The Competitive Status of the U.S. Fibers, Textiles, and Apparel Complex A Study of the Influences of Technology in Determining International Industrial Competitive Advantage (1983) / Chapter Skim
Currently Skimming:
2. The Changing Environment
2. The Changing Environment
Pages 27-55
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 27... ...
In the economic category, there were changes in consumption and production patterns, changes in international trade and investment activities, changes in technology and productivity, changes in exchange rates, and changes in employment and wages. In the government category, there were changes in trade policies, changes in other policies directed specifically at textile complexes, and changes in policies that had an indirect impact on textile complexes.
|
From page 28... ...
Man-made fibers accounted for more than 75 percent of all fibers consumed by the U.S textile industry; 68 percent of all broadwovens and over 85 percent of all knit fabrics produced contained man-made fibers.
|
From page 29... ...
However, during that period, man-made fiber production increased more than 300 percent, while production of natural fibers increased only 3 6 percent.2 Thus, the natural fiber share of total world production declined from nearly 78 percent in 1960 to less than 54 percent in 1 980. The overall rising global demand for man-made fiber and yarn and the dramatic growth of fabric production in developing countries resulted in sizeable trade surpluses for the United States in man-made fiber and yarn.
|
From page 30... ...
30 o o 3 oo `:: Ct oo ox .
|
From page 31... ...
What appeared to be the major factor was differential rates of growth of domestic demand in various groups of countrie - -primarily driven by demographic changes, growth of income, and income elasticities. The net result of these changes was a redistribution of fabric and employment more in line with that of world population, but with OECD and centrally planned economies still maintaining a higher percentage of fabric and apparel employment than their respective shares of world population (the opposite being true for developing countries)
|
From page 32... ...
While these trends were significantly influenced by U.S. consumer preferences, they were also affected by international developments as reflected in international trade patterns.
|
From page 33... ...
share of world production declined in many product lines, losing ground primarily to parts of East Asia and Pacific producers and those in centrally planned economies. In the last half of the 1970s, the value of U.S.
|
From page 35... ...
35 O ~ d ~ r~ ~ O ~ oo ~ — oo ~ d v)
|
From page 37... ...
textile complex, the share of western Europe's percentage of world production of man-made fibers fell from 32 percent in 1970 to 21 percent in 1980.8 And during the last half of the 1970s, over 4200 European apparel and fabric firms were closed, over 442,000 jobs were lost in the fabric sector and 27 8,000 in the apparel sector. An d despite having an increasing trade surplus in fibers and fabrics, Japan's textile and apparel employment suffered a decline of 15.5 percent from 1970 to 1978.
|
From page 38... ...
However, wage costs are not sufficient in themselves to explain trade patterns; productivity changes are also important. To offset increasing wage costs, firms in all countries have sought ways to increase productivity by at least as much as the increase in wages.
|
From page 39... ...
Firms based in Hong Kong, Korea, and Taiwan also made major foreign investments in East Asia and the PRC, although to a lesser extent than Japanese firms and sometimes in conjunction with Japanese firms. As will be discussed in greater detail in Chapter 3, the extent of foreign investment activity in general and by nationality resulted from differences in industrial structure, the size of domestic markets, government policies, and individual corporate strategies and capabilities.
|
From page 40... ...
statutory provision pertaining to offshore processing. In apparel production the decision to move offshore can be related to the variations in duty rates and the worldwide fiber and textile raw material costs, or it can be related to the ratios between the weight of the garment and the labor content.
|
From page 41... ...
SOURCE: Compiled by Research Department, International Ladies Garment Workers Union. CHANGES IN TECHNOLOGY Numerous changes in technology have taken place in the global textile complex over the past several decades, and they influenced many of the changes in employment levels, productivity, and trade patterns just described.
|
From page 42... ...
New production technologies in the textile industry encouraged integration of spinning and weaving. And in Europe particularly, regional economic integration created new opportunities for scale economies, and government policies favored mergers and acquisitions (the latter also occurred in Japan)
|
From page 43... ...
After the successive oil shocks of the 1970s, technology development shifted its emphasis toward reducing production cost and away from new fiber development, particularly in the manmade fiber sectors. This change in orientation was necessary to help offset the spiraling costs of crude oil, which had a dual effect on man-made fiber production cost: higher energy costs and higher material costs as petrochemical prices rose accordingly.
|
From page 44... ...
In sum, man-made fiber technological developments initially gave developed countries a position of world leadership and have continued to do so even though their international competitive lead in commodity products may have been reduced. N atural In the area of natural fiber production, only a few major technological developments occurred in the past 40 years.
|
From page 45... ...
. If there has been any international competitive impact of changing technology in the use of natural fibers and spinning equipment, it is difficult to assess.
|
From page 46... ...
However, slowing domestic demand for knits, increased knit fabric production abroad, and increased import competition, particularly from East Asia, kept knit fabric prices low and reduced U.S. producers' market share.
|
From page 47... ...
The traditional technology was largely one of compressing natural fibers to form fabric, e.g., felt. But, recent technological developments in fiber bonding and interlocking by mechanical thermal, chemical, hydraulic, and/or solvent processes have revolutionized what was a fairly insignificant sector into a high-growth, technologically intensive one with myriad end uses and equally varied inputs (e.g., wool fibers, plastics, and polymers, in addition to fibers typically used in woven and knit fabrics)
|
From page 48... ...
Apparel As was the case with fabric production, most of the technological changes affecting apparel production took the form of new equipment developed by the machinery industry. While there have been numerous improvements in sewing machines, which are the real backbone of the apparel manufacturing process, the biggest technological changes have not been in the sewing process, instead they have been in the presewing processes pattern grading, marker-making, and cutting.
|
From page 49... ...
However, for the larger apparel firms, advanced technology can result in some company economies of scale as opposed to sewing economies of scale. Centralized computer designing facilities, cutting, grading, marking, as well as administrative operations, can lower overall manufacturing cost of multiplant firms in particular.
|
From page 50... ...
More than any other protectionism device, quota arrangements determined the basic international trade patterns. Because quotas were originally set based on prior levels of trade, those countries receiving the largest quotas did the most exporting, and changes in quota allocations caused some shifts in trade and investment patterns.
|
From page 51... ...
. N umerous types ot government assistance nave been mace available, many times encouraging incoming foreign investments-all behind an increasing trade protectionist shield.
|
From page 52... ...
Their governments believed that an orderly restructuring of their textile complexes was necessary. Orderly meant continued protection with a f air dose of government assistance to help companies improve their international competitiveness -- after which the trade protection could (might)
|
From page 53... ...
Another area of government policy in various countries affecting international competitiveness is regulation of wage rates and working hours. By keeping wage rates low (such as in Eastern Europe and Southeast Asia)
|
From page 54... ...
In sum, there were various degrees of government intervention and numerous changes in policies that influenced the international competitiveness of textile complexes throughout the world. The ways in which various firms have reacted to some of these governmental policies is described in Chapter 3.
|
From page 55... ...
14. For fabric firms that were also involved in yarn spinning, their operations and competitiveness were impacted by th e technology developments in both the yarn and fabric sectors.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.