision, marking Dan River's first
investment in Mexico, was a difficult one for the company but Dan River
hopes to find jobs for most if not all of the laid-off Schoolfield
workers, she says.
Despite the spate of bad news, VEC's Kestner believes there is
life still in the state's textile and apparel industries. The
industries may not be contributing as much to the state's economy as in
the past, he says, but it's important to look beyond the statistics.
While NAFTA has contributed to job losses, Kestner notes that
increasing exports to Canada have provided some balance. And even as
jobs were declining, plant productivity in textiles increased slightly,
largely because of advances in technology.
Industry insiders bristle at the suggestion that the apparel and
textile industries are dead. Instead, they say, companies are evolving
into leaner operations that count on foreign production but also need
easy access to the lucrative U.S. market. "It isn't the apparel
industry of your grandparents' times, but you will always have a viable
apparel industry in this country if for no other reason than it gives
you proximity to this market," says Jack Morgan, spokesman for the
Virginia-based American Apparel Manufacturers Association. Employment
numbers are grim, he agrees, but the shift in production is inevitable,
given recent free-trade policies.
Sid Mason's advice to an apparel maker today? "Find some other
product," he says, echoing what others say may help secure Virginia's
remaining textile and apparel operations. Products like sweatshirts and
sweatpants - staples of producers like Tultex - can be made anywhere in
the world. The future is in higher-end products that command more
skilled workers and can be shipped quickly to U.S. retailers.
Kestner agrees. "We have long since passed the
sock-manufacturing-mass-retail-type clothes." On the apparel side, the
future may favor higher-end clothing such as well-made dresses and
suits for men and women. In textiles, domestic production might excel
in weaves used in the computer industry, or in expensive rugs,
upholstery and other high-end fabrics. "We're looking for things we
think will be long-term, viable, competitive product lines," says Dan
River's Laussade. Dan River derives two-thirds of its business revenue
from home fashions, such as sheets and comforters - logical products
for the company because of the quick turnaround time demanded by U.S.
retailers. "We continue to seek out relationships with customers we
provide some certain niche product to."
No matter what the textile and apparel industries look like in
10 years, plenty of Virginians have seen enough to convince them that
it's time to move on. Much of Southside Virginia's identity seems
indelibly tied to the textile and apparel industries, but local leaders
looking for a broader image are stepping up efforts to attract new jobs
and prepare workers for different fields. "What we are trying to do is
diversify: If there is a downswing in one industry, we won't be as
affected as we have been in the past," says Jack Messer, executive
director of the Southside Economic Development Partnership. The
3-year-old partnership for the region stretching from Martinsville to
Halifax touts the area's workforce and low cost of living, while
targeting businesses ranging from call centers and Internet technology
to wood products, plastics production and food industry companies.
Franklin County got the wakeup call after Virginia Apparel
Corp., Pluma, Bassett-Walker and JPS Converter all closed local plants
inside of a year. Businesses and community groups created a consortium
to help residents deal with the practical and emotional toll of those
lost jobs. "You are emotionally moved when you hear what it means from
someone who has lost a job after being with a company 20-30 years, and
obstacles they have gone through," says Francie Cumby, who coordinates
the consortium's retraining and work force efforts with local colleges.
"The economy is changing and we wanted to help people displaced from
employment due to no fault of their own."
One of the consortium's success stories is Sharon Law, who says
NAFTA helped her make the move from a factory to the classroom. Law had
a textile job since she was old enough to work, but when Pluma went out
of business last year - one of a half-dozen textile companies she has
worked for in more than 30 years - she looked for a new career. Today
the 54-year-old mother of two has a 4.0 average and is working on a
computer programming degree.
Making the switch was a tough call, but Law decided she had had
enough job hopping. "Most of the jobs went overseas. When NAFTA passed,
they just went faster," she said. Law hopes to find work in her new
field when she graduates next year. She would like to work in Franklin
County, if county developers can find a company to provide the jobs.
"It was hard and I didn't know if I could do it," said Law of going
back to school at her age. "But I think I'll like an office
Broader trade policies - like many decisions made in Washington
- are enacted with a national and even global perspective in mind. Yet
the consequences of those votes are felt most keenly in states and
local communities. Textile and apparel manufacturers still in business
are transforming industrial-era manufacturing into high-tech, high-end
operations. The Old Dominion drew part of its wealth in the last
century from the textile and apparel industries. But today, it finds
itself under increasing pressure for more education, worker training
and aggressive economic development to secure a future for Sharon Law
and thousands of laid-off workers like her in Virginia's "company