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Textiles, Competition and Efficiency
America’s struggling textile
industry garnered wide attention fairly recently with the bankruptcy of
Pillowtex Corp., which has resulted in the largest permanent layoff in North
Carolina’s history. The invisible hand of the free market has been wreaking
havoc across America, breaking records like this one left and right. The
free market certainly isn’t invisible to the good people of North Carolina,
who have been permanently freed from their jobs.
The mass layoffs at Pillowtex
definitely aren’t the end of the story. Several other smaller textile plants
across North Carolina are closing as well, and the numbers could be
collectively more than the Pillowtex layoffs alone. Thanks to the good
people at WBTV in Charlotte, NC, I was able to visit a closing plant in
Bowling Green, SC. Some of the machinery had already been shut off for good.
The rest was soon to follow.
The story behind the closing
of the Bowling Green plant, where 160 people will lose their jobs, isn’t
close to being about what free traders often make America’s manufacturing
plants seem to be all about. Free market advocates, the very kind that were
ridiculed by our founding fathers, would have you believe manufacturing
plant closings in America are usually about factories that don’t become more
efficient, and therefore deserve to close in exchange for more efficient
plants overseas. Never mind that the machinery at the Bowling Green plant
will be shipped overseas to be used by China or Pakistan to make goods once
made here in America. So it’s not really about efficiency, it’s about cheap
labor.
Daniel LaFar, the owner of the
plant, told me that the Bowling Green Spinning Company spent $2 million in
the last 12 months to make the plant more efficient and productive. It
didn’t matter. Circumstances beyond their control, including a spike in the
price of cotton, forced the closing. Mr. LaFar also told me that many plants
would probably have closed a long time ago, but LaFar’s plant had a lot of
history behind it, and has been in his family for generations. Bowling Green
survived the Great Depression, but it can’t survive circumstances beyond its
control in an economy that is supposed to be on the rebound.
The future of some of the good
people at the Bowling Green plant I had the pleasure of meeting is
definitely uncertain, and the future of the town is uncertain as well.
LaFar’s plant paid nearly $100,000 in taxes last year. Not many
opportunities for employing 160 people are evident in this small town where
the Bowling Green Spinning Company resides. What will remain in addition to
the Bowling Green Post Office across the street from the factory is unclear.
America routinely spends
billions of dollars each year for the privilege of laying off good Americans
like these. Last year Americans sacrificed $12 billion in tax dollars for
the privilege of putting other Americans in other employment lines, forcing
them to exchange paychecks for pink slips. They should be trained for the up
and coming job winners in America, we are told. Manufacturing is in the
past. Innovation industries are the future. But the fallacy of this argument
is that there is no reason we can’t do both, just as we did when we switched
from an agrarian society to a more-industrial society. We didn’t sacrifice
the farm to embrace the factory then, and we shouldn’t do anything similar
to that now. The farm and the factory worked together, side by side. Today,
innovation and manufacturing should work together, side by side.
Even free trade economists
admit that the average worker that loses a job because of trade or
technology earns an average 13% less at his or her new job, when they can
find one. Close to one-fourth earn a whopping 30% less. And, of course, the
wages lost while finding that new job at lower pay can never be recovered.
But today’s winning industry
could be tomorrow’s losing industry. One need only remember the dot com
crash to know that this is true. And with the time it takes for the gains of
the supposedly appropriate policies forced down our throats by the free
market to take hold, job winners may never have time to grow and mature into
the true winners that they are supposed to be. How long have we been told to
hold fast while the gains of free trade and unbridled free markets work
their magic? The only magic I’ve seen are disappearing acts. That kind of
magic isn’t fun if you’re without a job.
The good news is, however,
that Washington is starting to listen. Who would have thought that Elizabeth
Dole and Hillary Clinton would ever be talking up a bill that could put
27.5% tariffs on Chinese imports? Americans need to keep the pressure on
Washington, and if they do long enough, Washington will not only listen but
follow through on their increasingly populist rhetoric.
The issue is not whether or
not we should compete. The issue is how we should compete when it is
beneficial to do so. Abraham Lincoln once declared that trade should be used
“where it is necessary” and avoided “where it is not.” Chinese textile trade
is not “necessary.” It doesn’t matter to me if you call this
“protectionist.” Our founding fathers didn’t care that they were called
protectionist, and neither do I. “Protectionist” has been made out to sound
like a bad word, but I’m not concerned with how a term sounds, and neither
should you. I’m far more interested in what protectionism can do for
America. Forget how it sounds. Forget how it looks. “What does it do for
me?” That’s what we should be asking ourselves.
What protectionism will do,
and what it has done in the past is protect American industries so that they
can grow and operate at closer to 100% capacity, and therefore be more
efficient. The average operating capacity of today’s American manufacturing
plants is closer to 60%. Free trade economists should know that as plants
reach full capacity, they become more efficient and the cost per unit of
production goes down, which can make the American export more
price-competitive in overseas markets. This is how growth promotes trade.
Free trade economists have it backwards in telling us that trade promotes
growth.
The good people at the Bowling
Green plant want to be efficient and productive. Owner Daniel LaFar pulled
out all the stops to make it happen. America’s manufacturers want to be seen
as the potential contributors to America’s prosperity that they are – not
labor cost problems to be dealt with.
Roger Simmermaker, Author
How Americans Can Buy American
www.howtobuyamerican.com
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