No bailouts came for textiles
By Larry Dale
Daily Courier Staff Writer
Part 3 – July 9, 2009
FOREST CITY – Current bailouts are a bitter reminder in Rutherford County that the federal government didn’t step up when textiles were faltering.
"When we saw the textile thing hit," City Manager Chuck Summey of Forest City said, "nobody said ‘let’s bail out the textiles.’ They’re (now) wanting to bail out the cars and the banks. They just said, let ’em go. And that’s what they did. I’m going to tell you right now, I bet if somebody had to look back and say, ‘I told you,’ I bet they’d look at it differently. When they let those jobs go, to me, it’s changed the whole face of this country."
"Nobody was willing to bail out the textiles, and I think it was one of the worst things that has happened to this part of the South. I think it will come back around again, wait and see. We’re going to have to have some manufacturing jobs here."
That assessment is strikingly similar to what James R. Cowan, chairman of the board of Stonecutter Mills Corp., said in 1999 when the mill closed.
"The textile industry has been dumped on by the Chinese, Korean and Russian goods," he said. "The textile industry is 10 times the size of the steel industry. When the steel industry says they are dumped on, Washington listens. Washington hasn’t listened to the textile industry."
Cowan, in a statement printed June 2, 1999, in The Daily Courier, said:
"In recent years the policies of our Government have allowed imports to pour into our country’s domestic textile market. This influx has been extremely bad in the apparel portion of textiles. As we look to the future, we see extremely tough times for our portion of the domestic textile market. In the last few weeks this reality was made even more clear as we saw our business unexpectedly and severely decline. Such a climate has forced us to re-examine our business strategy. At this point we are a modern, well equipped company with no debt. We feel that the only effective business decision for Stonecutter is to take these assets and redeploy them in ventures that have a better opportunity for long term success. It is therefore with great sadness that we announce the closing of the textile portion of our business with an effective date of July 12,1999."
The last day actually was on July 2, 1999, when the manufacturing employees at Stonecutter’s Rutherford and Polk plants became unemployed.
The year 1999 was horrendous for textiles in Rutherford County. Four plants, including Stonecutter, announced triple-digit layoffs or closings that eliminated 1,708 jobs.
In April 2004, Tim Barth, then town manager of Spindale, and Duncan Murrell, a writer and journalist, did a case study of the Stonecutter closing.
They report that J.B. Tanner founded Stonecutter Mills in 1920, and the operation eventually ran spinning, dyeing and, weaving operations on the premises, which had some 300,000 square feet of manufacturing floors in several buildings.
Barth and Murrell report that the company operated conservatively during most of its history, and in the 1960s and 1970s had a cash surplus because the company did not invest in new equipment. "When management organized a leveraged buyout of the family shares, the new owners were left with a cash deficit and rapidly aging equipment," they say.
Ironically, the case-study notes, the 1977 movie "Saturday Night Fever" helped keep the company out of worse financial shape. Why? Because in the movie actor John Travolta was wearing a "blinding white suit made of the synthetic fabric Arnel, which Stonecutter had introduced and was manufacturing," Barth and Murrell report.
They say that Stonecutter used Arnel profits, industrial revenue bonds and a loan to buy new equipment for all of its operations. "The company weathered the 1980s, and went into the 1990s in very good shape," Barth and Murrell note.
In the early 1990s, the case study says, Stonecutter invested in 15 new state-of-the-art spinning frames and had its best profit year ever in 1995, "marketing itself as a nimble, responsive manufacturer."
But Stonecutter went from its best year ever to its closing in four years.
As Rutherford County Manager John Condrey said in speaking of textile job losses, "to their credit, the same textile companies were producing larger quantities of goods with fewer employees. They were doing a, good job of modernizing–that modernization they did with less people–but when you are competing against companies where wages weren’t a significant part of the overall cost factor, it’s difficult to get that modern."
Neil Caudle, in the Endeavors magazine article "When the Needles Went to China," includes a comment that probably would have prompted a lot of nodding heads in the textile industry. Caudle said Robert Connolly, associate professor of international finance and economics at the University of North Carolina at Chapel Hill, recalled "a conversation with a CEO in Gastonia, N.C., who said that his company could run ‘lights out’ – with computers and no human operators – and still not compete with Asian imports."
BusinessNC.com, in its "2006 Industry Reports: Manufacturing," reported, "from 2000 to 2004, textile and apparel employment in the state shrank 41 percent, to about 100,000." In the same issue; the business publication reported that International Textile Group, "a holding company that owns several old-line Tar Heel companies," including Cone Mills, announced that Cone would close its denim operation in Rutherford County, eliminating 225 jobs. "It’s building a factory in China," the BusinessNC.com site said. It reports that trade barriers to Chinese goods fell at the start of 2005. That caused downsizing and a shift to lowerwage countries.
The globalization of the textile industry continues to be seen today.
On Sept. 24, 2008, the Associated Press said that the Forest City plant was one of nine closings across five countries announced by Hanesbrands. The news service reported that the restructuring would eliminate about 8,100 workers in all.
Hanes’ Central American plants also took a hit, with sewing operations scheduled to close in El Salvador, Honduras, Costa Rica and Mexico. AP said the Central American plant operations would mostly be moved to Vietnam and Thailand, adding that the company was building a textile fabric plant in Nanjing, China. The story reported that Hanesbrands’ Asian work force was expected to grow by 2,000 workers, from 4,000 to 6,000, by the end of 2008.
Reprinted with permission from The Daily Courier. Copyright owned by The Daily Courier.