Plans To Save Textile Jobs: A Wash

Plans To Save Textile Jobs: A Wash

The Government is Spending Millions To Modernize The U.S. Textile Industry.
At The Same Time, Its Policies Are Sending Jobs Overseas.

DATE: Wednesday, June 7, 1995
BYLINE: By Gilbert M. Gaul and Susan Q. Stranahan, INQUIRER STAFF WRITERS
Contributing to this article was Frank Donahue
of The Inquirer’s News Research Library.


Shortly before noon, after three hours of false starts and
frustrations, Jack LaForge hit the big green “on” button and the experiment
that had drawn these 11 men into the crowded laboratory began in earnest.

Project leader Glenn Allgood – weapons builder, mathematician and engineer
– peered intently at one of the half-dozen computer screens around him.

At that moment, he was on the verge of solving a problem that had plagued
his team for almost a year.

Defective towels.

Not just defective towels; towels so defective that they have to be sold by
WalMart for a discount.

This, it turns out, is the high-tech battlefield of the 1990s. It’s a
battlefield onto which the U.S. government is throwing billions of tax dollars
in its technology effort.

The 11 men had gathered in this historic place, where a half-century ago
scientists produced fuel for the atomic bomb, to do battle with the new foe:
those who would steal textile jobs from U.S. workers.

In this case, the enemies are the low-wage nations of Asia that have
decimated America’s apparel and textile business.

And in the end, Allgood’s mission will be judged a success not if he puts a
man on the moon but if he can reduce the number of those defective towels that
WalMart has to unload at a cut rate.

The goal of the team assembled at the Oak Ridge National Laboratory is to
save this $50 billion industry – and its 1.6 million jobs – by developing
revolutionary technologies to speed textile production and cut waste.

In many ways, the effort to defend the American economy has been portrayed
as a patriotic mission, fundamental to the well-being of all Americans. To
that end, Congress has created more than 50 programs aimed at boosting U.S.
companies – at an estimated cost to taxpayers of $6 billion a year.

But there’s a catch.

Although the technology programs have been cast as a way to create high-
paying jobs for U.S. workers, there are no guarantees that these technologies
will remain in the United States.

And once they go offshore, U.S. workers may well find their jobs at risk.

There’s another irony, as well: At the same time that the U.S. government
is spending millions of dollars to help modernize textile manufacturing and
create U.S. jobs, it has, through trade policies such as NAFTA and GATT, been
throwing open U.S. borders to cheap imports and sending textile jobs overseas.

Thus, what Washington gives with one hand, it takes away with the other.

The government estimates that GATT, the General Agreement on Tariffs and
Trade, could cost American apparel workers upward of 120,000 jobs – the same
number of jobs that it expects to create through its technology initiative.

In other words: a wash.

The government’s aid package to the textile and apparel makers is one of a
growing number of such industry-wide agreements.

To blunt criticisms that it is playing favorites by selecting individual
companies for high-tech handouts, the Department of Energy increasingly is
committing its $8.2 billion research resources to rescuing whole industries.
Other agencies are following suit.

Instead of awarding grants and subsidies to individual companies, the
agencies are directing money to industry trade groups and nonprofit
institutions, which are supposed to share the technological advances with all
industry members for little or no cost.

Under terms of the government-industry partnerships, the industries
themselves target areas in need of technology triage. Scientists at former
weapons facilities, such as the Energy’s Department’s lab here, perform
generic research, available to all industry partners.

Cost of the research usually is shared by industry and government. In some
cases, partners pay a fee to join the consortium. In return, they get
exclusive access to the technologies for a fixed number of years.

The automobile, semiconductor, battery and financial industries are among
more than a dozen groups that have formed alliances with the federal
government. Since 1988, these industry partnerships have benefited from more
than $1 billion worth of taxpayer-financed research and subsidies.

The oldest and largest industry partnership – Sematech – has received
nearly $800 million in subsidies to help U.S. computer-chip manufacturers in
their battle with foreign competitors.

Among the expenses taxpayers have helped underwrite: the $599,151 pay
package Sematech president William J. Spencer received in 1993.

U.S. chipmakers once again dominate the world market. But even a spokesman
for Sematech plays down the organization’s role.

“That has basically been American firms fighting the global battle,” said
spokesman Miller Bonner. “We would not argue that point at all.”

America’s textile and apparel industry moved to create its own government-
industry partnership in 1993.

With about 1.6 million workers, the industry accounts for nearly 12 percent
of U.S. manufacturing jobs. About 800,000 of the jobs involve production of
clothing and accessories, a field where employment has plummeted since the
1970s, mostly due to foreign competition.

Without new technologies to make these industries more efficient and
competitive, warned government and industry officials, the exodus of jobs
would increase and thousands more would be thrown out of work.

And so in March 1993, amid the worst blizzard to hit the Eastern seaboard
in 100 years, officials gathered at North Carolina State University to
announce the formation of the American Textile Partnership – Amtex for short.

Grand things have been promised from Amtex, which represents 82 companies,
a tiny fraction of the 26,000 firms that make up the textile and apparel

The partnership is dominated by giants such as Fieldcrest Cannon, with $1
billion in annual sales, and Milliken & Co., a private company with estimated
sales of $2.5 billion. It includes smaller firms as well.

Energy Secretary Hazel R. O’Leary, who traveled to Raleigh, N.C., to attend
the signing ceremony only days after taking office, offered glowing

“We could save 350,000 jobs over the next five years, and projections are
that we could create 200,000 new and better-paying jobs in the American
textile and apparel industry in the fifth through 10th years. Our work with
Amtex can be a model for our nation.”

Milliken’s president, Tom Malone, was equally upbeat: “I believe this can
be a role-model example of total manufacturing industry-government- university
collaboration dramatically increasing the competitiveness of the industry to
preserve and create tens of thousands of new jobs in the U.S.A.”

Amtex officials projected savings of $12 billion a year, for an industry
that has annual sales of $220 billion.

The textile industry’s record on technology investment is poor, according
to a 1992 National Science Foundation study. The industry spends only four-
tenths of a percent of total sales on research and development.

The fact that the industry now wants taxpayers to help make up for this
bothers some, including C. Paul Robinson, vice president at Sandia National
Laboratories, which has several Amtex projects.

“I do feel that people think there is a sense of entitlement,” said
Robinson of textile officials. “We’re a big industry; we’re an American
industry, and we’re losing jobs like crazy, so we should be supported.”

Since its creation, the Amtex partnership has spent $102.6 million, 45
percent of which has been in taxpayer-provided government services –
scientists’ time and use of equipment. Its 1995 budget is $53.6 million.

The consortium has picked eight areas of research to pursue, including
development of software to speed production and distribution, new sensors to
detect manufacturing flaws and new processes to reduce fabric and processing

It was the sensor project – called Computer Aided Fabric Evaluation, or
CAFE – that brought the 11 men to this makeshift lab at Oak Ridge in March of
this year.

Poised near Glenn Allgood were Blake Van Hoy, who for 18 years has worked
on some of Oak Ridge’s most complex defense and energy technologies; Jack
LaForge, with 19 years of studying the separation of isotopes, and Gerry
Sleefe, whose work at Sandia National Laboratories in Albuquerque, N.M., for
eight years has been to develop state-of-the-art electronic sensors for the

To Allgood’s team had fallen the task of putting “eyes” on America’s
textile looms.

They are among 110 scientists from 12 national labs assigned to this
project, working with engineers from the textile firms. The budget for the
CAFE program this year is $10.1 million, about half from taxpayers.

The team was here to test the initial research on the car-size green-and-
silver loom sitting at the end of the crowded room. At that moment, so many
wires and sensors were snaking from it that the machine resembled a patient in
intensive care, its every movement detailed on nearby computers.

Fieldcrest Cannon, which operates 28 manufacturing facilities in five
Southern states, is a major player in Amtex. In the last three decades,
employment at its Kannapolis, N.C., mill has declined by nearly 50 percent –
to 6,600 from about 13,000 – primarily as a result of more efficient

For large textile manufacturers such as Fieldcrest Cannon, flawed products,
or “seconds,” represent a significant loss.

About 8 percent of the company’s bedsheets and 8 percent to 10 percent of
its towels are seconds. On the company’s lower-end brands, these seconds must
be significantly discounted. They sell at 30 cents per dollar of the company’s
production costs.

Fieldcrest Cannon is in search of technology that can reduce the number of
seconds rolling off its looms and printing equipment.

“We want to be able to stop the machine and correct the mistake
immediately,” explained Chris Kametches, senior vice president for
manufacturing and engineering at company headquarters in Kannapolis. “We don’t
have that technology now. But it is technology the government already has.”

Soon, Fieldcrest and other textile mills will have it, too. Allgood and his
colleagues hope to test a sensor system in a mill by year’s end and have a
system working in five years.

Until then, though, all that stands between a first-quality roll of fabric
and one that must be sold as a second are people such as John Trexler, who has
worked at Fieldcrest Cannon’s Kannapolis plant for 26 years.

Trexler, a quiet, stocky man in a T-shirt and baseball cap, spends his days
watching as vivid rolls of printed fabric stream past him, often at 60 yards a
minute. During an average shift, he will inspect eight miles of fabric.

Although Trexler is legendary at the mill for his ability to detect
imperfections no larger than a speck of dust, Fieldcrest Cannon still loses
about 4 percent of its weekly output of 1 million yards to printing flaws.
That’s about $140,000 worth of fabric that must be discounted each week.

When members of Glenn Allgood’s team wanted to learn about fabric
inspection, they sought out Trexler and Jeff Mills, who supervises the
printing operation.

The challenge was to take components of a sensor system that was used to
identify military targets during the Persian Gulf War, and reprogram the
system to detect tiny flaws in a bedsheet fabric full of random speckles and
faded colors.

As Allgood has discovered, getting a sensor system to function in a combat
zone is one thing; having it perform on a bedsheet in a dusty and noisy
textile plant is quite another.

The purpose of this day’s experiment was to isolate routine “background
noise” from the start-up of the loom so the sensors could be programmed to
ignore it.

The industry has identified 60 to 80 common problems that plague production
lines and represent “big money costs” for manufacturers, according to Allgood.
These are what the labs are attempting to eliminate.

The scientists and engineers re-created the defects in the lab and are
experimenting to determine if the sensors can detect the flaws.

Next comes the complex task of writing the algorithms – or programs – that
will enable a computer attached to the sensor to identify the problem and
alert inspectors such as Trexler.

Trexler won’t be out of a job, officials say. His expertise still will be

“The brain is the best computer around – still,” said Oak Ridge’s Van Hoy,
who spent time with Trexler on the printing line.

There are no guarantees that new technologies will not eliminate some jobs
in the industry, especially in the short run.

“But that’s the way technology has always been,” said Amtex executive
director Richard K. Quisenberry. “In the macro sense, it enhances the
competitiveness of that industry, and we eventually rebuild jobs – not always
the same people, unfortunately.”

The goal, says Quisenberry, is to stop the bleeding.

And the way to do that is to create a system so technologically
sophisticated and responsive to the market that it eliminates the advantage
now held by low-wage competitors such as China, Hong Kong and Mexico.

Put another way, the hope is to give U.S. apparel and textile firms a
powerful incentive to keep their production and assembly operations on U.S.

That’s no small challenge.

Since 1970, the high-water mark for employment in clothing and textile
manufacturing, nearly 700,000 jobs have been eliminated – one-third of all
such jobs.

In 1970, more than 2.3 million Americans, many of them women and
minorities, worked in garment and textile factories. By 1993, the figure had
shrunk to about 1.6 million.

Most of those lost jobs were exported to low-cost foreign shops. In some
cases, American companies set up operations offshore. In others, they
contracted out work. The reason in both cases: wages.

American workers in this industry earn an average of $8 to $12 an hour –
more than 10 times average wages in foreign plants.

“The driving force, above all others, is labor costs,” Quisenberry said.
”U.S. workers earn far more than workers in the Pacific Rim countries.
Depending on the country, some workers might only be paid 30 cents an hour.
That’s what drives it.”

The impact of foreign competition on the U.S. market has been dramatic. As
recently as 1980, nearly three-fourths of the clothing sold in the United
States was made here. In 1993, only 40 percent was American-made.

Amtex officials hope to check imports at their present level – 60 percent
of the retail market. Any future growth would then accrue to U.S. firms.

“I think what we’d like to do – and realistically can do – is put in place
technology that will allow us to hold the share of where we now are in the
domestic market,” said Quisenberry.

The domestic market has been growing about 3 percent a year, he said. “If
we can just hold our share and let the market grow, we can create 120,000 jobs
for people over the next 10 years.”

A key to doing that is finding ways to shorten the time it takes to produce
and sell a garment. Now, the cycle from farmer’s field to retail rack is about
66 weeks, Amtex managers say. Much of that is idle time in storage and
inventory – a clog in the apparel pipeline. The cost of that inventory
backlog: about $25 billion, according to Quisenberry.

Amtex officials hope to reduce inventory gridlock by 28 weeks and save $12
billion a year by creating a computer model of the textile chain, from start
to finish, and developing computer software to link the players.

“If you are a retailer, whether you buy from a Sri Lankan or whoever, you
get the best price you can,” said Jerry Work, a manager at the federal Pacific
Northwest Laboratory in Richland, Wash.

“But if you can shorten that 66-week pipeline by increasing the level of
technology, you can lower that wage-rate gap . . . and give U.S. companies a
competitive advantage.”

Said Quisenberry: “You have to give U.S. manufacturers an economic
incentive to source domestically, rather than offshore. They’re not going to
do it for patriotic reasons.”

Amtex members are prohibited from selling or using new technologies in
foreign operations for five years. That should help U.S. companies compete
more effectively in the United States, Amtex executives said.

What happens after five years?

Critics say the technologies will be copied by competitors or exported to
low-wage countries – in either case, eliminating any competitive advantage.

Amtex hopes the technologies will help U.S. firms gain a significant share
of emerging world markets.

A former military pilot with two Ph.D.s, Glenn Allgood in 20 years at Oak
Ridge has worked on laser isotope separation and command-and-control vehicles
for the Army. He did a five-year study to find why experienced Navy pilots so
often get sick in flight simulators, and how to predict who will be stricken.

But the days of free-ranging research at the weapons labs are on the wane
as their budgets are cut and major new projects are infrequent. Oak Ridge is a
good example.

The lab Allgood has commandeered for his loom until recently served as the
control room for a fusion research project. It was scrapped a few years ago –
“a victim of the balanced-budget effort,” said Jack LaForge.

Sitting around the lunch table with their colleagues at the Sagebrush
Steakhouse & Saloon, a few minutes from the unmanned security gates of Oak
Ridge’s Y-12 facility, LaForge and Van Hoy expressed uncertainty about the
lab’s future – and their own.

Both men, who are employees of Martin Marietta, which operates Oak Ridge
for the Department of Energy, hope for a positive side to linking up with
industry: a better-managed laboratory.

It’s all new to Allgood and his team. “There is a cost structure”
established by the industry partners, Allgood explained. “There are
(financial) constraints that have been applied to this technology, which
requires creativity on the lab’s part.”

And there’s a deadline.

“We have to be very, very aggressive in moving this technology along,”
Allgood said. “It couldn’t be one of these programs that went on for years and

If the lab-industry partnership represents a marriage, then it appears the
other spouse is happy, too.

Chris Kametches at Fieldcrest is one of Amtex’s biggest boosters. He
regards Allgood as a “genius” and the research being done in the labs as his
industry’s salvation.

The textile industry, said Kametches, does “not have scientists. A
scientist is an individual who comes up with new thoughts, new ideas. We don’t
have the money to fund that kind of operation. We operate on a very thin
profit margin.”

Increasingly, large-volume customers, such as WalMart, demand that
Fieldcrest fill huge orders within days. That requires the manufacturer to
produce and maintain large inventories, hoping it will have on hand the color
and style of towel or sheet WalMart orders.

“Over a 30-day period, we only guess right about half the time,” said
Kametches. “The faster we can respond (to an order), the later we can wait to
do something. And that reduces our chances of making a mistake.”

For that reason, the company is participating in another Amtex initiative,
funded this year at $23.4 million. Taxpayers are picking up $12 million of
that total.

The project is designed to produce a vast software system that will link
every segment of the apparel industry – from cotton growers to knitting mills
to T-shirt manufacturers to the cash register in the sportswear department at
the local J.C. Penney’s in the mall.

When sales data show a strong demand for purple T-shirts, the message is
relayed back down the system and turns on the production pipeline. Now, once
the purple T-shirts disappear from the rack, it often takes months to
replenish supplies.

This is the system Amtex officials are betting on to regain lost business –
and lost jobs.

Michael Macaluso operates RiverView Sportswear Inc., a Willingboro, N.J.,
company with 300 workers assembling women’s wear under contract for a large

Macaluso says he’s never heard of Amtex.

Nor does he believe government scientists can improve his assembly
operations or help him compete with Third World companies that pay workers 10,
20 or 30 cents an hour.

In fact, Macaluso thinks the federal government has signed the death
certificate for America’s beleaguered apparel business.

It’s called GATT and it will open the floodgates to cheap garments, he

“All of this other talk is just a smokescreen. The politicians are trying
to make us think they’re still trying to save the industry. If they are, I
must be missing the point.”

Beginning this year, GATT phases out quotas on clothing imports over a 10-
year period; the quotas had helped to blunt somewhat the impact of foreign
competition. The flip side of the quotas is that they have inflated the prices
paid by American consumers.

Researchers have estimated GATT could result in the loss of 50,000 to
250,000 American jobs – mostly in the apparel industry.

Macaluso puts it bluntly: “You’re sending all of this work offshore and
you’re talking about creating jobs? Give me a break.”

A 1994 study by the U.S. International Trade Commission on the potential
impact of GATT said it would “likely stimulate further investment in apparel
production in low-wage countries, adding to the competitive pressures facing
the U.S. apparel industry.”

The study estimated that foreign imports would increase by more than 15
percent, to more than 75 percent of the U.S. market. That would add to the
sector’s trade deficit and result in the loss of “over 5 percent to 15
percent” of the remaining apparel jobs.

Of the estimated 800,000 production jobs, GATT could result in a loss of
40,000 (5 percent) to 120,000 (15 percent) jobs – primarily affecting small
companies such as Macaluso’s.

Federal officials hope the industy will have time to adjust while GATT is
phased in over 10 years. But they’re concerned.

“I’m very worried about my textile (and apparel) workers. This
administration is certainly looking at every possible way at retraining,” said
Rita Hayes, deputy assistant secretary for textile, apparel and consumer goods
at the U.S. Department of Commerce.

Herman Starobin, research director for the International Ladies’ Garment
Workers Union, is also worried. After GATT is implemented, foreign firms could
control up to 90 percent of the U.S. apparel market, he said.

As for Amtex and the government’s job estimates: “Wet dreams. Worse than
pipe dreams,” Starobin said.

It’s unclear if federal officials include the job-destroying impact of GATT
when they talk about jobs they hope to create.

“I’ve not seen that number. I don’t know what that number is,” Amtex’s
Quisenberry said. “I don’t know that the industry has ever come up with a

O’Leary first said Amtex would create 200,000 high-wage jobs. Later, Amtex
officials lowered the estimate to 120,000 – a 40 percent drop. At other times,
they have used estimates of 140,000 and “more than 100,000.”

Amtex officials also have been imprecise about whether these will be new
jobs or jobs recaptured by the industry. They have used both explanations.

In either case, the estimate seems to assume that U.S. companies will use
the gains from any technological advances to hire new workers – not to
increase profits.

That may or may not be the case, says Irving F. Stowers, who heads Amtex
efforts at Lawrence Livermore National Laboratory in Livermore, Calif.

“What industry wants and government wants is often two different things.
Voters and government would like to see more jobs created. Industry wants to
see more profit,” Stowers said. “Basically, if you raise the productivity of a
business, it will profit, gain or turn around and invest and get back market

Assuming any jobs are created, Quisenberry said, the bulk of them “will
primarily be entry-level manufacturing jobs in the apparel sector. But they’re
better jobs than I think you can find in the service sector.”

Federal data contradict that claim.

The average hourly wage of apparel workers in 1993 ranged from $6.39 to
$7.78. In the services sector, it ranged from $7.28 in laundry services to
$15.28 in legal services.

“I think he’s wrong. The service industry has gotten a bad rap. There are a
lot of different service jobs and some of them pay fairly well,” said Maureen
Greene, a regional economist for the Bureau of Labor Statistics.

At Macaluso’s three South Jersey facilities, full-time workers earn above-
average wages. He said GATT would devastate the business.

“I have 300 people at three plants. My full-time people make between $9 and
$12 an hour and get full health benefits. Where are they going to go? They
(government officials) always evade the questions. They blow so much smoke.”

His company already uses computers at its three locations, Macaluso said.
It moves 47,000 garments a week and can turn around a product in two to three
days, he said.

Sure, it’s possible the system could be made more efficient, he said. “The
kinds of things they are talking about can work, to a degree.”

But “to me, it seems kind of late. With GATT, they’re already putting the
nails in the coffin anyway.”

© Copyright 1996 Philadelphia Newspapers Incorporated.

Next in the series…

High-Tech House That Clout Built
Wheeling Jesuit College Is Now a Center of Technology…and of Taxpayer Largesse.