BIS Released Assessment Report of the U.S. Textile and Apparel Manufacturing Sector

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The Bureau of Industry and Security (BIS) under the U.S. Department of Commerce recently released its assessment report of the U.S. textile and apparel (T&A) manufacturing sector. The report was based on a survey of 571 U.S. T&A manufacturers in summer 2017. These respondents include 230 textile mills (NAICS 313), 128 textile product mills (NAICS 314), and 213 apparel manufacturers (NAICS 315).

Below are the key findings of the study:

The state of the U.S. textile and apparel (T&A) manufacturing sector

  • U.S. T&A manufacturing has shrunk significantly: the value of T&A shipments (seasonally adjusted) in 2016 ($68 billion) was almost 56% decrease in real terms since 1995 ($153 billion).
  • U.S. T&A manufacturing has undergone substantial structural change: textiles and textile products accounted for 82% of the total shipments of the U.S. T&A industry as of 2016, compared to 57% in 1995. Notably, only 18% of shipments came from apparel manufacturing in 2016, compared to 43% in 1995.
  • U.S. T&A manufacturing sector is hiring less: Between 1990 and 2016, total employment decreased by 79%, from 1.7 million to 352,000 workers; over the same period, over 86% of apparel manufacturing jobs disappeared.
  • U.S. T&A manufacturers are making more capital investments: The overall total Capital Expenditures (CAPEX) of the 571 respondents increased 90 percent from 2012 to 2016 (from $1.6 billion to $3.1 billion). Particularly, the CAPEX of textile mills grew by 80 percent over that period—mostly on “Machinery, Equipment, and Vehicles.”
  • North Carolina hosted the largest number of U.S. T&A facilities (22 percent of the respondents), followed by Georgia (10 percent), and South Carolina (9 percent).
  • China, Mexico, and Canada are the most popular destinations for foreign investments by U.S. T&A manufacturers.

Competition landscape and factors

  • Respondents listed a total of 1,309 U.S. competitors and 552 non-U.S. competitors. Chinese companies were cited as the number one source of foreign competition.
  • “Quality,” “Lead Time,” and “Innovation” were the top three competitive advantages of U.S. T&A manufacturers as they related to foreign competition. “Labor Costs” was regarded as the top disadvantage of U.S. T&A manufacturing.
  • 43 percent of respondents believed that reshoring was occurring in U.S. T&A manufacturing. Almost all of these respondents believed that “Shorter Lead Times” and the “Marketability of the ‘Made in USA’ Label” were the factors driving the trend.
  • The Affordable Care Act (ACA), Minimum Wage regulations (Federal, State, and Local), and U.S. Trade Policy were the top governmental regulations and provisions cited as negatively impacting the competitiveness of U.S. T&A manufacturers.
  • 61 percent of respondents reported that they had difficulties hiring and/or retaining employees for their T&A operations, specifically production line workers such as operators and machine technicians. The skill gaps in the labor market for those positions were by far the biggest ones identified for the industry.
  • 43 percent of respondents believed that reshoring was occurring in T&A manufacturing (i.e., the practice of transferring a business operation that was moved to a non-U.S. location back to the United States.) Textile manufacturers were more likely to be aware of reshoring.

Trade and U.S. textile and apparel manufacturing

  • On average, respondents say 48 percent of their textile and textile products are “100 percent made in the U.S.”, while for apparel it was around 54 percent.
  • U.S. T&A exports dropped 10 percent between 2012 and 2016, from $2.2 billion to $1.98 billion. On average, exports accounted for only 12 percent of respondents’ total sales.
  • 33 percent of respondents considered themselves to be dependent on foreign sources for supplies, which was highest among textile mills.
  • 37 percent of respondents reported that they considered themselves to be dependent on non-U.S. sourcing for their machinery or equipment.

Berry Amendment and U.S. textile and apparel manufacturing

  • For textile mills, an average of 12 percent of U.S. output was Berry Amendment-related; for textile product mills the average was 21 percent, and for apparel production, it averaged 26 percent. 67 percent of respondents believed that the Berry Amendment had a positive impact on their organization’s business.

EU Textile and Apparel Industry Sees Commercial Opportunities in Trans-Atlantic Trade and Investment Partnership (T-TIP)

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(picture source: Euratex)

According to the European Apparel and Textile Federation (Euratex), Trans-Atlantic Trade and Investment Partnership (T-TIP), if reached and implemented, will bring substantial commercial benefits to the EU textile and apparel (T&A) industry. Euratex sees T-TIP has the great potential to help EU T&A expand exports to the U.S. market, particularly in two areas:

One is high-end apparel. The United States is EU’s third largest apparel export market only after Switzerland and Russia. In 2014, apparel exports from EU(28) to the United States exceed €2.5 billion and most products were much higher priced than those exported from elsewhere in the world. Euratex expects that when the high tariff facing EU apparel products in the U.S. market is removed—such as 28% tariff rate for women’s jacket, and customs red tape is cut, many small and medium (SME) sized EU T&A companies will be able to gain more access to the 300 million people U.S. apparel market.

The other is technical textiles: Euratex highlighted that “technical textiles, like high functionality fabrics used for firefighters’ uniforms or airbags, represent half of our textiles exports to the US. European home textiles are of great success in the US: more than €92million of bedlinen were sold in 2014. Nonwoven textile products for hygiene and medical purposes (cleansing tissues, surgical bedsheets, gauze, bandages, etc.) are a growing part of our exports to the U.S.. High-tech textiles products cover a wide range of applications – transport, construction, agriculture, defense, personal protection and much more.”

Moreover, it seems that the EU technical textile industry is very interested in getting access to the U.S. market currently protected by the Berry Amendment. Euratex sees “Opening business opportunities in public sector for technical textiles is a must in T-TIP. “Europe is a recognized leader in production of smart technical textiles due to advanced manufacturing technologies and constant innovation of materials and their application. The production of technical textiles in Europe significantly increased over the past ten years. With TTIP, the US public services will be able to benefit from the innovative products manufactured in Europe.” Euratex says.

Background: the state of EU-US textile and apparel trade

EU-US T&A trade