Where textile mills thrived, remnants fight for survival

During his 40-year career, William Lucas witnessed almost every stage of the erosion of the American clothing industry. As chief executive of Eagle Sportswear, a Middlesex, North Carolina, company that cuts, sews and assembles clothing, he hopes to keep what’s left of that industry intact.

Mr. Lucas, 59, has invested hundreds of thousands of dollars training his employees to use more efficient techniques with financial incentives to enable employees to work more quickly.

But he fears his investments could be jeopardized by a U.S. trade rule.

The rule, known as de minimis, allows foreign companies to ship goods worth less than $800 directly to U.S. customers while avoiding tariffs. Mr. Lucas and other textile manufacturers in the Carolinas, once a textile hub, say the provision — nearly a century old but exploding in use — is motivating retailers to rely even more on foreign producers to keep prices low.

Defenders of this rule say it is not responsible for America’s lack of competitiveness. But domestic manufacturers say it particularly benefits China, to the detriment of American manufacturers and workers.

“It’s just hard to compete with that,” Mr. Lucas said. “All it takes is for someone to change the law. “Someone just needs to change the rules.”

During the pandemic, when online shopping exploded, so did the use of de minimis.

In fiscal year 2016, 150 million packages entered the United States duty-free under this policy, but by 2023, that figure rose to more than 1 billion, according to Customs and border protection. About half are textile and clothing products.

in Congress report in June, China-founded ultra-fast fashion retailers Shein and Temu accounted for nearly 30% of packages falling under the de minimis threshold. (Shein and Temu have said they’re open to reworking the exemption.) But while U.S. manufacturers say the rule poses one of their biggest challenges, it’s not the only one.

Clothing sales reached pandemic highs and declined. That means fewer orders for remaining operators in the Carolinas. Bryan Ashby, president of Carolina Cotton Works of Gaffney, S.C., said he purchased equipment to handle a larger capacity a few years ago but noticed late summer that its buyers were withdrawing.

Eight textile mills in the southern United States closed between August and December, according to the National Council of Textile Organizations, an advocacy group. In November, a spinning factory in North Carolina, he attributed part of its demise to the growing use of de minimis measures.

“When factories that have been open for so long close, it is a canary in the coal mine for how politics and economics contribute to the economic damage facing the industry,” said Kim Glas, president of the advice.

For most of the 20th century, mills in the area were abundant. This began to change in the 1990s after the signing of the North American Free Trade Agreement, eliminating U.S. tariffs on products from neighboring countries, and when large multinational companies began to offshore their production of clothing in Mexico. In 2001, when China joined the World Trade Organization, retailers headed to Asia in search of cheap labor to produce their products. Since 1994, employment in the U.S. apparel sector has declined by 65 percent, according to the Bureau of Labor Statistics.

The surviving companies are mostly family-owned and privately owned, systematically reinvesting money into their operations to finance expensive new equipment and automation in order to remain competitive. Many produce items for the U.S. military, which requires certain clothing to be made in the United States, or for companies whose stated mission is exactly that. In 2022, according to the American Apparel and Footwear Association, only 2.9% of clothing sold in the United States was made domestically.

Halsey Cook, chief executive of Milliken, a 159-year-old manufacturer based in Spartanburg, South Carolina, that makes items such as military clothing, car flooring and merchandise for Patagonia and Carhartt, said that Because of the de minimis principle, the textile industry was “feeling pain in a new way.”

“This clothing industry was already largely exported abroad,” he said. Surviving U.S. textile manufacturers have adapted to the realities of free trade agreements, Mr. Cook said, but the enormous growth in the use of de minimis “has just completely opened up and undermined that system.”

In the cotton fields, ginning mills, spinning mills, dye houses and cut-and-sew shops of the Carolinas, conversations become lively when they discuss commercial law, which weighs on the work in progress.

Parkdale Mills, one of the nation’s largest yarn manufacturers, has a mill in Gaffney, South Carolina, that processes only cotton. Men transport the bales of cotton on forklifts, and automated equipment cleans the cotton and turns it into spun yarn that can be made into fabric. Many of Parkdale’s employees have been there for decades, and Davis Warlick, the executive vice president, greets his employees on the ground with warm familiarity.

“We’re trying to create more jobs,” Mr. Warlick said after a tour of the 400,000-square-foot facility. But he said he and his employees remain concerned. “All of this is threatened daily by a bad and ill-informed decision made at the Capitol. And all this goes away and they don’t understand it.

The clothing industry is one of the most price-sensitive, and retailers will take every opportunity to save as much money as they can.

“When you erode any aspect of the supply chain, it hurts everyone,” said Ms. Glas, of the National Council of Textile Organizations. That includes American farmers and those who work with them, she added.

Tatum Eason knows this well. She owns Enfield Cotton Ginnery in eastern North Carolina, which cleans hundreds of bales of cotton for farmers in the surrounding community. She removes debris and other impurities from the cotton for free and makes money by selling the cotton seeds that come out during cleaning. (This cottonseed is then used to make cottonseed oil and feed livestock in the United States and tilapia in Saudi Arabia, she said.)

In 2023, it has ginned half of the cotton it produced the previous year. And with high interest rates making operating loans for farmers more expensive and the futures price of cotton falling, she senses the year ahead could also be difficult. Its business relies on farmers’ optimism, and the difficult environment could prompt them to plant less cotton in April.

She had filled her office with a carousel of bags of Miss Vickie’s crisps and a bubble gum machine – gentle incentives to keep the farmers coming back to her so she could encourage them by telling them it was worth it. It’s hard to plant cotton.

“We’re thinking about what we can do on our farm to know what we’re going to gin each year,” she said, sitting in her wood-paneled office. “It’s worrying.”

The pandemic-driven e-commerce boom isn’t the only factor in the proliferation of de minimis shipping. In 2016, Congress raised the de minimis cap from $200 to $800 in an effort to reduce costs for importers, speed up delivery times for small and medium-sized businesses, and reduce paperwork for Customs and Border Protection.

The textile and clothing industry wants to limit the use of this provision, but has not agreed on a single proposal to submit to Parliament. But there appears to be agreement that manufacturers in China and throughout Asia get a free pass to the U.S. consumer market.

There are bills in Congress that seek to ban certain countries, such as China and Russia, from using this provision, but none call for its elimination.

Supporters of the de minimis principle say its elimination could lead to increased costs for consumers and businesses that import goods. The competitive challenges felt by the textile industry are not caused by this provision, according to John Pickel, senior director of international supply chain policy at the National Foreign Trade Council, a lobbying group that supports the de minimis principle. .

“I think it’s a bit of a red herring to present yourself as some sort of bogeyman explaining why certain domestic industries are not competitive,” Mr. Pickel said.

While the details and bills are sorted out in Washington, American manufacturers continue to fulfill their orders.

In a nondescript one-story building at Eagle Sportswear, a team of 75 fills orders for hoodies, shorts and sweatpants for clients like the U.S. military and American Giant, a privately-held retailer dedicated to sale of clothing made in the country.

Up to five workers work together and share the tasks necessary to create a garment. This departs from the traditional “batch sewing” approach, in which one person sits down and works on an individual task before moving a garment down the production line. By placing multiple pairs of hands and eyes on a piece of material and attending to it immediately, the company aims to increase quality control and deliver greater value to customers.

Pay starts at $11 per hour and goes up to $17, including bonuses for meeting production goals. It used to take an hour to complete a garment, Mr. Lucas said, but that time has been cut to 43 minutes.

Mr. Lucas says he had to charge American Giant more last year to make some of his clothes, partly because of orders requiring smaller batches. Bayard Winthrop, who founded American Giant in 2012 and built a national supply chain capable of making his company’s $138 cotton hoodies, says things are going well.

Many retailers, in their situation, have decided to set up abroad to produce more at lower cost. Keeping production — and those jobs — in the United States is more important to him, he said.

“The people here should be celebrated as the heroes of this country, and we’ve lost our way for a very long time,” he said, sitting in Mr. Lucas’s office at Eagle Sportswear. “I just don’t know why. “I think it should be celebrated more – more from a political point of view.”