by William V. “Bill” McCrary Jr.
It has been an amazing year for the U.S. textile industry and the National Council of Textile Organizations (NCTO). President Trump’s pro-manufacturing agenda is forcing Washington to do what NCTO has long sought – rethink policies on trade, taxation, regulatory reform and a host of other issues.
Let there be no doubt. The time for change is now and NCTO is committed to working with the Trump administration to achieve the best policy outcomes on these and other issues. But before laying out NCTO’s policy agenda, I want to recap how the industry fared in 2017.
THE NUMBERS
Thanks to its productivity, flexibility and innovation, the U.S. textile industry has cemented its position in the global market.
In 2017, the value of U.S. man-made fiber and filament, textile, and apparel shipments totaled an estimated $77.9 billion, this is an uptick from the $74.4 billion in output in 2016 and an increase of 16 percent since 2009.[1]
The breakdown of 2017 shipments by industry sector is:[2]
- $31.5 billion for yarns and fabrics
- $26.6 billion for home furnishings, carpet & other non-apparel sewn products
- $12.5 billion for apparel
- An estimated $7.3 billion for man-made fibers
Capital expenditures also are healthy. Investment in fiber, yarn, fabric, and other non-apparel textile product manufacturing has more than doubled from $960 million in 2009 to $2.1 billion in 2016.[3]
Our sector’s supply chain employs 550,500 workers.[4] The 2017 figures include:
- 112,300 jobs in yarns and fabrics
- 114,700 jobs in home furnishings, carpet, and other non-apparel sewn products
- 119,300 jobs in apparel manufacturing
- 25,100 jobs in man-made fibers
- 126,600 jobs in cotton farming and related industry
- 52,500 jobs in wool growing and related industry
As we examine these numbers, it is important to note that the heavy job losses incurred because of massive import surges in the 1995-2008 timeframe, virtually have stopped.[5] Today, like most other U.S. manufacturing sectors, fluctuations in employment figures are generally due to normal business cycles, new investment, or productivity increases.
U.S. exports of fiber, yarns, fabrics, made-ups, and apparel were $28.6 billion in 2017. [6] This is nearly a nine percent increase in export performance over 2016. Shipments to NAFTA and CAFTA-DR countries accounted for 54 percent of all U.S. textile supply chain exports.
The breakdown of exports by sector is as follows:
- $5.9 billion – cotton and wool
- $4.4 billion – yarns
- $8.9 billion – fabrics
- $3.7 billion – home furnishings, carpet & other non-apparel sewn products
- $5.7 billion – apparel
The United States is especially well-positioned globally in fiber, yarn, fabric, and non-apparel sewn products markets; it was the world’s 4th largest individual country exporter of those products in 2016.[7]
The most important U.S. export markets by region are:[8]
- $11.85 billion – NAFTA
- $3.4 billion – CAFTA-DR
- $8.7 billion – Asia
- $2.8 billion – Europe
- $2.0 billion – Rest of World
Focusing solely on America’s $13 billion in man-made fiber, yarn and fabric exports, the countries buying the most product are:[9]
- $4.4 billion – Mexico
- $1.7 billion – Canada
- $1.3 billion – Honduras
- $987 million – China
- $473 million – Dominican Republic
The numbers show the fundamentals for the U.S. textile industry are sound. This is true even though some markets for U.S. textiles and apparel were soft last year. For the most part, any sluggishness was due to factors beyond control, such as disruption in the retail sector caused by the shifting of sales from brick and mortar outlets to the internet. With that said, the U.S. textile industry’s commitment to capital re-investment and a continued emphasis on quality and innovation make it well-positioned to adapt to market changes and take advantage of opportunities as 2018 moves along.
POLICY ISSUES
For decades, U.S. policy systematically undervalued the importance of domestic manufacturing, and President Trump is right that this has hurt America.
As evidenced by the work done by NCTO’s government relations team, NCTO endorses President Trump’s macro policy objectives of reshoring industry, fighting for free, but fair trade, enforcing U.S. trade laws, making the U.S. tax code more competitive, buying American, cutting unnecessary regulation, revitalizing infrastructure, ensuring cheap energy, and fixing health care.
On trade, NCTO agrees with President Trump that U.S. trading relationships must be rooted in fairness and reciprocity to benefit a broad swath of American society.
America’s most important trading relationship is NAFTA, a pillar upon which the U.S.-Western Hemisphere textile supply chain is built. At almost $12 billion combined, Mexico and Canada are the U.S. textile industry’s largest export markets. Moreover, Mexico provides vital garment assembly capacity the United States lacks at this time.
Let me be clear. NCTO strongly supports NAFTA. That said, NCTO agrees with President Trump that NAFTA can and must be improved.
NAFTA’s yarn-forward rule of origin contains loopholes that benefit third-party countries, such as China. Closing them would boost U.S. and NAFTA partner textile and apparel production and jobs.
NCTO’s NAFTA objectives include:
- Eliminating tariff preference levels (TPLs) on apparel, non-apparel sewn products, fabrics & yarn
- Require use of NAFTA-origin components beyond the “essential character” of the fabric – i.e. sewing thread, pocketing & narrow elastics
- Strengthen buy American laws for Dept. of Homeland Security textiles & clothing by closing the Kissell Amendment loophole for Canada & Mexico
- Strengthen customs enforcement
NCTO further agrees with President Trump that all U.S. free trade agreements should be periodically reviewed on a performance basis.
As for any new trade deals, NCTO supports President Trump’s preference for individual bilateral free trade agreements (FTAs) over multilaterals. Moreover, any new FTA targets should be limited to countries that trade in a fair, reciprocal manner. NCTO would oppose any FTAs with non-market economy countries like China and Vietnam because of their demonstrated ability to disrupt the U.S. textile market.
NCTO welcomes President Trump’s view that U.S. has made a mistake by not prioritizing trade enforcement in recent years. NCTO intends to make this issue a point of emphasis in the coming months because curtailing customs fraud and enforcing trade laws incentivizes reshoring. Moreover, due to the extremely high volume of trade in our sector, the textile industry is especially susceptible to customs fraud.
For FY 2017, the U.S. International Trade Commission reports calculated duties for all imports for domestic consumption was $34.8 billion, including $13.5 billion in textile and apparel-related goods. With billions at stake, lax U.S. customs enforcement entices unscrupulous importers to avoid duty payments.
To reduce customs fraud, the United States must put a higher priority on enforcement. This means devoting more resources to investigate those who are avoiding duties by purposely undervaluing U.S. imports, illegally circumventing U.S. free trade agreement rules of origin via third-country transshipment, or other fraudulent means. In addition, penalties for customs fraud must be certain, swift, and sufficient to deter this harmful, illegal activity.
Stopping customs fraud has the added benefit of more than paying for itself. The U.S. Treasury will collect more duty revenue and more textile supply chain production and jobs will shift to the United States and the broader NAFTA and DR-CAFTA regions.
NCTO also supports tough U.S. action against countries that engage in predatory trade practices. Noting that this problem is pervasive among non-market economies, NCTO welcomes the Trump administration’s rejection of China’s demand to be recognized as a market economy under the World Trade Organization. This decision prevents China from arguing that their manufacturing cost structures are fair and transparent with respect to trade enforcement actions.
One final trade priority is the Miscellaneous Tariff Bill, a pro-jobs measure vital to U.S. competitiveness. NCTO urges swift enactment of the Miscellaneous Tariff Act, legislation providing duty relief on manufacturing inputs that are unavailable domestically and do not compete with other U.S.-made products.
Moving on to tax policy, NCTO welcomes the tax reforms enacted by President Trump and Congress. Lowering the corporate rate and providing for more favorable capital expensing will encourage more manufacturing investment in the United States.
President Trump’s initiatives to cut unnecessary regulation are pro-jobs too.
With respect to government procurement policy, NCTO steadfastly supports the Berry Amendment. This “buy American” provision for the military is an example of how the government and private sector can work together for mutual benefit. The U.S. military gets a secure U.S. supply line for thousands of superior, highly-advanced products. In return, the domestic textile sector receives $1.5 to $2 billion in annual Defense Department sales that boost U.S. investment and employment.
NCTO is deeply concerned by congressional attacks on the Berry Amendment in recent annual defense bills, including the 2017 National Defense Authorization Act. NCTO urges Congress to reject any proposals to weaken the Berry Amendment, and instead work to strengthen the law.
NCTO also encourages Congress to include textiles in any efforts to enact commonsense laws or regulations that would strengthen “buy American” requirements applying to infrastructure or other federal spending. As demonstrated by Berry, when the federal government buys “American,” it is good for the U.S. textile industry and even better for America.
NCTO urges Congress to follow President Trump’s lead by drafting and passing a comprehensive plan to rebuild America’s infrastructure. Besides boosting U.S. productivity and facilitating commerce, infrastructure is a key market for textile products such as workwear, geosynthetics, and filtration systems. Infrastructure is a growing market for textile composites too.
Fostering a national culture of innovation is also important. NCTO urges continued support for the Advanced Functional Fabrics of America (AFFOA). This Defense Department-funded program is matched three to one with private dollars and tasked with making it easier to develop and commercialize the next generation of high-performance textiles.
NCTO also calls for the U.S. government to invest in improving automation for garment assembly because this technology shows promising potential to reshore U.S. textile and apparel production and jobs.
Another NCTO priority is ensuring that the U.S. textile industry has uninterrupted access to reasonably priced energy. Most man-made fibers are derivatives of petroleum products and many textile producers are reliant on natural gas to power manufacturing operations. Noting this, NCTO supports construction of expanded oil and gas pipeline capacity to keep energy prices low.
Finally, the U.S. textile industry must acknowledge its workforce is aging, making the recruitment of new talent a priority. U.S. companies must continue to forge links with local and state leaders, and educators to make sure government policy nurtures a labor pool both adequate in size and well prepared to succeed in a competitive global economy.
OTHER NCTO ACTIVITIES
On March 8, NCTO announced a merger, effective April 1, with the American Fiber Manufacturers Association (AFMA), a fellow trade group representing domestic manufacturers of man-made fiber.
From NCTO’s perspective, the merger with AFMA adds new members, financial resources and extends NCTO’s political reach. It also enhances NCTO’s status as the voice of every facet of the U.S. textile production chain, a fact that will help NCTO more effectively influence policies being made in Washington that impact U.S. textile investment, production and workers.
From AFMA’s perspective, as a multi-billion industry, it is critical that the U.S. man-made fiber sector remain engaged in Washington. Merging with NCTO allows U.S. fiber producers to keep its seat at the federal policy table.
As I have just outlined, NCTO is involved in the policymaking process on all major matters affecting the textile production chain. This includes key international trade negotiations, congressional initiatives, federal procurement, and regulatory activity. This merger, will allow the domestic fiber sector to be fully aware of what is transpiring in these areas and to have an effective voice in influencing policy outcomes.
In other activities, NCTO’s American Textiles: We Make Amazing campaign is helping to rebrand the U.S. textile sector’s image because its manufacturers have a great story to tell. America’s textile industry is world class thanks to leveraging the most cutting-edge production processes, investing in the best machinery, and leading in sustainability and innovation.
Campaign highlights include:
- Launching a new website to promote the U.S. textile industry
- Textiles in the News (TIN), textilesinthenews.org, debuted March 15
- TIN is a sister website to NCTO’s trade association website, ncto.org,
- Platform to drive policymakers and opinion leaders to content that rebrands the U.S. textile industry along the American Textiles: We Make Amazing™ message
- Includes newsfeed updated every business day, regularly posted NCTO-produced original content & a link to NCTO’s Twitter feed
- Publishing a third edition of Textures, NCTO’s member magazine
- Emailing a weekly news blog, also called Textiles in the News
- Publishing the quarterly NCTO Newsletter
- Posting planned social media on Twitter, Facebook, and LinkedIn
- Regular public relations outreach to selected media
- Generating more than $3 million in earned media coverage
Judging by the engagement generated by American Textiles: We Make Amazing™ marketing efforts, more and more people are getting an accurate, positive description of our sector, and as a result, are viewing the U.S. textile industry in a new light.
CONCLUSION
Although the U.S. textile industry is world-class, it cannot afford to rest on its laurels. There will always be intense and sometimes unfair competition from abroad, changing consumer demands and inevitable economic downturns.
Fortunately, the Trump administration wants to spur manufacturing output and jobs, and it is incumbent upon the U.S. textile industry to seize this generational opportunity to usher in a new era of growth. With so much at stake, I implore all members of NCTO to stay active in this indispensable association that is fighting to promote the interest of our industry here in Washington.
I also invite domestic textile manufacturers who have not been active in Washington but want to change textile policy for the better, to join NCTO. Good policy does not materialize from thin air, and NCTO must have the financial and political resources necessary to help build a stable and prosperous future for U.S. textile companies. In short, our workers and their families and communities are depending on your involvement and leadership.
Thank you for the opportunity to be Chairman of NCTO for this past year. It has been a privilege to serve this great industry.
William V. “Bill” McCrary Jr. delivered the 2018 State of the U.S. Textile Industry overview at NCTO’s 15th Annual Meeting on March 22 at the Capital Hilton in Washington, DC.
Mr. McCrary was the 2017-18 Chairman of the National Council of Textile Organizations (NCTO) and is Chairman and CEO of William Barnet & Son LLC, a synthetic fiber/yarn/polymer firm headquartered in Spartanburg, South Carolina with plants and/or offices in the Americas, Europe, and Asia.
[1] Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2017 Data for NAICS 32522 is not yet available. Our 2017 estimate for the value of shipments in that category is $7.3 billion.
[2] Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2017 Data for NAICS 32522 is not yet available. Our estimate for the value of shipments in that category is based on data from 2016.
[3] Source: U.S. Census Bureau, Annual Capital Expenses Survey (ACES). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), and 315 (Apparel).
[4] Sources: U.S. Bureau of Labor Statistics, U.S. Department of Agriculture, National Cotton Council, and the American Sheep Industry Association.
[5] Source: U.S. Bureau of Labor Statistics
[6] Source: Data for textiles and apparel is from The Export Market Report produced by the U.S. Department of Commerce, Office of Textiles and Apparel (OTEXA). U.S. export data for cotton, wool, and fine animal hair is calculated from the U.S. International Trade Commission Interactive Tariff and Trade DataWeb using HTS Codes 5101, 5102, 5103 (wool), 5201, 5202, and 5203 (cotton).
[7] Source: U.N. COMTRADE Database, HTS Chapters 50-60
[8] Source: U.S. Commerce Department and U.S. International Trade Commission
[9] Id.
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TEXTILES IN THE NEWS
CONTACT: Lloyd Wood
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President Trump Announces Intention to Appoint NCTO Vice Chairman Don Bockoven to the Advisory Committee for Trade Policy and Negotiations
/in Press Releases /by nctoWASHINGTON, DC – On September 25, President Trump announced his intention to appoint 2018-19 National Council of Textile Organizations (NCTO) Vice Chairman Don Bockoven to the Advisory Committee for Trade Policy and Negotiations (ACTPN) for a four-year term. Bockoven is the President & CEO of Leigh Fibers and ICE Recycling, companies based in Wellford and Lake City, South Carolina respectively.
“NCTO is very appreciative of this announcement. Don Bockoven is highly respected leader in the U.S. textile sector,” said NCTO President & CEO Auggie Tantillo as he thanked President Trump for his appointment of Bockoven to the ACTPN on behalf of the U.S. textile industry.
“Because the textile supply chain from fiber production to finished apparel and sewn products is very trade-sensitive, the U.S. textile industry is grateful for the opportunity to have a voice in formulating America’s trade policy,” Tantillo added, noting that nearly 40 percent of duties collected by the U.S. government are on textile-related goods.
The ACTPN is appointed by the President of the United States and is the principal trade advisory committee which provides overall policy advice on trade matters to the Office of the U.S. Trade Representative (USTR). Established by Congress under the Trade Act of 1974, the committee provides information and advice with respect to U.S. negotiating objectives and bargaining positions before entering into trade agreements, on the operation of any trade agreement once entered into, and on other matters arising in connection with U.S. trade policy. The ACTPN considers trade policy issues in the context of the overall national interest.
Leigh Fibers maintains over a million square feet of space dedicated to fiber reprocessing, research and development, quality control, warehousing and administration and is capable of handling over 350 million pounds of recycled fiber annually.
ICE Recycling custom designs plans for businesses to divert their waste products away from landfills, specializing in carbon footprint reduction, bailing, grinding and packaging of recyclable materials for repurposing in future manufacturing projects.
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
· U.S. employment in the textile supply chain was 550,500 in 2017.
· The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
· U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
· Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.
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NCTO Welcomes the Official Launch of the Rhode Island Textile Innovation Network
/in Press Releases, Recent News /by nctoWASHINGTON, DC – The National Council of Textile Organizations (NCTO) congratulates the state of Rhode Island and its textile and apparel industry for the official launch of the Rhode Island Textile Innovation Network (RITIN). The Slater Mill Museum in Pawtucket was the site of the event.
At the launch, RITIN unveiled its new website and held an expo featuring local manufacturers. The activities dovetailed with NCTO’s We Make Amazing campaign promoting the U.S. textile industry, namely that Rhode Island’s textile industry is involved in research, development, design and manufacturing of an incredible array of end products and providing career opportunities with on-the-job training and advancement.
“Rhode Island companies make some of the world’s most amazing textiles and are an important cog in the U.S. textile and apparel supply chain, especially with respect to innovating and manufacturing textiles used by America’s military,” said NCTO President & CEO Auggie Tantillo.
Welcoming the official launch of RITIN, Tantillo added, “Thanks to e-commerce and other emerging technologies, the global textile and apparel sector is experiencing an era of rapid change. Rhode Island is to be commended for being proactive in helping to ensure that its industry remains at the forefront in leveraging those changes to America’s benefit,” Tantillo added.
RITIN fosters collaboration among textile industry leaders, designers, academia and government with a mission to make Rhode Island a leader in advanced textile manufacturing and to develop solutions to recruit and train the sector’s future workforce.
Created in late 2016 by U.S. Senator Sheldon Whitehouse and the University of Rhode Island Business Engagement Center, RITIN operates with planning grants received in late 2017 from Real Jobs RI and the Rhode Island Commerce Corporation. Polaris MEP, an affiliate of the National Institute of Standards and Technology’s Manufacturing Extension Partnership (NIST MEP) provides RITIN’s program management.
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
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NCTO Applauds Continued IPR Enforcement Efforts; Renews Request for Added Tariffs on Chinese Textile and Apparel End Items
/in Press Releases /by nctoWASHINGTON, DC – The National Council of Textile Organization’s (NCTO) applauds the Trump administration’s September 17 Section 301 tariff announcement as necessary to resolve longstanding trade inequities with China. NCTO, however, strongly believes that the administration’s continued focus on added tariffs on upstream textile inputs while thus far refusing to impose tariffs on finished Chinese textile home furnishing and apparel is flawed.
“The Trump administration is right to confront China’s unfair trade practices. Section 301 tariffs show the world that countries which serially abuse U.S. intellectual property rights (IPR) will be held accountable,” said NCTO President & CEO Auggie Tantillo.
“NCTO also thanks the Trump administration for removing various items from the latest retaliation list, including rayon fiber and certain dyes and chemicals. The U.S. textile industry requested the exclusion of these products because they are not available domestically and China is the only significant source of supply,” Tantillo continued.
“Had U.S. textile manufacturers been forced to pay higher duties on the excluded items, it would raise costs for manufacturers making goods that must compete with like Chinese products,” Tantillo added.
“Despite yesterday’s announcement, the U.S. textile industry remains of the belief that the administration’s strategy to impose Section 301 tariffs on inputs is not the most effective approach to penalize China for its rampant abuses of intellectual property rights in our sector,” Tantillo said.
“Added tariffs on finished Chinese textile home furnishings and apparel is the most effective sanction the United States could impose on China because like products from the NAFTA and CAFTA regions using U.S.-made textile inputs immediately become more competitive, thereby incentivizing the reshoring textile manufacturing jobs,” Tantillo explained as he referred to NCTO’s public comments filed on May 11 requesting Section 301 tariffs on Chinese textile and apparel end products.
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
· U.S. employment in the textile supply chain was 550,500 in 2017.
· The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
· U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
· Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.
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NCTO Renews Call for Tariffs on Textile and Apparel End Items at USTR China 301 Hearing
/in Press Releases /by nctoWASHINGTON, DC – National Council of Textile Organizations (NCTO) Senior Vice President Sara Beatty is testifying this afternoon on Panel 6 at the Office of the U.S. Trade Representative’s hearing on the Trump administration’s proposed Section 301 tariffs on $200 billion in imports from China.
Beatty’s statement as prepared for delivery is included at the bottom of this release and it reiterates NCTO’s 24-page public comments and testimony from earlier this year that the following products be prioritized on the China 301 retaliation list:
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
Sara Beatty, Senior Vice President, National Council of Textile Organizations
China 301 IPR Hearing
Panel 6, August 20, 2018
Remarks as Prepared for Delivery
My name is Sara Beatty, and I am the Senior Vice President of the National Council of Textile Organizations. Thank you for the opportunity to appear today.
NCTO represents the full spectrum of the U.S. textile sector, from fiber through finished sewn products. As we have consistently voiced throughout this process, NCTO steadfastly supports the President’s pursuit of a Section 301 case to address China’s rampant intellectual property (IP) abuses.
Importance of Covering End Items
In NCTO’s previous testimony and public comments, we documented the severely damaging effects of China’s IP theft and related abuses on U.S. textile and apparel manufacturers and our views on how best to address the problem in our sector. To summarize, it remains our recommendation that priority should be placed on covering the following products on the retaliation list:
While products in Chapters 50-60 covering textile fibers, yarns and fabrics are on the subject $200 billion list, finished apparel and other sewn products in Chapters 61-63 are again absent. The U.S. textile industry is disappointed by this repeated omission and asks that USTR consider the following:
First, finished apparel, home furnishings and other made-up textile goods equate to 93.5 percent of U.S. imports from China in our sector, while fiber, yarn and fabric imports from China represent only 6.5 percent. Given that apparel and other sewn products made in China almost always contain Chinese inputs, a significantly greater value of fibers, yarns and fabrics made in China enter the U.S. market in the form of Chinese-made downstream finished products than at the input stage.
Noting textiles have been identified as a key industry under the Made in China 2025 plan and Chinese-made textiles gain significant competitive advantages in the U.S. market through intellectual property theft, NCTO agrees that textiles should be part of the administration’s 301 strategy. It is also why, however, NCTO continues to stress that the most logical and effective way to target China’s predatory trade practices in our sector is to address their primary means of disrupting our market, exports of end items to the United States.
Most of China’s 10 million direct textile and apparel jobs are concentrated at the final steps of the supply chain, the highly labor-intensive cutting and sewing operations. As such, imposing tariffs on end items would maximize U.S. leverage in bringing China to make meaningful reforms.
Further, the importance of targeting finished products on the retaliation list is not only derived from the fact that China predominantly ships end items versus intermediate inputs, but also because end item imports most directly and negatively impact U.S. textile and apparel production, investment and jobs. China’s apparel and other textile-based end items compete head to head with like Western Hemisphere products that typically are made from U.S. fibers, yarns and fabrics.
By the time a pair of Chinese blue jeans arrives in the U.S. market, they have benefited from China’s illegal trade practices at every stage in the production chain, allowing them to displace other products in the market. The pre-duty unit cost of a pair of jeans is $7.50 imported from China compared to $8.29 from our Western Hemisphere free trade partners. A 25% additional tariff adds $1.88 to China’s price, providing a considerable incentive to shift sourcing from China to duty-free sources in the Western Hemisphere.
NCTO is convinced that the Trump administration’s Section 301 tariffs would be far more effective if Chinese apparel and related end products were included on the 301 list because that would benefit the entire U.S. textile and apparel supply chain and address the root issue.
Textile and Related Products on the $200 Billion List
With the inclusion of virtually all fiber, yarn and fabric tariff lines on the $200 billion list, NCTO is finalizing feedback on a line-by-line basis that identifies products where the U.S. textile industry would be negatively impacted by additional tariffs of 10%, or up to 25%, on product from China. A number of our member companies are also filing comments speaking to their unique circumstances. Given that these are largely intermediate-stage manufacturing inputs, additional duties on products imported from China for further processing can be counterproductive in instances where there is no U.S. production and China is one of a limited number of import sources.
As this type of detailed information cannot be adequately conveyed in testimony form, NCTO will be submitting supplementary public comments. However, acrylic and rayon staple fibers serve as good examples of products that NCTO recommends be removed from the 301 list to avoid undue harm to U.S. manufacturers. These fibers are not produced in the United States and their unavailability is reflected in the rules of origin of our more recent free trade agreements as well as in the Miscellaneous Tariff Bill (MTB) pending in Congress.
Raising the production costs for these inputs will only undercut U.S. competitiveness for manufacturers that utilize them without bolstering U.S. producers, of which none exist. Further, yarn and fabric producers in China and other countries will not face these added costs, thus simultaneously placing U.S. producers at a significant disadvantage while providing a loophole for Chinese fibers to enter the U.S. market in the form of a downstream product.
Beyond the traditional textile chapters, NCTO recommends removal of certain chemicals, dyes and finishes that are integral to the textile manufacturing process and create value add in U.S. products. Our members report that many of these products are largely unavailable from U.S. sources, particularly in the quantities consumed, and thus the increased raw material costs will damage downstream domestic manufacturing competitiveness. Again, a list of specific tariff lines will be provided.
Last, we are concerned that while textile machinery was largely removed from the initial $50 billion list, additional lines have been proposed on this list. NCTO continues to strongly recommend the removal of all machinery-related items as U.S. textile companies are almost entirely dependent on imports to equip their factories.
Thank you again for the opportunity to appear today. NCTO looks forward to working with the Trump administration on ways to maximize the benefit of Section 301 tariffs to American industry and workers, and I would be pleased to answer any questions.
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NCTO Applauds Trump Administration Efforts to Address China’s Unfair Trade Practices; Calls for Tariffs on Chinese Textile and Apparel End Products
/in Press Releases /by nctoWASHINGTON, DC – The National Council of Textile Organization’s (NCTO) applauds the Trump administration for its continued effort to resolve longstanding trade inequities with China, noting the July 10 announcement proposing $200 billion in Chinese goods for an added 10 percent tariff. The latest U.S. action follows China’s unjustified retaliation against U.S. imports after the United States placed Section 301 tariffs on Chinese goods in response to that country’s unfair trade practices related to the forced transfer of American technology and intellectual property.
NCTO also called on the Trump administration to include finished textile and apparel products on any future lists of imports from China to be made subject to Section 301 tariffs.
“The Trump administration is right to confront China’s unfair trade practices. Section 301 tariffs show the world that countries who cheat the United States on trade will be held accountable,” said NCTO President & CEO Auggie Tantillo.
That said, NCTO will be thoroughly vetting the new retaliation list. “With the inclusion of virtually all fiber, yarn and fabric tariff lines, NCTO’s response will be on a line-by-line basis, with support or opposition to individual lines dependent on the how the competitiveness of the U.S. textile industry is impacted,” Tantillo continued.
“NCTO is convinced that the Trump administration’s Section 301 tariffs would be far more effective if Chinese apparel and sewn non-apparel end products were included in the 301 list because that would benefit the entire U.S. textile and apparel supply chain,” Tantillo said as he referred to NCTO’s China 301 public comments filed on May 11 and noted that no apparel and sewn non-apparel end products were included on the U.S. government’s latest proposed tariff list.
“If properly targeted, Section 301 tariffs would not only address the underlying illegal activity on the part of China, but also help reshore American jobs and boost U.S. exports to the NAFTA and CAFTA regions. That’s why NCTO will continue to engage the Trump administration on ways to maximize the benefit of Section 301 tariffs to American industry and workers,” Tantillo added.
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
· U.S. employment in the textile supply chain was 550,500 in 2017.
· The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
· U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
· Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.
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NCTO Applauds Trump Administration 301 Tariffs; Calls to Include Textile and Apparel End Products in Future Actions
/in Press Releases, Recent News /by nctoWASHINGTON, DC – The National Council of Textile Organization’s (NCTO) praised the Trump administration’s announcement imposing Section 301 tariffs on China in response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property. NCTO also called on the Trump administration to include finished textile and apparel products on any future lists of imports from China to be made subject to Section 301 tariffs.
“The Trump administration is to be commended for taking decisive action against China’s unfair trade practices. Section 301 tariffs deter trade cheats,” said NCTO President & CEO Auggie Tantillo.
“As per our recommendation, NCTO is pleased that almost all textile machinery products were removed from the final list of tariff lines subject to immediate 301 duties because tariffs on textile machinery hinder the competitiveness of U.S. textile manufacturers,” Tantillo continued.
“While appreciative of today’s actions, NCTO is convinced that the Trump administration’s efforts to deter China’s unfair trade practices would be even more effective if textile and apparel end products from China were made subject to Section 301 tariffs,” Tantillo said as he referred to NCTO’s China 301 public comments filed on May 11.
Noting that the Trump administration proposed an additional list of Chinese products for Section 301 tariffs as part of today’s announcement, Tantillo concluded, “NCTO is pleased that some textile products are on the second list. It would have a greater deterring effect, however, if more textile and apparel end products were included. As such, NCTO looks forward to working closely with the Trump administration to refine it.”
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
· U.S. employment in the textile supply chain was 550,500 in 2017.
· The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
· U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
· Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.
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Richmond Area Student Wins the 2018 Paul T. O’Day Memorial Scholarship Sponsored by NCTO’s Fiber Council
/in Press Releases /by nctoWASHINGTON, DC – The National Council of Textile Organization’s (NCTO) Fiber Council announces Mr. William Parker of Glen Allen, VA as the recipient of the 2018 Paul T. O’Day Memorial Scholarship Award.
Mr. Parker will graduate with honors from Mills E. Godwin High School in suburban Richmond in June and will go to the Georgia Institute of Technology’s (Georgia Tech) College of Engineering where he intends to major in computer engineering.
NCTO Fiber Council Chair, Don Bockoven, President & CEO of Leigh Fibers, commented, “We are pleased to recognize Mr. Parker’s exceptional record of academic achievements with his selection as the 2018 recipient of the Paul T. O’Day Memorial Scholarship. All of us on the Fiber Council congratulate Mr. Parker and wish him continued success in his academic career.”
The scholarship program was created in 2014 in honor of Paul T. O’Day who served as President of the American Fiber Manufacturers Association (AFMA) for more than three decades. AFMA merged with NCTO effective April 1, 2018 and NCTO’s Fiber Council now administers the scholarship program. Recipients receive a $5,000 award each year, totaling $20,000 for four years of study. Sons or daughters of NCTO’s Fiber Council member company employees are eligible to apply.
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.
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U.S. Textile Industry Calls for China 301 Tariffs on Textile & Apparel End Products
/in Press Releases /by nctoWASHINGTON, DC – National Council of Textile Organizations (NCTO) President & CEO Auggie Tantillo testified as a witness at the Office of the U.S. Trade Representative’s (USTR) public hearing on proposed China 301 tariffs in Washington, DC on May 17. “The U.S. textile industry strongly supports the Trump administration’s Section 301 case to sanction China’s […]
NCTO Elects Georgia Yarn Manufacturing CEO as 2018 Chairman
/in Press Releases /by nctoWASHINGTON, DC – The National Council of Textile Organizations (NCTO) held its 15th Annual Meeting March 20-22 in Washington, DC. Elected as NCTO officers for 2018 are:
Chairman – Marty Moran
Vice Chairman – Don Bockoven
NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers.
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2018 State of the U.S. Textile Industry Address
/in Press Releases /by nctoby William V. “Bill” McCrary Jr.
It has been an amazing year for the U.S. textile industry and the National Council of Textile Organizations (NCTO). President Trump’s pro-manufacturing agenda is forcing Washington to do what NCTO has long sought – rethink policies on trade, taxation, regulatory reform and a host of other issues.
Let there be no doubt. The time for change is now and NCTO is committed to working with the Trump administration to achieve the best policy outcomes on these and other issues. But before laying out NCTO’s policy agenda, I want to recap how the industry fared in 2017.
THE NUMBERS
Thanks to its productivity, flexibility and innovation, the U.S. textile industry has cemented its position in the global market.
In 2017, the value of U.S. man-made fiber and filament, textile, and apparel shipments totaled an estimated $77.9 billion, this is an uptick from the $74.4 billion in output in 2016 and an increase of 16 percent since 2009.[1]
The breakdown of 2017 shipments by industry sector is:[2]
Capital expenditures also are healthy. Investment in fiber, yarn, fabric, and other non-apparel textile product manufacturing has more than doubled from $960 million in 2009 to $2.1 billion in 2016.[3]
Our sector’s supply chain employs 550,500 workers.[4] The 2017 figures include:
As we examine these numbers, it is important to note that the heavy job losses incurred because of massive import surges in the 1995-2008 timeframe, virtually have stopped.[5] Today, like most other U.S. manufacturing sectors, fluctuations in employment figures are generally due to normal business cycles, new investment, or productivity increases.
U.S. exports of fiber, yarns, fabrics, made-ups, and apparel were $28.6 billion in 2017. [6] This is nearly a nine percent increase in export performance over 2016. Shipments to NAFTA and CAFTA-DR countries accounted for 54 percent of all U.S. textile supply chain exports.
The breakdown of exports by sector is as follows:
The United States is especially well-positioned globally in fiber, yarn, fabric, and non-apparel sewn products markets; it was the world’s 4th largest individual country exporter of those products in 2016.[7]
The most important U.S. export markets by region are:[8]
Focusing solely on America’s $13 billion in man-made fiber, yarn and fabric exports, the countries buying the most product are:[9]
The numbers show the fundamentals for the U.S. textile industry are sound. This is true even though some markets for U.S. textiles and apparel were soft last year. For the most part, any sluggishness was due to factors beyond control, such as disruption in the retail sector caused by the shifting of sales from brick and mortar outlets to the internet. With that said, the U.S. textile industry’s commitment to capital re-investment and a continued emphasis on quality and innovation make it well-positioned to adapt to market changes and take advantage of opportunities as 2018 moves along.
POLICY ISSUES
For decades, U.S. policy systematically undervalued the importance of domestic manufacturing, and President Trump is right that this has hurt America.
As evidenced by the work done by NCTO’s government relations team, NCTO endorses President Trump’s macro policy objectives of reshoring industry, fighting for free, but fair trade, enforcing U.S. trade laws, making the U.S. tax code more competitive, buying American, cutting unnecessary regulation, revitalizing infrastructure, ensuring cheap energy, and fixing health care.
On trade, NCTO agrees with President Trump that U.S. trading relationships must be rooted in fairness and reciprocity to benefit a broad swath of American society.
America’s most important trading relationship is NAFTA, a pillar upon which the U.S.-Western Hemisphere textile supply chain is built. At almost $12 billion combined, Mexico and Canada are the U.S. textile industry’s largest export markets. Moreover, Mexico provides vital garment assembly capacity the United States lacks at this time.
Let me be clear. NCTO strongly supports NAFTA. That said, NCTO agrees with President Trump that NAFTA can and must be improved.
NAFTA’s yarn-forward rule of origin contains loopholes that benefit third-party countries, such as China. Closing them would boost U.S. and NAFTA partner textile and apparel production and jobs.
NCTO’s NAFTA objectives include:
NCTO further agrees with President Trump that all U.S. free trade agreements should be periodically reviewed on a performance basis.
As for any new trade deals, NCTO supports President Trump’s preference for individual bilateral free trade agreements (FTAs) over multilaterals. Moreover, any new FTA targets should be limited to countries that trade in a fair, reciprocal manner. NCTO would oppose any FTAs with non-market economy countries like China and Vietnam because of their demonstrated ability to disrupt the U.S. textile market.
NCTO welcomes President Trump’s view that U.S. has made a mistake by not prioritizing trade enforcement in recent years. NCTO intends to make this issue a point of emphasis in the coming months because curtailing customs fraud and enforcing trade laws incentivizes reshoring. Moreover, due to the extremely high volume of trade in our sector, the textile industry is especially susceptible to customs fraud.
For FY 2017, the U.S. International Trade Commission reports calculated duties for all imports for domestic consumption was $34.8 billion, including $13.5 billion in textile and apparel-related goods. With billions at stake, lax U.S. customs enforcement entices unscrupulous importers to avoid duty payments.
To reduce customs fraud, the United States must put a higher priority on enforcement. This means devoting more resources to investigate those who are avoiding duties by purposely undervaluing U.S. imports, illegally circumventing U.S. free trade agreement rules of origin via third-country transshipment, or other fraudulent means. In addition, penalties for customs fraud must be certain, swift, and sufficient to deter this harmful, illegal activity.
Stopping customs fraud has the added benefit of more than paying for itself. The U.S. Treasury will collect more duty revenue and more textile supply chain production and jobs will shift to the United States and the broader NAFTA and DR-CAFTA regions.
NCTO also supports tough U.S. action against countries that engage in predatory trade practices. Noting that this problem is pervasive among non-market economies, NCTO welcomes the Trump administration’s rejection of China’s demand to be recognized as a market economy under the World Trade Organization. This decision prevents China from arguing that their manufacturing cost structures are fair and transparent with respect to trade enforcement actions.
One final trade priority is the Miscellaneous Tariff Bill, a pro-jobs measure vital to U.S. competitiveness. NCTO urges swift enactment of the Miscellaneous Tariff Act, legislation providing duty relief on manufacturing inputs that are unavailable domestically and do not compete with other U.S.-made products.
Moving on to tax policy, NCTO welcomes the tax reforms enacted by President Trump and Congress. Lowering the corporate rate and providing for more favorable capital expensing will encourage more manufacturing investment in the United States.
President Trump’s initiatives to cut unnecessary regulation are pro-jobs too.
With respect to government procurement policy, NCTO steadfastly supports the Berry Amendment. This “buy American” provision for the military is an example of how the government and private sector can work together for mutual benefit. The U.S. military gets a secure U.S. supply line for thousands of superior, highly-advanced products. In return, the domestic textile sector receives $1.5 to $2 billion in annual Defense Department sales that boost U.S. investment and employment.
NCTO is deeply concerned by congressional attacks on the Berry Amendment in recent annual defense bills, including the 2017 National Defense Authorization Act. NCTO urges Congress to reject any proposals to weaken the Berry Amendment, and instead work to strengthen the law.
NCTO also encourages Congress to include textiles in any efforts to enact commonsense laws or regulations that would strengthen “buy American” requirements applying to infrastructure or other federal spending. As demonstrated by Berry, when the federal government buys “American,” it is good for the U.S. textile industry and even better for America.
NCTO urges Congress to follow President Trump’s lead by drafting and passing a comprehensive plan to rebuild America’s infrastructure. Besides boosting U.S. productivity and facilitating commerce, infrastructure is a key market for textile products such as workwear, geosynthetics, and filtration systems. Infrastructure is a growing market for textile composites too.
Fostering a national culture of innovation is also important. NCTO urges continued support for the Advanced Functional Fabrics of America (AFFOA). This Defense Department-funded program is matched three to one with private dollars and tasked with making it easier to develop and commercialize the next generation of high-performance textiles.
NCTO also calls for the U.S. government to invest in improving automation for garment assembly because this technology shows promising potential to reshore U.S. textile and apparel production and jobs.
Another NCTO priority is ensuring that the U.S. textile industry has uninterrupted access to reasonably priced energy. Most man-made fibers are derivatives of petroleum products and many textile producers are reliant on natural gas to power manufacturing operations. Noting this, NCTO supports construction of expanded oil and gas pipeline capacity to keep energy prices low.
Finally, the U.S. textile industry must acknowledge its workforce is aging, making the recruitment of new talent a priority. U.S. companies must continue to forge links with local and state leaders, and educators to make sure government policy nurtures a labor pool both adequate in size and well prepared to succeed in a competitive global economy.
OTHER NCTO ACTIVITIES
On March 8, NCTO announced a merger, effective April 1, with the American Fiber Manufacturers Association (AFMA), a fellow trade group representing domestic manufacturers of man-made fiber.
From NCTO’s perspective, the merger with AFMA adds new members, financial resources and extends NCTO’s political reach. It also enhances NCTO’s status as the voice of every facet of the U.S. textile production chain, a fact that will help NCTO more effectively influence policies being made in Washington that impact U.S. textile investment, production and workers.
From AFMA’s perspective, as a multi-billion industry, it is critical that the U.S. man-made fiber sector remain engaged in Washington. Merging with NCTO allows U.S. fiber producers to keep its seat at the federal policy table.
As I have just outlined, NCTO is involved in the policymaking process on all major matters affecting the textile production chain. This includes key international trade negotiations, congressional initiatives, federal procurement, and regulatory activity. This merger, will allow the domestic fiber sector to be fully aware of what is transpiring in these areas and to have an effective voice in influencing policy outcomes.
In other activities, NCTO’s American Textiles: We Make Amazing campaign is helping to rebrand the U.S. textile sector’s image because its manufacturers have a great story to tell. America’s textile industry is world class thanks to leveraging the most cutting-edge production processes, investing in the best machinery, and leading in sustainability and innovation.
Campaign highlights include:
Judging by the engagement generated by American Textiles: We Make Amazing™ marketing efforts, more and more people are getting an accurate, positive description of our sector, and as a result, are viewing the U.S. textile industry in a new light.
CONCLUSION
Although the U.S. textile industry is world-class, it cannot afford to rest on its laurels. There will always be intense and sometimes unfair competition from abroad, changing consumer demands and inevitable economic downturns.
Fortunately, the Trump administration wants to spur manufacturing output and jobs, and it is incumbent upon the U.S. textile industry to seize this generational opportunity to usher in a new era of growth. With so much at stake, I implore all members of NCTO to stay active in this indispensable association that is fighting to promote the interest of our industry here in Washington.
I also invite domestic textile manufacturers who have not been active in Washington but want to change textile policy for the better, to join NCTO. Good policy does not materialize from thin air, and NCTO must have the financial and political resources necessary to help build a stable and prosperous future for U.S. textile companies. In short, our workers and their families and communities are depending on your involvement and leadership.
Thank you for the opportunity to be Chairman of NCTO for this past year. It has been a privilege to serve this great industry.
William V. “Bill” McCrary Jr. delivered the 2018 State of the U.S. Textile Industry overview at NCTO’s 15th Annual Meeting on March 22 at the Capital Hilton in Washington, DC.
Mr. McCrary was the 2017-18 Chairman of the National Council of Textile Organizations (NCTO) and is Chairman and CEO of William Barnet & Son LLC, a synthetic fiber/yarn/polymer firm headquartered in Spartanburg, South Carolina with plants and/or offices in the Americas, Europe, and Asia.
[1] Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2017 Data for NAICS 32522 is not yet available. Our 2017 estimate for the value of shipments in that category is $7.3 billion.
[2] Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2017 Data for NAICS 32522 is not yet available. Our estimate for the value of shipments in that category is based on data from 2016.
[3] Source: U.S. Census Bureau, Annual Capital Expenses Survey (ACES). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), and 315 (Apparel).
[4] Sources: U.S. Bureau of Labor Statistics, U.S. Department of Agriculture, National Cotton Council, and the American Sheep Industry Association.
[5] Source: U.S. Bureau of Labor Statistics
[6] Source: Data for textiles and apparel is from The Export Market Report produced by the U.S. Department of Commerce, Office of Textiles and Apparel (OTEXA). U.S. export data for cotton, wool, and fine animal hair is calculated from the U.S. International Trade Commission Interactive Tariff and Trade DataWeb using HTS Codes 5101, 5102, 5103 (wool), 5201, 5202, and 5203 (cotton).
[7] Source: U.N. COMTRADE Database, HTS Chapters 50-60
[8] Source: U.S. Commerce Department and U.S. International Trade Commission
[9] Id.
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TEXTILES IN THE NEWS
CONTACT: Lloyd Wood
(202) 822-8028
lwood@ncto.org