Three Upbeat Signs
Robert S. Reichard, Economics Editor
An Improving Import Picture
Other encouraging signs come from gradual changes taking place in U.S. imports of textile and apparel products. First, there's this year's small decline in incoming shipments. Based on latest data, volume totals look to be down about 1.5 percent. While hardly huge, it marks a vast improvement over the big increases posted over the past decade or so, when a steady tattoo of double-digit annual gains pretty much decimated many U.S. mills and factories. Credit the slowdown to a variety of factors: the fact that foreign producers already have captured virtually all vulnerable U.S. markets; a modest narrowing in the overseas cost advantage; and increasing sophistication on the part of U.S. firms, which have become a lot more savvy in producing and marketing their products. Equally important for the U.S. industry's continued health is a shift in overseas sourcing away from China and other Far Eastern nations and more toward Western Hemisphere sources. This year's imports from China look to be off by about 2.5 percent, while incoming shipments from the Americas are up about 2 percent. This kind of change in sourcing should help increase demand for U.S. mill products. Indeed, that could be one reason why, despite the sluggish economy, domestic mill shipments of these products are running more than 4-percent above 2010 levels.
Capacity Levels Stabilize
The fact that shrinkage in U.S. textile/apparel production potential has been slowing down can also be regarded as an indication of better days ahead. According to latest government statistics, mill capacity has been dropping only about 2.5 percent annually since 2009 — close to half the 4.5-percent annual decline reported over the previous six years. And this changing pattern is even more pronounced in the apparel sector, where the 2-percent annual declines over the past few years are not even within shooting distance of the 8-percent-per-year slippages reported over the 2002-09 period. This new flattening out in the textile/apparel capacity curve is occurring at the same time many companies are continuing to close down their older, more obsolete facilities. Do the math and it's clear something else is being added to replace these shutdowns. And that something is new plant and equipment, which Textile World now estimates at the mill level is coming on-stream at near a $1 billion-a-year clip - the equivalent of 2 cents of every mill sales dollar. And the picture is even more encouraging in the apparel sector, where capital spending per dollar of sale is nearly 2.5 percent. If nothing else, this continuing investment seems to suggest that U.S. companies are fairly confident about their industries' future. Indeed, it's part and parcel of their overall strategy: The building of a leaner and meaner industry — one ready, willing and able to compete in today's dog-eat-dog marketplace.
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