The AMERICAN TEXTILE INDUSTRY • COMPETITION • STRUCTURE • FACILITIES • COSTS

By L.D. Howell

Agricultural Economist Economic Research Service Marketing Economics Division

Issued November 1964

UNITED STATES DEPARTMENT OF AGRICULTURE »WASHINGTON, D.C.

For sale by the Superintendent of Documents, U.S. (Jovernment Printing Office Washington, D.C, 20402 - Price 75 cents PREFACE

This report, prepared by the Economic Research Service of U.S. Depart- ment of Agriculture, extends and brings up to date the information in Technical Bulletin 891, "Marketing and Manufacturing Margins for Textiles," published in 1945 and now out of print; Teclinical Bulletin 1062, "Marketing and Manu- facturing Service and Margins," published in 1952 and now out of print ; and Technical Bulletin 1210, "Changes in American Textile Industry—Competi- tion, Structure, Facilities, Costs," published in 1959 and now out of print. The information presented was brought up to date through 1962, or as near that date as data available in 1963 would permit. The data were compiled mainly from secondary sources, including govern- ment and private agencies. Data made available by the Bureau of the Census, the Bureau of Labor Statistics, Federal Trade Commission, International Cotton Advisory Committee, U.S. Tariff Commission, National Association of Textile and Apparel Wholesalers, National Retail Merchants Association, Dun and Bradstreet, Inc., and National Cotton Council of America were especially useful in the preparation of this report. Inadequate funds for publication necessitated the deletion of many tables prepared for this report. Other tables were reduced and combined. But the text is based on the tabulations before the deletions and reductions. Credit is due Amos D. Jones for contributions to the section on marketing wool, Joseph L. Ghetti for contributions to the section on ginning cotton, and Evelina K. Southworth of the U.S. Tariff Commission for contributions to the section on manufacturing knit goods. Contents

Pase Page Summary and conclusions v Wool products manufacturing 66 Competition and market outlets 1 Nature and practices ~_ 66 American and foreign-grown cottons 1 Size and organization ] 67 American cotton and manmade fibers 2 Manufacturing methods 70 American and foreign wool 4 Machinery and equipment 73 American wool and manmade fibers 6 Charges or costs 73 Prospects and related problems 6 Means and importance of improvement 78 Marketing channels and division of consumer's Adjustments in quality 78 dollar 7 Improvements in manufacturing opera- Cotton and cotton products 7 tions 80 Marketing channels 8 Manmade fiber and silk product manufacturingj.. 81 Division of consumer's dollar 9 Nature and practices 81 Wool and wool products 10 Size and organization 82 Marketing channels 10 Manufacturing methods 84 Division of consumer's dollar 12 Machinery and equipment 84 Marketing raw cotton 14 Charges or costs involved 85 Margins in eluded in farm prices 14 Means and importance of improvement 89 Hauling from farm to gin 14 Dyeing and finishing 89 Ginning and bailing 16 Nature and practices "__ 90 Cotton merchandisers' margins 21 Size and organization 91 Receiving and related services 22 Methods and practices [ 93 Compression of cotton 23 Machinery and equipment ^__ 94 Storage and insurance 24 Charges or costs involved 94 Transportation 24 Means and importance of improvement 95 Financing 25 Knit-goods manufacturing 95 Other services 26 Nature and practices 95 Importance of reduction in costs 26 Size and organization 96 Marketing raw wool 27 Manufacturing methods '_ 100 Method and practices 28 Machinery and equipment ~ 101 Charges or costs 31 Charges or costs involved 102 Means and importance of improvement """"" IQ^ Means and importance of improvement_ 32 Manufacturing fabricated products 105 Yarn, except wool, and thread manufacturing 35 Nature and practices 106 Nature and practices 35 Size and organization 106 Size and organizations 35 Manufacturing methods __l no Man ufacturing methods 40 Machinery and equipment I 112' Machinery and equipment 42 Charges or costs involved '_ 114 Charges or costs involved 44 Means and importance of improvement 118 Means of improvement 45 Wholesaling textile products 121 Adjustments in quality 46 Partially manufactured products IIIIII 121 Improvements in manufacturing opera- Methods and practices 121 tions 48 Charges or costs involved ~_ 122 Importan ce of improvement 51 Means and importance of improvement.. 124 Cotton fabric manufacturing 51 Products for ultimate consumers 125 Nature and practices 51 Methods and practices 125 Size and organizations 52 Charges or costs involved ~_ 127 Man uf acturing methods 56 Means and importance of improvement ~ 130 Machinery and equip ment 57 Retailing textile products 132 Charges or costs involved 58 Methods and practices "IIIII 132 Means and importance of improvement 63 Charges or costs involved HI 135 Means of improvement 63 Means and importance of improvement ~~~ 140 Importance of improvement 65 Literature cited 143

HI SUMMARY AND CONCLUSIONS

Cotton and wool produced in the United States 1960's. Annual mill consumption of wool in the continue to be confronted by greatly increased United States decreased from 17 percent of the competition from other fibers. Expandmg pro- world total during the late 1930's to 13 percent m duction of foreign-grown cotton and wool and of 1962. U.S. consumption of manmade fibers in- manmade fibers, improvements in the quality or creased from about 23 percent of that for cotton, suitability of these fibers, and availability of m- and 151 percent of that for wool, in 1947 to 58 creased quantities of the competing products at percent of that for cotton, and to more than 5 attractive prices are among the factors that ad- times that for wool, in 1962. versely affect market outlets for American cotton Inroads made on market outlets for Ameri- and wool. can cotton and wool indicate that the threat of Trends in this competition are indicated by increased competition is serious and that it is be- changes in supplies, prices, and consumption of coming progressively more so. These develop- competing products. The proportion of total ments and prospects emphasize the importance of world production of cotton, wool, and manmade exploring alternative means of strengthening the fibers accounted for by American cotton decreased competitive position of American cotton and wool from more than one-half in the early 1930's to about one-fifth in the early 1960-s. The corre- Prospective demands for textiles indicate the sponding proportion for domestic wool decreased possibility of maintaining or expanding consump- from 1.4 percent to 0.4 percent; whereas that for tion of American cotton and wool, if all potential manmade fibers increased from less than 5 per- market outlets are fully exploited. To exploit cent to more than 25 percent during this period. these outlets fully would require that adequate Prices of American ^ cotton and wool in the and dependable supplies of suitable qualities of United States in most of the recent years have cotton and wool and their products be made readily been maintained above their normal free-market available to consumers at attractive prices. To relationship to comparable prices in other coun- meet these requirements, improvements are tries, as a result of price-support programs for needed in the adequacy and efficiency of the serv- cotton and import tariffs on apparel wool. Prices ices involved at each stage in producing and mar- of manmade fibers have declined in relation to keting cotton and wool and in manufacturing and domestic prices of cotton and wool. Prices of distributing the products. rayon staple fiber in cotton equivalent pounds, for Data on margins for marketing textiles sup- example, declined from more than twice those of ply a basis for evaluating problems involved in Middling 1%6-inch cotton during the late 1930's reducing costs and in expanding market outlets. to 10 percent lower than those in the early 1950's These margins cover charges made for assembling and to 27 percent lower than those in 1962. Prices a.nd merchandising raw cotton and wool, manu- of rayon staple fibers, as proportions of domestic facturing these products into yams and fabrics, prices of Fine Good French Combing and Staple fabricating apparel and household textiles, and wool, declined from about 36 percent in the late distributing the finished products to ultimate con- 1930's to 20 percent in 1954, and amounted to 21 sumers. Combined margins for these services for percent in 1962. Prices of other manmade fibers, cotton products decreased from about 91 percent particularly the newer noncellulosic ones, declined of the consumer's dollar in 1938 to about 82 per- relatively more during the 1950's and early 1960's cent in 1951, and amounted to about 85 percent in than did those of rayon. 1962. Similar margins for wool products de- Changes in price relationships were associated creased from about 90 percent in 1938 to 75 per- with substantial increases in the consumption of cent in 1951, and amounted to about 88 percent foreign-grown cotton and wool and manmade in 1962. These margins tended to increase from fibers in relation to consumption of American cot- the early 1950's to the early 1960's. ton and wool. The proportion of total world mill The size of these margins emphasizes the consumption of cotton accounted for by American importance of information to show the distribu- cotton decreased from more than one-half during tion of the consumer's dollar among important the early 1930's to less than a third in the early services and cost items. Estimates, based on of- ficial data and other information, were made to ^The terms "American cotton" and "American wool" or "domestic wool" are used to designate cotton or wool "" Italic figures in parentheses refer to items in Litera- produced in the United States. tiie Cited, p. 143.

IV show average distribution of the consumer's dollar Marketing margins for wool in 1946 averaged paid for textile products in 1939, 1947, 1954,1958, 5.7 cents a pound, or about 12 percent of the Boston and 1962. Data available for this purpose are not price, for grease wool in original bags; 6.8 cents a complete, and some adjustments were required in pound, or 16 percent of the Boston price, for making these estimates. Furthermore, the com- graded wool bought in the grease; and 27.1 cents bined margins for the different services were ad- a pound, or 25 percent of the Boston price, for justed to approximate the farm-to-retail price scoured wool. Data for more recent years indicate spread, as calculated by the Economic Research that charges for handling, grading, and trans- Service of the U.S. Department of Agriculture. portation increased considerably from 1946 to the The farmer's share of the consumer's dollar middle 1950's. They were reduced somewhat by paid for apparel and household textiles made of the early 1960's. Apparently charges for scour- cotton increased, with advances in prices, from ing and carbonizing during the late 1950's and about 9 percent in 1938 to 18 percent in 1951, and early 1960's were low^er than they were in 1946. amounted to 15 percent in 1962. The farmer's Means of improving the marketing of wool share of the consumer's dollar paid for textiles include (1) more and improved preparation of made of wool increased from 10 percent in 1938 wool for marketing and manufacture at or near to 25 percent in 1951, and amounted to about 12 points of origin; (2) increased use of improved percent in 1962. Gross margins for merchandis- facilities and equipment for handling, preparing, ing the raw fibers, including ginning and baling and storing wool at warehouses; (3) improved for cotton, but not including the scouring of wool, packaging of wool, including use of suitable bag- increased in recent years and averaged about 3 ging to prevent contamination and waste, and percent of the consumer's dollar in the early 1960's. compressing into suitable bales to facilitate han- Combined gross margins for spinning yarns, weav- dling, transportation, and storage; and (4) devel- ing fabrics, and dyeing and finishing cotton cloth opment of more adequate and dependable classi- decreased in recent years and averaged 12 percent fication and market information services, upon of the consumer's dollar in 1962. The correspond- the basis of which the sale and purchase of wool ing proportion for manufacturers of wool fabrics on description can be expanded. varied irregularly and amounted to 14 percent in Adequate classification and market informa- 1962. Similar proportions for fabricators oí ap- tion services for cotton and wool would require parel and household textiles increased in recent (1) that differences in all important quality ele- years, and amounted to about 30 and 31 percent ments of these fibers be ascertained and evaluated ; respectively for cotton and wool in 1962. Mar- (2) that the sample used be truly representative g;ins for w^holesale and retail distribution of tex- of the quality or qualities of fibers included in the tile products have increased since 1947 and in bale or lot and that it be correctly identified with 1962 averaged about 41 percent of the consumer's the bale or lot from which it was taken; (3) that dollar. the evaluations be in accordance with uniform Marketing margins for raw cotton increased standards upon the basis of which differences in from about 2.5 cents a pound of lint in 1939 to 7.2 all iniportant quality elements of the fibers can be cents in 1962. Charges for ginning and baling described for commercial purposes with reason- increased from about 0.8 cent a pound of lint in able accuracy; (4) that the evaluations be made 1939 to 3.2 cents in 1962. Charges for other mer- by competent and reliable classifiers under condi- chandising services increased from about 1.7 cents tions conducive to accurate evaluations; and (5) a pound in 1939 to 4.1 cents in 1962. The propor- that facilities be provided for assembling the tion of total cost of cotton to mills accounted for samples, recording the evaluations on convenient by these margins decreased from about 23 percent forms, and making this information available in in 1939 to 12 percent in 1947, and then increased time for its use in selling and buying the cotton to about 20 percent in 1962. and wool. Means of improving the marketing of cotton Mergers and acquisitions in the textile in- include (1) more general use of suitable condition- dustry in recent years have changed the organiza- ing, cleaning, and ginning equipment, well orga- tion and management of many operating units. nized and operated; (2) utilization of this equip- These changes were associated with some decrease ment to nearer full capacity for a longer time each in average size of textile manufacturing establish- year; (3) development and use of suitable auto- ments as measured by the number of employees. matic samplers and higher density presses at gins; Census data for 1958 show that 34 percent of the (4) increased use of improved facilities and equip- weaving mills processing cotton and manmade ment for handling cotton at compresses and ware- fibers, with 11 percent of the looms, did weaving houses ; (5) improved bagging and handling prac- only. About 53 percent of the mills with 74 per- tices for bales to reduce waste and contamination cent of the looms and 83 percent of the spindles of lint; and (6) development of more adequate had spinning and weaving machinery or throwing, and dependable classification and market informa- spinning, and weaving machinery. About 13 per- tion services, upon the basis of which the sale and cent of the mills with 15 percent of the looms and purchase of cotton on description can be expanded. 17 percent of the spinning spindles had weaving and finishing or spinning, weaving, and finishing Adjustments in quality of cotton and wool to machinery. In wool manufacture in 1958, about mill requirements would need to be based on 78 percent of the mills with 79 percent of the looms more complete information than is now available had equipment for both spinning and weaving. to show not only the influence of differences in the A comparison of these data for both cotton and various quality elements of the fibers on their value wool with similar data for 1954 shows a consider- for use in the manufacture of specified products able increase in vertical integration, a combination but also the influence of these differences on costs of two or more successive stages. of raw fibers to mills, on costs of producing the Gross margins of manufacturers of yarns cotton and wool, and on prices to farm producers. and fabrics, as proportions of the wholesale value When reasonably complete and integrated, such of the products, decreased, on the average, from information would supply a basis for arriving at 1947 to 1958, but the changes varied considerably approximations to the best adjustments in the qual- from one type of product to another. With ad- ity of cotton and wool to mill requirements. But vances in wage rates and other developments, the developments in technology, in farm production, proportion of these margins accounted for by sal- in marketing, and in other factors may result in aries and wages in 1958 averaged higher for cotton considerable changes in qualities of cotton and and wool products and lower for manmade fiber wool that are relatively best adapted to the produc- products than in 1947. Average value added by tion of specified products. manufacture per dollar of payroll decreased from Improvements in manufacturing operations 1947 to 1954, despite substantial improvements in have been made in recent years, but further mod- plants and equipment, and then increased to 1962. ernization is greatly needed. A report in 1958 Improvements in the manufacture of textile indicated that during the 10-year period, 1948-57, yarns and fabrics may result from using the the textile industry spent $4.4 billion for new qualities of raw materials relatively best adapted, plants and equipment, and productivity per man- physically and economically, to the production of hour rose 67 percent. Yet it was estimated that specified products, and from modernizing equip- fully 65 percent of the textile manufacturing ment and manufacturing operations. Better ad- equipment was obsolete in 1957. Of the textile justments in qualities of cotton and wool used, for manufacturers who were replacing old facilities example, could be based on detailed analysis of mill with new plant and equipment in 1958, 37 percent operations, under controlled conditions, to show expected these replacement expenditures to pay for differences in value, for mill purposes, of cotton themselves in 1 or 2 years, 47 percent in 3 to 5 and wool of different qualities but physically years, and 16 percent in 6 or more years (^^). A usable in the production of specified products. report in 1958 on operating costs in the textile in- Differences in value for mill purposes are made dustry indicated that labor costs to mills can be up of a combination of differences in processing cut as much as 80 percent in opening and picking, costs and in quality or value of the products as a 10 to 33 percent m carding, 75 to 80 percent in result of differences in quality of the cotton or wool drawing, 60 to 70 percent in roving, 40 to 60 per- used. Data showing such differences in value for cent in spinning, 65 to 70 percent in slashing, 30 mill purposes, along with data showing differences percent in weaving, and 50 to 75 percent in man- in the cost of cotton or wool as a result of differ- ufacturing knit goods (63), A foUowup report ences in quality, would need to be taken into ac- in 1961 emphasized the continuing need for further count in determining the quality of cotton or wool improvements and pointed out specific means that relatively best adapted to the production of speci- have been and are being developed to greatly in- fied products. crease the efficiency of the manufacturing opera- A basic requirement for determining the tions (i). qualities of cotton and wool relatively best Research in the carded cotton yarn industry adapted to the production of specified products is in 1950 also indicated possibilities for substantial that differences in all important quality elements improvements, particularly in labor costs. Pos- of cotton and wool be ascertained and evaluated. sible reductions in costs in individual establish- Techniques and equipment would need to be devel- ments ranged up to 60 percent in labor costs and oped for accurately measuring differences in these up to 40 percent in total manufacturing costs. The more promising improvements included use quality elements, and in the quality or value of the of new and modern machinery, especially opening products, and for relating differences in these and picking equipment, long-draft fly frames, and quality elements of cotton and wool to differences larger long-draft package spinning machines; in processing performance and in quality or value some rearrangement of machinery in most of the of the products. Considerable progress has been buildings then in use; installation of evaporative made in developing techniques for measuring dif- cooling systems, including more modern humidi- ferences in some properties of cotton and wool fying systems and better lighting equipment; in- fibers, but at least some of the known quality fac- creased machine assignment per man; an equal- tors need to be more accurately measured and eval- ization of reasonable workloads as determined by uated, and perhaps other important ones need to be competent specialists; and adjustments in size of identified, measured, and evaluated. mills and in number of counts of yarn spun (105).

VI Similar information is needed for other im- labor and management in formulating and carry- portant segments of the textile manufacturing ing out plans to modernize establishments for effi- industry as a basis for indicating the means by cient operation. Modernization of plants might which and the extent to which it would be feasible well be supplemented by in-service training pro- to increase efficiency and reduce costs of manufac- grams for improving the skill of employees. Uti- turing operations. Eeports indicate that results lization of employees to their full potentialities, to of similar studies of other segments of the textile the mutual benefit of employees and management, industry are likely to present an even more star- may be an effective means of reducing costs of tling picture than those presented for manufac- manufacturing and distributing textile products. turers of carded cotton yarn {93). Case studies Combining two or more of the successive and other developments reported in 1958 and 1961 links in the chain of manufacturing and dis- confirm the need for, and possibilities of, further tributing processes for textile products may be improvements {63^ 1), A report in 1961 indicated an important means of achieving economies and a that much of the textile machinery in place in closer linkage between production planning and 1960 was installed prior to 1940 and less than ultimate consumer requirements. Developments one-fourth was installed since 1950 {1), This during World War II were favorable in some situation apparently indicates that economic ap- respects to the extension of unified control. Inte- plications are lagging far behind technological gration in the textile industry in the 1950's and developments in the textile manufacturing indus- early 1960's apparently indicates a continuing try. Manufacturing costs are therefore substan- and perhaps growing interest in possibilities of tially higher than they would be if technological further combinations. But additional informa- developments were fully utilized. tion relating to economic possibilities of and limi- Integration in industries manufacturing ap- tations to both horizontal and vertical integration parel and related products in recent years has is needed as a basis for adequate appraisals. resulted in some changes in organization and Gross margins of textile and apparel whole- management of operating units. Changes in de- salers increased in recent years and averaged gree of vertical integration are indicated by about 17 percent of net sales in 1962, compared increases in the proportion of the establishments, with 16 percent in 1939 and a high of almost 19 employees, and value added by manufacture ac- percent m the early 1940's. Operating expenses counted for by multi-industry companies engaged of these wholesalers averaged about 15 percent of in different segments of the textile industry. net sales in 1962, about the same as in other Changes in degree of horizontal concentration, on recent years but higher than in the late 1940's and a company basis, from 1947 to 1958 showed in- early 1950's. Expenses of manufacturers' sales creases in 12 industries, decreases in 6 industries, branches and offices also increased, and averaged and no changes in 3 industries. Average value 9 percent of net sales in 1958. These expenses added by manufacture per dollar of payroll in per dollar of sales usually average less for estab- 1954 and 1958 varied directly with degree of verti- lishments with a large volume of sales than for cal and horizontal integration in both the men's those with a small volume. Selling and adminis- and boys' and the women's and children's clothing trative expenses account for most of the whole- industries {10). salers' gross margins. Profits during the 1950's Gross margins for manufacturers of apparel and early 1960's averaged less than 2 percent of and other fabricated textile products increased net sales. from about 48 percent of the value of the products Gross margins of department stores averaged in 1939 to about 57 percent in 1958. These pro- 36.1 percent of net sales in 1962, slightly lower portions varied considerably from one kind of than in other recent years, but somewhat above product to another. The proportion of gross mar- the low point of 35.2 percent reached in 1949. gins accounted for by costs of wages decreased Payroll expenses, the largest item of costs, aver- from 40 percent in 1939 to 36 percent in 1947, and aged 18.1 percent of net sales in 1962, about the amounted to 37 percent in 1958. Average value same as in other recent years, but somewhat higher added by manufacture per dollar of wages de- than the low point of 15.4 percent reached in creased from $1.76 in 1947 to $1.61 in 1954, despite 1945. Operating profits, amounting to 2.4 per- substantial improvements in machinery used, in- cent of net sales in 1962, were lower than those creased to $2.24 in 1961, and amounted to $2.21 in the 5 years immediately preceding this period in 1962. and were lower than in any other recent year. Improvements in the manufacture of apparel Gross margins of men's and boys' clothing and and related products might well include more furnishing stores, women's and children's cloth- attractive styling and good construction of prod- ing stores, and family clothing stores average ucts, installation and use of modern facilities and considerably less than those of department stores. equipment, adjustments in sizes of plants to facil- Means of reducing costs of distributing tex- itate effective use of the more efficient equipment tile products include methods for increasing the and methods, and development of labor-relations general efficiency of existing agencies, concen- programs that would enlist the cooperation of both trating services in the hands of agencies or com-

Vll binations of agencies that can perform them most rangements for payment at a convenient desk set efficiently, and reducing "unnecessary" services. up for that purpose. Such simplification makes Improvements in general efficiency of the agencies possible reductions in retail margins mainly by involve problems of organization and operation, reducing payroll costs, which average more than selection and management of personnel, loca- half of the total operating expenses of retailers. tion of places of business, number and kinds of Accurate labeling to show the quality and size of commodities handled, volume of operations, and the products, on the basis of adequate standards, purchase and sales policies, among others. De- would facilitate self-service methods. These and tailed information on the influences of each im- other economies in retailing would make possible portant factor on efficiency and costs is needed to substantial reductions in costs of distributing tex- indicate the extent to which and the most effective tile products. These reductions would be to the means by which it would be feasible to bring about advantage of farm producers and consumers. improvements. Research of the type indicated The relative importance, from the viewpoint for carded cotton yarn, with appropriate modifica- of costs, of increasing efficiency and of reduc- tions, should supply the information needed {105). ing the margins for manufacturing and distrib- Wholesalers^ gross margins may be reduced uting textile products may be indicated by data by increasing to more nearly optimum the vol- showing that a reduction of 10 percent in these umes handled by the smaller operators and by combined margins during 1939, 1947, 1954, 1958, concentrating a larger proportion of the services and 1962 would have amounted to about 8.5 per- in the hands of the larger and more efficient estab- cent of the costs of the finished products to ulti- lishments. In 1958, operating expenses per dol- mate consumers, to about two-thirds of the gross lar of net sales of apparel by merchant wholesalers returns to farmers for the cotton and wool used, averaged about half as much for operators and to about three times the total costs of market- with annual sales of over $2 million as for those ing the raw fibers, including the ginning and with annual sales of less than $50,000. Although baling of cotton but excluding the scouring of factors other than size may also be involved, it wool. A reduction of 10 percent in costs of man- appears likely that at least a part of these dif- ufacturing textiles, including the fabrication of ferences in operating expenses is attributable to apparel and household textiles, would have differences in efficiency that arise from differences amounted to about a third of the gross returns to in volume of sales. farmers for the cotton and wool used and substan- Retailers' margins may be reduced by simpli- tially more than the total costs of marketing the fying the selling process so as to permit and raw fibers. A reduction of 10 percent in costs of encourage self-selection and self-service by cus- retailing during this period would have amounted tomers. This simplification may be facilitated by to more than total costs of marketing the raw open display of merchandise, arranged on the fibers used and to more than a fourth of the gross basis of consumers' primary interests, and by ar- returns to farmers for the cotton and wool used.

Vlll THE AMERICAN TEXTILE INDUSTRY COMPETITION—STRUCTURE—FACILITIES—COSTS

By L. D. HowELL, Agricultural Economist, Marketing Economics Division, Economic Research Service

COMPETITION AND MARKET OUTLETS

Market outlets for American cotton and wool from 16.4 million bales in 1953 to 10.9 million in continue to be adversely affected by greatly in- 1957, and then increased to 14.9 million in 1962; creased competition from cotton and wool pro- but that in other countries continued to increase duced in other countries and from manmade fibers with the result that during the 5 years ended with produced in the United States and abroad. Con- 1962 cotton produced in the United States ac- tinuing increases in production of foreign-grown counted for only about 30 percent of the world cotton and wool and of manmade fibers, improve- total. ments in the quality or suitability of these fibers, Prices of American cotton in the United States and the availability of these competing products in most of the years since 1933 have been main- at attractive prices are among the factors that tained above the normal free-market relationship adversely affect market outlets for American with those of other countries, as a result of price- cotton and wool. support operations. These differences in relative Trends in the nature and extent of this competi- prices, except as offset by export payments; short- tion are indicated by data showing recent changes ages of dollar exchange; and other developments in supplies, prices, and consumption of these com- have resulted in considerable shifts in foreign con- peting products. Data are presented on changes sumption from American to cotton of other in supplies, prices, and consumption of American growths {4S). During the 5 years ended with July cotton in relation to those for foreign-grown cot- 1932, American cotton accounted for 56 percent ton and for manmade fibers; on similar changes of total world mill consumption of all growths for wool produced in the United States in relation and for about 42 percent of mill consumption out- to those for foreign wool and for manmade fibers ; side the United States. During the 5 years ended and on prospects and related problems. July 1939, after initiation of price-support loan and agricultural adjustment programs in the American and Foreign-Grown Cotton United States in 1933, American cotton accounted for about 42 percent of total world mill consump- The proportion of world production of cotton tion of all growths and for about 25 percent of accounted for by production in the United States- mill consumption outside the United States. has decreased markedly in recent years (table 1). During and after World War II, the adverse During the 5 years ended wâth 1932, cotton pro- effects of differences between prices of American duced in the United States accounted for about cotton and of foreign-grown cottons, shortages of 57 percent of the world total. Following inaugu- foreign exchange, and other factors related to for- ration of the agricultural adjustment program in eign outlets for American cotton have been offset to this country in the early 1930's, production of cot- some extent by financial aid from the U.S. Govern- ton in the United States was reduced, but that in ment for exports of American cotton. These aids other countries continued to increase and, during include (1) grants, gifts, and sales for local cur- the 5 years ended with 1939, cotton produced in rency; (2) short-term credit sales repayable in the United States accounted for only about 44 per- dollars; (3) barter transactions; and (4) export cent of the world total. Production of cotton in subsidies or payments (60). the United States and in other countries decreased From 1945 to 1951, domestic prices of American during World War II and then increased in the cotton averaged substantially more than the gov- early postwar period. During the 5 years ended ernment loan rate. Financial aids for cotton ex- with 1952, cotton produced in the United States ports averaged 44 percent of the value of American accounted for about 45 percent of the world total. cotton exported, and American cotton accounted Production of cotton in this country decreased for about 45 percent of total world mill consump-

r86-S0'6—64- TABLE 1.—World production of cotton^ wool^ and manmade fibers^ 193^-38 and 1938-62

Cotton 2 Wools Manmade fibers * Year Total Ameri- All Total Domes- Foreign Total Rayon, All Total can other tic acetate other

Million Million Million Million Million Million Million Million Million Million pounds pounds pounds pounds pounds pounds pounds pounds pounds pounds Average:1934-38 6,146 7,805 13, 951 207 2,021 2,228 1,401 0 1,401 17, 580 1958 5, 554 15, 216 20, 770 130 2,921 3,051 5,027 1,048 6, 075 29, 896 1959 6,974 15, 360 22, 334 140 3,082 3,222 5, 557 1,453 7,010 32, 566 1960 6,851 15, 796 22, 647 145 3,079 3,224 5,738 1,792 7,530 33, 401 1961 6,873 15, 115 21, 988 143 3, 112 3,255 5,931 2,053 7,984 33, 227 1962 7, 136 16, 274 23, 410 134 3,128 3,262 6,314 2,634 8,948 35, 620

Proportion of total

Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent Average:1934-38 34. 9 44.4 79.3 1. 2 11.5 12.7 8.0 0 8.0 100. 0 1958 18. 6 50.9 69.5 .4 9.8 10. 2 16. 8 3.5 20.3 100.0 1959 21.4 47. 2 68.6 . 4 9.5 9.9 17.0 4.5 21.5 100.0 1960 20. 5 47.3 67. 8 . 4 9.2 9. 6 17. 2 5. 4 22.6 100.0 1961 20.7 45.5 66.2 .4 9. 4 9.8 17.8 6.2 24.0 100. 0 1962 20.0 45.7 65. 7 . 4 8.8 9.2 17.7 7.4 25. 1 100, 0

1 Year for cotton begins August 1; that for wool and International Cotton Advisory Committee and Bureau manmade fibers January 1. of the Census reports. 2 Commercial cotton. Excludes the quantities pro- 3 From reports and publications of the Commonwealth duced for household use. Based on estimates of the Committee. * From Textile Organon. tion of all growths and for about 21 percent of the raw cotton equivalent of U.S. imports of cot- total mill consumption outside the United States. ton products increased from 67,500 bales in 1952 During the 7 years ended July 1958, domestic to about 645,500 bales in 1962, a total increase of prices of American cotton averaged near the gov- about 856 percent. Exports of cotton products ernment loan rate, government financial aids for by domestic manufacturers decreased from the exports averaged 60 percent of the value of Ameri- equivalent of 703,900 bales of cotton in 1952 to can cotton exported, and American cotton ac- the equivalent of 459,000 bales in 1962, a decrease counted for about 33 percent of total world mill of about 35 percent. consumption of all growths and for about 14 per- The information presented clearly indicates that cent of mill consumption outside the United cotton price-support operations m the United States. States have been associated with substantial in- Domestic prices of American cotton averaged creases in consumption of foreign-grown cotton higher than the choice B loan rate and lower than in relation to that of American cotton. They have the choice A rate during the 2 years ended July also been associated with large increases in im- 1961. They averaged near the single loan rate ap- ports of cotton products manufactured in other plicable during the year ended July 1962. During countries in relation to exports of cotton prod- these 3 years, aids for exports averaged 57 percent ucts manufactured in this country. These devel- of the value of American cotton exported. Dur- opments and prospects of further expansions in ing the same years, American cotton accounted, production of cotton and cotton products outside on the average, for about 32 percent of total world the United States emphasize the importance of mill consumption of cotton of all growths and for exploring alternative means of strengthening the about 16 percent of mill consumption outside the competitive position of American cotton and cot- United States. ton products manufactured in the United States Prices of cotton to manufacturers continue to be considerably higher in the United States than they are in other countries. In 1960, for example, net American Cotton and Manmade Fibers cotton costs per linear yard of fabric in the United States exceeded those in Japan by about 6 percent The competitive position of American cotton is for cotton used in sheeting and print cloth and by also adversely affected by continuing increases in about 14 percent for cotton used in broadcloth and supplies and improvements in quality or suitability gingham (tables 33 and 34, pp. 60, 61). With the of manmade fibers available at reduced prices. costs of raw cotton, labor, and other items in other World production of these fibers, in pounds, in- countries lower than those in the United States, creased from about 10 percent of that for cotton in 1934-38 to 38 percent in 1962 (table 1). In the in North America, from 6 to 21 percent in Central United States^ production of manmade fibers in- and South America, from 5 to 14 percent in Asia, creased from about 4.5 percent of that for cotton and from 8 to 46 percent in Africa. The propor- in 1934-38 to 16 percent in 1947-49 and to 33 per- tions in Oceania (islands in the South Pacific, not cent in 1962. Although no satisfactory measures in Asia or America, including Malaysia, Australia, of changes in quality of manmade fibers are avail- and Polynesia, among others) varied irregularly able, improvements in the quality or suitability from year to year (table 2). of at least some of these fibers are generally Prices of many, if not most, manmade fibers recognized. have been reduced in recent years; whereas do- A pound of manmade fibers is equivalent to more mestic prices of American cotton have been and than a pound of cotton for use in comparable continue to be maintained at relatively high levels fabrics. Adjusting these fibers to cotton equiv- as a result of loan and adjustment programs. Dur- alents shows that total world production of man- ing the 5 years ended July 1939, equivalent prices made fibers increased from the equivalent of about of rayon staple fibers averaged 118 percent higher 14 percent of that for cotton in 1934-38 to 26 per- than those of Middling i%6-inch cotton, but dur- cent in 1947-49 and to 55 percent in 1962. In the ing the 5 years ended July 1952 they averaged 12 United States, production of manmade fibers in- percent lower. During the 5 years ended July creased from the equivalent of about 7 percent of 1961 they averaged 21 percent lower, and during that for cotton in 1934-38 to 24 percent in 1947- the year ended July 1962 they averaged 28 percent 49 and to 54 percent in 1962. lower. Similar changes occurred in the relation- Per capita consumption of cotton and manmade ship between prices of rayon staple fibers and fibers varies widely from one contintent and coun- prices of Strict Middling li/ig-inch cotton. De- try to another (table 2). In most instances, per clines in prices of acetate, nylon, Dacron, Orion, capita consumption of both fibers has increased and other manmade fibers during the 1950's and in recent years, but usually the increases for man- early 1960's were about as great as or greater than made fibers were proportionally greater than those for rayon. those for cotton. For the world as a unit, per The declines in prices of manmade fibers in rela- capita consumption of manmade fibers on a tion to domestic prices of American cotton were poundage basis increased from 14 percent of associated with substantial increases in mill con- that for cotton in 1938 to 31 percent of that sumption of these fibers in relation to consumption in 1959. Corresponding proportions by specified of cotton in the United States (table 3). Average areas show increases from about 33 to 55 percent annual mill consumption of manmade fibers in- in Western Europe, from 3 to 34 percent in Eastern creased from 2.7 pounds per capita in 1935-39, Europe and Russia, from about 11 to 40 percent or the equivalent for use in comparable fabrics

TABLE 2.—Per carita consumption {net available for home icse) of cotton^ wool^ and Trmnmade fibers^ specified areas and years^ 1938-69

Eastern Central Item and 3^ear Western Europe North and Asia Africa Oceania * World Europe and America South USSR America

Cotton : Pounds Pon/nds Pounds Pounds Pounds Pounds Pounds Pounds 1938 8.8 6.8 20.7 6.4 4.2 2.4 8.4 6.4 1949 . 9.0 7.5 25.8 6.6 2.6 2.4 10.1 6.0 1958 10.4 12. 1 21.6 7.1 4.9 2.4 9.7 7.3 1959__ . 10.4 12.3 21. 8 7. 1 5. 1 2. 4 10.6 7.4 Wool: 1938 3.3 1.3 2.4 0.9 0.2 2.9 0.9 1949 3.5 1. 1 4.0 1.1 . 1 7. 1 1.0 1958 3.5 2.0 2.4 .9 . 2 .2 4. 2 1. 0 1959 ._ 3.5 2.0 2.6 .9 .2 . 2 4.4 1.0 Manmade fibers: 1938 2.9 0.2 2.2 0.4 0.4 0. 2 2.9 0.9 1949___ 3.4 1. 1 7.4 1. 1 . 2 .2 3.3 1. 2 1958 5.4 3.9 9.3 1.7 .6 1.4 4. 0 2. 2 1959 5.7 4.2 8.8 1. 5 .7 1. 1 4.4 2.3 Total: 1938 15. 0 8.3 25.3 7.7 4.8 2.8 17. 0 8.3 1949 15. 9 9.7 37. 2 8.8 2.9 3.0 20.5 8. 2 1958 19. 3 18. 0 33.3 9.7 5. 7 4.0 17.9 10. 5 1959 _ 19.6 18. 5 33.2 9. 5 6. 0 3.7 19.4 10.7

1 Includes Near East and Far East. In 1958 and 1959 Aden, Cyprus, Jordan, and Libya are also included. Adapted from reports of Food and Agriculture Organization of the United Nations. (p. 3) of about 16 percent of that for cotton, to 9 1 percent in domestic consumption of noncellulosic pounds in 1948-52, or the equivalent of about 48 manmade fibers in cotton equivalent pounds was percent of that for cotton. In 1956-60, it increased associated, on the average, with a decrease or in- to 10.6 pounds, or the equivalent of about 62 per- crease respectively of about 0.14 percent of cotton cent of that for cotton, and in 1962 to 13.1 pounds, consumed {32), or the equivalent of about 92 percent of that for Changes in the proportion of manmade fibers cotton. to cotton consumed in the United States in the manufacture of specified end-use products vary TABLE 3.—Mill consumption of cotton^ loool^ and considerably from one product to another (table mauTYiade fhers^ United States^ specified years^ 4). Consumption of manmade fibers in all end- 193J^-62 use products combined, on a poundage basis, in- creased from about 9 percent of that for cotton in 1937 to about 57 percent of that in 1962. Cot- Manmade fibers ton's competitive position apparently was rela- tively strongest in children's and infants' wear, Year Cotton Wooli Ray- Total but the proportion of the market regained since on, Oth- All 1951 was relatively greater in women's and misses' ace- er 2 tate apparel. Gains made by manmade fibers were relatively greater in industrial products and in home furnishings. Million Million Million Million Million Million Average: pounds pounds pounds pounds pounds pounds Continuing improvements in the competitive 1934-38._ 3,090 344 283 16 299 3,733 position of manmade fibers in relation to cotton 1947 4,666 698 988 70 1,058 6,422 in the united States may be accounted for mainly 1958 3,867 331 1, 127 637 1, 764 5,962 by increases in production of these fibers, improve- 1959 4,334 435 1, 252 812 2,064 6, 833 1960 4, 191 411 1,055 823 1,878 6,480 ments in their quality or suitability, and reduc- 1961 4,082 412 1, 127 936 2,063 6,557 tions in prices of manmade fibers in relation to 1962 4, 190 429 1,264 1,160 2,424 7,043 prices of cotton. These developments and pros- pects of further increases in production and im- Proportion of total provements in the quality or suitability of manmade fibers emphasize the importance of ex- ploring alternative means of strengthening Amer- Average: Percent Percent Percent Percent Percent Percent 1934-38-_ 82.8 9.2 7.6 .4 8.0 100.0 ican cotton's position in competition with these 1947 72. 6 10. 9 15. 4 1. 1 16.5 100.0 fibers {IfS), 1958 64.9 5.5 18.9 10.7 29.6 100.0 1959 63.4 6. 4 18.3 11.9 30. 2 100.0 1960 64. 7 6.3 16.3 12.7 29.0 100.0 American and Foreign Wool 1961 62. 2 6.3 17.2 14.3 31. 5 100.0 1962 59. 5 6. 1 17.9 16. 5 34.4 100.0 The proportion of world production of wool ac- counted for by the United States decreased from about 10 percent in 1934-38 to 6 percent in 1947-54 1 Apparel and carpet wool on scoured basis, as reported by Bureau of the Census. and to 4 percent in 1962 (table 1, p. 2). Produc- 2 Includes noncellulosic and manmade waste. tion of domestic wool decreased from an annual Adapted from reports of Bureau of the Census and average of about 207 million pounds, clean basis, Textile Organon. in 1934-38 to 120 million pounds in the early 1950's, and amounted to 134 million pounds in The relationship of changes in domestic mill 1962. Annual production of wool in all other consumption of cotton to changes in consumption countries combined increased from less than 2 bil- of manmade fibers also is indicated by statistical lion pounds, clean basis, in 1947 to more than 3 analysis of data for the years 1920-40 and 1947-52 billion pounds in 1962. {61). The analysis shows that after adjustments Annual mill consumption of wool in the United for the inñuence of other factors, a change of 1 States increased from an average of 344 million percent in consumption of manmade fibers was as- pounds, clean basis, or 17 percent of the world sociated, on the average, with a change of about total, in 1934-38 to a high of 698 million pounds 0.1 percent in consumption of cotton in the op- in the postwar period, or 29 percent of the world posite direction. During the two periods, per total in 1947, and amounted to 427 million pounds, capita consumption averaged 26 pounds of cotton or about 13 percent of the world total, in 1962. At and 3 pounds of manmade fibers. Taking these least a part of the decrease indicated may be ac- differences into account, it appears that a change counted for by relatively high prices of apparel of 1 pound in consiunption of manmade fibers wool in the United States, despite incentive pay- was associated, on the average, with a change in ments, associated with import tariffs on apparel the opposite direction of about 0.86 pound of cot- wool and to increases in imports of wool products. ton consumed. Analysis of data for the periods Prices of apparel wool in the United States 1927-32, 1935-40, and 1948-60 indicates that, with have been and continue to be maintained above other factors constant, an increase or decrease of their free-market relationships to wool in other countries by import tariffs. From 1930 to 1948 accumulated in Government stocks, while manu- the import duties ranged up to 37 cents a pound, facturers in the United States imported apparel scoured basis, but since 1948 they have ranged up wool for consumption. to 27.75 cents a pound. In addition, prior to the Incentive payments under the provisions of the National Wool Act of 1954, prices of domestic ISTational Wool Act of 1954 began in 1955, and wool were supported by Government loan and pur- price-support loans and purchase programs for chase programs. As a result of these price sup- wool were discontinued. Consequently, during the ports, substantial quantities of domestic wool were late 1950's and early 1960's, American wool com-

TABLE 4.—Fiber coTisumption in the manufacture of specified end-use products^ specified years ,1937-62'

End use and fiber 1937 1949 1959 1961 1962

Apparel : Million Million Million Million Million Men's and boys' : pounds pounds pounds pounds pounds Cotton._ _ _ 808 835 1,091 1,093 1 1 P;Q Wool 210 168 181 154 168 Manmade_ 34 111 167 198 232

Total- ______1, 052 1,114 1,439 1,445 1,559 Women's and misses': Cotton 270 321 498 447 457 Wool 90 152 161 155 168 Manmade_ 172 324 380 427 470 Total _ 532 797 1,039 1,029 1, 095 Children's and infants': Cotton _ _ 178 192 311 322 337 Wool 19 31 26 25 26 Manmade 11 27 50 53 60 Total 208 250 387 400 423 All apparel: Cotton__ _ 1,256 1,348 1,900 1,862 1,953 Wool 519 351 368 334 362 Manmade 217 462 597 678 762 Total 1,792 2, 161 2,865 2,874 3.077 Homef urnishings : Cotton- 817 759 1,055 1, Oil 1,046 Wool 162 190 178 157 159 Manmade _ 29 79 431 494 600 TotaL_ _ __ _ 1,008 1,028 1,664 1,662 1,805 Other consumer type Products: Cotton _ _ _ 322 400 399 375 383 Wool 25 42 24 23 22 Manmade 77 146 227 242 256 Total 424 588 650 640 661 Industrial uses: Cotton __ 1,255 893 656 600 599 Wool- __ 50 48 12 11 11 Manmade 14 300 630 563 639 Total 1,319 1, 241 1,298 1, 174 1, 249 All end uses: Cotton 3,650 3, 400 4, 010 3,848 3,981 Wool 556 631 582 525 554 Manmade 337 987 1,885 1, 977 2,257 Total 4, 543 5, 018 6,477 6, 350 6,792

1 End-use consumption of wool shown exceeds mill consumption plus semimanufactured imports as a result of double counting. Adapted from Textile Organon (91). peted more effectively with imported apparel increases since 1950 have been in the newer non- wools in domestic markets, consumption of domes- cellulosic fibers, which apparently are more di- tic wool increased, imports of apparel wool for rectly competitive with wool for many uses than consumption decreased, and Government stocks are rayon and acetate. Analysis of data for the of wool were liquidated. period 1920-40 and 1948-60 mdicates that, with Despite the discontinuance of price-support other factors constant, an increase or decrease of loans and purchase programs, costs of apparel 1 percent in domestic consumption of noncellu- wool to manufacturers in the United States con- losic staple fibers on a wool equivalent basis was tinue to be substantially higher than they are in associated, on the average, with a decrease or in- other countries. In 1960, for example, net costs crease respectively of about 0.28 percent of apparel of wool used in the manufacture of worsted shark- wool consumed {S2). skin averaged 35 percent higher in the United World per capita consumption of wool has States than in the United Kingdom and 15 per- shown no definite trend in recent years ; whereas cent higher than in Japan (table 48, p. 75). Net that for manmade fibers has increased markedly. costs of wool used in the manufacture of high- World consumption of manmade fibers increased grade woolen flannel averaged 30 percent higher from about the same amount as that for wool in in the United States than in the United Kingdom, 1938 to more than tv/ice as much in 1959 (table and similar costs of wool used in the manufacture 2, p. 3). Per capita consumption of both wool of lower grade woolen flannel averaged 74 percent and manmade fibers varies widely from one con- higher in the United States than in Italy (table tinent to another. In most instances, no definite 48, p. 75). With costs of raw wool, labor, and trends in recent years are indicated for wool, but other items in other countries substantially lower per capita consumption of manmade fibers on most than those in the United States, imports of manu- of the continents increased markedly. Consump- factured wool products into this country from tion of manmade fibers in Western Europe in- 1954 to 1962 increased more than 100 percent and creased from 88 percent of that for wool in 1938 domestic exports of wool products decreased 22 to 173 percent in 1959. Corresponding propor- percent. tions for other areas show increases from. 15 to 210 percent in Eastern Europe and Russia, from American Wool and Manmade Fibers 92 to 338 in North America, from 44 to 166 per- cent in Central and South America, from 200 to Marked increases in production, improvements 350 percent in Asia, and from 100 to 550 percent in quality or suitability, and reductions in prices in Africa. In Oceania the proportions varied ir- of manmade fibers continue to adversely affect regularly from one year to another (table 2, p. market outlets for wool as well as for cotton. World production of manmade fibers increased Changes in proportions of manmade fibers to from about 63 percent of that for wool in 1934-38 wool consumed in the United States in the manu- to about the same as that for wool in 1947 and to facture of specified end products vary consider- 260 percent of that for wool in 1962 (table 1). In ably from one product to another (table 4, p. 5). the United States, production of manmade fibers For all end-use products combined, consumption increased from less than twice that of wool in of manmade fibers increased from about 61 percent 1934-38 to about 7 times that of wool in 1947 and of wool consumed in 1937 to 344 percent in 1961. about 18 times that of wool in 1962. The competitive position of wool was relatively Domestic prices of manmade fibers advanced weakest in industrial products and was strong- less than prices of wool during the late 1940's and est in women's and misses' apparel. early 1950's, and declined less during the late Relatively higher prices of wool than of man- 1950's and early 1960's. Prices of rayon staple made fibers and associated relatively higher costs fiber, for example, as proportions of prices of Fine of finished v/ool products in the United States than Good French Combing and Staple wool, averaged in other countries are accounted for, at least in 36 percent during the 5 years ended 1938, declined part, by tariffs on apparel wool imported into this to an average of 20 percent in 1954, and amounted country. Changes in relative prices and in con- to 21 percent in 1962. Prices of other manmade sumption of wool and manmade fibers and pros- fibers, especially the newer noncellulosic ones, pects of further increases in production and im- such as nylon, Orion, Dacron, Acrilan, and Dynel, provements in quality or suitability of these fibers declined more during the late 1950's and early emphasize the importance of exploring alternative 1960's than did those for rayon. means of strengthening the competitive position of Mill consumption of manmade fibers has in- wool with these fibers (J^). creased more rapidly in recent years than that for wool. In the United States, mill consumption of Prospects and Related Problems manmade fibers increased from about 87 percent of that for wool in 1934-38 to more than three Developments and trends outlined above clearly times that for wool in 1950-54 and to more than indicate that cotton and wool produced in the five times that for wool in 1962. The greatest United States are confronted by greatly increased competition as a result of (1) continuing expan- erating units; (2) kind and arrangement of build- sion in production of foreign-grown cotton and ings, machinery, and equipment used; (3) kind wool and of manmade fibers, (2) improvements and effectiveness of the labor used; (4) operating in the quality or suitability of these fibers, and methods and practices; and (5) kinds, qualities, (3) increased availability of the competing prod- and suitability of the materials used. ucts at reduced prices. With further expansion The problem of making available adequate sup- in production of competing products in prospect, plies of suitable qualities of cotton and wool and inadequate market outlets for American cotton their products at attractive prices involves consid- and wool at remunerative prices may continue to eration of the costs at each stage from farm pro- handicap the cotton and wool industries in this duction of the raw fibers to retail distribution of country, unless prompt and effective actions are the finished products. The importance of market- taken to maintain or expand these outlets. Given ing services and costs may be indicated by data a reasonably prosperous peacetime economy and showing that gross margins for assembling and continued increases in population, prospective merchandising raw cotton and wool, manufactur- deraands for textiles indicate the possibility of ing yarns and fabrics, fabricating apparel and maintaining or expanding consumption of cotton household textiles, and distributing the finished and \Yool, if all potential market outlets are fully products to ultimate consumers account, on the exploited. average, for about seven-eighths of the consumer's To exploit fully these outlets for cotton and wool dollar paid for apparel and household textiles would require: (1) adequate and dependable sup- made of cotton and wool. It is apparent from the plies of suitable qualities of raw cotton and wool, width of these margins that reductions in them readily available to manufacturers at attractive may have important influences on returns to farm prices; (2) efficient manufacture of a variety of producers, on costs of finished products to ultimate suitable and attractive cotton and wool yams and consumers, and on market outlets for cotton and fabrics, appropriately finished and made available wool. at attractive prices for use in industry and in The size of these margins and the seriousness of fabricating apparel and household products; (3) the threat of increased competition from manmade suitable and attractive styling and good construc- fibers and other products emphasize the impor- tion of apparel and household products made of tance of information that will show the influence suitable cotton and wool fabrics; (4) education of the different factors on the adequacy, efficiency, of consumers regarding the quality, variety, and and costs of the marketing, manufacturing, and adaptability of these products; (5) timely adjust- distributing services required and that will indi- ments in the manufacture and distribution of these cate means of improvement. Data are presented products to meet consumer requirements; and (6) in this report to show changes in size and organiza- increased efficiency in the entire chain of market- tion of the operating units, in machinery and ing, manufacturing, and distributing procedures equipment used, in operating methods and prac- so that a variety of suitable and attractive products tices, and in charges or costs for the services ren- made of cotton and wool are readily available to dered at each important stage involved in taking consumers at attractive prices. cotton and wool from farms and delivering the Cotton and wool compete with manmade fibers finished textile products to ultimate consumers. and other products as raw materials, as yams and The data presented are designed to show the rela- fabrics, and as fabricated products. The effec- tive importance of these margins from the view- tiveness of this competition may be largely in- point of cost, to indicate some of the factors re- ñuenced by differences between the quality, suit- sponsible for or associated with differences in ade- ability, and prices of cotton, wool, and their prod- quacy and costs of services, and to serve as a basis ucts and the quality, suitability, and prices of for suggesting feasible means of improvement. competing products. Among important factors Information on marketing channels and the that may affect the quality, suitability, and cost of division of the consumer's dollar paid for cotton textile products at each stage of the marketing, and wool products is presented as a background for manufacturing, and distribution procedure are the more detailed data relating to specific stages (1) the size, organization, and control of the op- of the marketing procedure.

MARKETING CHANNELS AND DIVISION OF CONSUMER S DOLLAR

The data for cotton and wool begin with the Cotton and Cotton Products movement of these items from the farm and with prices to farmers; those for manmade fibers and Taking cotton from farms and delivering it in related products begin with the delivery of fibers the form of finished clothing and household tex- and prices paid for them by manufacturers of tiles to ultimate consumers require the services of textile products. many different types of middlemen. They include ginners, warehouse and compress operators, trans- mainder, which amounts to about 93 percent, is portation agenices, and merchandisers of raw made into yarn (fig. 1). According to census cotton ; manufacturers of cotton yarns and fabrics ; reports for 1958, for example, about 81 percent fabricators of cotton apparel and household tex- of the yarn was woven into cloth, 10 percent was tiles ; and wholesale and retail distributors. These used by the knit-goods industry, 3 percent was services begin w^hen seed cotton is hauled from made into carpet and tufting yams, 2 percent farms to gins where such services as conditioning was used in thread, and 4 percent was used in and cleaning of seed cotton, separating the lint making other yarns. from the seed, cleaning the lint cotton, and pack- Census reports indicate that in 1958 about 18 ing and wrapping it into bales of approximately percent of the woven cloth was used in the gray or 500 pounds are rendered. unfinished form, less than 6 percent was colored yarn fabric, and about 76 percent was finished MARKETING CHANNELS from the gray (97). Finishing gray goods in- cludes bleaching, dyeing, and printing. Of the From the gin, cotton usually moves to ware- total linear yardage finished in 1958, about 44 per- houses, which may be operated in connection with cent was bleached and white finished, 33 percent compresses, where it is assembled and stored. was plain dyed and finished, and 23 percent was Much of the cotton, particularly in central and printed and finished. In 1962 the corresponding western areas of the Cotton Belt, is compressed to proportions were 44, 34, and 22 percent respec- a higher density to facilitate storage and transpor- tively (76^6^). Styling and finishing of a large tation. From warehouses and compresses it usu- part of the cotton cloth is controlled by converters ally moves to mills by railroad or motortruck or by (persons who take gray goods and have them some combination of truck, rail, and water trans- finished), but substantial proportions are con- portation. Taking cotton from gins and deliver- trolled by mills, with or without the coUaboration ing it to mills involves merchandising services such of the fabricators. as assembling, compressing, storing, insuring, Much of the finished cloth usually goes to cut- transporting, financing, and risk-bearing. At the mill, bales are opened and the cotton is ters, where it is made into wearing apparel and cleaned, carded, combed (for fine yarns), and household goods. Estimates of cotton consump- spun into yarn. On the average, about 4 percent tion by end uses show^ that the proportion that of the gross weight of the bale is tare, less than went into apparel increased from 36 percent in 3 percent is nonlint waste, and most of the re- 1947 to about 54 percent in 1962; that used in

Consumed in U. S. APPROXIMATE DISTRIBUTION OF A TYPICAL BALE OF COTTON, 1958

WASTE TARE (NONLINT) 20 LB 13 LB.

feiJa^^u^^ fe^^ M?nA HOUSEHOLD GOODS INDUSTRIAL USERS

U. S. DEPARTMENT OF AGRICULTURE NEC. ERS 2763-64(4) ECONOMIC RESEARCH SERVICE

Figure 1 household goods increased from 28 percent in the early 1960's, the farmer's share tended to 1947 to 29 percent in 1962 (70), The remainder decrease. went into industrial uses. Clothing and house- The proportion of the consumer's dollar ac- hold textiles usually go either directly or in- counted for by the farm value of cotton varies directly through wholesalers, jobbers, or other widely among products. During the 10-year agencies, to retailers. period, 1953-62, the proportion for clothing averaged 12 percent, and ranged from 11 percent DIVISION OF THE CONSUMER'S DOLLAR in 1960 and 1961 to 13 percent in 1954 and 1955. For household furnishings, the proportion aver- Charges for the many services performed in aged 23 percent for the 10-year period and ranged transforming raw cotton into finished cotton goods from 21 percent in 1960 to 25 percent in 1954 and and in making them available to the consumer ac- 1955. During the 11 years 1952-62, the farmer's count, in most instances, for a large share of the share of the retail price averaged 7 percent for consumer's dollar paid for the finished products. business shirts, 16 percent for work shirts, and Data on retail values of a group of 25 cotton 34 percent for sheets. articles of clothing and household furnishings and The large proportions of the consumer's dollar on receipts by farmers for equivalent quantities accounted for by marketing margins emphasize of cotton indicate that from 1935 to 1962 returns the importance of breakdowns to show the items to farm producers for the cotton used amounted, included. Estimates, based on official data and on the average, to about 15 percent of the con- other information, were made to show the average sumer's dollar. Marketing margins amounted to distribution of the consumer's dollar paid for cot- 85 percent of the consumer's dollar (fig. 2) (72), ton apparel and household goods in 1939, 1947, The proportion of the consumer's dollar repre- 1954, 1958, and 1962. Data available for this pur- sented by the farm value of the cotton usually pose are not complete, and in some instances they varied irregularly with prices of cotton. It ranged from about 9 percent in 1938, when farm are not strictly comparable. Consequently, some prices of cotton averaged about 8.60 cents a pound, adjustments were required in approximating to 18 percent in 1951, when farm prices of cotton margins on the basis of these data and other in- averaged about 38.88 cents a pound, and amounted formation. Furthermore, estimated margins were to 15 percent in 1962, when farm prices averaged adjusted to approximate the farm-to-retail price 31.80 cents a pound. From the early 1950's to spreads for cotton clothing, household textiles.

MARGINS FOR COTTON PRODUCTS

COTTON USED ANNUALLY I PER FAMILY IN | 25 COTTON ARTICLES 2.40

' ' ' ' ' I I ' ' I I ■ ' ' I I ' I ■ I 11 I ' I ' I ' I 1940 1950 1960 1940 1950 1960

^RETA/L VALUE OF A CROUP OF 25 COTTON CLOTHING AND HOUSEHOLD ARTICLES EQUIVALENT TO 1 LB. LINT COTTON. ^■ESTIMATED PRICES RECEIVED BY FARMERS FOR COTTON OF GRADE AND STAPLE LENGTHS REQUIRED IN THE MANUFACTURE OF VARIOUS ARTICLES.

U. S. DEPARTMENT OF AGRICULTURE NEC. ERS 2764-64(4) ECONOMIC RESEARCH SERVICE

Figure 2 9 and yard goods, as calculated by the Economic wholesaling and retailing, or for manufacturing Eesearch Service, U.S. Department of Agriculture. and finishing cloth and fabricating it into apparel Approximations were made to show the average and household goods, would have reduced the distribution of the consumer's dollar paid for these spread between retail prices to consumers and products on the basis of the specific conversions prices to growers for the cotton more than a made or services rendered. Eesults show that 50-percent reduction in total margins for ginning, charges for marketing services in dollars increased baling, and merchandising the raw cotton. markedly during the 1940's. The proportion of Although these differences in size of margins are the consumer's dollar that went to cotton growers important, they may not reflect accurately the rela- for farm production (receipts by farmers less tive opportunities for making savings in market- ginning charges) increased, on the average, from ing costs that can be passed back to cotton growers about 9 percent in 1939 to 15 percent in 1954, and or on to consumers of the finished products. A then decreased to about 14 percent in 1962. The determination of the extent to which it would be proportions accounted for by margins for ginning, feasible to reduce these margins would require baling, and merchandising raw cotton, and for detailed studies of each important segment of the wholesale and retail distribution, decreased from marketing, manufacturing, distribution proce- 1939 to 1947, and then increased to 1962. The dures to evaluate the influence of the factors affect- proportions accounted for by margins for spinning ing the adequancy, efficiency, and costs of the yarns, weaving cloth, and dyeing and finishing services, and to discover the most feasible means fabrics decreased markedly from 1939 to 1954, of improving the adequancy and efficiency of the and then decreased gradually to 1962. The pro- services and of reducing costs for the various portion accounted for by margins for manufactur- agencies. Eesults of such studies are not available ing apparel and household textiles continued to for many of the agencies, but the available in- increase, and amounted to about 30 percent in 1958 formation on margins and costs and on means of and 1962 (fig. 3). reducing them is presented in this report in about Information on specific items of cost is not com- the order in which the marketing services are plete, and in some instances data for the different rendered, beginning with movement of cotton agencies are not strictly comparable. But ap- from farms. proximations based on available information in- dicate that, of the spread between retail prices of Wool and Wool Products cotton apparel and household goods and returns to growers for the cotton used, the proportion ac- Wool utilized in the United States is of two counted for by wages and salaries decreased from rather distinct kinds, apparel and carpet wools. about 53 percent in 1939 to 51 percent in 1947, and Apparel wool includes the finer fibers used mainly then increased to about 56 percent in 1962. The in the manufacture of apparel yams and fabrics. proportion of these spreads accounted for by Carpet wool consists of the coarser fibers used profits increased from about 5 percent in 1939 to mainly in the manufacture of carpets and rugs. 16 percent in 1947, and then increased to about 6 In 1962, apparel wool accounted for about 65 per- percent in 1962. Proportions accounted for by alJ cent, and carpet wool for about 35 percent, of all other items decreased from about 42 percent in wool consumed by mills in the United States. All 1939 to 32 percent in 1947, and then increased to of the carpet wool and substantial proportions of 37 percent in 1962 (fig. 4). During the years for the apparel wool were imported. About seven- which estimates were made, wages and salaries eighths of the wool produced in the United States of employees engaged in marketing, manufactur- in 1962 was shorn wool, obtained from shearing ing, and distributing cotton and cotton products live sheep. The remainder was pulled wool, ob- averaged almost four times as much as returns to tained by pulling the wool from the skins of growers for farm production of the cotton, and slaughtered sheep. Production of both kinds of profits to these intermediate agencies averaged wool is widely distributed throughout the United about half as much. States. Data on the distribution of the consumer's dol- MARKETING CHANNELS lar paid for apparel and household goods made of Soon after sheep are shorn, fleeces are usually cotton may indicate the relative importance, from packed for shipment in bags weighing from. 175 the viewpoint of costs, of increasing efficiency and to 300 pounds when filled. Some of this wool is reducing costs for the different services. During assembled by local dealers or handlers and sold the years studied, margins for ginning and baling, to merchants in central markets or to manufac- combined with those for merchandising cotton, turers, but many growers, particularly the large amounted, on the average, to less than 7 percent producers, sell directly to merchants in central of the combined margins for manufacturing and markets or to mill buyers. A large portion of the finishing cloth and for fabricating it into apparel wool usually moves out of producing areas to cen- and household goods, or for wholesale and retail tral markets or to mills soon after it is clipped. distribution of these products. Thus, a reduction Producers of pulled wool usually sort it into uni- of only 4 percent, for example, in the margins for form lots and put it in bags or bales which range 10 Where it Goes THE CONSUMER'S COTTON DOLLAR, BY OPERATIONS OR SERVICES Paid for Apparel and Household Goods, Selected Years $1.00 ^Retailing

Wholesaling

Manuf. apparel and ► household goods

Manuf., dyeing, and finishing- (yarns and fabrics

/AMerchandising cotton

y^Ginning and baling

Farm production

1939 1947 1954 1958 1962

BASED ON OFFICIAL AND OTHER DATA. AND PARTLY ESTIMATED.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2765-64 ( 4 ) ECONOMIC RESEARCH SERVICE

Figure 3

Where it Goes THE CONSUMER'S COTTON DOLLAR, BY COST ITEMS Paid for Apparel and Household Goods, Selected Years

I Profits '

lAll other

■ Salaries and wages

Farm production

1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA, AND PARTLY ESTIMATED. *NET PROFITS OF ALL AGENCIES, EXCEPT FARM PRODUCERS, AFTER DEDUCTION OF FEDERAL INCOME AND EXCESS-PROFIT TAXES. O INCLUDES DEDUCTIONS FOR FEDERAL INCOME AND EXCESS-PROFIT TAXES.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2766-64(4) ECONOMIC RESEARCH SERVICE

Figure 4 11 in weight from 140 to 800 pounds when filled. 14 percent of the retail prices to consumers for the Much of it is sold directly to mill buyers {S6). finished products (fig. 6) .^ Most of the imported apparel wool goes to cen- The proportion of the retail value of wool prod- tral markets, where it is handled by the same mer- ucts accounted for by the farm value of the wool chants and manufacturers who handle the wool ranged from about 9 percent in 1958, when prices produced in the United States. Imported carpet per pound, grease weight, received by farmers for wool also goes directly to central markets, where shorn w^ool averaged 37 cents, to 25 percent in 1951, it is handled by a specialized group of merchants when farm prices averaged 97 cents. In 1962, and manufacturers, most of w4iom are located in when farm prices averaged 48 cents per pound it Philadelphia. amounted to 11.5 percent. From the early 1940's Domestic and imported wools are assembled in to the early 1960's the proportion tended to decline. warehouses, at concentration points, or in central Marketing margins for wool, or the spread markets, where they are sorted into lots of uniform between prices to farmers for the raw fibers and quality and stored until needed by manufacturers. prices paid by consumers for the finished products, Most of the wool required by manufacturers, par- amounted, on the average, to about 86 percent of ticularly those producing w^orsted fabrics, is the consumer's dollar during the 27-year period, bought in the grease. But considerable quantities, 1935-62. The proportion, by years, ranged from particularly that used by woolen mills, are bought about 75 percent in 1951 to 91 percent in 1958, and in the scoured state. This wool usually is scoured amounted to 88 percent in 1962. The relative by dealers or processors. size of these margins emphasizes the importance The apparel wool manufacturing industry con- of a breakdown to show the amounts contributed sists of two major divisions, the worsted and the by the various services and the cost of items woolen. Of the virgin apparel wool consumed included. in the United States, the worsted division ac- Based on official data and other information, counted for about 66 percent in 1948 ; the propor- rough approximations were made to show the tion decreased to 49 percent in 1957, and then average distribution of the consumer's dollar paid increased to 62 percent in 1962. Worsted manu- for wool clothing and household goods in 1939, facturers sort, blend, and scour wool ; card, comb, 1947, 1954, 1958, and 1962. As previously indi- and convert it into semimanufactured products cated on page 9, data available for this purpose known as tops; and spin the tops into yarn. are not complete, and in some instances they are Woolen manufacturers combine and mix the wool not strictly comparable. Consequently, some ad- and other materials used, card it, and spin it into justments were required in approximating mar- yarn without combing it and converting it into gins on the basis of these data and other informa- tops. If wool manufacturers do not buy the wool tion. Furthermore, the estimated margins were on a scoured basis, they have it scoured. adjusted to approximate the farm-to-retail price Most of the worsted and woolen yams are woven spreads for 20 items of woolen and worsted into fabrics, but some of them go into knit goods. clothing and household goods, as calculated by the Census data .show that in 1958 about 85 percent of Economic Research Service, U.S. Department of the yarn produced by worsted and woolen manu- Agriculture. facturers w^as weaving yarn and 15 percent was The results show that the proportion of the knitting yarn (fig. 5). About 88 percent of the consumer's dollar that went to growers for farm weaving yarn was used in making apparel fabrics, production of wool increased, on the average, from about 7 percent was used in blankets, and 5 percent 11.8 percent in 1939 to 13.4 percent in 1954, de- in other nonapparel fabrics. Apparel fabrics are creased to about 9 percent in 1958, and amounted to 11.5 percent in 1962 (fig. 7). used chiefly for making men's and women's outer- wear. In 1958 about 46 percent of these fabrics ^ Data were assembled by K. Parr and R. O. Been for were used in the manufacture of men's and boys' use in constructing farm-to-retail price spreads for 1926- clothing and 54 percent in women's and children's 41. The items included are men's overcoats, suits, sweaters (medium and expensive quaUty), jackets, top- clothing. coats, and trousers ; women's coats, dresses, hats, flannel robes, and sport coats; boys' suits, overcoats, trousers, DIVISION OF CONSUMER'S DOLLAR sweaters, and jackets; girls' coats and dresses; and blankets. The values shown were arrived at by weighting The value added to wool by marketing, manu- the retail price of each item by the number bought by the facturing, and distribution services is so great average wage earner's family, as reported by the Bureau of Labor Statistics in "Money Disbursements of Wage that returns to farm producers for the raw wool Earners and Clerical Workers, 1934-36." (130). In are only a small proportion of the prices paid by arriving at the farm value of the wool used, the quantity consumers for the finished products. The retail and kind of wool required for each of the 20 items were estimated and weighted by the average number of articles value of 20 representative w^ool products and the purchased per family. The arithmetical products thus farm value of the wool used in their manufacture obtained were multiplied by the average annual farm price show that during the 27 years 1935-62, gross re- of wool. Farm-to-retail price spreads for more recent years were estimated by the use of indexes for specific turns to growers for the raw wool averaged about items, as reported by the Bureau of Labor Statistics. 12 Consumed in U. S. APPROXIMATE DISTRIBUTION OF WOOL, 1958

ÍTOTAL WOOL CONSUMPTION 100%

/v^WOOLEN AND WORSTED YARN llX^Zyy/ZA 28%

^ WOVEN GOODS 61%;?

OTHER :^APPAREL FABRICS 54%á^g>v>i NONAPPAREL FABRICS 3%

MEN'S & BOYS' WOMEN'S & CHILDREN'S CLOTHING CLOTHING 25% 29%

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2767-64(4) ECONOMIC RESEARCH SERVICE

Figure 5

MARGINS FOR WOOL PRODUCTS

WOOL USED ANNUALLY PER FAMILY IN | 20 WOOL ARTICLES 120

Q I I I I I I I I I I I I I I I I I I I 1940 1950 1960 1940 1950 1960 */N COMBINING THE VALUES FOR THE 20 ITEMS, PRICES WERE WEIGHTED BY THE NUMBER OF ARTICLES PURCHASED BY THE AVERAGE WAGE EARNER'S FAMILY AS REPORTED BY THE BUREAU OF LABOR STATISTICS. COMPLETED DATA FOR ALL ITEMS WERE NOT AVAILABLE EACH YEAR AND TOTALS WERE ESTIMATED FOR SOME YEARS ON THE BASIS OF RATIOS OF AVAILABLE ITEMS TO TOTALS, OFARM VALUE OF 4.86 POUNDS OF TERRITORY WOOL AND 5.85 POUNDS OF WOOL FROM EASTERN STATES. U. S. DEPARTMENT OF AGRICULTURE NEC. ERS 2768-64(4) ECONOMIC RESEARCH SERVICE

Figure 6 13 Where ff Goes THE CONSUMER'S WOOL DOLLAR, BY OPERATIONS OR SERVICES Paid for Apparel and Household Goods, Selected Years

^Retailing

' iWholesaling

/^Manuf. apparel and ^household goods

Manuf.,dyeing, and finishing I yarns and fabrics

^Merchandising wool ^Farm production

1939 1947 1954 1958 1962

BASED ON OFFICIAL AND OTHER DATA, AND PARTLY ESTIMATED.

U. S, DEPARTMENT OF AGRICULTURE NEC. ERS 2769-64(4) ECONOMIC RESEARCH SERVICE

Figure 7

Where ¡t Goes THE CONSUMER'S WOOL DOLLAR, BY COST ITEMS Paid for Apparel and Household Goods, Selected Years

1939 1947 1954 1958 1962 BASED ON OFFICIAL AND OTHER DATA. AND PARTLY ESTIMATED. *NET PROFITS OF ALL AGENCIES, EXCEPT FARM PRODUCERS, AFTER DEDUCTION OF FEDERAL INCOME AND EXC ESS - P ROF IT TAXES. ^INCLUDES DEDUCTIONS FOR FEDERAL INCOME AND EXC ESS - P ROFIT TAXES.

U.S. DEPARTMENT OF AGRICULTURE NEC. ERS 2770-64(4) ECONOMIC RESEARCH SERVICE

Figure 8 15 specific requirements for hauling seed cotton, and in costs of bagging and ties. They vary aUo loading them fully, when feasible, for each trip from one State or region to another with differ- to the gin, and obtaining return loads whenever ences in condition of seed cotton and in kinds and amounts of services rendered. For the United GINNING AND BALING States as a whole, average charges for ginning and wrapping a 500-poimd bale of American Up- Most of the cotton produced in the United land cotton, including charges for conditioning States is taken to gins, where the seed cotton is and cleaning seed cotton, the use of lint cleaners, conditioned, coarse trash removed, the lint sep- and for bagging and ties, increased from $4.04 for arated from the seed and subjected to one or more the 1931 crop, when farm prices of cotton averaged stages of lint cleaning, and where it is baled be- 5.66 cents a pound, to 16.80 for the 1963 crop, fore it is sold by the farm producer. Only a small when farm prices averaged about 32.1 cents (table part of the U.S. crop is sold as seed cotton, and a 5). The proportion of the farm value of cotton substantial portion of it is remnants harvested accounted for by ginning charges ranged from toward the end of the season. 5 percent for the 1946 crop, when farm prices averaged 32.63 cents a pound, to 14 percent for Charges or Costs the 1931 crop, when farm prices averaged 5.66 Charges for ginning cotton and related services cents. For the 1963 crop, when farm prices av- vary considerably from year to year with changes eraged 32.1 cents a pound, the proportion averaged in general business conditions, in prices of cotton, about 11 percent.

TABLE 5.—Average charges per 500-pound gross-weight hale and proportion of farm value for ginning Upland cotton^ hy States^ specified years^ 1939-63

Year beginning August— State 1939 1945 1951 1955 1959 1963

Dollars Dollars Dollars Dollars Dollars Dollars Alabama 3. 17 7.08 8.37 9. 08 11.43 12. 72 Arizona 5.12 8. 90 11.41 13.68 16.88 19.48 Arkansas- 5.21 9. 50 13.42 14. 08 15. 71 17.20 California 4. 61 8.40 11.20 13.84 15.91 18.58 Florida 4.63 7. 13 10. 00 11.32 13.94 15. 86 Georgia 3.44 6.87 9.71 9.71 11.23 13.50 Louisiana 4.77 8.26 11. 17 12. 77 15. 08 16.01 Mississippi 4.96 8.09 10. 68 11.30 13.73 14.76 Missouri 5.97 12. 11 17.75 17. 05 17. 81 19.52 New Mexico 5.24 9.21 14.42 12. 71 14. 01 17.65 North Carolina 3. 16 7.39 10.07 10.48 12. 51 13. 73 Oklahoma 5.88 11.68 15. 84 14.61 15.52 19.20 South Carolina 2.70 7. 00 9.58 9. 60 11.73 14.25 Tennessee _ _ _ 4.38 7.77 10.40 11.86 13. 96 15.28 Texas 5.46 10. 65 14. 18 14.02 15.94 18. 11 United States ^ 4.67 9.00 1 12. 04 1 12. 75 1 15. 02 116. 80

Proportion of farm value

Percent Percent Percent Percent Percent Percent Alabama 6.9 4.4 4.4 5.3 6.9 7. 8 Arizona 9. 1 5. 9 5.9 8.5 10. 1 11.8 Arkansas 11.8 6. 1 7. 1 8.6 9.6 10.5 California 9.6 5.0 5.7 8.4 9.9 11. 0 Florida _ 9.7 4. 5 5. 5 6.7 8.8 10.0 Georgia 7.3 4.2 5.0 5.7 6.8 8.3 Louisiana 10.6 5. 1 6. 0 7.8 9.2 9.9 Mississippi 10.7 4. 9 5.4 6.7 8.3 8.9 Missouri 13.4 7.9 9.9 10.4 11. 1 12. 0 New Mexico 11. 1 5. 5 6. 7 7.8 8.0 10.3 North Carolina 6. 6 4. 5 5.2 6.5 8.3 8.3 Oklahoma 14. 1 7. 7 8.9 10. 0 11. 1 13. 1 South Carolina 5.7 4.3 5. 1 5.8 7.4 8.6 Tennessee 9. 7 4. 8 5.4 7. 1 8.3 9.2 Texas 12. 5 6. 9 7.8 9.3 10. 8 12. 0 United States _ _ - 10.3 5.7 16.4 17. 9 19.5 110. 5

1 Includes separate charges for drying seed cotton or use of lint cleaners. Adapted from reports of Economic Research and Agricultural Marketing Services. 16 During the 1963-64 season, average charges for clean and to gin than the shorter staples. For the ginning and related services for a 500-pound bale 1962 crop, the quantity of handpicked seed cotton of American Upland cotton, including charges required to make a 500-pound bale averaged 1,405 for bagging and ties, ranged from $12.21 in Vir- pounds for American Upland and 1,469 pounds ginia to $19.52 in Missouri. The proportion of for American-Egyptian {101,) . American-Egyp- the farm value of cotton accounted for by these tian has an extra long staple and is gmned on charges ranged from about 8.3 percent in Georgia roller gins; whereas Upland has a shorter staple and North Carolina to 13.1 percent in Oklahoma and is ginned on saw gins. (tableo). Quantities of seed cotton required per 500-pound Keflecting lower rates of ginning and associated bale of Upland averaged 2,006 pounds for hand- higher costs, charges for ginning American-Egyp- snapped, 1,534 pounds for machine-picked, 2,214 tian cotton are much higher than those for ginning pounds for machine-stripped, and 2,555 pounds American Upland. Seasonal average charges for for machine-scrapped cotton {10Í). Ginning ginning and wrapping American-Egyptian cotton charges per 100 pounds of seed cotton usually increased from $12.57 per bale for the 1942 crop are about the same for cotton harvested by differ- to $27.06 for the 1963 crop. ent methods. Under these conditions, costs of ginning a 500-pound bale would average about 43 Factors Affecting Charges or Costs percent more for hand-snapped, 9 percent more for machine-picked, 58 percent more for machine- Many factors are responsible for or associated stripped, and 82 percent more for machine- with changes in ginning charges from one period scrapped cotton than for handpicked cotton. to another and with differences in these charges In North Carolina, about 73 percent of the 1962 from one State to another. crop was handpicked and 27 percent was machine General business conditions.—Charges for picked ; whereas in Oklahoma almost all the crop ginning cotton usually vary directly with prices was hand snapped or machine harvested. Charges of cotton, farm wage rates, and general business for ginning a 500-pound bale of cotton, excluding conditions. From Í928 to 1931, ginning charges were reduced, on the average, about 32 percent. charges for bagging and ties, averaged 60 percent This reduction was associated with average reduc- higher in Oklahoma than in North Carolina. tions of 69 percent in farm prices of cotton, 28 per- Other factors also help to account for differences cent in farm wage rates, and 14 percent in the in ginning charges. Data for Missouri, for exam- index of industrial production. From 1931 to ple, show that 17 percent of the 1962 crop was hand 1962, ginning charges increased more than 300 picked, 77 percent was machine picked, and 6 per- percent. During the same period, farm prices of cent was hand snapped; but ginning charges, ex- cotton fluctuated considerably, but in 1962 they cluding bagging and ties, averaged 55 percent averaged more than 5.5 times as high as they were higher than in North Carolina and 2 percent lower in 1931. Farm wage rates increased about 500 than in Oklahoma. percent and industrial production increased about Supplementary equipment.—Increases in the 300 percent. These changes since the early 1930's proportion of the crop harvested by hand snap- reflect substantial reductions in the purchasing ping, machine picking, and machine stripping power of the dollar. have necessitated increased use of supplementary Volume of ginning.—Average cost per bale for ginning equipment. During the 15-year period, ginning cotton usually is influenced by the volume 1947-62, the proportion of the U.S. crop harvested of ginning per gin plant. Differences in costs may by handpicking decreased from about 78 percent result from differences in size of gin plants used in 1947 to 20 percent in 1962 ; whereas the propor- to optimum capacity, in volume of ginning per unit tions hand snapped and machine harvested of ginning equipment, or in some combination of increased from about 22 percent in 1947 to 80 the two factors. Data on the extent to which aver- percent in 1962. Increases in the use of supple- age ginning costs per bale are influenced by size mentary equipment, such as dryers for condition- of gin plant, when the volume of ginning per gin ing green or damp seed cotton, cleaners for remov- stand was about the same, appear inconclusive {18^ ing dirt and small particles of foreign matter, and 75. 76^ 126). Average costs per bale for ginning extractors for removing burs and other coarse ma- cotton usually decrease considerably with increases terials associated with the changes in harvesting in proportion of the capacity of the gin utilized practices, greatly influenced charges or costs of over extended periods {11, 19, 23, 52, 67, 58, 73, ginning {98,106). 75. 76, 8If). Gins in the Southeastern States usually have less Weight of seed cotton per bale.—The quan- auxiliary equipment and also lower ginning tity of seed cotton required per 500-pound bale charges than those in other parts of the Cotton may be influenced considerably by the variety of Belt, although factors other than the use of auxil- cotton, by humidity and other conditions at the iary equipment also may help to account for differ- time of ginning, and by methods of harvesting. ences in ginning charges. Data for gins in The longer staple varieties usually give a smaller Georgia show that in 1951, for example, average lint outturn and are somewhat more difficult to replacement costs ranged from $54,000 for single 17 gins with no overhead cleaners, one or two driers, aged about 72 cents per bale for fixed costs and 84 and one bur extractor to $88,850 for elaborate gins cents for operating costs, a total of $1.56 {11), with lint cleaners, one or two overhead cleaners, In 1961, costs of one-stage lint cleaners installed one or two dryers, and one bur extractor. Costs in gins in the Midsouth, in the Texas High Plains, per bale for these gins ranged from $9.28 for the and in California, complete with all necessary simple gins with an average volume of 2,011 bales motors, fans, and accessories, ranged from about to $11.57 for elaborate gins equipped with lint $12,000 to $19,000. Costs for three stages of lint cleaners and with an average volume of 1,940 bales cleaners ranged from about $36,000 to $58,000. {11). These costs have increased in recent years. With an average ginning rate of 6 bales per hour In the Eio Grande and Pecos Valleys of Texas and an annual volume of 6,000 bales, cost to gins and New Mexico, the value of gin plants in the for one stage of lint cleaning was estimated at 43 1950-51 season averaged $34,000 for standard gins cents per bale for single-stream cleaning and 68 with moderate overhead cleaning equipment, but cents per bale for split-stream cleaning. The cost with no bur machines or lint cleaners, and $85,000 for three stages of split-stream cleaning, under for specially equipped gins with lint cleaners these conditions, was $2.04 per bale in the Midsouth {35). Ginning costs per bale averaged $11.50 for and $1.96 per bale in Texas and California. Costs the standard gins with an average volume of 3,345 per bale would decline moderately with increases in bales and $12.39 for the specially equipped gins volume above 6,000 bales, but would rise sharply with an average volume of 3,878 bales {35). with a decline in volume below that level {59), In Arizona, replacement costs per gin in 1952 Other equipment for cotton gins may include were about $153,000 for specially equipped gins automatic lint cotton samplers and presses for com- with huiler fronts, extractor feeders, one or more pressing bales at gins to densities equal to or higher driers, a large bur machine, 12 to 21 cylinders of than the regular standard density. Automatic overhead cleaning, and in some instances lint samplers were designed to provide a sample repre- cleaners. These costs were about $100,000 for sentative of cotton throughout the bale, to reduce standard gins with huUer front, extractor feeders, the amount of cotton removed by multiple usually with one drier or heat on the feeders, all sampling, and to lower damages to bale covers and with less than 12 cylinders of overhead cleaning, to cotton from exposure. By the early 1960's, and some with lint cleaners. Ginning costs in mechanical devices for sampling cotton during the 1952-53 season averaged $9.47 per bale for spe- ginning had been installed in more than 190 gins, cially equipped gins with an average volume of mainly in Texas and California. Three different 11,781 bales and $8.67 for standard gins with an makes of mechanical samplers were in use. Each average volume of 11,246 bales. possessed distinctive features, but all extracted, In addition to equipment for conditioning and accumulated, pressed, and packaged a series of sub- cleaning seed cotton, many gins have installed samples taken at intervals while the cotton was equipment for cleaning the lint after it is removed being ginned. The cost of owning and operating from the seed. The proportion of gins in the one of these samplers was estimated in 1958 at 16 United States with lint cleaners increased from cents per 9-inch sample at gins with an annual vol- less than one-third in the 1954-55 season to about ume of 9,000 bales and at 22 cents per 9-inch sam- 94 percent in the 1962-63 season {31^, 106). In the ple at gins with annual volume of 4,000 bales. 1961-62 season, about 33 j)ercent of the gins had Use of some of these samplers was discontinued only one stage of lint cleaning, 49 percent had two in the early 1960's. stages, about 10 percent had three stages, and a few Eq[uipment for compressing cotton to standard had four stages of lint cleaning. In 1956, costs of or higher densities at gins is of recent development. providing a one-stage lint cleaning for a plant with In 1960, about 2 percent of the gins in the United B gin stands of 90 saws each in California ranged States had this equipment. Most of them were from about $9,750 to more than $17,000, or from in California. In the 1958-59 season, the cost of 5 to 8.5 percent of the total cost of the gin. this equipment installed amounted to about $49,000 Charges for lint cleaning averaged about $1.60 per for standard density presses and $68,000 for high bale {83), density presses. Costs per bale of operating stand- In Arkansas in 1954 and 1955, initial costs of ard and high density presses exceeded those for flat lint cleaners ranged from about $8,000 to $18,500, presses by $1.31 and $1.94 respectively when an- depending on the type of machine and the number nual volume was 4,000 bales and by 83 cents and of gin stands. The additional cost of lint clean- $1.15 respectively when annual volume was 9,000 ing was estimated at 94 cents per bale in 1954, bales {20), when the average volume was 3,468 bales per gin Labor, power, and other items.—Ginning and 84 cents per bale in 1955, when the average costs are influenced considerably by the cost of volume was 4,129 bales per gin {19), Similar labor, power, and other expenses of operating and data for gins in Georgia in the 1951-52 season maintaining ginning and auxiliary equipment show that replacement costs of lint cleaners aver- {29^ 73). As indicated in a previous section (p. aged about $16,000 {11), Costs per bale for cot- 16), increases in ginning charges from the less than ton taken through one stage of lint cleaning aver- $5 per bale in 1939 to $17.08 in 1962 were associated 18 with greater proportional increases in farm wage portion of the 1957 crop, for example, covered with rates. In 1962, farm wage rates per day, without new open-weave jute bagging ranged from 28 per- room or board, averaged $4.32 in South Carolina, cent in the Southeast to 78 percent in the West. $6.10 in Arkansas, $7.80 in Oklahoma, and $7.62 The proportion covered with bugar bag cloth in New Mexico {108). Average ginning charges ranged from 22 percent in the West to 71 percent in these States were $14.17, $17Jl, $19.79, and in the Southwest, and amounted to 67 percent in $17.36 per bale respectively. the Southeast. Apparently use of sugar bag cloth Costs per bale of power and fuel in ginning decreased from 1957 to the early 1960's. Second- operations vary with the kind and amount of hand ties were used on 36 percent of the bales in powder and equipment used, size of the gin plant, southeastern States ; they were used on only 5 per- and the number of bales ginned. In Arkansas in cent of the bales in the United States {81). 1955, for example, the cost of power and fuel Supplementary services rendered.—Services amounted to $1.32 per bale for gins powered by rendered in connection with ginning, the charges electricity and 50 cents for gins powered by diesel for which are included with those for ginning, may engines. These gins had about the same amount materially affect total ginning charges. Such serv- of seed cotton cleaning and drying equipment. ices, in addition to those already indicated, may Annual volume of cotton ginned averaged 4,675 include hauling from gin to warehouse, cotton bales for gins powered by electricity and 4,214 yard, or railroad platform; storing lint cotton on bales for gin powered by diesel engines {'29), In the gin yard and cottonseed at the gin ; sampling 1960, the cost of electric power for gins in Arkansas the bales; and advancing credit for producing and and Missouri averaged $1.69 per bale of cotton harvesting the crop. In addition, ginners buy a and ranged from less than $1 to more than $3 per substantial part of the cotton crop, and most of bale (4^). the conttonseed crushed is bought by or through Cost per bale for drying seed cotton varies with ginners. Proportions of lint purchased by ginners the type of fuel used and from one State or region decreased from about 33.3 percent in the 1947-48 to another. In 1960, costs of drying seed cotton season to 8 percent in the 1960-61 season, and then in Arkansas and Missouri averaged 27 cents per increased to 20 percent in the 1962-63 season {Slf.^ hale for gins using natural gas for drying and 101,), 54 cents for gins using propane or butane (^^). Means of Reducing Costs Other items of cost, including maintenance, insur- Because conditions vary from one area to an- ance and taxes, interest on investments, and mis- other, specific information on the situation in each cellaneous expenses, account for substantial pro- locality would be needed as a basis for indicating portions of total costs. Since most of these items the means by which and the extent to which it tend to be fixed, the cost per bale for most of them might be feasible to reduce ginning costs and decreases markedly with increases in the number charges in specified localities. of bales ginned per gin stand {^2). Increase in volume of ginning.—The fact that Quality of services performed.—Costs of gin- average costs per bale for ginning cotton usually ning and the value of lint ma;^ be greatly influ- decline as the volume increases and that nearly 34 enced by the adequacy of ginning services. The percent of the gins in the United States ginned proportion of cotton that shows rough prepara- 1,500 bales or less in 1962 indicates that ginning tion is used as a measure of the quality of the gin- costs might be reduced considerably by increasing ning services. Of the 1962 cotton crop, the pro- the volume ginned per gin. This would require portion that was rough ginned or gin cut aver- further reductions in the number of gins. The aged about 0.2 percent for the United States and number of gins operated in the United States de- ranged from less than 0.04 percent in Arizona to creased from about 6,800 in 1947 to 5,400 in 1962. about 0.7 percent in Oklahoma. Further reductions might well be made in some Bagging and ties.—Charges for bagging and areas by discontinuing the use of old, badly worn, ties, when assessed separately, averaged $4.94 per and obsolete equipment and by limiting the con- bale, or about 29 percent of total charges for gin- ning the 1962 crop (lOJi), Average charges for struction of new plants and replacements, other than necessary repairs, to those required for effi- these materials by States ranged from $4.15 per bale in South Carolina to $5.25 in Missouri. In cient operations. the southeastern States, charges for these mate- The possibility of further increases in volume of ginnings per unit of equipment by reducing rials usually average less than in other areas. excess ginning capacity may be indicated by data These relatively low charges are accounted for on the extent to which ginning capacity was chiefly by the fact that ginners in those States utilized during the heaviest part of the ginning cover a considerable proportion of the cotton with season. This information provides a basis for secondhand materials; whereas in other areas, gin- estimating the extent to which the volume of gin- ners customarily use new bagging and ties {SO), ning per imit of equipment might be increased by Types of bagging used include open and close- reducing excess capacity, without providing ad- woven jute, sugar bag cloth, cotton, and other ma- ditional storage space for seed cotton or changing terials. Costs vary with the kind used. The pro- harvesting practices. Census data indicate that 19 in 1956, for example, in about 27 percent of the gin plant might be offset to some extent by in- cotton-producing counties in the United States, creases in distance of hauling and possibly by some less than 40 percent of the estimated total ginning delays in getting cotton ginned, particularly dur- capacity (on the basis of a 12-hour day) was used ing the peak of harvest. But in many instances, during the peak of the ginning season. Outside increases in volume per gin plant could be ac- of irrigated counties, the proportion of counties complished by reducing the number of gin plants that utilized less than 60 percent of their estimated in specific villages or towns, where two or more ginning capacity (on the basis of a 12-hour day) gins are operated, without increasing appreciably during the peak period amounted to 53 percent for the distances seed cotton would have to be hauled. the United States, and ranged from 23 percent in The fact that in the 1947-48 season, for example, Mississippi to 96 percent in Oklahoma. The pro- more than three-fourths of the seed cotton was portion of gin capacity utilized during peak per- hauled 6 miles or less to gins indicates that in iods in irrigated counties was substantially greater many instances the volume per gin could be con- than that utilized in other areas (^^). siderably increased without making the distance These data clearly indicate that substantial re- from the farm to the gin very great {99), ductions in the amount of ginning equipment used, Further concentration wnthin a short period of and corresponding increases in the volume of the movement of seed cotton from farms to gins, ginning per unit of equipment, might be made in as a result of expanding machine harvesting, many parts of the Cotton Belt with little or no would tend to increase the difficulties involved in delay in harvesting and ginning and with no in- fully utilizing ginning equipment for longer pe- crease in storage space required for seed cotton. riods each season. The feasibility of storing Unfavorable weather, the availability of cotton, limited quantities of seed cotton at the gin, at the the necessity for repairing machinery, and other farm, or at both places has been considered a factors may make it impossible to operate all gins means of reducing the peak load demands for continuously at full capacity (on a 12-hour day ginning services {125.126). Reports indicate that basis) for extended periods. But during the seed cotton may deteriorate in storage if not kept busiest part of the ginning season, gins may be in suitable condition, but is not adversely affected operated (many actually are) for considerably if stored where the moisture is relatively low.^ Ap- more than 12 hours each day. In some instances, parently the cotton harvesting-ginning pattern in gins are known to have been operated 24 hours a one area of California was altered in 1962 by the day, 6 or 7 days a week, for a considerable period use of wire baskets for storing seed cotton at a of time. Furthermore, the pressure on ginning cost of 70 cents per bale {26). "Turnrow storage" facilities, when the movement of cotton to gins is in the field has been suggested as a means of heaviest,^ might be eased and the period during spreading the peak load of ginning in Arkansas which gins can operate at more nearly full ca- {125). Additional information is needed to show pacity extended somewhat by providing storage the conditions under which and the extent to which space for substantial quantities of seed cotton it would be feasible to store seed cotton as a means at the gin and by inducing farm producers to of lengthening the ginning period. store more seed cotton on farms during the peak Careful selection and efficient use of supple- of the harvesting season. But additional costs of mentary equipment.—The cost of conditioning, such storage and related factors would also need cleaning, and other supplementary equipment, and to be taken into account. the fact that some equipment, if not properly used, Where gin plants are too small for efficient oper- may seriously damage cotton fibers emphasize the ation, average costs per bale for ginning may be importance of careful selection and use of equip- reduced by increasing the number of gin stands ment. For best results, the equipment used would per plant, as well as by increasing the volume of need to be limited to that relatively best adapted, ginning per stand. This might be accomplished mechanically and economically, for rendering the by combining existing stands, preferably only the services than can be performed more effectively better ones, into fewer plants and by limiting con- and economically at gin plants than at other loca- struction of new plants to the larger sizes. To be tions and by other agencies. In addition, this economically feasible, savings in costs attributable equipment would need to be operated efficiently to greater efficiency of the larger plants would and in such a w^ay as to minimize damages to the need to equal or exceed expenses of making the cotton fibers. changes. In addition to such horizontal combina- As previously indicated (p. 18), use of lint tions, savings under some conditions might re- cleaners at gins has increased greatly in recent sult from vertical integration through combining with regular ginning the functions of one or more years. Results of research indicate that the use of such services as financing production and mar- of lint cleaners usually increases the bale value keting of cotton, operating cottonseed oil mills, and buying and selling cotton and cottonseed. * Cooke, J. B. and Reid, T. P. HANDLING AND STORAGE OF SEED COTTON FROM FIELD TO GIN. A paper presented at In some instances, reductions in costs of ginning Southeast Section of Amer. Soc. Agr. Engin., Memphis, by increases in the volume per gin stand and per Tenn., Feb. 24, 1959.

20 to producers for cotton that, without lint clean- iary equipment might well be made by efficient ing, would be of the lower grades; and usually use of the more suitable types rather than by the decreases the bale value to producers for cotton reduction or elimination of equipment needed for that, without lint cleaning, would be of the higher rendering essential services. With adequate vol- grades (59), These results also indicate that lint umes of cotton for efficient operation reasonably cleaning at gins increases the cost, reduces the certain, a ginner probably is more likely to use a quantity, and lowers the quality or value of lint suitable quantity and kind of equipment and to to mills. Such increases in costs and reductions keep it in good condition so as to improve the in quantity and value of lint to mills plus costs quality of ginning services and to reduce ginning of lint cleaning at gins may be greater than any costs per bale. immediate benefits to farm producers plus reduc- Eesults of research indicate the possibility of tions in transportation costs and in costs of lint substantial savings in ginning costs by more ef- cleaning at mills as a result of lint cleaning at ficient organization and operation of gin machin- gins. If so, lint cleaning at gins, particularly if ery and equipment (127). Careful selection and more than one cleaner is used, may w^eaken the efficient utilization of labor, power, and other items competitive position of the American cotton in- of expense may also reduce ginning costs (7^, dustry as a whole, including cotton producers. 126), Data on variations in connected horse- Careful harvesting and conditioning of seed power, m number of fans, and in power cost per cotton.—Costs of ginning and damage to lint bale for gms in Arkansas and Missouri during from cleaning and ginning might be reduced by the 1960-61 season indicate that a substantial re- picking the cotton carefully so as to include only duction in ginning costs could be made in many small amounts of trash, instead of snapping, of the gms by improvements in plant design or machine-picking, or stripping and including large gm layout that would reduce the number of fans amounts of foreign matter with the seed cotton required to move cotton through the ginnino- sys- (38). But the feasibility of handpicking depends tem (42, 82), Data for gins in California and in upon the extent to w^iich the cost exceeds costs west Texas m 1962 show that substantial savings of other methods of harvesting, taking into ac- m costs might be made by rearrangements and count field waste, reductions in quality, and dif- reductions m the number of trash removal fans ferences in costs of ginning and related services. (ISS), In 1953 and 1955, the total cost of mechanical Substantial proportions of the cotton ginned, picking in North Carolina, including field and and even larger proportions of the cottonseed, are grade losses and additional ginning charges, was bought by the gin operator. The possibility of equivalent to the cost of handpicking at $3.58 per further integration to include delinting and pos- hundredweight of seed cotton (88). In 1958, sibly other processing of cottonseed at the gin machine-harvesting costs in Arkansas were greater has been suggested as a means of more fully uti- than hand-harvesting costs at $3.50 per hundred- lizing labor and power facilities at gins (126). weight of seed cotton, unless the acreage harvested Adequate information is not available to ascer- w^as large (^/). Costs of machine picking in the tain the conditions under which and the extent to Mississippi Delta, including estimated losses in which these and other types of integration would yield and grade, were higher in 1958 than costs be feasible. of handpicking at $3.50 or less per hundredweight of seed cotton (82). In 1949, costs of handpick- Importance of Reductions in Costs ing in California averaged substantially more than costs of machine pickmg, including field waste, Available information indicates that in many grade loss, and additional costs of ginning (IS). instances ginning costs might be reduced by one- Data for 1952-55 indicate that harvesting cotton fourth or more by increasing the volume of gin- with mechanical strippers was more economical ning per unit of equipment, by using suitable on the black prairies of Texas than hiring crews equipment and operating it more efficiently, and to pull or snap it by hand (7^). Picking instead by other economies. The relative importance of of snapping or machine-harvesting cotton may such savings is apparent when it is observed that, delay harvesting and increase damage from ex- if such reductions had been reflected in prices to posure in the field. cotton growers in the 1962-63 season, the result- Efficiency in organization and operation.— ing increase m income would have been about $4.27 per bale, or about 2.7 percent of the farm value The kind and amount of ginning and auxiliary of the cotton. equipment, the condition or state of repair in which it is kept, and the method of organizing and operating it also may influence ginning costs Cotton Merchandisers' Margins considerably. The choice of kinds of equipment Merchandisers- gross margins for raw cotton are in plants already set up may be limit>ed, but it the differences between the prices at gins and the may be an important consideration in setting up costs of cotton delivered to mills. These margins new plants or in making replacements. Any re- include costs of services incident to taking the ductions in costs resulting from the use of auxil- cotton from gins and delivering it to mills at the 21 time in the quantity and of the quality desired. TABLE 6.—Average charges per hale at public cot- These services include receiving, sampling, weigh- ton loarehouses and compresses^ by States^ speci- ing, classing, compressing, stormg, insuring, trans- fied years 1939-63 ^—Continued porting, financing, and risk-bearing, among others. Storage charges (per month)— RECEIVING AND RELATED SERVICES After most cotton leaves the gin, it is assembled 1939 1947 1951 1955 1959 1963 in public warehouses or compresses where sev- eral services are rendered incident to its compres- Alabama 23 31 41 47 54 55 sion, concentration, and storage. These services Arizona 20 (^) 30 40 51 49 usually include issuing warehouse receipts, weigh- Arkansas 15 30 34 38 50 50 California 20 25 30 42 45 347 ing, sampling, marking or tagging, and storage Georgia 22 30 46 51 54 57 up to 30 days. In some instances, costs of these Louisiana 20 30 35 42 51 51 services are paid by producers and included in Mississippi 19 30 35 39 49 50 Missouri 15 30 33 35 50 50 farm prices. New Mexico 25 40 37 49 49 48 Charges or Costs North Carolina 25 {') 40 45 50 50 Oklahoma 15 30 45 50 49 50 Average charges for receiving cotton at public South Carolina 25 32 41 47 53 52 Tennessee 15 30 36 37 51 50 warehouses and compresses in the United States Texas 23 32 40 47 48 51 ranged from 23 cents per bale in the 1939-40 sea- son to 81 cents in 1958-59, and amounted to 74 United States 20 30 37 43 50 51 cents in 1963-64 (table 6). Although receiving charges have increased greatly since 1939, they did Standard density compression not advance proportionally as much as prices of charges— cotton up to 1950. After 1950, prices of cotton declined, but receiving charges continued to in- 61 98 116 120 129 140 Alabama 60 95 100 82 101 120 crease to 1958, and then declined to 74 cents in Arkansas 100 130 140 167 168 184 1963. The proportion of the farm value of cotton California 50 100 108 116 129 represented by receiving charges decreased from Georgia 61 96 111 113 128 136 Louisiana 60 95 102 95 109 123 0.5 percent in the 1939-40 season to 0.3 percent in Mississippi 60 95 100 88 100 120 1950-51. It incresaed to more than 0.5 percent Missouri 76 125 160 163 175 190 New Mexico 76 100 125 130 163 200 in 1957-58, and amounted to less than 0.5 percent Oklahoma 50 93 104 119 130 132 in the 1963-64 season. South Carolina 60 95 100 82 100 120 Tennessee 76 101 132 145 162 184 Texas TABLE 6.—Average charges per tale at public cot- 62 98 119 120 139 158 ton warehouses and compresses^ hy States^ spéci- United States fia years, 19S9-6S ^ High density compression charges— Receiving charges— State Alabama 70 100 125 125 150 159 Arkansas 75 115 125 107 140 160 1939 1947 1951 1955 1959 1963 California 100 130 150 177 185 208 Georgia 65 100 119 125 147 Louisiana 68 108 124 128 144 Î54 CenU Cents Cents Cents Cents Cents Mississippi 75 115 128 119 142 160 Alabama _ _ 30 47 56 66 71 85 Missouri 75 115 125 122 140 160 Arizona 27 {') 75 100 100 60 New Mexico 79 150 185 185 185 200 Arkansas 15 55 56 53 67 66 Oklahoma 76 100 125 135 163 200 California _ _ _ 22 50 78 100 96 52 South Carolina 65 102 112 125 146 147 Georgia - - 37 35 53 60 73 92 Tennessee 75 115 125 106 140 160 Louisiana _ _ 28 51 57 60 73 74 Texas 76 103 134 146 163 184 Mississippi 28 55 57 58 66 66 Missouri 17 55 55 50 65 65 United States 77 110 134 146 166 184 New Mexico 25 50 75 88 86 95 North Carolina. 37 0) 44 44 51 54 Oklahoma.- _ _ _ _ _ 15 50 75 75 66 75 1 Based on published tariffs of major units of the public South Carolina __ 35 32 46 38 65 71 cotton warehouse industry, chiefly represented by those Tennessee _ _ 15 55 50 56 69 66 with compress facilities. Most of the storage companies Texas - - 23 52 76 82 75 90 included insurance in the storage charge. 2 Data insufficient for reporting. United States 23 52 65 70 75 74 3 Charge does not include insurance. Adapted from reports of Economic Research and See footnotes at end of table. Agricultural Marketing Services.

22 During the 1963-64 season, average receiving weighing cotton could be reduced through im- charges by States ranged from 52 cents per bale in proved methods of operation, including use of California to 95 cents in New Mexico. Variations temporary blocks, and through use of improved in these charges may be accounted for largely by handling and weighing equipment, including differences in services. The storage period in- clamp trucks and mobile beam scales {131^ 182). cluded, for example, ranged from 0 to 30 days and, even if storage rates were all the same, this ran^e COMPRESSION OF COTTON would account for considerable differences m charges. Furthermore, the kinds and amounts of Cotton bales vary considerably in size, shape, other services included also vary, and some com- and density. They include the flat or square gin presses do not make a receiving charge if they bale and the standard- and high-density com- compress the cotton. pressed bales. Flat gin bales are, on the average, about 56 inches long, 28 inches wide, and 45 inches Means of Reducing Costs thick. Density averages about 12 pounds per Costs of the services in connection with receiv- cubic foot. Standard-density bales are, on the ing cotton at warehouses and compresses may be average, about 56 inches long, 31 inches wide, and reduced by minimizing unnecessary assembling 22 inches thick. In these bales, density averages and handling before shipment to mills and by ren- about 23 pounds per cubic foot. The average dering the necessary services more efficiently. A high-density bale is about 57 inches long, 22 inches large amount of cotton changes hands several wide, and 21 inches thick. Its density averages times in the course of movement through market- about 32 pounds per cubic foot. These dimensions ing channels. In many instances, these changes and densities vary considerably with the weight are accompanied by duplicate sampling and addi- of the bale {136), tional handling. Such resampling means addi- Most of the cotton crop in this country is put tional service charges, waste of cotton used, up at first in flat gin bales. Charges for this serv- damage to bagging, and exposure of the cotton to ice are included in those for ginning. Flat bales further waste and damage from contamination. are bulky and, except in the Southeastern States Such duplication and waste might be reduced where most of the cotton goes from gins directly by the development and use of suitable equipment to local mills, most of them are compressed to for taking automatically adequate and authentic standard or high density to minimize costs of samples of cotton bales during ginning operations. transportation and storage. As indicated above (p. 18), more than 190 auto- Charges or Costs matic samplers had been installed in gins, mostly in Texas and California, by the early 1960's. Charges for compressing cotton are made, in Many farmers, ginners, classers, and spinners ap- most instances, on a per bale basis, but in some parently considered samples taken by these auto- instances they are based on actual weight. Rates matic samplers as representative as or more repre- charged for compression to standard density usu- sentative than cut samples. But, as previously ally are somewhat lower than those for compres- indicated, use of some of these samplers was dis- sion to high density. In the 1963-64 season, rates continued in the early 1960's. for standard-density compression averaged $1.58 Disadvantages from the use of these mechani- per bale for the United States ; averages by States cal samplers include: (1) high cost per bale in ranged from $1.20 per bale in Arkansas, Missouri, gins with small annual volume, (2) complicated and Tennessee to $2.00 in Oklahoma. For high- features and failure to sample every bale, (3) density compression, the U.S. average rate was buyers' preference for fresh cut samples, and (4) $1.84 per bale; averages by States ranged from differences in dimensions and quality of cut and $1.47 per bale in South Carolina to $2.08 in Cali- mechanically drawn samples. To overcome these fornia (table 6). U.S. average rates for standard- disadvantages, special efforts might be made to density compression increased from 62 cents in develop simpler, more dependable, and less expen- 1939 to $1.58 in 1963 and the rates for high-den- sive mechanical sampling devices and to reduce sity compression increased from 77 cents in 1939 the need for fresh cut samples. The most effec- to $1.84 in 1963. tive use of such sampling devices would require The compress industry performs several services reliable means for correctly identifying the sam- other than compressing. These include weighing, ple with the bale from which it was drawn, suit- sampling, marking, insuring, reconditioning, stor- able methods of handling and storing the samples ing, and loading out the cotton. Revenues derived to preserve the quality of the lint included, and from these other services account for a large part willingness of traders to sell and buy the cotton on of total revenues received by compress companies. the basis of these samples. Savings might also be made by reducing or elim- Means of Reducing Costs inating unnecessary duplications of services such Since a large portion of the total revenues of as weighing, marking, and tagging. Research in- compress companies are derived from services dicates that labor and other costs of handling and other than the compression of cotton, the extent

23 to which compress charges could be reduced may proportionally less than the advance in cotton be influenced considerably by efficiencies in the prices. other services and the charges made for them. Because of differences in space required, rates Compression of cotton to higher densities at gins charged by many warehouses with compressing has been considered a promising means of reducing facilities are lower for compressed than for un- costs of compressing and related services at gins compressed bales. Warehouses that do not pro- {135), vide differential rates usually compress all cotton Eesults of research designed to evaluate the pos- upon arrival or reserve the right to compress the sibilities and limitations of these higher density cotton in the event of a shortage of storage space presses at gins indicate that tariff charged by Cali- fornia compresses in 1958 for compressing flat bales Carryover of American cotton in the United to standard density averaged $1.68 per bale. These States on August 1, 1961 totaled 7,228,000 bales. compresses also levied a special delivery fee aver- The 1961 crop of American cotton totaled aging 67 cents a bale on gin standard-density 14,384,000 bales, most of which was made ready for bales, leaving a net difference in value at ware- market during; the first half of the crop year. houses of $1.01 a bale in favor of gin standard- Domestic consumption of this cotton during the density bales. As a result, marketing agencies 1961-62 season totaled about 8,954,00 bales, and usually paid ginners an additional dollar a bale exports totaled 4,915,000 bales. Under these con- for gin standard-density bales. The additional ditions, the quantity of American cotton ready for expense of turning out standard-density bales in- storage in the United States during the 1961-62 stead of flat bales ranged from $1.31 a bale for season averaged about 11,081,000 bales. If this ginners with an annual volume of 4,000 bales to cotton were all stored and insured at the average 83 cents for ginners with an annual volume of 9,000 monthly rate of 52 cents per bale until needed for bales. The volume at which the average cost of consumption by domestic mills or exported, stor- compressing standard-density and flat bales was age and insurance charges that season would have the same was indicated at about 6,500 bales. The amounted to about $69,145,000, or an average of break- even volume for gin high-density presses about $3.20 per bale of the crop and carryover in would be substantially greater [20). The annual the United States that year. Similar charges volume of cotton ginned at many of the gins in the amounted to about $3.62 in the 1963-64 season, United States is substantially lower than these $3.45 in the 1958-59 season, $3.15 in the 1954-55 break-even volumes. season, $1.50 in the 1947-48 season, and $1.45 in the 1939-40 season. All of this cotton may not STORAGE AND INSURANCE have been stored and insured all of the time, but losses, on the average, from not doing so probably Large quantities of cotton are held from the about equaled the storage and insurance charges time it is ready for market until it is needed by made by commercial warehouses. mills. Stocks of American cotton in the United States on August 1 increased from a low point of Means of Reducing Costs 2,166,000 bales in 1951 to 14,490,000 bales in 1956. C^harges for storage and insurance may be re- It decreased to 7,228,000 bales in 1961, and duced by one or more of several means. Com- amounted to 11,200,000 bales in 1963. In addition, pression of cotton to a higher density before stor- most of the American crop usually is ready for age might be used to reduce storage costs. In some market during the first half of the crop year. Cot- instances, rates may be reduced considerably by ton in these stocks and that from the current crop increasing the period of continuous storage. Sub- needs protection to avoid or minimize deteriora- stantial savings apparently would result from use tion and to prevent destruction by fire and other of suitable machinery and equipment for handling, hazards. These services are performed by ware- weighing, and stacking cotton, and from a con- houses with or without compressing facilities. venient system of arranging the bales so they can be shipped out with minimum handling (i^, 55, Charges or Costs 86,131,132). Since, in many instances, storage and insurance Charges for storage and insurance for cotton are provided in connection with related services, vary from year to year, from one State or region such as receiving, sampling, marking, and com- to another, and with the size of the bale (table 6). pressing, any economies in organization and oper- In the 1963-64 season, monthly charges for un- ation of the combined business would make possible compressed cotton, or for compressed cotton for a reduction in charges for storage and insurance. which no differential was provided, averaged 51 Use of any excess storage space for other com- cents per bale per month for the United States. modities also might be advantageous. Averages by States ranged from 47 cents in Cali- fornia to 57 cents in Georgia. Average rates for TRANSPORTATION the United States increased from 20 cents in 1939- Cotton is shipped from producing areas by rail, 40 to 51 cents in 1963-64, but this increase was motortruck, or some combination of rail, truck,

24 and water transport directly to domestic mills, to tributed fairly uniformly throughout the year. ports, or to compress or concentration points. The average quantity of American cotton carried From these points it goes to domestic mills or is in stock in the United States during the year exported. Data on proportions moving to these ranged from about 40 percent of the crop in the outlets in recent years are not available, but during 1951-52 season to 123 percent of the crop in the the 1938-39 season, about 6 percent of the cotton 1956-57 season. from interior compress points went to interior Charges or Costs concentration points, 41 percent to domestic mill points, and 53 percent went to ports {13I{). Since Interest charges for financing the holding of the end of World War II, cotton production has cotton vary considerably from one merchant to shifted westward, and direct buying by domestic another. Rates charged the smaller local mer- mills has increased. Information for evaluating chants who obtain funds from local banks may be the influence of these changes on the movement of higher than those charged the larger merchants. cotton through marketing channels is not available. In recent years, large quantities of cotton have been carried as collateral for Commodity Credit Charges or Costs Corporation loans to farm producers at an annual Charges for transporting cotton by rail usually interest rate of 3.5 percent. This rate apparently are based on a fixed schedule of rates relating to is lower than the average for cotton merchants. size of load and distance shipped. Data based on On the basis of an average interest rate of 4 per- freight revenue and the value of cotton trans- cent, interest charges amounted, on the average, ported on first-class railroads, on indexes of freight to about 15 cents per 500-pound bale per month rates, and on other information indicate that in the 1939-40 season, when farm prices averaged charges for rail transportation of cotton in the 9.09 cents per pound; 53 cents in the 1947-48 sea- United States increased from an average of about son, when farm prices averaged 31.93 cents; and $2.80 per bale in 1939 to $3.90 in 1947 and to $5.15 56 cents in the 1954-55 season, when farm prices in 1954, decreased to $4.95 in 1958, and amounted averaged 33.61 cents. Interest rates increased to $5.05 in 1961 and 1962. Indexes show that markedly in the late 1950's and early 1960's. On rail freight rates for cotton increased from 66 per- the basis of an average interest rate of 4.5 percent, cent of the 1957-59 average in 1945 to 108 percent interest charges amounted to about 62 cents per in 1953 and 1954, and then decreased to 99 percent bale per month in the 1958-59 season, when farm in 1961 {103), prices of cotton averaged 33.23 cents a pound. On the basis of an average interest rate of 5.5 percent, Means of Reducing Costs interest charges amounted to about 73 cents per bale per month in the 1962-63 season, when farm Costs of transporting cotton may be reduced by prices of cotton averaged 31.80 cents. lowering freight rates, reducing or eliminating, The average length of time individual bales were when feasible, crosshauls and backhauls, loading financed varied considerably from one year to an- cars to capacity to obtain minimum rates, the use other. American cotton available in the United of through-rate privileges whenever possible, and States for financing averaged about 11,076,000 substituting other means of transportation for rail bales during the 1961-62 season. If all this cot- when savings in charges are available. Decreases ton had been financed at a rate of 5.5 percent per in the index of freight rates for cotton since 1954 year, costs for financing would have amounted to and apparent increases in the proportion trans- $99,904 million, or about $4.65 per bale of total ported by trucks indicate that some progress has carryover and crop of American cotton in the already been made by the use of these means. United States that year. Similar costs for other years averaged about $5.05 in the 1962-63 season, FINANCING $4.40 in the 1958-59 season, $4.15 in the 1954r-55 season, $2.70 in the 1947-48 season, and $1.10 in the Cotton merchants buy the large volume of cot- 1939-40 season. ton sold by farm producers during or soon after harvest and supply the demands of spinners Means of Reducing Costs throughout the year. This requires the financing of cotton from the time it is ready for market As costs of financing cotton are based on the in- until it is needed for consumption by mills or for terest rate charged, the value of the cotton, and the export. Information on the average length of length of time it is financed, a decrease in any one time cotton is financed is not complete, but the or all of these would reduce the costs of financing. carryover of American cotton in the United States Interest charges, particularly for the smaller local on August 1 ranged from 14 percent of production merchants, may be reduced by an increase in the in 1951 to about 111 percent of production in 1956. volume of business through mergers or by other Most of the crop usually is harvested and sold, or means that would permit getting money on terms pledged as collateral for government loans, by comparable to those obtained by the larger mer- farm producers during the first half of the crop chants. The average length of time cotton is year; whereas mill consumption of cotton is dis- financed is influenced considerably by the size of

736-806—^64- 25 the carryover. The increase in carryover of est, storage, and insurance averaged about $8 per American cotton in the United States on August 1 bale {28), from 2,166,000 bales in 1951 to 14,490,000 bales in Means of Reducing Costs 1956 was responsible for a substantial increase in Merchandising raw cotton appears to be a highly costs of financing, and a reduction to 7,228,000 competitive business, and the possibility of making bales in 1961 tended to reduce costs of financmg. substantial reductions in costs of the marketing Further reductions to more nearly normal amounts services without changing marketing methods and would have contributed in an important way to- practices, therefore, may be limited. Large quan- ward reducing costs of financing cotton but the tities of cotton are sold by growers on the basis carryover increased to about 11,200,000 bales in of an inspection of samples taken from the bales 1963. at the gin, cotton yard, or warehouse. In recent OTHER SERVICES years, increased quantities have been sold in local Aside from the services already discussed, mar- markets on description on the basis of government keting involves classing and assembling cotton for classification. The number of buyers in local mar- sale in even running lots, risk bearing, and selling. kets ranges from one in some to a dozen or more in A risk bearer assumes responsibility for risks from others. In many instances, sales necessitate resam- price changes, losses in cotton weight, and from pling and reclassification for each change or pro- rejection of cotton because of its failure to meet posed change in ownership. This repetition of quality specifications. Selling costs may be m- services results in damage to bale coverings, in cluded under "overhead expenses." contamination and waste of cotton, and in in- Cotton usually is classified to facilitate sale from creased costs of marketing. one to several times, and it may be assembled more Apparently marketing procedures could be sim- than once during its passage through commercial plified and costs of services reduced if cotton were channels to mills. When prices are not stabilized sold on description throughout the marketing sys- by government loans and adjustment programs, tem on the basis of a dependable classification. merchants, particularly the larger ones, usually Such a classification would require (1) that the hedge their market interests or position in spot sample classified be truly representative of the cotton by offsetting transactions in future mar- quality or qualities of cotton in the bale and that kets. But not all risks of loss from changes in it be correctly identified with the bale from which prices may be offset by this means {ItS^51). The it was drawn; (2) that the classification be made general practice is for buyers to make deductions in accordance with uniform standards upon the for any failure of the cotton delivered to meet basis of which the quality of cotton can be de- specifications as to weight or quality, but usually scribed for commercial purposes with reasonable no credit is allowed for overweight or for qualities accuracy; (3) that the classifications be made by above specifications. competent and reliable classifiers under conditions Selling and incidental services involve selling conducive to accurate classifications; (4) that fa- commissions and several other items grouped under cilities be provided for assembling the samples^ overhead costs, such as salaries and bonuses, travel- recording the classifications on convenient forms, ing expenses, telephone and telegraph expenses, and for making the information available in time rents and taxes, supplies and stationery, interest for use in selling the cotton; and (5) that sellers and depreciation, membership dues and fees, legal and buyers have enough confidence in the classifi- and other professional services, and profits. cation service to be willing to sell and buy cotton on the basis of this information {37). Charges or Costs All of these requirements are not likely to be fully met within the immediate future. But, as Data relating to charges or costs for these other indicated above, by the early 1960's, mechanical services in marketing cotton are not complete. Re- devices for sampling cotton bales during ginning ports for the 1956-57 season indicate that standard had been installed in more than 190 gins, mostly charges for buying and local handling of cotton in Texas and California. These automatic sam- at points of origin were $1.20 per bale in Bakers- plers were designed to provide a sample repre- field, Calif. ; 90 cents in Dallas, Tex. ; and 95 cents sentative of cotton throughout the bale, to reduce in Greenwood, Miss. Charges for taking cotton the amount of cotton removed by multiple sam- in mixed lots and concentrating it into even-run- pling, and to minimize damage to bagging from ning lots were $1.40 per bale in Bakersfield, $1.60 cutting and to cotton from exposure {37), Use in Dallas, and 70 cents in Greenwood. Selling of these samplers has been retarded by (1) the costs averaged about 90 cents per bale in Bakers- high cost per bale at gins with small annual vol- field and Greenwood and 85 cents in Dallas. These umes, (2) the complicated features of samplers, charges were for cotton shipped to Carolina and (3) the practice of obtaining fresh cut samples New England mills. For cotton shipped to Ger- each time the bale is sold or offered for sale, and many or Japan, charges for buying and local han- (4) the difficulty of obtaining mechanically sub- dling, concentration, and selling; and costs other samples taken from the thin outer portions of the than those for compression, transportation, inter- bale {25).

26 Officiai standards for grade and length of staple Importance of Reductions in Costs have long been established and in general use, but lack of standards for the quality elements in- Estimated charges or costs of services involved cluded under the term "character," limit the de- in taking cotton from farms and delivering it to pendability and usefuhiess of classifications based on official standards. Measures of differences in mills have increased considerably in recent years, fineness, strength, and other fiber properties, in but the proportion of such costs to total costs of addition to grade and staple length, have been cotton to mills continued in 1962 to be substantially developed and are used to a considerable extent below what they were in 1939 (table 7). Although in marketing. Use of standards and classifica- charges for ginning and baling increased from an tions m marketing cotton has been expanded con- average of about 0.8 cent a pound of lint in 1939 to siderably and further progress is anticipated. To 3.2 cents in 1962, the proportion of the average make the maximum contribution toward increas- price of cotton to mills accounted for by these ing the efficiency and reducing the costs of market- charges was greater in 1939 than in any other ing, these developments would need to be combined recent year. Estimated gross margins for mer- with other improvements in marketing methods chandising cotton increased from about 1.65 cents and practices. a pound in 1939 to 4.08 cents in 1962. But the A principal limitation to further improvements proportion of prices to domestic mills accounted m the marketing of cotton relates to the small for by these margins decreased from 15.4 percent volume of cotton handled in many local markets. In many instances, the volume handled is so small in 1939 to 7.6 percent in 1947, and then increased that it is not feasible to provide facilities adequate to 11.4 percent in 1962. for rendering efficiently such services as classifi- If costs of ginning, baling, and merchandising cation, assembling, compression, and storage. cotton had been reduced by 10 percent during the Apparently market services could be improved 1962-63 season, for example, the reduction would and their costs per unit reduced by reorganizing have amounted to about 0.7 cent a pound. This and integrating cotton marketing so the volume would equal about 2.5 percent of returns to growers handled would be adequate to make possible the for farm production and 0.37 percent of costs to effective use of modem facilities and equipment consumers of finished cotton apparel and house- in rendering efficiently the essential marketing hold goods. A reduction of 10 percent in charges services. In addition, adjustments in the quality for ginning and baling would have amounted to of cotton produced in accordance with mill re- 0.32 cent a pound, or about 1.1 percent of returns quirements would facilitate improvements in to growers for farm production and 0.16 percent marketing. Such adjustments might require fur- of costs to consumers of finished apparel and ther developments in the evaluation and standard household goods. A reduction of 10 percent in measures of the quality elements of cotton, in merchandisers' gross margins would have classification services available to growers, and in amounted to about 0.4 cent a pound, or about 1.4 market news so that prices to growers would re- percent of returns to growers for farm production flect differences in value to mills of the quality of and 0.21 percent of costs to consumers of finished cotton produced. apparel and household goods.

MARKETING RAW WOOL

All wool produced in the United States is million pounds a year, clean basis, and ranged apparel wool. Large quantities of it are imported from about 118 million pounds in 1949 to 233 mil- over a tariff duty of 11 to 27.5 cents a pound, clean lion in 1948. During the 1950's, these imports basis. Production of wool in this country de- ranged from 89 million pounds in 1951 to 192 mil- creased from 221 million pounds, scoured basis, in lion in 1959, and amounted to 143 million in 1962. 1942 to 120 million pounds in 1950, and amounted Most of the wool produced in the United States to about 134 million pounds in 1962. During the is shorn wool, obtained by shearing live sheep. 5 years 1946-50, imports of apparel wool for con- Considerable quantities of pulled wool are ob- sumption averaged 277 million pounds, clean con- tained by pulling the wool from skins of slaugh- tent, a year and ranged from 155 million pounds tered sheep. Small quantities obtained by detach- in 1949 to 473 million in 1946. These imports de- ing wool from carca sses of sheep which died on the creased from 272 million pounds in 1951 to 67 mil- range or farm are known as dead or murrain wool. lion in 1958, and amounted to 126 million in During the 5 years 1946-50, shorn wool accounted 1962 {103), for about 85 percent and pulled wool about 15 Carpet wools are admitted into this country free percent of total production in the United States. of duty. During the 5 years 1946-50, imports of In 1962 the proportions were 89 and 11 percent carpet wool for consumption averaged about 175 respectively. 27 TABLE 7 —Avproximate average gross margin per pound and proportion of total cost of producing and marketing American cotton^ hy items^ specified years^ 1939-6%

Year beginning August Item 1939 1947 1954 1958 1961 1962

Cents Cents Cents Cents Cents Cents 8.27 30.36 31.28 30.49 29.69 28.65 Farm production ^ — 2.33 2.74 3.11 3.15 Ginning and baling 2_ .82 1.57 33.61 33.23 32.80 31.80 Farm prices-.. 9.09 31.93 .16 .16 .15 Receiving and related services. .05 . 10 .14 .23 .26 .28 .28 Compressing ^ .09 . 15 .29 .30 .63 .69 .64 .72 Storage and insurance * 1.03 1.00 .99 .99 Transportation ^ .56 .78 .22 .54 .83 .88 .93 1.01 Financing ^ .91 .93 .93 Another 7 .44 .74 .84 3.93 4.08 Total merchandising margins. 1.65 2.61 3.70 3. 90 37. 13 36.73 35.88 Average cost to mills 10.74 34.54 37.31

Proportion of cost to mills

Percent Percent Percent Percent Percent Percent 77.0 87.9 83.8 82. 1 80.8 79.8 Farm production ^ 6.3 7.4 8.5 8.8 Ginning and baling ^ 7.6 4.5 92.4 90. 1 89.5 89.3 S. 6 Farm prices 84.6 .4 .4 .4 .4 Receiving and related services .5 .3 .8 .4 .6 .7 .8 .8 Compressing ' 2.7 .9 1.7 1.9 1.8 2.0 Storage and insurance * 2.3 2.8 2.7 2.7 2.8 Transportation ^ 4.8 2.7 1. 6 2.2 2.4 2.5 2.8 Financing ^ 2.2 2.4 2.5 2.6 All other 7 3.9 2. 1 10.5 10.7 11.4 Total merchandising margins 15.4 7.6 9.9 100. 0 100. 0 100.0 100.0 Average cost to mills 100.0 100. 0

the beginning of the year plus ginnings of the crop of the 1 Includes hauling to gin. XT o T^ + ^..+ ^f same year. x- ^ ^ 2 Based on data published by US. Department of 5 Based on official information and partly estimated. Agriculture. Charges attributed to Imt equals charges 6 Farm value of average number of bales of American for bagging and ties plus a prorata share of other gmnmg cotton in United States, adjusted for domestic consump- charges based on the relative farm value of Imt to seed. tion and exports, multiplied by interest rate (4 percent 3 Average rate per bale multiplied by estimated propor- in 1939, 1947, and 1954; 4.5 percent in 1958; and 5.5 tion compressed to standard and high density. . percent in 1961 and 1962) and the product divided by 4 AvSâge number of bales in the United States during carryover at the beginning of the year plus gmnmg from the year, adjusted for domestic consumption and exports multiplied by average rate for storage and insurance and crop of that year. Sie product divided by the amount of the carryover at 7 Estimated, including an allowance for proùts.

Production of wool is widely distributed over duced in wool puUeries, independent of major the United States. Every State produces some meatpacking plants. wool. In 1962, production of shorn wool ranged from about 13,000 pounds, grease weight, m Khode Methods and Practices Island to 52,225,000 in Texas. The 10 largest wool-producing States that year, listed by rank, Marketing wool in the United States involves were Texas, Wyoming, California, South Dakota, the handling of domestic shorn and pulled wool, Colorado, Montana, New Mexico, Utah, Iowa, and and also that imported. The total amount of wool Idaho Production by these 10 States made up produced in this country, plus that imported for about 70 percent of the U.S. total for that year. consumption, decreased from 1,396 million pounds, Pulled wool is produced mainly m slaughtering grease weight, in 1946 to 464 million in 1958, and and meatpacking plants in centers such as amounted to 641 million in 1961. During the 5 Chicago, San Francisco, New York, Denver, and years 1958-62, domestic shorn and pulled wool Philadelphia; but considerable quantities are pro- accounted for 47 percent, imported apparel wool 28 for 21 percent, and carpet wool for 32 percent of and from small speculators. Of the wool handled the total handled by the wool industry in this by these warehouses, 43 percent was consigned, 53 country. These proportions vary considerably percent was purchased on warehouse account, and among years as a result of changes in domestic 4 percent was handled on some other basis. Of the production and imports. wool handled on warehouse account, 53 percent Most of the domestic clip is shorn from Feb- was purchased prior to delivery, 46 percent was ruary through July and usually most of the pro- purchased on delivery, and about 1 percent was ducers sell their wool at or soon after shearing purchased after consignment. Warehouse opera- time. Before the National Wool Act of 1954 be- tors sold about 74 percent of this wool to manu- came effective in April 1955, most of the wool was facturers and 26 percent to dealers. This wool sold by producers from April through July. Since moved from warehouses mainly by rail and truck 1955, sales by producers have been concentrated to New England and Southeastern States (55). mainly from March through June. More than 70 Some of the more popular services and propor- percent of the 1961 clip was sold by producers dur- tions of the total volume warehoused that received ing this period. But practices with regard to each service were : Sampling for buyer inspection, time of selling vary considerably. In some years, 12 percent; grading at warehouse, about 52 per- considerable quantities of wool are sold (con- cent ; core testing, 33 percent ; sorting, 3 percent ; tracted) by growers well in advance of shearing. scouring, 7 percent; and baling, 6 percent (55). Furthermore, in some years large quantities are During the late 1950's and early 1960's, apparently consigned by producers to handlers and may not both the volume of wool scoured and the volume be sold for several months or for 1 or more years. baled in producing areas increased, particularly Wool as it comes from the sheep varies widely in the Southwest. in fineness, length, strength, and other character- Additional operations required in taking wool istics of the fibers, and in the kinds and amounts from farms and ranches and delivering it to manu- of foreign matter mixed with the fibers. Pro- facturers involve such services as assembling, ducers and many buyers in producing areas are transporting, storing, financing, and merchandis- unable to accurately evaluate these quality ele- ing. Marketers engaged in these operations, ments as a basis for selling and buying the wool. classified on the basis of the nature and extent of Consequently, much wool is sold, especially by the services and other functions performed, in- producers of small clips, on a more or less flat clude brokers, commission agents or handlers, price basis, with little variation in prices on the dealers, topmakers, and other manufacturers. But basis of the quality of individual clips. Such pric- a firm may engage in two or more types of opera- ing offers little inducement to farmers and ranch- tions during any marketing season. men to improve the quality and preparation of Brokers arrange for the purchase or sale of wool wool offered for sale. and are paid a fee for their services, but usually Lack of uniform standards for some of the chief they handle neither the physical wool nor the quality elements of wool, and of adequate classifi- financial settlement for it. They take no part in cation and market information services, may help the grading, sorting, or other preparation of the to account for the failure of prices to producers wool. Some brokers with purchase orders from to reflect more of the diflferences in the quality and eastern merchants or mills go west and buy speci- preparation of wool. Official U.S. standards for fied quantities of selected types of wool to meet grades of wool, based on fineness or diameter of special requirements. They usually pay the grower the fibers, were established in the 1920's, and re- by draft and attend to shipping the wool. {12S). visions of these standards were proposed in 1955 Commission agents or handlers receive wool on and in 1963. But these revisions have not been consignment, take responsibility for its care and accepted in the wool trade {109^ 110^ 111), Fa- preparation while it is held for sale, sell to and cilities and methods have been developed for tak- collect from buyers, deduct expenses and commis- ing adequate samples and for measuring the sions, and remit the balance to the owner. In 1956, shrinkage or yield of wool. Suggested staple shorn wool consigned to operators accounted for lengths for grades of grease wool have been pre- about 43 percent of the wool handled at ware- pared, but official standards for length, strength, houses in producing areas. The volume of wool color, and other quality elements of the fibers are consigned usually is greatest in years when prices not available. Technical and other problems in- at shearing time are relatively low. Such prices volved in evaluating the quality elements and may induce many growers to store wool in antici- yield of wool are such that only small amounts pation of higher prices. are graded at shearing pens as a basis for sale by Dealers buy and take outright posssesion of the producers. wool, usually pay the full price at the time of pur- Warehouses in producing areas handled about chase, and sell it as advantageously as possible 90 percent of the shorn wool marketed in 1956. for their own account. Wool handled on ware- About 80 percent of this wool was obtained from house account or purchased on delivery in 1956 individual producers. The remainder was ob- amounted to 53 percent of all wool handled by tained through pools, interwarehouse purchases, warehouses in producing areas that year {ß5).

29 Dealers commonly do a great deal of grading and Of about 64 million pounds of wool handled by other preparation of wool, especially that of the Texas warehouses in 1956, slightly more than half domestic clip. A variation from the ordinary was consigned; the remainder was purchased on dealer type of operation is the practice of con- warehouse account. tracting for the purchase of wool before it is shorn. Operators of these warehouses graded 23 per- In 1956, about 7 percent of the 215 million pounds cent, core tested 31 percent, scoured 9 percent, and of wool marketed through warehouses was sold baled 6 percent of the w^ool handled. More than on contract before it was shorn (65). The con- three-fourths of this wool was offered for sale by tracts specify the amounts to be delivered and warehouse operators on an individual clip basis. prices to be paid. Since it is impossible to esti- Private treaty sales accounted for 97 percent, and mate wool shrinkage accurately before the sheep sealed bid sales 3 percent of the wool sold. About are shorn, considerable risks of loss from under- 60 percent of this wool was sold to dealers; the estimates of shrinkage, as well as from changes in remainder went to topmakers and other manufac- prices, are involved. Because of these risks, buyers turers. Sixty-six percent of this wool was shipped are necessarily conservative in the prices they offer. to New England and 25 percent to Southeastern Marketing practices involved in taking wool States. More than 90 percent of it was moved from growers and delivering it to manufacturers from warehouses by truck (55). vary considerably from one area to another, with In fleece wool States (all except Texas and terri- differences in the size of individual clips, and with tory States), much of the wool is bought by resi- other factors. In territory States (the 11 Western dent country dealers or by representatives of top- States and the western part of South Dakota) makers and other manufacturers. In many in- where many of the clips are large, considerable stances the wool is ungraded; in others it may be amounts of the wool are sold at the ranch by the rough graded as fine, medium, and rejects. Coun- producer to agents of central market operators, try dealers may buy on their own account or on particularly those in Boston. When possible, commission against orders from central market buyers inspect the clips at the shearing shed dur- dealers, topmakers, and other manufacturers. In ing the shearing season as a basis for estimating recent years, topmakers and other manufacturers shrinkage and quality. When such inspection is have purchased increased quantities of this wool not feasible, the wool may be examined in the barn from growers and from country dealers {12Ji), on the grower's ranch, or it may be bought without Of the 90 million pounds of wool handled by inspection on the basis of knowledge of previous w^arehouses in producing areas of the Central and clips of the same producer (^^). Eastern States in 1956, about 29 percent was con- In 1956, about 69 million pounds of wool, or signed, 67 percent was purchased on warehouse more than 60 percent of the shorn wool produced account, and 4 percent was handled on some other in the territory States, were handled by 39 west- basis. About 76 percent of this wool was obtained em warehouse operators. About 87 percent of from individual producers. Operators of these the wool handled was obtained from individual warehouses graded 80 percent, core tested 32 per- producers. About 54 percent was consigned, 39 cent, scoured almost 4 percent, and baled 2 percent percent purchased on warehouse account, and 7 of the wool handled. Only about 8 percent of the percent was purchased on delivery or handled on wool sold at warehouses was offered for sale on an some other basis. Operators of these warehouses individual clip basis. Private treaty sales ac- graded 37 percent, core tested 35 percent, scoured counted for about 96 percent and sealed bid sales 10 percent, and baled 11 percent of the wool han- for 4 percent of the wool sold by warehouse oper- dled. About 54 percent of the wool sold by ware- ators. Eighty-eight percent of the wool was sold house operators was offered on an individual clip to manufacturers and 12 percent to dealers. Sixty- basis. Private treaty sales accounted for 87 per- six percent of this wool was moved from ware- cent and sealed bid sales 13 percent of the wool houses by rail and 34 percent by truck. About 82 sold. About 84 percent was sold to manufacturers percent of this wool w^as sent to New England, 15 and 16 percent to dealers. About 73 percent was percent to Southeastern States, and 3 percent to moved from warehouses by rail, 21 percent by other outlets {55). truck, and 6 percent by ship. Sixty-six percent Substantial quantities of wool are marketed went to New England, 20 percent to Southeastern through cooperative associations, including pools. States, and 14 percent to the Pacific Northwest and The methods used in physical handling, showing, other outlets (5^). and selling through these associations are similar A large part of the wool produced in Texas is in most respects to those of other agencies. The delivered to local warehouses for storage and sale. proportion of U.S. production of shorn wool In addition, operators of Texas warehouses handle marketed cooperatively averaged about 24 percent substantial quantities of wool produced in other during the 6-year period 1952-57 and amounted States. These operators provide facilities for con- to about 21 percent in 1962.^ centrating wool in volumes large enough for more efficient handling, prepare it for storage and sale, ^ Data supplied by Walter L. Hodde, Fanner Coopera- and display sample bags for inspection by buyers. tive Service. 30 The number of Boston dealers and the volume Costs of freight and trucking averaged 2.41 cents of wool handled by them have decreased markedly a pound for the United States and ranged from in recent years. Yet more than 170 wool dealers 0.62 cent for wool produced in New England and in Boston were listed in Davidson's Textile Blue the Middle Atlantic States to 2.57 cents for that Book for 1962 and about 30 of them were members produced in Arizona, California, Idaho, Nevada, of the National Wool Trade Association that year. Oregon, and Washington. Handling charges av- Dealer houses vary greatly in size and organiza- eraged 2.15 cents a pound for the United States; tion and in kind and volume of wool handled. A averages by States ranged from 1.25 cents for wool small house may have only one traveling buyer, produced in Texas to 4.50 cents for tliat produced five or six resident agents in producing areas, and in New York. Service and appraisal charges one salesman. A large house may have 2 or 3 were listed at 1.125 cents for wool from each of the traveling buyers, 40 or 50 resident agents in pro- States (44)' ducing areas, and 3 or 4 salesmen. Quantities of For 169 million pounds of graded wool pur- wool handled annually by individual dealers may chased in the grease, gross merchandising margins range from less than 1 million pounds to more than averaged 6.85 cents a pound, or about 13 percent 20 million. of the Boston price. State averages ranged from Kesident agents of dealers buy wool mostly on 5.91 cents for wool produced in Wyoming to 7.78 commission under the supervision of traveling cents for that produced in Oklahoma. Charges buyers. In addition to buying wool, these agents for freight and trucking averaged 2.00 cents a see that it is assembled and properly shipped. pound for the country as a whole, and ranged from They also keep their principal posted on w^ool- 0.625 cent a pound for w^ool produced in New Eng- growing conditions, current prices in the country, land and the Middle Atlantic States to 2.57 cents and the activities of competitors (36). for that produced in Far Western States. Grad- Dealers may grade or otherw^ise prepare wool ing charges were listed at 0.75 cent a pound for and try to sell it to topmakers and manufacturers wool from each of the States. at prices that will net them a profit. Dealers' Gross merchandising margins for scoured wool salesmen contact processors or manufacturers, de- in 1946, including costs of scouring and carbon- scribe their w^ool or show small samples, quote izing, averaged 27.08 cents a pound, or about 25 prices, and try to interest them in buying the deal- percent of the Boston price. Averages by States er's holdings. If interested, the prospective buyer ranged from 22.74 cents a pound for wool from examines the wool in the dealer's warehouse before Texas to 28.89 cents for that from California. definitely deciding to buy it (36) Cost of freight and trucking averaged 5.08 cents Domestic pulled wool usually is sold by meat a pound for the United States ; averages by States packers, through their Boston offices, direct to ranged from 1 cent for wool from New England manufacturers. Offers and sales of this wool are to 5.59 cents for that from Far Western States. made on the basis of small samples. A 2-pound Handling charges averaged 8.2 cents a pound for sample may represent 20,000 pounds. If the pur- the United States, and ranged from 4.8 cents for chaser finds that the wool received is not equal in wool from Texas to 10.5 in many other States. quality to that in the sample, he may reject it. Cost of service and appraisal was listed at 2.8 cents Some pulleries sell direct from their plant to manu- for wool from all States. Scouring and carbon- facturers through traveling salesmen or by corre- izing charges were listed at 10 cents for all States spondence, and others sell through commission except California, where the charge w^as listed at agents in Boston (36). 12 cents a pound. Maximum charges for handling w^ool permitted Charges or Costs in the wool handler's agreement for the 1954 price- support loan program provide some basis for indi- Data on costs of marketing wool in recent years cating changes in costs since 1946. In 1954, maxi- are incomplete. However, a large part of the 1946 mum charges for handling amounted to 4.75 cents domestic clip was handled by the Commodity a pound for lots of less than 2,000 pounds, 3.5 Credit Corporation. Data on prices at Boston, on cents for lots of 2,000 to 5,000 pounds, and 2.25 farra prices, and on deductions for merchandising cents for lots in excess of 5,000 pounds. Charges services for this wool provide a basis for indi- for country services of accumulating and assem- cating the costs or margins involved. Cost data bling small lots of less than 2,000 pounds in the for more recent years provide a basis for indi- United States were listed at 1.5 cents a pound. cating changes made up to 1962. Grading charges were 2.25 cents for lots of less Gross merchandising margins for 106 million than 2,000 pounds and 1.5 cents for lots of 2,000 pounds of grease wool purchased by the Commod- pounds and larger. ity Credit Corporation in original bags during More recent data indicate that in the early 1960's 1946 averaged 5.69 cents a pound, or about 12 per- wool-handling charges at warehouses, including cent of the Boston price (44)- Average margins storage up to 6 months or more, ranged from by States ranged from 5.36 cents for wool from about 1.5 cents to 4.5 cents a pound. They were Colorado to 7.03 cents for that from Oklahoma. apparently somewhat lower than those in 1954 31 and 1946, particularly in the Western and South- supplying producers and local buyers with ade- western States. Grading charges reported ranged quate information on prices of the various quali- from 1.5 cents to 2 cents a pound, and apparently ties of wool and on market outlets. were about the same as those in 1954 and in 1946. Fragmentary data available indicate that scour- WOOL CLASSIFICATION AND MARKET INFORMA- ing and carbonizing charges in the late 1950's TION SERVICE and early 1960's were lower than those in 1946. Transportation costs for wool increased from The feasibility and usefulness of a wool classi- about 2.16 cents a pound in 1946 to 2.79 cents in fication service to producers and local buyers may 1958 and then decreased to about 2.07 cents in be materially influenced by (1) availability and the early 1960's. Keductions in these costs were suitability of wool for sampling (2) adequacy of associated with increases in the amounts of wool the sample on the basis of which the classifications scoured and baled or baled in the grease in pro- are made (3) adequacy of the standards on the ducing areas. They were also associated with basis of which the various quality elements are shifts from rail to truck transportation, particu- evaluated and described (4) accuracy of the evalu- larly for wool from Texas and other Southwestern ations of the quality elements represented by the States, and with shifts in manufacturing from sample on the basis of the established standards New England and Middle Atlantic States to (5) confidence of sellers and buyers in the ade- quacy of the classification service, and their will- Southeastern States. ingness to sell and buy wool on the basis of this information (6) adequacy of market news service Means and Importance of Improvement for use as a guide in selling and buying wool, and Recommendations for improving services con- (7) cost of the services. nected with the marketing of wool would need to be based on information showing the comparative Availability of Wool for Sampling advantages and disadvantages of performing such Wool may be available for sampling at the farm marketing services as skirting, grading, sorting, or ranch, at the warehouse, or at other concentra- scouring, packaging, storing, and processing wool tion points. Where flocks are large and the wool at different locations, by different agencies, and by fairly uniform, adequate samples may be taken use of different facilities and methods. Results at the farm or ranch. But in 1959, fewer than of analysis should show the influence of different 2 percent of the wool-producing units had 1,000 or factors on the adequacy and costs of services, on more sheep each, according to census reports. the quality and adaptability of wool for further Small farm flocks would need to be assembled be- processing, and on costs of moving wool to centers fore shearing, or the wool would need to be con- of consumption. Such information is limited. centrated after shearing at warehouses or at other Specific suggestions on means of improvement concentration points, to provide volumes large must be limited accordingly. enough for adequate sampling. In 1959, about Wool producers in many localities undoubtedly 84 percent of the wool-producing units had fewer could strengthen their competitive position and than 100 sheep each, according to census reports. increase their incomes by improving the quality, The large number of these small flocks and varia- uniformity, and preparation of their wool. Bene- tions in quality of the wool emphasize the advis- fits from these improvements could be enhanced if ability of assembling the wool, grading or all producers, particularly the smaller ones, in an otherwise preparing it, and combining it into lots extended area of uniform environment would co- of adequate uniformity and size prior to sampling. operate in producing wool of about the same qual- ity. This cooperation would facilitate combining Adequacy of Samples wool from small flocks into lots of fairly uniform quality and lots large enough to be marketed more The adequacy of the sample from a lot of wool eificiently. Larger proportions of premiums paid is determined largely by the nature and extent of the variations in quality of the wool, the number by mills for the better qualities of wool and of of bags or bales sampled and the parts of the bale discounts made for the lower qualities, reflected from which the sample is drawn, the method and in prices to producers, would encourage them to equipment used in obtaining the sample, and the improve the quality, uniformity, and preparation care taken in handling and conditioning it. Lots of their wool. of wool that are fairly uniform in quality offer few The relationship between prices and qualities of difficulties in obtaining representative samples. wool in producers' local markets could be improved But it may be quite difficult to get representative (1) by making more generally available to pro- samples from lots containing widely different qual- ducers and buyers a practical and dependable ities of wool not uniformly distributed in the same wool classification service (2) by offering for sale or different bags or bales. Such variations com- well prepared wool of uniform quality in lots large plicate the problem of determining the bags or enough to be handled economically, and (3) by bales to be sampled, the parts of the bags or bales

32 to be sampled, and the equipment and method to be these services with what is now available, and to used in drawing the sample. Quality differences improve the evaluations, standards, and services may be so diverse and so irregularly distributed as as time and opportunity permit. to require assorting and recombination into lots of more uniform quality before sampling. Variations in Classification or Evaluation Differences in results of analysis of samples from the same lot of wool taken by different methods, Accuracy of the evaluations of the important by cores of different sizes, or from different parts quality elements of wool in the sample, as well as of the bags or bales may be great enough to result the representativeness of the sample and the ade- in substantial gains or losses in individual in- quacy of the standards, may greatly influence the stances, if wool is bought on the basis of one sample usefulness of wool classification services. Accu- and sold on the basis of another taken from the racy of these evaluations may be materially same lot (114). To assure the representativeness influenced by the competence of the analyst or of the samples and to increase the acceptability of appraiser, the method and equipment used, the con- the quality evaluations based on them, provisions ditions under which the evaluations are made, and may need to be made for having certified samples the physical condition of the sample at the time of drawn, prepared, and identified by qualified sam- analysis or appraisal. plers who may be licensed and supervised by a Evaluations of quality elements in individual competent and unbiased agency. samples are subject to some variations on the part of almost all analysts or appraisers, even under Uniform Standards for Quality the most favorable conditions (^). Such varia- tions may be great enough to affect materially the The usefulness of a classification service in mar- usefulness of a classification service as a basis for keting wool depends largely upon the adequacy selling and buying wool on description. They of the standards on the basis of which the various emphasize the importance of having the quality quality elements are evaluated and described. elements of wool evaluated by competent and un- These elements of quality include all of the physi- biased analysts or appraisers, under favorable con- cal properties of wool that affect its value or use- ditions, and subject to the supervision of a com- fulness, such as yield of clean wool, fineness of petent and unbiased agency. fibers, length of staple, uniformity and strength of staple, crimp of staple, and color. Confidence in the Adequacy of Services Methods and equipment for determining yield on the basis of core samples have been developed, General acceptability and usefulness of a wool but apparently some questions remain with regard classification service may depend upon the avail- to^ the accuracy or dependability of results ob- ability of the service, when needed, confidence in tained by the use of coring tubes of different sizes. the adequacy and dependability of the evaluations, Official standards for grades or fineness of wool and willingness of producers and buyers to sell have been developed, but there is some opposition and buy on the basis of such evaluations. The to their use as a basis for selling and buying wool time between the sampling and sale of wool may on description (109, 110, 111), There are no offi- be an important consideration, especially for pro- cial standards for length, strength, uniformity, or ducers who desire to sell immediately after shear- crimp of staple, color, or other quality elements ing. The facilities and personnel available, and the costs involved also are important. of wool fibers, except fineness. Confidence in a wool classification service and The development of standards on the basis of the willingness of producers and buyers to co- which all important quality elements of wool can operate in selling and buying on the basis of the be evaluated and described with reasonable accu- information provided by it may be influenced racy appears to be essential to the development largely by the dependability of the classification. of effective classification and market information This dependability, in turn, may be greatly in- services. As a prerequisite to the development of fluenced by the adequacy of the standards used, such standards, all important quality elements the representativeness of the samples, the condi- need to be identified and evaluated, and adequate tions under which the samples are evaluated, the methods and equipment developed for measuring competency of the analysts or appraisers, and the significant differences in them. Considerable time way in which the information or evaluations may and the cooperation of both public and private be used. agencies in the wool industry may be needed Despite the limiting influence of some of these factors, the classification of samples of wool taken to meet these requirements. These statements are by approved methods and techniques and evalu- not intended to imply, however, that standards for ated on the basis of reasonably adequate standards all quality elements of wool must be satisfactory may be accurate enough to be of considerable as- to all marketing agencies before classification and sistance to growers and buyers in marketing wool. market information services to producers can or Also, it may be accurate enough for effective use should be initiated. It may be advisable to start in selling and buying wool on description, if no

736-806 -64- 33 selections or rejections of individual lots on the one locality to another. The successful operation basis of other information on quality are allowed. of wool classification and market information Apparently, then, a means of building up and services in one locality, under one set of conditions,, maintaining confidence in a classification service should not be interpreted to mean that similar would be to provide for the sale of all wool by pro- services would produce equally good results in ducers on the basis of the classification by a reli- others. The volume and uniformity of the wool able agency, and to permit no selections or produced, facilities and personnel available, and rejections of individual lots on the basis of other the attitudes and reactions of producers and information on quality. Under such situations, buyers may differ considerably from one locality differences in value of lots of the same description, to another. These differences may be important as a result of variations in classification, and dif- practical considerations in determining the feasi- ferences in quality of wool of the same description bility of developing and maintaining wool classi- would be offsetting. This would mean that^ on fication services in the various localities. the average, for a substantial number of lots, little gain or loss would result from differences in STORAGE AND RELATED SERVICES classification (4^). Storage and related services for wool may be Adequate Market Information improved by use of more suitable buildings, better operating methods, and improved equipment for In addition to an adequate classification service, handling, grading, sorting, packagmg, storing, wool producers need current information on prices and other services of warehouse operators. Stor- of wool of various qualities in local and central age space may be more efficiently utilized by com- markets, on the demand and supply situation for pressing wool to a higher density before it is stored. wool, and on costs of selling in alternative markets Substantial savings apparently would result from for use in determining when, where, and at what the use of adequate machinery and equipment for prices to sell their wool. handling, weighing, bagging, baling, and stacking wool and from a convenient system of arranging Cost of the Service the bags or bales so they could be shipped out with minimum handling {131^ 132), Research results Data on costs of supplying such classification indicate that in wool warehouses grading 2 million services are incomplete. Estimates based on the pounds annually, improved work methods and limited information available indicate that ob- equipment can reduce costs for grading operations taining samples and analyzing them to show yield, by as much as 34 percent for consigned wool and fineness, staple length, crimp, color, and other by as much as 30 percent for warehouse-owned quality elements of the wool may cost as much as $50 or more per lot of wool sampled. These costs wool {128). Results of additional engineering and may be influenced considerably by the availability, cost studies are needed to show more specifically quality, and uniformity of the wool sampled. the means by which the adequacy and efficiency Costs per pound of wool sampled would vary in- of these and other storage and related services for versely with the size of the lots. If, for example, wool can be improved. analysis of a sample cost $50, this cost would amount to 5 cents a pound for a lot of 1,000 TRANSPORTATION AND RELATED SERVICES pounds, 0.5 cent for a lot of 10,000 pounds, and The charge for transportation is one of the larg- 0.1 cent a pound for a lot of 50,000 pounds. est items of cost involved in marketing raw wool. Costs of transportation services may be greatly Benefits of the Service influenced by the type of transportation agency A practical and dependable wool classification used, by the condition of the wool and the way it and market information service for producers is packaged, and by other factors. During the would (1) increase the bargaining power of those late 1950's and early 1960's, rates charged for who produce wool of higher qualities and encour- transporting wool were reduced considerably. age improvements in the quality and preparation These reductions were associated with substantial of wool (2) increase the usefulness of price quota- increases in the amount of wool scoured and baled tions in selling wool on the basis of its quality (3) or baled in the grease in producing areas. Scour- make possible reductions in costs of multiple show- ing reduces the weight of wool by removing for- ing, sampling, and reappraisals (4) improve the eign matter, and compressing to a higher density collateral value of warehouse receipts for wool in baling permits loading of more wool per car or (5) reduce risks of loss from errors in quality per truck. Both scouring and compressing tend evaluations, and (6) make possible other economies to reduce transportation costs. Additional infor- in marketing wool. mation is needed to show the feasibility of making Practical difficulties in developing and main- further reductions in transportation costs by these taining such a service doubtless would vary from and other means.

34 IMPORTANCE OF IMPROVEMENT retail value of these goods. It is apparent from From the viewpoint of cost, the importance of these data that large proportional reductions in improving the marketing of wool may be indicated costs of merchandising raw wool would have rel- by the fact that in recent years gross merchandis- atively little influence on the total marketing ing margins have averaged about one-fifth of margins, or spread between the prices to farm pro- gross returns to growers for the wool, or more ducers and the retail prices paid for finished ap- than $20 million m 1961, and 2.5 percent of the parel and household goods made of wool.

YARN, EXCEPT WOOL, AND THREAD MANUFACTURING

In 1958, the yarn, except wool, manufacturing TABLE 8.—Distribution of manufacturers^ ship- industry included 356 establishments primarily en- ments of yarn spun on cotton and silk systems^ gaged in spinning yarns wholly or chiefly by ly class of customer and outlet. United States, weight of cotton, manmade fiber staple, or silk 1958 staple. These establishments were owned or con- trolled by 268 companies. Tire cord and tie cord Customer and outlet Value Propor- fabric producers, formerly included in this in- tion dustry, were placed in a new industry, in accord- ance with the 1957 edition of the Standard Million Industrial Classification Manual. Manufacturer to— dollars Percent The value of total shipments by the yarn manu- Sales offices, branches, etc 81 7.3 facturing, except wool, industry in 1958 was about Other plants, same company 345 31.0 Other manufacturers- _ 592 53 1 $855 million. Ninety-three percent of this amount Merchant wholesalers 46 4 1 was accounted for by primary products. Second- Exports 9 .8 ary products, accounting for about 7 percent of the All other. __ 41 3. 7 value of shipments, included broadwoven fabrics, Total 1, 114 100 0 thrown filament yarns, wool yarns, and thread. The value of shipments of primary products by Sales offices, branches, etc. to— this industry accounted for 77 percent of the value Other manufacturers 80 96. 4 Exports. __ 2 9 4 of these products shipped by all industries. Only Another 1 1 2 about one-fourth of the spun cotton, manmade fiber, and silk yarns produced by all industries in Total 83 100 0 1958 were shipped. The remainder was used in the manufacture of woven fabrics. About two- Adapted from Census of Manufactures (96). thirds of these shipments were distributed directly or indirectly through manufacturers' sales offices mainder were made of manmade fibers. A large and branches to other manufacturers, and 31 per- proportion of yarn production in the United cent were shipped to other plants of the same com- States is integrated with weaving and other opera- pany. Only small proportions were shipped to tions. In 1958, yarns produced on the cotton sys- merchant wholesalers and to other outlets (table tem by establishments for their own use accounted 8). for about three-fourths of the total. Some in- Thread mills are establishments primarily en- tegrated mills sell surplus yarns not needed in gaged in manufacturing thread of cotton, man- their weaving departments. Thread mills are made fibers, or silk. Important products of this highly specialized in the manufacture of thread industry inchide sewing, crochet, darning, em- as a finished product. broidery, tatting, hand-knitting, and other hand- craft threads. In 1958, the value of shipments of SIZE AND ORGANIZATION thread by this industry totaled $148 million and accounted for 90 percent of its total product ship- Changes in the size and organization of estab- ments. Shipments of thread by this industry re- lishments manufacturing yarn and thread may be presented 91 percent of that shipped by all indicated by information on the number of spin- industries in 1958 and 94 percent of that shipped dles and the quantity of fibers consumed, owner- in 1954. ship and organization of the establishments, and Nature and Practices mergers and acquisitions of firms. Some of the information available, particularly that on num- At niills cotton bales are opened and the lint ber of spindles, on fibers consumed, and on merg- cotton is cleaned, carded, combed (for fine yarns), ers and acquisitions, relates to larger segments and spun into yarns. In 1958, according to census of the textile industry than the yarn and thread reports, yarns spun on the cotton system totaled industries. This overall information is summa- more than 4,000 million pounds. Five-sixths of rized in this section and referred to in subsequent these yarns were made of cotton ; most of the re- parts of this report. 35 Number of Spindles and Quantity of Fibers Europe but increased in South America, Eastern Consumed Europe, Eussia, Asia and Oceania, and Africa. The proportion of the world total number ac- The number of spindles in place customarily in- counted for by non-Communist countries de- dicates the size of plants or the size of the cotton creased from about 85 percent in 1950 to 79 textile industry. The world total number of cot- percent in 1960; whereas the proportion in the ton spindles in place increased from 123,349,000 in 1950 to 129,447,000 in 1959. In 1960, it Communist Bloc increased from 15 percent in 1950 amounted to 125,867,000, substantially below the to 21 percent in 1960. The proportion of the world 147,648,000 spindles in place in 1939 (table 9). total accounted for by the United States decreased During the 1950's, the total number of spindles in from about 19 percent in 1950 to about 16 percent place decreased in North America and Western in 1960.

TABLE 9.—Number of cotton spinning spindles and of hales of cotton consumed^ hy countries^ 1939^ 1950^ and 1960

Cotton spinning spindles in place ^ Bales of cotton consumed 2 Country 1939 1950 1960 1939 1950 1961

North America: Thousands Thousands Thousands Thousands Thousands Thousands Canada 1,159 1, 117 817 286 421 335 Mexico _ - -- 884 986 1,350 226 310 500 TTnited States -- 25,911 23, 286 19, 916 6, 858 8,883 8,279 Other ------95 173 334 18 55 106 Total 28, 049 25, 562 22,417 7,388 9,669 9,220 Western Europe: T^elffiuin ___ 1,984 1,802 1,493 321 406 427 France - - -- - 9,794 8, 148 5,802 1,316 1, 160 1,397 Germany (Federal Republic) 12, 225 5,785 5,909 1,204 873 1,500 Italy -___ --- -_ -- -- 5,324 5, 566 4,611 665 936 1,040 Netherlands _ _ _ - -- 1,241 1, 170 1, 020 260 280 377 Portugal -- - 444 536 1,105 110 165 303 Spain __ ------2,000 2,210 2,589 140 270 580 Switzerland - 1,249 1,156 1,169 141 140 195 TTnited Kingdom 36, 322 29, 580 9,710 2,690 2, 092 1,232 Other - - __- 2,287 2, 056 2,349 621 595 805 Total -- 72, 870 58, 009 35, 757 7,468 6,917 7,856 Eastern Europe: Czechoslovakia __ _ _ - - 3,330 2,331 1, 950 200 315 460 750 1, 150 125 480 Poland _- _-- - 1,764 1, 067 2,001 350 410 600 Other --_ - - - 668 689 1,377 338 414 775 Total 5,762 4,837 6,478 888 1,264 2,315 USSR total 10, 350 9,483 10, 800 3,765 3,350 6,300 Asia and Oceania: China ------4,730 4,251 9,600 3,295 2,700 7,700 India - 10, 054 10, 534 13, 864 3,436 3,270 4,620 Japan _ _ 11, 502 3, 739 13,218 2, 517 1, 032 3, 169 Pakistan 167 1,941 145 1,085 Other - - ---_ __ _- 600 1,508 4, 256 623 785 2, 142 Total ------26, 886 20, 199 42, 879 9, 871 7, 932 18, 716 World total 147, 648 123, 349 125, 867 30, 353 31, 003 47, 504 Non-Communist _ 126, 806 104, 778 98, 989 22, 405 23, 689 31, 189 Communist Bloc 20, 842 18, 571 26, 878 7, 948 7,314 16, 315

1 Estimated number of spindles in 1939 and 1950 as of January, those in 1956 as of July, and those in 1959 and 1960 as of December. 2 Year ended July. Adapted from Cotton World Statistics prepared by the International Cotton Advisory Committee.

36 World mill consumption of cotton increased TABLE 10.—Number of active spindles and propor- from about 31 million bales in 1950 to 48 million tion of cotton consumed^ hy areas^ united in 1960, and amounted to 47.5 million in 1961. Be- States^ specified years^ 1930-62, tween 1950 and 1960 increases are shown for all major geographic divisions, except North Amer- United Cotton- New- All ica, and for most of the individual countries (table Yeari States growing England other 9). The proportion of world total mill consump- States States tion of cotton accounted for by non-Communist countries decreased from about 76 percent in 1950 Active spindles ^ to 66 percent in 1961 ; that for the Communist Bloc increased from about 24 percent in 1950 to 34 per- Thousands Thousands Thousands Thousan ds cent in 1961. The proportion accounted for by the 1930 31, 245 18, 586 11, 351 1,308 United States decreased from about 29 percent in 1940 23, 586 17, 641 5,279 666 1950 to about 17 percent in 1961. 1950, 20, 518 16, 574 3,603 341 Spinning activity is indicated by the number 1960 17, 521 16, 261 1,191 69 1961 17, 273 16, 184 1,042 47 of active spindles and by the number of hours 1962 16, 774 15, 993 741 40 spindles are operated during a specified period. In the United States, the number of active spindles Proportion of cotton consumed decreased from more than 31 million in 1930 to about 17 million in 1962 (table 10). Most of the Percent Percent Percent Percent decrease occurred in New England and other 1930 100. 0 77.8 18.7 3.5 States outside the Cotton Belt. Of the total num- 1940 100.0 85.4 11.8 2.8 ber of active spindles in the United States, the 1950 100. 0 90.7 7.5 1.8 proportion in cotton-growing States increased 1960 100.0 96. 2 3.4 .4 1961 100. 0 96.3 3. 3 .4 from less than half in 1925 to about 95 percent in 1962 100.0 96.9 2.9 .2 1962; whereas the proportion in New England decreased from 46 percent in 1925 to 5 percent in ^ Year ending July. 1962. Of the total U.S. consumption of cotton, the 2 Active at anytime during year to 1945; active at end of proportion consumed by mills in cotton-growing year for other years. States increased from ßS percent in 1925 to about Adapted from {99), 97 percent in 1962, and that consumed in New England decreased from 26 percent in 1925 to less Ownership and Operation than 2 percent in 1962 (table 10). Kates of mill consumption of cotton vary di- The type of ownership or control of some cot- rectly with the number of active spindles, the ton yarn and thread mills has been changing. Cot- proportion of total capacity utilized, and the ton yarn mills that were under corporate owner- coarseness of yarns produced. The proportion of ship or control in 1958 accounted for 93 percent of spinning capacity utilized in the United States, the total number of establishments, and employees based on an 80-hour week, ranged from 62 percent of these mills accounted for 99 percent of the total in 1925 to 156 percent in 1960, and averaged 155 number of employees in this industry (table 12). percent in 1962. Mill consumption of cotton Of the total number of establishments, the propor- ranged from less than 6 million bales in 1925 to tion operated by corporations increased from 1939 10.7 million in 1951, and amounted to about 9 mil- to 1954 but decreased from 1954 to 1958 ; whereas lion bales in 1962. Cotton consumption per active the corresponding proportion of the total number spindle increased markedly from 1925 to 1951 and of employees in this industry remained about the continued at relatively high rates through 1962. same. Changes in cotton consumption per 100 spindle Yam mills operated from central administra- hours were relatively small (99). tive offices as multiunits decreased from about 50 Spindle activity and rate of cotton consumption percent of the total nmnber of mills in 1939 to 46 in cotton-growing States during the 1960-61 year pecent in 1958. But the proportion of total em- were high in relation to the average for all other ployees accounted for by multiunits increased from areas combined (table 11). The total number of 61 percent in 1939 to 64 percent in 1954, and then hours spindles were operated during this year decreased to 62 percent m 1958 (table 12). average about 146 percent of capacity (for an 80- The proportion of thread mills under corporate hour week, for spindles active at the end of the ownership or control increased from about 71 per- year) in cotton-growing States, compared with cent of the total in 1939 to 80 percent in 1954 and about 134 percent in New England and 146 per- to 83 percent in 1958. The proportion operated cent in the United States as a whole. The quantity from central administrative offices as multiunits of cotton consumed per 100 spindle hours in 1960- increased from 23 percent in 1939 to 26 percent 61 averaged 3.87 pounds in cotton-growing States, in 1954 and to 45 percent in 1958. Average num- 2.25 pounds in New England, and 3.79 pounds in ber of employees per mill decreased for both multi- the United States as a whole. unit and single-unit establishments, but according 37 TABLE 11.—Numher of active cotton spindles^ hours operated^ and cotton consumption^ hy area^^ united States, 1961 ^

Cotton consumed Total Proportion State Active spindle of spindles ^ hours capacity ' Per 100 Total spindle hours

Cotton-growing States : Thousands Millions Percent IrOOO bales Pounds South. Carolina 6,021 38, 701 154. 5 2,520 3. 13 North Carolina 4,810 28, 599 142. 9 2, 445 4. 10 Georgia - - 2,637 15, 445 140. S 1, 539 4. 78 Alabama 1,427 8,369 141. 0 842 4. 83 All other _._- -- 1,289 7,460 139. 1 600 3. 86 Total or averaee -- 16, 184 98, 574 146.4 7, 946 3.87 New England: Massachusetts - - - 414 1,949 113.2 79 1.95 Maine ------246 1,650 161.2 116 3.37 Rhode Island -- 241 1,306 130.3 39 1.43 All other -_ 141 916 156. 2 39 2. 04 Total or averasre 1,042 5,821 134.3 273 2.25 Other States 47 166 84.9 34 9. 83 United States -- 17, 273 104, 561 145. 5 8, 253 3.79

1 Year ending July. 2 Spindles consuming 100 percent cotton. 8 Proportion of capacity for 80-hour week for spindles active at end of year. Adapted from (99). to census reports, the proportion of total employees ranged from 1 to 43, and fewer than 5 percent accounted for by employees of multiunits increased acquired 10 or more firms each. These ac<][uisitions from about 65 percent in 1939 to 87 percent in 1958. and mergers apparently represent various com- binations of vertical, horizontal, and conglomerate Mergers and Acquisitions integration. Vertical integration is the combination under Mergers and acquisitions in the textile industry, one management of operating units in two or more including those of yarn and thread mills, appar- stages in the manufacture and distribution of prod- ently have resulted in considerable changes in the ucts. These may be spinning and weaving, weav- organization and management of many operating ing and finishing, finishing and fabricating, fabri- units. According to the Cotton Textile Institute, cating and wholesaling, wholesaling and retailing. the ownership of about 154 cotton textile com- Acquisitions of textile firms by vertical integration panies engaged in spinning, weaving, or both, increased markedly from 1940 to 1946. About changed between 1940 and 1946 (117). These half of the spindles that changed hands^ during firms owned more than 4,400,000 spindles and more this period did so as a result of vertical integra- than 88,000 looms, or approximately one-fifth of tion. Among the most active purchasers in this the industry's productive facilities. kind of acquisition were selling agents and con- Eecent reports of the Federal Trade Commis- verters, cotton mill operators, cutters, and other sion on corporate mergers and acquisitions in the end-use firms. textile and apparel industries show that during Horizontal integration is the merging of two or the 6 years 1955-60, about 295 acquisitions were more firms or establishments on the same level of made by 112 acquiring firms. Acquisitions by production or distribution, such as two or more years ranged from 34 in 1958 to 56 in 1956. Assets spinning, weaving, finishing, fabricating, whole- of acquiring firms ranged from less than $10 mil- saling, or retailing establishments. Acquisitions lion to more than $500 million. About 8 percent of textile firms or establishments by horizontal of the acquiring firms indicated assets of more integration also increased markedly from 1940 to than $100 million and 21 percent indicated assets 1946. Approximately 18 percent of the mergers of more than $50 million. Annual acquisitions during this period were horizontal combinations. per firm ranged from 1 to 11, and only 13 percent Conglomerate integration is the merging of two acquired more than 2 firms during any 1 year. or more firms or establishments not in the same Total acquisitions per firm during the 6 years industry and not engaged in the same or different 38 TABLE 12.—Number of establishments and average backward and horizontally to control their sources number of employees per establishment for yarn of goods and to take advantage of wider margins. mills^ except wool^ by type of ownership and Some industrial firms which use yarns and fabrics operation^ united States^ 1939^ 1951^^ and 1958 in the manufacture of other products found it advantageous to buy cotton mills to supply their Average em- requirements, either partially or fully (30^ 62). Establishments ployees per Such integrations in the textile industry appar- Type of ownership Establishments ^ ently niultiply with prosperity and decline with and operation depression. The first real wave of mergers during 1939 1954 1958 1939 1954 1958 this century came with the boom following World War I. It was temporarily arrested during the Num- Num- Num- Num- Num- Num- depression that began in 1921. Absorption and Ownership or control: ber ber ber ber ber ber purchases of businesses increased with improve- Corporate 318 336 330 218 251 204 ments in business conditions in the middle 1920's. Partnership 13 11 13 34 49 23 Individual 15 9 13 33 (') 5 A peak reached in 1929 was followed by another Other ______3 1 0 53 0 letup during the depression of the early 1930's. Increased interest in mergers began again in the All 349 357 356 202 239 191 early 1940's, and the rate of acquisitions reached a Operation: high level in 1947. Following a decline in the Single unit: rate of mergers during the late 1940's and early Corporate 148 180 166 179 153 1950's, another wave started in 1953, and except Other _ 26 20 26 33 14 for some letup in 1957 and 1958, continued to the All 174 200 192 157 151 134 early 1960's. Mergers and acquisitions, along with changes in Multiunit: types of ownersliip and operation of cotton yarn Corporate 170 156 164 252 257 Other 5 1 0 47 0 and thread mills after 1947, apparently were asso- ciated with irregular changes in average size of All _ 175 157 164 246 350 257 individual mills, as indicated by the number of em- All ployees. Average number of employees per yam 349 357 356 202 239 191 mill decreased from 256 in 1947 to 210 in 1958. The proportion of yarn mills with 100 or more 1 In 1939 only wage earners are included; in 1954 and 1958 all employees are included. employees decreased from 70 percent of the total 2 Witliheld to avoid disclosing figures for individual in 1947 to 66 percent in 1958 (table 13). The pro- companies. portion with fewer than 20 employees decreased Adapted from Census of Manufactures. from 14 percent in 1947 to 13 percent in 1958. The number of employees per thread mill averaged stages of the production, marketing, manufactur- about the same in 1958 as in 1947, but the propor- ing, and distribution of the same products. In tion of mills with 100 or more employees increased 1958, establisliments that employed about 10 per- and those with fewer than 20 employees decreased cent of the total number of employees of all estab- (table 13). lislnnents classified in the textile mill products The trend toward greater concentration in the <îategory were operated by companies classified in textile industry is indicated by reports that the other categories. Of the total number of em- share of total spindles accounted for by the largest ployees of companies classified in the textile mill four firms increased from 5 percent in 1937 to 17 products category in 1958, about 15 percent were percent in 1955 {129). In 1958, cotton yarn mills in establishments classified in other industry cate- operated by 4 of the largest of 263 companies ac- gories (101). counted for 24 percent of the total value of ship- Several factors contributed to the wave of merg- ments of the industry (table 14). Mills operated ers in the 1940's. IVofit margins, affected by by 20 of the largest companies, or less than 8 per- price controls during the war emergency, ex- cent of the total number, accounted for 54 percent; panded demand, and other factors led some mills and 50 of the largest companies, or 19 percent of to integrate forward by buying or building finish- the total, accounted for 74 percent of the value of ing plants to take advantage of wider margins on shipments of the industry. The proportion of the converted goods. This development, in turn, total value of shipments accounted for by specified made it necessary for some converters and custom- numbers of the largest companies decreased from finisliing plants to integrate backward by buying 1954 to 1958. mills to secure a supply of goods for their finishing Similar data for the thread industry show that operations. Some selling houses found it neces- in 1958 mills operated by 4 of the largest of 70 com- sary to integrate by buying mills to control a full panies accounted for 68 percent of the value of line of products for sale. In some instances, shipments by the industry (table 14). Mills oper- wholesale houses and mills that owned their own ated by 20 of the largest companies, or about 29 •sales agencies found it advisable to integrate both percent of the total number, accounted for 92 per- 39 TABLE 13.—Number of yarn^ except wool^ and supplies of raw materials and adequate market thread mills^ hy number of employees, United outlets for the products; (2) to diversify various States, 19Ii7 and 1958 textiles as a means of coping with fluctuations in popularity among fibers and of facilitating the Yarn mills Thread mills blending of fibers; (3) to coordinate the various Employees per stages of production with consumer requirements plant and; (4) to facilitate financing for operating units 1947 1958 1947 1958 of the most economic size, for acquiring improved facilties and equipment, and for providing mod- Number Number Number Number em management methods, including research and 500 and more 42 27 9 7 advertising. 250 to 499 91 56 2 8 100 to 249 150 151 10 8 Adequate information is not readily available 50 to 99 40 50 14 13 for determining to what degree these motivating 20 to 49 24 26 13 13 purposes are served by mergers and acquisitions 10 to 19- 28 17 10 14 in the textile industry. It is also inadequate for 5 to 9 18 10 16 9 1 to 4 11 19 15 14 determining the influence of such combinations on the adequacy and efficiency of the marketing serv- Total 404 356 89 86 ices, on prices to producers and consumers, or on competition among fibers. Evidently the problem Adapted from Census of Manufactures. of formulating and developing feasible plans for assembling and analyzing adequate information cent of total shipments. The share of the value for such determinations would be an extremely of shipments accounted for by specified numbers difficult one. Some have concluded that integra- of the largest companies did not change much from tion has not essentially altered the overall competi- 1947 to 1958 (table 14). tive structure of the textile industry {129). Additional data on companies manufacturing cotton yam and thread are combined with those MANUFACTURING METHODS on companies manufacturing broadwoven fabrics and those engaged in finishing textiles, except Cotton yarns are classified according to clean- ing processes, to twist or construction, and to yarn wool (table 28, p. 57). In addition to concentration on a company basis, numbers. According to cleaning processes they integration in the textile industry may involve are classed as carded, double carded, or combed. various other combinations of manufacturing, By twist or construction, they are known as warp, financing, and selling agencies. For example, in filling, knitting, ply, cord, sewing thread, or twine. 1958, one company, formed as a mill sales agency, Yarn numbers under 8s identify very coarse yam ; represented mills producing more than 500 million 8s to 16s, coarse ; 16s to 32s, medium ; 32s to 60s, yards of cloth annually for converters, apparel fine; 60s to 120s, fine; and over 120s, very fine. manufacturers, and retail piece goods departments The type of yarn and its number determine the {5). This company was selling agent for 23 tex- type and number of processes required in its man- tile manufacturing companies in 10 States in the ufacture. The number of processes range from United States and in 3 other countries. Principals 4 to 16 for single yams, but the usual number is of this company had financial interests in some of from 8 to 12. the manufacturing companies. The agent initiated Conventional or regular-draft processing usu- or cooperated with all the manufacturers in plan- ally requires two more processes than the more ning operations, plant modernization, fabric de- modem long-draft processing. Production of velopment, styling, pricing, packaging, advertis- plied yams, sewing thread, tire cords, and other cable strands necessitates one or two additional ing, and market analysis. Sales offices were main- processes known as twisting. Auxiliary process- tained in 11 cities in the United States and 2 in Canada. Furthermore, a close working relation- ing equipment needed by yarn mills for the pre- ship between this selling company and its financing paration of yams for twisting, for warps, or for affiliate was guaranteed by interlocking director- sale may be winders, spoolers, coners, and beamers. Further steps may be those of bleaching, dyeing, ates and by some duplication in executive officers. gassing, and mercerizing. This financing company had a volume of business The main processes involved in the manufacture in 1958 of about $101 million (5). of cotton yarn usually include the following: One or more of a number of factors may moti- vate mergers, in addition to wartime advantages Opening and Cleaning as a result of price controls and other regulations. Unprofitable companies may be acquired so that Bales of cotton of different densities usually are their losses may be used as income tax credits. rceeived at mills in lots of 100 bales or more from Closely held companies may be sold as a means of a number of sources. After the ties and bagging converting accumulated profits into capital gains. are removed from the bales, cotton from a few Mergers may be used (1) to assure dependable bales is blended to produce a uniform quality of

40 TABLE 14.—Share of total shipments of the cotton yam and thread manufacturing industry accounted for hy largest companies^ united States^ 1958^ 1951^^ and 19Ji7

Concentration ratio: Proportion of total shipments accounted for Primary Com- Value of by 3— product Industry and year panies ^ shipments ^ speciali- zation * 4 largest 8 largest 20 largest companies companies companies

Yarn mills: Cotton system: ^ Number 1,000 dollars Percent Percent Percent Percent 1958 263 1, 145, 238 24 36 54 1954 _-_ - _ --- 278 1, 030, 627 26 40 56 92 Thread mills: ^ 1958 --- - 70 165, 906 68 79 92 90 1954 - 84 183, 746 66 78 92 88 1947 - 83 154, 269 65 78 90 85

1 Determination of company affiliation is based on ^ The ''primary product specialization ratio" measures census reports and public records. Value of shipment the extent to which plants classified in the industry spe- totals for establishments has been summarized into com- cialize in products regarded as primary to the industry; pany totals in each industry. "Largest companies are that is, value of shipments of primary products is expressed determined by each company's value of shipments in the as a ratio of the total shipments of all products made by specified industry. these establishments (excluding miscellaneous receipts, 2 Includes, for all manufacturing establishments classi- such as receipts for contract and commission work on fied in the industry, not only (a) their value of products materials owned by others, scrap and salable refuse, re- ''primary" to the industry, but also (b) their value of pair, etc.). The 1954 and 1947 ratios for some industries "secondary" products, which are primary to other in- reflect minor revisions of previously published census data. dustries, and (c) their "miscellaneous receipts," such as ^ Includes data for yarn mills, silk system. Comparable receipts for contract and commission work on materials data are not available for 1947 because of changes in the owned by others, scrap and salable refuse, repair, etc. 1947 classification of plants or products in the industry. Excludes sales of products bought and resold in the same ^ Data not available. condition. The 1954 and 1947 figures for some industries 7 Jobbers were included in 1947 but excluded in 1954 reflect minor revisions of previously published census data. and 1958. 3 The percentages consist of the sum of the value of Adapted from (120), shipments of the largest 4, 8, 20, or 50 companies, divided by the total value of shipments of the industry.

material for further processing. This blending by removing most of the fine trash, some short applies particularly to mills that produce staple fibers, and other particles of foreign matter. It fabrics and to those that maintain uniform stand- transforms the bulky lap into a rope-like strand ards of quality during extended periods of time. called card sliver. This strand, weighing 40 to 70 Formerly, it was general practice to use a ma- grains a yard, is coiled uniformly into a can. chine with a high rate of production. Known as the bale breaker, this machine is used to open and Combing mix cotton. The more modem practice is to feed The combing process is applicable to the longer portions of a few bales continually to each of staple cottons that are used for products having several so-called blending hoppers and have the fine yam counts and for products that require loosened cot^ton from each hopper fall onto a high strength and smooth appearance. Its pri- traveling lattice to provide mixing and to convey mary purpose is to remove short fibers and paral- the material to the next machine in the cleaning lelize the longer fibers into an even sliver. Comb- line. ing processes are among the most expensive opera- This cotton is conveyed by either pneumatic or tions in making yams. They include sliver lap- mechanical means, or both, to the first of a series ping, ribbon lapping, and combing. The sliver of cleaning machines. Finally, after it is cleaned, tapper combines several slivers into a sheet or rib- mainly of the heavier impurities, by agitation, bon and rolls it onto wooden cores. Some slivers rotary beaters, and screens, it is delivered from the are combined after a small amount of drafting; cleaners in a rolled-up sheet known as a lap. These others without drafting. Four or six ribbons or laps, weighing 10 to 50 pounds, are then placed in laps of slivers are fed to the ribbon lap per, which racks on wheeled platforms or conveyors and further parallels the fibers and combines the re- transferred to the carding department. sultant thin drafted sheets of fiber into one sheet or lap. It then rolls the lap onto cores, where it Carding remains ready for use at the comber. Six or eight The carding operation disentangles the masses ribbon laps are fed to the comber, and a single of fibers in a picker lap and cleans them further sliver is produced. The comber removes from 41 10 to 20 percent of noil (waste), which contains Warping or Beaming niany of the shorter fibers, fine particles of for- eign matter, and tangled fibers, and delivers a An auxiliary process to weaving and to some clean sliver in which the fibers are highly paral- ply yam twisting is the laying parallel of a large lelized. The product of this machine, comber number of strands over the surface of a large sliver, is coiled neatly into cans and delivered to beam (spool) and the w^inding of great lengths the drawing frames. of the strand onto the beam. Often from 350 to 600 strands are wound uniformly, as to spacing Drawing and tension, at a rate of from 400 to 900 yards a minute. This gives a full beam containing 20,- The card or comber sliver is delivered to draw- 000 to 36,000 yards or more. A full beam may ing frames, which combine six or eight slivers contain yarn equal to the fiber from li/^ to 2 bales for drawing or drafting the fibers to increase of cotton. parallelism and uniformity and to reduce the com- Twisting bined strands to approximately the size of a single strand. The combined strands are coiled sys- Twisting is necessary when ply yarns and cords tematically into cans. are to be made. Cones, parallel tubes, cheeses, or spools of yarn produced on the winding machines The Roving Process are fed two or more strands together to make ply yams. The further combining of ply yams Eoving operations successively reduce the sliver in later twisting produces cabled yams or cords. from the drawing process to a much smaller strand These processes are also used in the production of of fiber, called roving, by the drafting action of sewing thread. the drawing rolls. This drafting action also adds to the parallelism of the fibers, inserts a slight Machinery and Equipment amount of twist to give the strands sufficient strength for handling, and winds the strands onto Changes in the amount and kind of machinery a bobbin. During the 1950's and early 1960's, and equipment used in the manufacture of cotton these processes were in a stage of transition as a yarn since World War II have resulted in a num- result of the development of so-called long-draft ber of improvements. The number of improved processes, which make it possible to perform in one long-draft spindles increased from 1942 to 1954 process what was formerly done in two or more. and then decreased in 1958. The largest ring spin- dles increased markedly from 1942 to 1958 (table Spinning 15). Decreases in the number of regular draft and shorter ring spindles were greater than the The final process in the manufacture of yam corresponding increases in improved long-draft is spinning. Here the roving from the last rov- and larger ring spindles. The total number of ing process is fed into the spinner, either as a spindles also decreased. Marked increases in the single or double strand, drafted to the desired number of combs from 1942 to 1947 were followed size, and twisted to produce the correct hardness by greater decreases from 1947 to 1958, so that or some other quality. Yam, the product of spin- the number of combs in 1958 was 48 percent less ning, is wound onto small bobbins. than that in 1947 and about 35 percent less than that in 1942. Spooling or Winding Information on the condition of machinery and equipment of cotton yarn manufacturers is lim- Yarns produced from spinning are necessarily ited, but some indications of the condition may be put in small packages or on bobbins wliich con- derived from results of a survey made in Í950 tain relatively short lengths of yarn. Before this yarn is usable in other processes, except that of of 15 representative carded cotton yam mills. filling (yam spun directly for use in the shuttle They showed that none of the buildings were new or looms), several bobbins of it must be combined and modem. Twelve mills had buildings that end to end to make a considerably longer strand. were in good condition and fairly well laid out Many forms of winding are prevalent in the tex- in most respects; three mills had buildings that tile industry. Some are cone, cheese, tube, spool, appeared to be in need of considerable alteration and doubler winding. and repair. Winding permits inspection of yarn, cleans it Floor spacing and arrangement of machinery further, eliminates weak places and lumps, and, and equipment for efficient flow of materials be- through use of knot-tying devices, either hand tween products were considered good for five of operated or machine-operated, produces small non- the mills, fair for seven, and poor for three of the slip knots that are not difficult to handle in later mills. Cotton warehouses and w^astehouses were processes. These conditions are necessary to per- conveniently located in relation to the opening and mit economical operation of warpers, slashers, picking rooms for 12 of the mills. The arrange- looms, and twisters. ments for two mills were only fair in this respect,

42 TABLE 15.—Number of cards^ combs^and spindles condition, those for 2 mills were of the improved in the cotton and manmade fiber industries^ by type but were rather old, and those for o mills type of machine^ united States^ 191^2^ 19J^7^ were quite old and in poor condition. Five of 195If, and 1958 the mills had modern fly frame equipment. In one mill this equipment was fairly modern ; in nine 1942 1947 1954 1958 it was not modern. Spinning equipment for 1 Type of machine mill was good, but that for 13 mills was not mod- Number Number Number Number ern. One mill had a partial installation of mod- Cards -- 90, 582 86, 442 88, 670 88, 312 ern spinning equipment. Combs - 7,245 9,138 5,996 4,737 A new machine, developed in the early 1950's to Spindles (thousands) : improve the opening and fluffing of cotton, offers Roving: substantial benefits to mill operators. As cotton Long draft 883 1, 145 1, 277 997 passes through the machine, it is fluffed and Regular draft 2,942 1,901 757 310 blended without damage to the fibers, it is claimed, Total _- 3,825 3,046 2,034 1,307 and considerable amounts of trash are removed. In more recent years the lint cotton opener has Cotton-system spinning: Ring spinning: 1 been integrated with a carding cleaner, with By type: the result that cleaning efficiency has greatly Long draft 12, 420 14, 385 18, 153 17, 856 11, 766 8,227 3,421 1,354 increased {66, 77), Regular draft Although some equipment used in the manu- Total 24, 186 22, 612 21, 574 19, 210 facture of cotton yarn and thread is old and in unsatisfactory condition, improvements have been By diameter, inches: 1% and under 5,137 4,440 3,776 2, 615 and are being made. Census reports indicate that iKeto IK 9,457 7,620 5,242 3,840 expenditures for plant and equipment by manu- PK6to2>^ 8, 690 8,715 9,856 9,428 facturers of cotton yarn and thread increased from 2^6 and over 902 1,837 2,700 3,327 about $7 million in 1939 to $34 million in 1947. Total 24, 186 22, 612 21, 574 19, 210 It then decreased to $20 million in 1958 and was about $36 million in 1962. The proportion of Mule spinning _ (0 118 33 20 these amounts spent for new plants and equipment Total spinning 24, 186 22, 730 21, 607 19, 230 ranged from 77 percent in 1939 to 85 percent in Doubling and twisting, 1958 (table 16). inches: 2 1% and under 508 513 190 72 TABLE 16.—Total expenditures for plant and 113/6 to 2% 1,233 1, 166 795 541 2K6 to ?>%- . 1,219 1,266 1,348 1,223 equipment by manufacturers of cotton yarn and 3%6 and over • 412 568 659 821 thready by industry group, United States, 1989, 194,7,1954, and 1958 "^ Total 3,372 3,513 2,992 2,657 Throwing and twisting 1,884 2,629 41, 729 Expenditures Silk-system spinning 597 203 106 Industry, plant, and equipment Warping equipment: 1939 1947 1954 1958 High-speed warpers 2,763 1,622 Low-speed warpers 2, 644 1,245 622 1,000 1,000 1,000 1,000 Total 5,407 1,245 2,244 Yarn mills: dollars dollars dollars dollars P) New equipment 3,662 18, 059 15, 028 13, 792 New plant 1,189 9,721 3,473 1, 715 ^ 1942 data for mule spinning spindles included in ring All other _ 1,471 1,770 2,072 2, 705 spinning spindles. ^ Cotton system. Total______6,322 29, 550 20, 573 18, 212 ^ Not available. ^ Accurate data not available. Thread mills: New equipment 751 1, 879 4,933 1,319 Adopted from Bureau of Census reports. New plant- 19 2,329 3, 610 458 All other _ _ _ _ 73 167 416 56 and that for one was poor enough to materially Total 843 4,375 8,959 1, 833 reduce efficiency. The type, amount, and condition of the opening 1 In 1958 and 1954 establishments that reported on the and picking equipment used by eight of the mills short form were asked to show only their total expenditures were good ; equipment used by four mills was not for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments of the most improved type but was in good condi- that reported detailed expenditures by type to obtain tion ; and that used by three mills was neither mod- separate expenditure figures for new plant, new equip- ern nor in good condition. Breaker and finisher ment, and used plant and equipment. draw frames for 10 mills were modern and in good Adapted from Census of Manufactures. 43 Charges or Costs Involved TABLE 17.—Valii^s^ costs^ and margins for yam and thread mills^ except wool, united States. Cotton yam and thread manufacturers' gross 191,7 and 1958 margins, or the spread between costs of materials, supplies, parts, and containers used and the value Yarn mills Thread mills of the products, vary from one establishment to Item another, from one time to another, and with the kind of yarn and thread produced. Census re- 1947 1958 1947 1958 ports on cotton yarn show that in 1958 manufac- turers' gross margins averaged 36.5 percent of the i.œo 1,000 1,000 1,000 dollars dollars dollars dollars value of the yarn produced (table 17). This pro- Value of products^ 781, 897 843, 850 154, 269 165,919 portion was substantially less than that in 1947 but greater than that in 1954. Raw cotton ac- Cost of materials, etc.2 433, 730 535, 963 77, 559 97, 851 counted for most of the costs included under Gross margin 348, 167 307, 887 76, 710 68, 068 "materials, supplies, parts, and containers," but the spread between the cost of raw cotton and the Salaries and wages _ 180, 076 178, 828 33, 240 35, 479 value of the yarn was somewhat greater than the Salaries 16, 158 22, 016 6,310 8,473 proportion derived from census data. Wages and Wages 163, 918 156, 812 26, 930 27, 006 salaries, the largest item of cost included in the margin, accounted for about 58 percent of manu- Fuel 2,036 1,924 1,240 1,231 facturers' gross margins in 1958, compared with Purchased electric energy 10, 451 12, 852 756 h 705 52 percent in 1947 and 64 percent in 1954. Contract and com- Manufacturers' gross margins for thread aver- mission work 1,912 2,653 7,342 2,354 aged 41 percent of the value of thread produced Others 153, 692 111, 630 34, 132 27, 299 in 1958, compared with about 50 percent in 1947 (table 17). Wages and salaries accounted, on Proportion of value of products the average, for about 52 percent of manufac- turers' gross margin in 1958, about 57 percent in Percent Percent Percent Percent 1954, and 43 percent in 1947. Value of products ^ 100.0 100.0 100.0 100. 0 Costs of manufacturing cotton yarn vary with the type of yarn produced and from one mill to Cost of materials, etc.2._ _ _ 55. 5 63.5 50.3 59 0 another. In 1950, for example, the proportion of Gross margin 44.5 36. 5 49. 7 41.0 the total cost of carded cotton yarn to manufac- turers, excluding selling expenses, accounted for Salaries and wages. 23.0 21.2 21. 5 21.4 by processing costs averaged about 28 percent for Salaries 2. 1 2. 6 4. 1 5 1 10s hosiery yarn, 34 percent for 20s hosiery yarn, Wages 20. 9 18.6 17.4 16 3 and 39 percent for 30s hosiery yarn {105). The proportions by mills ranged from about 25 to 32 Fuel . 3 . 2 .8 7 Purchased electric percent for 10s yarn, 32 to 38 percent for 20s yarn, energy 1.3 1.5 . 5 1. 0 and from 38 to 40 percent for 30s yarn. The pro- Contract and com- portion of processing costs accounted for by labor mission work . 2 .3 4. 8 1. 4 ranged from 52 to 65 percent for 10s yam and Others _ 19.7 13.3 22. 1 16 5 from 51 to 64 percent for 20s yarn {105). In 1950, average production per man-hour by 1 Excludes products bought for resale without further mills ranged from 9.55 pounds to 15.16 pounds processing. Data for 1954 and 1958 are adjusted for changes in inventory. for 10s hosiery yam and from 7.34 pounds to 9.60 2 Includes supplies, parts, and containers. pounds for 20s hosiery yarn. Average hourly 3 Includes depreciation, interest, insurance, rent, taxes, wage rates ranged from 93 cents to $1.15 for man- other expenses, and profits. ufacturers of 10s hosiery yam and from 93 cents Adapted from Census of Manfactures. to $1.17 for manufacturers of 20s hosiery yarn. Average labor costs per pound ranged from 7.50 are such that costs vary somewhat irregularly with cents to 11.37 cents for 10s hosiery yam and from the size of the plant. Data for 15 mills surveyed 10.22 cents to 12.97 cents for 20s hosiery yarn. in 1950 show that manufacturing costs for plants Some of the influence of differences in wage rates spinning 12 or fewer counts of yam averaged on costs per pound was offset by differences in substantially less for mills with 7,000 to 14,000 production per man-hour {105). spindles than for mills with fewer than 7,000 Differences in size of mills may affect unit costs spindles. Costs for mills spinning more than 12 of manufacturing cotton yam. But the influence counts and with 14,000 to 25,000 spindles averaged of such factors as differences in ability and efforts substantially lower than those for mills with a of managers, in variety and quality of the yams smaller number of spindles {105). spun, in kinds and amounts of machinery used, The number of counts of yam spun and the fre- and in quality of the cotton consumed apparently quency of changes in the variety of products manu- 44 factured may co^ittribute to relatively high manu- ship is indicated between wage rates per hour and facturing costs. The 15 carded cotton yarn mills the size of thread manufacturing companies. surveyed in 1950 showed a wide range in number In 1958, value added per dollar of payroll by of counts of yam spun. Average manufacturing cotton yarn mills operated by corporations aver- costs per pound of yam for small and medium- aged more than that for those operated by partner- sized mills varied directly and substantially with ships and less than that for those operated by the number of counts spun. For the larger mills, individuals (table 19). Comparable values added average manufacturing costs varied somewhat ir- by thread mills operated by corporations averaged regularly with the number of counts spun {105). about the same as those for niills operated by The relationship of size and number of counts to partnerships, and were substantially greater than cost indicates that carded cotton yarn mills with those for mills operated by individuals. Value fewer than 7,000 spindles usually are too small for added per dollar of payroll by yam and thread the most efficient operation, even for the manufac- mills operated as multiunits averaged substan- ture of only a few counts of yarn ; that mills with tially more than that for mills operated as single 7,000 to 14,000 spindles may be large enough for units (table 19). efficient operation if the number of counts is small ; In 1958, value added by manufacture of yam and that the size of mills usually would need to ex- and thread, broadwoven fabrics, and finished tex- ceed 14,000 spindles if 12 or more counts are to tiles (except wool) per dollar of payroll averaged be spun and if the most efficient operation is to $1.53 for establishments operated by single-unit be expected (/6^5). companies and $1.59 for those operated by multi- Developments in recent years emphasize the im- unit companies, according to census reports (table porlcince of changes in costs of labor in the manu- 28, p. 57). Similarly, value added per dollar of facture of textile products. ^ Average hourly earn- payroll averaged $1.54 for establishments operated ings of production workers increased from 93 cents by multiunit companies primarily engaged in a in 1947 to $1.55 in 1962 in cotton yam mills and single industry, compared with an average of $1.60 from $1.02 in 1947 to $1.60 in 1962 in thread mills. for establishments operated by multiunit com- Average value added by manufacture per hour panies engaged in more than one industry. Value of labor increased from $1.88 in 1947 to $3.12 in added by establishments primarily engaged in the 1962 in yarn mills and from $2.54 in 1947 to $3.88 manufacture of these products, operated by com- in 1962 in thread mills, according to census reports. panies primarily engaged in other industries, In yam mills, value added per dollar of wages and averaged $1.57 per dollar of payroll. The rela- per dollar of total payroll in 1962 averaged $2.02 tionship of value added per dollar of payroll to and $1.78 respectively, and was greater than that kind of integration in 1954 was similar in most in- in 1954, but less than that in 1947, despite improve- stances to that indicated for 1958 {101). These ments in machinery and equipment used (table results appear to indicate that average value 18). In thread mills, value added per dollar of added by manufacture per dollar of payroll varied wages and per dollar of payroll in 1962 averaged directly with the degree of inteo:ration. But ade- $2.42 and $1.90 respectively, and was greater than quate information is not available to indicate that in 1947, 1954, or 1958 (table 18). whether or to what extent these differences in aver- Average hourly earnings of production workers age value added per dollar of payroll may be at- and value added by manufacture per hour of labor, tributed to factors other than differences in kind per dollar of wages, and per dollar of payroll or degree of integration. in yarn and thread mills varied widely from one Means of Improvement State or region to another in 1947 and 1958 (table 18). Wage rates per hour usually averaged high- The manufacture of cotton yarns and fabrics est in Middle Atlantic States and lowest in South can be improved by the use of qualities of cotton Atlantic States. Differences in average wage rates that are relatively best adapted, physically and per hour varied irregularly with differences in economically, to the production of various prod- average value added per hour of labor, per dollar ucts and by other means of increasing the efficiency of wages, and per dollar of payroll. Wages of of the manufacturing operations. Attempts to production workers in 1958 accounted for about bring about these improvements would necessitate 89 percent of total payroll for yarn mills and 76 an evaluation of the influences of a number of vari- percent of that for thread mills. ables, separately and in combination. These vari- In 1958, data by companies show that value ables may include (1) differences in all important added per hour of labor, per dollar of wages, and quality elements and costs of cotton; (2) type and per dollar of payroll by manufacture of cotton condition of the manufacturing machinery and yarn and thread varied irregularly with the size equipment used, layout or organizational setup of of the company as indicated by the number of this machinery and equipment, labor used, operat- employees {120). Average wage rates per hour ing speeds, settings, and draft organization; (3) varied irregularly with the size of cotton yarn types and quality of yarns produced; and (4) the manufacturing companies, but an inverse relation- interactions among these factors. 45 TABLE 18.—Value added hy yam mills^ cotton system^ and thread mills^ per dollar of payroll^ per dollar of wages^ and per hour of labor^ and average wage rates per hour^ ly region and State^ 1947 and 1958 ^

Value added by manufacture

Wage Type of mill and region Per dollar of— rates Total Per hour per hour of labor Payroll Wages

1947 YARN MILLS

1,000 dollars Dollars Dollars Dollars Dollars Northeast and North Central.. ._ _ 30, 114 1.62 1.85 1. 96 1. 06 South Atlantic _ _ 262, 858 1. 92 2. 10 1.89 . 90 North Carolina. _ 197, 253 1.96 2. 13 1. 94 . 91 East South Central 33, 867 1. 63 1. 76 1. 82 1. oa United States 326, 839 1. 86 2. 03 1. 88 .9a

1958

New England. _. . 5,216 1. 27 1.59 2.41 1. 52 Middle Atlantic _ 10, 611 1. 68 2. 04 3. 44 1. 68 South Atlantic _ _ 272, 107 1. 68 1. 88 2. 52 1.34 North Carolina 174, 830 1. 64 1. 84 2. 42 1. 32 Georgia __ _ 70, 750 L 65 1.85 2. 56 1 ^R East South Central _ ___. 43, 662 1.75 1.97 2. 87 1 46 Alabama. __ _ 27, 151 1. 75 1. 97 2, 90 1 47 Another . 5,865 1. 33 1. 47 2. 65 1 80 United States 337, 461 1. 67 1. 89 2. 58 1. 37

1947 THREAD MILLS

New England 41, 236 1.99 2, 43 2. 63 1 08 Middle Atlantic ... _ 9,929 2. 51 3. 79 3. 96 1 04 Another 16, 207 1. 89 2. 20 1. 95 8Q United States. _ 67, 372 2. 03 2. 50 2.54 1 02

1958

New England _ 20, 412 1. 64 2. 25 3.37 1 50 Middle Atlantic _. 5,199 1. 99 3. 05 5. 07 1 66 South Atlantic _. 35, 809 1.84 2. 31 3. 29 1 42 An other 1,545 1. 58 2. 04 3. 05 1 50 United States ... _ __ 62, 965 1. 77 2. 33 3. 41 1 46

^ For 1958, value added is adjusted by taking into account value added by manufacturing operations and net chan ge during the year in inventories of finished goods and work-in-process. Data'^for 1947 are unadjusted. Adapted from Census of Manufactures.

ADJUSTMENTS IN QUALITY ous combinations of quality elements of cotton used on (1) the quantity, quality, and market value of Better adjustments in the qualities of cotton used the yarns and fabrics produced and (2) manufac- in the manufacture of specified types and qualities turing costs of the yams and fabrics, including of yarn and fabrics would need to be based on labor, overhead, and reasonable returns to man- results of adequate experiments or tests designed agement and capital. For manufacturing pur- to provide accurate evaluations of all important poses, differences in quality or value of cottons that quality elements of cotton. These evaluations are of different combinations of quality elements would show the influence of differences in the vari- but usable in the manufacture of the specified

46 TABLE 19.—Value added hy cotton yarn and thread Apparently one of the quickest and most satis- mills^ iy type of ownership and operation^ factory means of relating the various quality united States^ 1958 factors of cotton to processmg performance and to the quantity, quality, and value of the resultant Total Per dollar products is by carefully controlled pilot plant of payroll studies in which commercial equipment for proc- Type of ownership essing the cotton and reliable measures for indi- and operation cating differences in quality or value of products Yarn Thread Yarn Thread mills mills mills mills are used. The size, equipment, organization, and operation of the pilot plant would need to be such that the results obtained would be read- 1,000 1,000 Ownership: dollars dollars Dollars Dollars ily convertible to the equivalent of similar re- Corporate. _ _ _ 290, 044 62, 307 1.63 1.78 sults obtainable in commercial plants using com- Partnership _ _ _ 1,707 490 1.49 1.79 parable qualities of cotton in the production of Individual 468 168 2. 96 1.06 Other._ _ __ 0 0 0 0 comparable products. Any differences between pilot plant and commercial results may be ac- All 292, 219 62, 965 1. 63 1.77 counted for by the influence of differences in such factors as size of the operating units, type and Operation: Single unit: condition of equipment, layout or organizational Corporate 102, 247 0) 1.54 0) setup, labor used, operating speeds, settings, and Other 2,175 0) 1.67 C) draft organization. Accurate measures of the in- 1.54 1.42 fluence of these factors would be needed for con- All _ _ . 104, 422 7,429 verting pilot plant results to commercial plant Multiunit : equivalents, and the cooperation of operators of Corporate 187, 797 0) 1. 68 0) commercial plants would be required for develop- Other, _ 0 0) 0 0) ing these measures. Without such conversions, All 187, 797 55, 536 1.68 1. 84 results of pilot plant operations may be of limited usefulness. All 292, 219 62, 965 1. 63 1.77 ^Variations in the kinds and combinations of machinery and equipment used and in the organi- 1 Withheld to avoid disclosing figures for individual zational setup of commercial plants, particularly companies. over short periods of time, may not be feasible Adapted from Census of Manufactures. for developing all the information needed to show the influence of these factors on the value of cot- products would be indicated by differences in the ton of specified qualities in the manufacture of spread between the value of the products and man- specified products. But some indications of the ufacturing costs. The quality of cotton relatively influence of such variations may be obtained by best adapted to the manufacture of a specified type comparing results of the use of similar qualities and quality of yarn and fabric is that with the low- of cotton in the manufacture of similar products est net cost, adjusted for waste, in relation to its by different plants at the same time and by the value to mills for that purpose. same plant at different times, where differences In addition to supplying an improved basis for in equipment, organization, and operations were making needed adjustments in the quality of cot- involved. Manufacturers of cotton products, tex- ton used, accurate evaluations of all important tile research agencies, and possibly others may have developed information on the influence of quality elements of cotton would provide a basis these and other factors on differences in values for (1) setting up adequate standards for the among cottons of various combinations of quality various quality elements of cotton ; and (2) pricing- factors for use in the manufacture of specified cotton on the basis of these standards throughout products. This information would need to be as- marketing channels, including those to farm pro- sembled and evaluated for dependability and ade- ducers. Such evaluations would require suitable quancy as a basis for formulating plans for equipment and methods for accurately measuring developing additional information needed. (1) differences in all important quality factors of Variations in such factors as equipment, operat- cotton, and (2) the influence of these differences ing speeds, settings, and draft organization might on the processing performance and on the quantity, well be made in pilot plants and possibly in some quality, and value of the products. Considerable commercial plants as a means of evaluating the progress has been made in developing facilities influence of these changes on differences in value and methods for measuring some quality factors among cottons of various combinations of quality of cotton, but at least some of the known quality factors for use in the manufacture of specified factors need to be more accurately evaluated and products. Measures of differences in value of cot- perhaps other important ones need to be identified ton of various combinations of quality factors for and evaluated. use in the manufacture of specified products, based 47 on results from the use of the same kinds of ma- tion on the influence of differences in some quality chinery and equipment, operating speeds, settings, factors of cotton on processing costs and on qual- and draft organization, may not correctly reflect ity of the products. But better adjustments in the differences in potentials of the different quality the quality of cotton to mill requirements would combinations. One combination of quality factors need to be based on more nearly complete infor- may give best results when one type of machinery mation showing more specifically the influence of and equipment, operating speeds, settings, and differences in all important quality factors of cot- draft organization is used in the manufacture of ton on its value for use in the manufacture of specified products; whereas, other combinations specified products, on costs to mills, and on prices of quality factors may give best results when other and costs to farm producers of the cotton. This types of machinery and equipment, operating information, if reasonably complete and inte- speeds, settings, and draft organization are used. grated, would supply a basis for arriving at ap- A means of minimizing or eliminating such dis- proximations to the best adjustments in quality crepancies, and of obtaining more accurate meas- of cotton to mill requirements. But developments ures of differences in quality of the cotton, would in technology, in plant breeding, and in other be, first, to ascertain the best kinds of equipment, areas may result in considerable changes in quali- operating speeds, settings, and draft organization ties of cotton relatively best adapted to the pro- for each quality of cotton used in the manufacture duction of particular products. Such changes of specified products. Then, differences in qual- would necessitate réévaluations from time to time ity or value of the cottons used for this purpose, on the basis of changed conditions. under these conditions, would be reflected in dif- With differences in all important quality fac- ferences in the extent to which the value of the tors of cotton accurately measured and evaluated products exceeded processing costs, adjusted for in terms of uniform standards, differences in prices the value of waste. of cotton to mills as a result of differences in qual- The term "cotton products" may refer to the ity, under perfect market conditions, would reflect output at any stage of manufacture from yams to differences in the costs of producing cotton of dif- fabricated apparel and other products ready for ferent qualities. But not all quality factors of ultimate consumers. Differences in quality or use cotton have been so measured and evaluated. value of intermediate products, as indicated above Furthermore, the market mechanism apparently for cotton, are reflected in variations in the spread is such that prices of cotton to producers reflect between the value of the products they are used to only a part of the differences in value, for mill produce and costs of manufacturing them under purposes, attributable to differences in quality fac- optimum conditions. Ideally, it might be logical tors that have been measured and evaluated. to start with the evaluation of differences in qual- Under such conditions, price incentives to pro- ity or value of finished fabrics used in the manu- ducers would be at variance with the best adjust- facture of specified apparel or other consumer ments in quality of cotton to mill requirements, goods and to work in reverse order back to the in accordance with the principle of comparative evaluation of differences in quality or value of cot- advantage. ton. But because of practical considerations, it may be advisable first to measure differences in IMPROVEMENTS IN MANUFACTURING quality of cotton on the basis of differences between OPERATIONS the value of yarns produced and costs of processing them, despite the fact that these measures may not The problem of increasing efficiency in the man- accurately reflect differences in potential values ufacture of cotton yam may involve consideration of the cotton. of such factors as location, size, organization, and Measures of differences in physical characteris- control of the operating units ; kinds and arrange- tics of cotton fibers and economic evaluations of ment of buildings, machinery, and equipment these differences would supply a basis for setting used; labor used; operating methods and prac- up uniform standards for the quality factors of tices ; and the quality of raw materials used. In- cotton. Graduations of differences based on phys- tegration in the textile industry has resulted in ical measurements and on experiences and prac- changes in the organization and control of some tices in the industry may need to be adjusted on operating units. But adequate information is not the basis of economic evaluations, so the gradua- available to show whether or to what extent these tions would approach as nearly as practical, dif- changes affect (1) the adequacy and efficiency of ferences small enough to reflect all significant the manufacturing operations, (2) the quality and differences in use value to mills and large enough suitability of the yams and fabrics produced, or for reasonably accurate and expeditious determi- (3) the competition among fibers. nations for commercial purposes. Such stand- The possibility of making large reductions in ards would facilitate better adjustments in quality manufacturing costs through modernization of of cotton to mill requirements. equipment and operations was indicated by results Manufacturers of cotton and of other textile of a study of the carded cotton yarn industry in products presumably have considerable informa- 1950. This study was designed to show how man-

48 ufacturers of cotton yarn could increase efficiency for drawing to 181 percent for fly frames for 10s and reduce costs. It was made for the U.S. De- hosiery yarn, and from 14 percent for opening and partment of Agriculture on contract by the Ralph picking to 147 percent for fly frames for 20s E. Loper Co., a textile cost-engineering firm, with yarn {106), the advice and assistance of the Carded Yam As- Such differences in unit labor costs emphasize sociations, Inc. Detailed cost data for a repre- the importance of adjustments to increase efficiency sentative sample of manufacturers of carded cotton and to reduce costs. If adjustments were made so yarn were assembled and analyzed to show the in- that costs of labor for each department of each of ñuence of various factors on efficiency and costs the mills surveyed approximated that for the op- of each important stage or process of the manu- erator with the lowest cost for that department, facture of specified kinds of yarn under actual total costs of labor for 10s yarn, for example, would operating conditions. Detailed specifications, be reduced 15 percent for the lowest cost mill, 44 based on cost-engineering data and other informa- percent for the highest cost mills, and 28 percent, tion, were prepared for model, low-cost establish- on the average, for all mills combined. Adjust- ments manufacturing typical kinds of carded ments to approximate the conditions indicated for cotton yarn. Data on the more desirable build- model mills would result in reductions ranging ings, floor plans, machinery and equipment ; labor from 40 to 60 percent. requirements; draft programs; and production Some of the more promising means of increasing were shown along with data relating to costs for efficiency and reducing the cost of manufacturing the different processes and operations. Conclu- yams, as indicated by the results of the study men- sions regarding the possibilities of and most fea- tioned, include (1) increased use of new and mod- sible means for increasing the efficiency and re- ern machinery, especially opening and picking ducing the costs of manufacturing the yarn were equipment, long-draft fly frames, and larger long- based on the results of analyses of data for the draft package spinning machines; (2) some re- representative sample of establishments, on the arrangement of machinery for better flow of the results indicated for the model, low-cost establish- work and more efficiency in operations; (3) better ments, and on the contractor's cost-engineering lighting and improved cooling and humidifying knowledge of and experience with the industry. systems; (4) increased machine assignment for Eesults show that in 1950 total costs of manu- some workers and the equalization of reasonable facturing 10s yarn, for example, for the mills sur- work loads for machines and employees; and (5) veyed ranged from 12.88 cents a pound to 17.78 adjustments in size of mills and in number of cents and averaged 15.05 cents. Similar costs in- counts of yam spun. dicated for the model mill totaled 10.54 cents a Substantial improvements in the textile industry pound. They were 4.51 cents, or about 30 per- were reported in 1958, but further modernization cent lower than the average for all mills studied, was greatly needed {63), During the 10 years and 7.24 cents, or about 40 percent lower than for 1948-57, the textile industry spent $4.4 billion for the mill with the highest costs. Differences in new plants and equipment, of which about $3.5 costs for mills spinning 20s and 30s yarns followed billion were for machinery and equipment. Pro- a similar pattern. Such differences in manufac- ductivity per man-hour, based on yards of broad- turing costs apparently indicate that economic woven goods produced, rose during this 10-year applications by some manufacturers of carded cot- period from 7.7 yards to 11.6 yards, an increase of ton yarn were lagging far behind tested techno- 67 percent, or 6.7 percent per year. Despite these logical developments in the industry. The results improvements, it was estimated that fully 65 per- indicate that manufacturing costs were substan- cent of the textile manufacturing equipment in tially higher than they would have been if the eco- place in 1957 was obsolete. Of the textile manu- nomic benefits of technological improvements had facturers who were replacing old facilities with been fully utilized {106). new plants and equipment in 1958, 37 percent of These differences in manufacturing costs are them indicated that they expected these replace- largely accounted for by differences in cost of ment expenditures to pay for themselves in 1 or^ 2 labor. Costs of labor for 10s yam, for example, years, 47 percent in 3 to 5 years, and 16 percent in ranged from 7.50 cents a pound to 11.37 cents and 6 or more years {63), averaged 8.85 cents for the mills surveyed, com- An investigation of the textile industry in 1958, pared with 4.50 cents for the model mill. That department by department, to ascertain what could these differences in labor costs are accounted for be done by mills to strengthen their competitive mainly by diff'erences in quantity of yarn produced position indicated the possibility of substantial per man-hour is indicated by the fact that pro- improvements. Case studies showed that the use duction of lOs hosiery yarn per man-hour by the of modern opening and picking machinery, ar- mills surveyed ranged from 41 to 66 percent of ranged and operated to suit individual mill re- that for the model mill and averaged 55 percent. quirements, reduces labor costs up to 80 percent, Average costs of labor, by departments, for the produces better picker laps, improves subsequent mills studied exceeded those indicated for the operations, and makes possible the use of lower model mills by amounts ranging from 43 percent grade cotton {63), A followup report in 1961 49 indicated that pickers have been improved since ments in spinning include the use of larger rings, 1953, but that not over 7 percent of the textile mill longer traverses, greater bobbin capacity, individ- installations in 1960 included the newest types of ual spindle drives, more compact frames, and equipment. Only 14 percent of the total installa- other improvements. Yet only about 19 percent tions have been in place since 1950. More than of the spinning equipment in place in 1960 was two-thirds of the pickers in place in 1960 were installed since 1950, and about 59 percent was in- installed prior to 1940 (1). stalled prior to 1940 (i). Case studies reported in 1958 indicate that the Reports indicate that a new continuous auto- use of new carding equipment speeds production matic spinning system will be ready for installa- per man-hour and reduces labor costs 10 to 33 per- tion by late 1963. Several manual material- cent in carding, 75 to 80 percent in drawing, and handling operations are eliminated in this system. 60 to 70 percent in roving (63). The folloAvup re- Output of yarn per man-hour is expected to be as port in 1961 indicates that only 10 percent of the much as 72 percent greater, and cost of labor 42 cards in place in 1960 were installed since 1950 and percent less than that for the standard mill. An 80 percent were installed prior to 1940. However, automatic spinning-frame doffer is a key part of about half of the cards in place have been improved the automation. It doffs and replaces with empty somewhat by the addition of automatic stripping. bobbins at a rate of 400 bobbins in 3 minutes, then A new type of card in the developmental stage transports the yarn to the next operation. Total in the early 1960's was expected to increase produc- costs could be 25 percent more than those for a tivity five to one and to reduce operating costs conventional spinning system, but payout for the substantially (7). Improved drawing frames, in- automatic doffers may be as low as 2.5 years. Re- troduced during the late 1950's, increase produc- ports indicate that elements of the system could tive efficiency about 300 percent and reduce labor be installed in American mills one at a time, and requirements about 75 percent. But of the draw- that^ the investment necessary for complete con- ing frames in place in 1960, about 15 percent were version to automation could thus be made by installed since 1950 and more than half were in- stages (S, 78). stalled prior to 1940 (7). A 1958 report indicated that new yarn-prepara- Further developments expected in 1962 include tion machines can reduce payroll costs 35 to 80 per- an improved carding system effected by connecting cent, but a large proportion of the machines in use two conventional cards in a tandem arrangement. are 20 to 30 years old {63). New spoolers can re- In this arrangement the carded fibers of the first duce man-hours of labor up to 37 percent and pro- card are continuously transferred at high speed duce cleaner and better running yarn {6S), A to a second cylinder, where the finishing carding report in 1962 indicated that a new automatic cone actions are performed before the sliver is delivered winder can increase cone winding productivity by to the coiler. This system is said to (1) increase as much as 300 percent per spindle, improve yarn production by 300 percent or more over the con- quality, and sharply reduce labor costs {6). A ventional card, (2) improve the quality of the sliv- new twister-winder machine requires 50 percent er by a full grade with same grade of cotton or fewer man-hours than older machines formerly produce the same quality of sliver with a lower used for the same job {63). A report in 1961 in- grade of cotton, (3) reduce the number of neps, dicated that a new yarn-handling system for and (4) effect savings in floor space (10), winders of coarse cotton yam saved 58 percent in The most modem combers are reported to have indirect labor costs (1), a productive efficiency 138 percent greater than The reports cited indicate the possibility for previous models and to reduce payroll costs by making further substantial improvements in the 90 percent. Of the combs in place in 1960, less manufacture of yarn through more general use of than one-fourth were installed since 1950 and 20 improved machinery and equipment, well orga- percent were installed prior to 1940 (1). The nized and operated. Since the end of World War newest, most recently developed roving equipment II, marked improvements have been made in al- is said to reduce man-hours by 75 percent per 40- most all kinds of machinery and equipment used hour shift and to reduce labor costs about 67 per- in the manufacture of yarns. Yet in 1960, 20 to cent. But only about 27 percent of the roving 80 percent of the spinning and related machinery machines in place in 1960 were of the improved was installed prior to 1940, and only 10 to 27 per- types that reflect these savings to mills. About cent was installed since 1950 {1). The modern- 35 percent of the roving spindles in place were ization of yarn manufacturing machinery and installed during the transition period 1940-50, equipment involves financing the purchase of new when long-draft roving was first introduced. This and modern machinery and minimizing losses was a great advance in machine efficiency (1). from scrapping the old and obsolete machinery. A report in 1958 indicated that modern spinning For modernization to be economically feasible, machinery doubles production per man-hour, re- prospective benefits from modernization of in- duces labor costs in spinning by 40 to 60 percent, dividual plants would need to be great enough to improves yarn quality, reduces ends down, and equal or exceed costs of the new machinery, losses increases machine efficiency. Since 1952, develop- from scrapping the old, and expenses of making 50 the changes. An increasing number of executives justments in the organization and operation of in the textile industry can partially solve the prob- manufacturing establishments would increase the lem of financing modernization by leasing equip- efficiency and reduce the costs of labor. ment, and thereby conserve their working capital The relative importance of increases in efficiency, U). from the viewpoint of costs and margins, may be IMPORTANCE OF IMPROVEMENT indicated by the fact that a reduction of 25 per- cent, for example, in gross margins for manu- The importance of using labor more efficiently facturing cotton yarn would result in savings in the cotton yarn manufacturing industry is greater than total costs of ginning and baling. emphasized by the fact that hourly earnings of A reduction of this size would also result in sav- laborers in this industry in 1958 averaged 48 per- ings of more than half the total merchandising cent higher than those in 1947. The proportion costs for the raw cotton used, almost 10 percent of gross margins of cotton yarn manufacturers of return to growers for farm production of the accounted for by wages increased from 46 percent cotton used, and about 1 percent of the costs to in 1947 to 51 percent in 1958, despite substantial consumers of finished cotton apparel and house- improvements in machinery and equipment used. hold textiles. Such savings might result in in- More general use of improved automatic ma- creased returns to farm producers, reduced costs chinery and equipment and more effective ad- to consumers, and expanded market outlets.

COTTON FABRIC MANUFACTURING

This section relates mainly to the manufacture lion, and amounted to 3,160 million in 1962 (table of cotton broadwoven and narrow fabrics. The 20). Most of the yarn was made of cotton, but cotton broadwoven fabric industry is made up of yarn made of manmade fibers increased from establishments primarily engaged in weaving about 7 percent of the total in 1947 to about 13 per- fabrics over 12 inches wide wholly or chiefly of cent in 1953 and then declined to about 4 percent cotton. Establishments weaving gray goods and in 1962. further processing them into finished fabrics or fabricated products, such as sheets, pillowcases, TABLE 20.—Tarn consumed hy manufacturers of towels, and washcloths, are also included. hroadwoven cotton goods^ hy type of yam^ The narrow fabrics industry is made up of united States, 1H7 and 1958-62 establishments primarily engaged in weaving or braiding cotton, wool, silk, and manmade fibers, Type of yarn 1947 1958 1959 1960 1961 1962 including glass fibers, into fabrics 12 inches or less in width. Establishments primarily engaged in Million Million Million Million Million Million weaving or braiding fabric-covered elastic into Cotton: pounds pounds pounds pound pounds pounds fabrics 12 inches or less in width are also included. Carded ._ 3, 135 2,392 2,643 2, 578 2, 515 2,546 Combed 230 382 415 424 435 431 Nature and Practices Total - - 3,365 2,774 3,058 3,002 2, 950 2,977 Rayon and acetate: Most of the mills in the cotton broadwoven Spun 8 32 44 35 39 52 fabrics industry, particularly the larger and Filament 232 28 33 34 30 31 medium-size ones, perform many or all of the processing operations involved in converting raw Total 240 60 77 69 69 83 fibers into woven fabrics. These processes include Nylon 12 15 17 15 18 fiber preparation, spinning, spooling, warping, AU other: 1 slashing, weaving, shearing, and inspecting. The Cotton 2 18 17 16 17 16 20 practice of finishing yam by bleaching, dyeing, or Rayon and ace- mercerizing it before weaving is fairly common. tate 2_ _ __ 9 18 17 14 20 30 Wool, alpaca and Some fabrics are bleached, dyed, and finished and mohair 12 2 2 2 2 2 some are fabricated into such products as sheets, Others 5 16 16 17 19 30 pillowcases, towels, and washcloths before they Total 44 53 51 50 57 82 leave the mill. Principal materials consumed by this industry Total an types- 3,649 2,899 3,201 3, 138 3,091 3,160 are cotton fibers and cotton yarn. In 1958, about four-fifths of the yarn spun on the cotton system 1 Includes blends and mixtures, 2 Used as part of blends or mixtures. was produced by establishments for their own use. 3 Includes such fibers as acrylic, polyesters and protein Since 1917 annual consumption of yarn by cotton fibers, ñax, jute, linen, etc. broadwoven fabric mills ranged from a low of Adapted from Bureau of Census Current Industrial about 2,899 million pounds to a high of 3,899 mil- Reports. 51 Production of cotton broadwoven fabrics from TABLE 21.—Distribution of manufactureras sales blended yarns or mixtures of two or more fibers of cotton broadwoven gray goods and narrow increased from 343 million linear yards in 1958 fabrics^ by class of customer and outlet^ United to 502 million in 1962, or about 4 and 5.5 percent States, 1958 respectively of the total yardage produced. Of the total production of cotton blends in 1962, about Broadwoven Narrow 60 percent was cotton and rayon, 15 percent was gray goods fabrics cotton and acetate, 12 percent was cotton and nylon, and 13 percent was cotton and two or more Customer and oulet Pro- Pro- other fibers, according to census reports. Value por- Value por- The value of shipments by the cotton broad- tion tion woven industry decreased from $2,913 million in 1947 to $2,838^ million in 1954, and amounted to Manufacturer to— Million Million $2,749 million in 1958, according to census reports. Sales oiEces and branches, dollars Percent dollars Percent Primary products include gray goods, such as etc 353 17. 9 31 11 5 duck, print cloth, sheeting, colored yarn fabrics, Other wholesalers, same company _ 156 7.9 0 0 and fine fabrics; finished fabrics; and fabricated Other plants, same com- products such as sheets, pillowcases, towels, and pany. 427 21.7 14 5 2 washcloths. Primary products, valued at $2,517 Other manufacturers 486 24.6 126 46. 7 million in 1958, accounted for 92 percent of the Merchant wholesalers 409 20. 7 73 27.0 Retailers, not owned 26 1.3 7 2. 6 total value of shipments and receipts of this in- Allother___ _ 116 5. 9 19 7 0 dustry and 83 percent of the total value of the shipments of these products by all industries. Total 1,973 100.0 270 100.0 Secondary products include broadwoven fabrics Sales offices and branches, made of manmade fibers and silk, cotton yarn, etc. to— and yarn made of manmade fibers. Other manufacturers 212 56.4 17 53.1 In 1958, shipments of cotton broadwoven gray Merchant wholesalers 140 37. 2 7 21.9 Retailers, not owned 12 3.2 3 9.4 goods by manufacturers were mainly to sales offices Ail other _ 19 ?. 9. 5 15 6 and branches of the same company, other plants 1 1 of the same company, other manufacturers, and Total 376 100.0 32 100 0 wholesale merchants (table 21). Distribution of these products from sales offices and branches was Adapted from Census of Manufactures. mainly to other manufacturers and merchant wholesalers. Number of Looms and Quantity of Fabrics Operations performed in narrow fabric mills Produced include yam preparation, weaving, braiding, and finishing. Some mills spin yarns from cotton or The number of broadlooms in place in cotton manmade fibers for their own use, and most of the mills in 1962 totaled 303,046, or 48 percent fewer narrow fabrics are finished in this industry. The than in 1931 and 23 percent fewer than in 1951 value of shipments of this industry increased from (table 22). But increases in yam consumed and $215 million in 1947 to $301 million in 1958. Pri- in fabrics produced per loom in place were rela- tively greater than the decreases in number of mary products accounted for 87 percent of the looms. The result was that in 1962 total con- value of all shipments of this industry and 97 sumption of yarn was about 53 percent greater percent of the value of these products shipped by and total production of fabrics was about 33 per- all industries in 1958. cent greater than in 1931. In 1958, distribution of narrow fabrics by man- Of the total number of cotton and manmade ufacturers was mainly to other manufacturers, fiber looms, the proportion located in cotton-grow- wholesale merchants, and sales offices and branches ing States increased from about 70 percent in 1942 of the same company (table 21). Sales offices and to about 85 percent in 1958 (table 23). The pro- branches distributed most of the products han- portion in New England decreased from 22 per- dled to other manufacturers and to merchant cent in 1942 to 11 percent in 1958, and that in the wholesalers. Middle Atlantic States decreased from 8 percent in 1942 to less than 4 percent in 1958. SIZE AND ORGANIZATION Narrow fabric mills are located mainly in the Middle Atlantic and New England States, but in Changes in the size and organization of the cot- recent years the number of these mills in Southern ton broadwoven fabric industry are indicated by and other States has increased. The proportion information on the number of looms and quantity of these mills in the Middle Atlantic and New of yam consumed, ownership and operation of England States decreased from about 84 percent manufacturing establishments, and on mergers in 1947 to 77 percent in 1958, and the proportion and acquisitions. of total employees decreased from about 81 percent 52 TABLE 22.—Number of hroad looms in cotton mills^ in 1947 to 73 percent in 1958, according to census pounds of yam consumed^ and yards of hroad- reports. Of the total number of narrow fabric woven goods produced^ united States^ specified plants, the proportion in Southern States in- years, 19Sl-ß2 creased from 10 percent in 1947 to 17 percent in 1958, and of the total number of plant employees the corresponding proportion increased from 11 Yarn consumed Broadwoven goods produced percent in 1947 to 24 percent in 1958.

Year Looms in Ownership and Operation place 1 Per Per Total loom Total loom Ownership and operation of cotton broadwoven in in fabric mills have changed somewhat since 1939. place place Of the total number of mills, the proportion under corporate ownership or control decreased from Million Million about 95 percent in 1939 to 91 percent in 1958, Number pounds Pounds yards 2 Yards 2 1931 588, 128 2, 056 3,496 6,984 11, 875 but the proportion of total employees accounted 1939 442, 698 2,501 5,649 8,287 18, 719 jpor by these mills continued to be about 99 per- 1949 380, 862 3,064 8,045 8,406 22, 071 cent (table 24). Mills operated from central ad- 1955 367, 215 3,286 8,948 10, 175 27, 708 ministrative offices as multiunits decreased from 1959 323, 153 3,201 9,906 9,603 29, 717 1960 320, 664 3, 138 9,786 9,366 29, 208 62 percent of total mills in 1939 to 54 percent in 1961 315, 170 3,091 9,807 9, 168 29, 089 1958. But the proportion of total employees ac- 1962 303, 046 3,160 10, 429 9,256 30, 542 counted for by multiunits increased from 77 per- cent in 1939 to 83 percent in 1958. 1 Average number at end of quarter or at end of year. The proportion of narrow fabric mills under 3 Linear yards 1939-62 and square yards 1931-35. corporate ownership or control increased from 71 Adapted from Bureau of Census Current Industrial percent in 1939 to about 85 percent in 1958, and Reports. the proportion of total employees accounted for by these mills increased from about 91 percent in 1939 to 95 percent in 1958, according to census TABLE 23.—Numher of cotton and manmade fber reports. Mills operated from central administra- looms in place, hy State and region, 19^2,19Jt9, tive offices as multiunits accounted for 28 percent 195JÍ, and 1958 of all narrow fabric mills in 1939 and 22 percent in 1958. Employees in multiunit mills accounted for 47 percent of total mill employees in 1958, about Looms in place the same proportion as in 1939. Region and State 1942 1949 1954 1958 Mergers and Acquisitions As already indicated, mergers and acquisitions Cotton-growing States: Number Number Number Number Alabama 34, 870 30, 050 30, 915 27, 415 in the textile industry have resulted in consider- Georgia 54, 404 54, 208 56, Oil 59, 070 able changes in the organization and management North Carolina 85, 383 84, 635 88, 123 77, 044 of many operating imits. The extent of integra- South Carolina 144, 770 135, 682 155, 950 152, 402 tion in cotton, manmade fiber, and related broad- 44, 434 43, 020 36, 099 Other States! 43, 949 woven fabric mills in 1958 may be indicated by Total 363, 376 349, 009 374, 019 352, 030 data showing, by size of mill, the number with weaving machinery only ; with spinning and weav- New England States: ing machinery; with weaving and finishing ma- Massachusetts 56, 790 53, 931 41, 547 23, 456 Rhode Island and chinery ; and with spinning, weaving, and finishing Connecticut 35, 029 25, 506 16, 877 11, 692 machinery (table 25). These data relate mainly Maine, New Hamp- to vertical integration, and as indicated earlier shire, and Ver- mont 25, 201 22, 707 22, 260 13, 023 in this report (p. 38), about half of the spindles that changed hands in recent years did so in con- Total - - 117, 020 102, 144 80, 684 48, 171 nection with vertical integration. In 1958, about 34 percent of the mills with 11 Middle Atlantic States 2_ 39, 483 39, 573 26, 360 14, 736 All other States 2, 248 2,131 1,816 580 percent of the looms did weaving only. About 53 percent of the mills with about 74 percent of the United States 522, 127 492, 857 482,879 415, 517 looms and 83 percent of the spindles had spinning and weaving machinery; throwing and weaving 1 Includes Arkansas, California, Kentucky, Louisiana, machinery; or spinning, throwing, and weaving Mississippi, Oklahoma, Tennessee, Texas, and Virginia. 2 Includes Delaware, Maryland, New Jersey, New York, machinery. About 13 percent of the mills with 15 and Pennsylvania. percent of the looms and 17 percent of the spinning spindles had weaving and finishing or spinning, Adapted from Bureau of Census Current Industrial Re- Dorts and Census of Manufactures. weaving, and finishing machinery. More than two- 53 TABLE 24.—Number of establishments and aver- and operation, of cotton broadwoven and narrow age nurriber of employees per establishment for fabric mills apparently were associated with de- manufacturers of cotton broadwoven fabrics^ by creases in the average size of individual mills, as type of ownership and operation^ united States. indicated by the number of employees. The aver- 1939, 195Í, and 1958 age number of employees per mill in the cotton broadwoven fabric industry decreased from 574 in Average em- 1947 to 480 in 1958, a decrease of 16 percent, ac- Establishments ployees per cording to census reports. Mills with 500 or more Type of ownership establishment * and operation employees decreased from about 42 percent of the total number in 1947 to 33 percent in 1958 (table 1939 1954 1958 1939 1954 1958 26). Establisliments with less than 50 employees increased from 23 percent of the total in 1947 to 27 Num- Num- Num- Num- Num- Num- percent in 1958. Ownership: ber ber ber ber ber ber The average number of employees per mill in Corporate 627 540 453 492 547 536 the narrow fabrics industry decreased from 58 in Partnership 13 19 18 « 42 35 Individual 19 23 25 31 9 7 1947 to 50 in 1958. Mills with 100 or more em- Other 2 0 0 0 0 ployees decreased from about 16 percent of the total number in 1947 to 14 percent in 1958, and All 661 582 496 472 509 491 those with fewer than 20 employees increased from Operation: about 46 percent in 1947 to 50 percent in 1958 Single unit: (table 26). Corporate 225 255 183 319 P) 218 The degree of concentration in the cotton broad- Other 26 41 43 27 « 19 woven and narrow fabric industries, on a company All 251 296 226 289 208 180 basis, may be indicated by the proportion of the total value of shipments accounted for by specified Multiunit: numbers of the largest companies. Data on the Corporate 402 285 270 588 751 cotton broadwoven fabric industry show that in Other 8 1 0 419 0) 0 1958 mills operated by four of the largest com- All 410 286 270 585 821 751 panies, or about 1 percent of the total number, ac- counted for 25 percent of the value of total ship- All 661 582 496 472 509 491 ments (table 27). Twenty of the largest compa- nies, or 6 percent of the total number, accounted 1 In 1939 only wage earners are included; in 1954 and for 59 percent; and 50 of the largest companies, or 1958 all employees are included. 2 Withheld to avoid disclosing figures for individual 16 percent of the total number, accounted for 79 companies. percent of total shipments. Proportions of total Adapted from Census of Manufacturers. shipments accounted for by the 4, 8, and 20 larg- est companies increased markedly from 1954 to thirds of the throwing and twisting spindles were 1958. ^ The degree of specialization in this industry in establishments with throwing and weaving is indicated by data showing that in 1954 and 1958 machinery; 23 percent in mills with spinning, about 94 percent of total shipments of cotton throwing, and weaving machinery ; and 7 percent broadwoven fabric mills were accounted for by in mills with spinning, weaving, and finishing products regarded as primary to this industry machinery. (table 27). In addition to other types of machinery re- Similar data on the narrow fabric industry show ported, vertically integrated mills had, on the that in 1958 mills operated by 20 of the largest average, in 1958 more than 4 times as many looms companies, or about 4 percent of the total number, per mill as those that reported weaving machinery accounted for 41 percent of the value of total ship- only (table 25). The number of looms per mill ments by the industry (table 27). Fifty of the for both integrated and nonintegrated mills largest companies, or about 11 percent of the total ranged from less than 50 to 2,000 or more, but 56 number, accounted for 62 percent of total ship- percent of the integrated and only 8 percent of the ments. Proportions of total shipments accounted nonintegrated mills had 500 or more looms each. for by the 4, 8, and 20 largest companies in 1958 Mills with 500 or more looms each accounted for were larger than those in 1954 and about the same about 42 percent of the total number of establish- as those in 1947. The proportion of total ship- ments, 82 percent of the number of looms operated, ments by narrow fabric mills accounted for by 84 percent of the spinning spindles, and 77 percent primary products decreased from 96 percent in of the throwing and twisting spindles in the cot- 1954 to 94 percent in 1958. ton, manmade fiber and related broadwoven fabric Of the 2,360 establishments primarily engaged industry. The degree of vertical integration in in the manufacture of yarn, thread, broadwoven 1958 was greater than that in 1954 {4-i). fabrics, and in finishing textiles, except wool, in Between 1947 and 1958 mergers and acquisi- 1958, about 95 percent were operated by companies tions, along with changes in types of ownership primarily engaged in this segment of the textile 54 TABLE 25.—Number of cotton and manmade fiber weaving mills^ looms^ and spindles^ by size of mill and degree of integration^ United States^ 1958

Looms per mill

Degree of integration ^ All 1-49 50-99 100-499 500-999 1, 000- 1, 500- 2,000 1, 499 1,999 or more

Number Number Number Number Number Number Number Numoer W^eavinff onlv - 229 68 54 88 11 28 Süinnins: and weaving: __ - - 313 9 10 103 98 41 25 27 Throwing and weavine _ 38 2 4 16 14 24 {') Spinning, throwing, and weaving 6 2 3 2~§" (') W^pavins" and finishing 26 2 14 12 Spinning,^ weaving, and finishing 64 3 2 41 i') 10 6 4 Total 676 88 74 243 143 59 35 34

Looms operated

Weaving only - 43, 943 1,978 3,894 20, 385 6,697 210, 989 W Sninnine: and weaving 275, 375 465 682 32, 566 65, 744 50, 786 42, 317 82, 815 Throwing and weavinff _ _ _ 22, 909 2 204 5,444 9, 980 2 7, 281 (') Spinning, throwing, and weaving 7,882 2 1, 645 '2"6,"237' (') \Vf»flvins" nnd finishiner 3,220 2 669 2, 551 Spinning,^ weaving, and finishing 62, 188 212 2 20, 146 {') 12, 499 10, 584 18, 747 Total 415, 517 2,789 5,315 67, 884 97, 274 72, 637 60, 035 109, 583

Cotton and silk system spinning spindles

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Spinning and weaving 12, 197 36 57 2,028 2,993 2,165 1,884 3,034 Spinning, throwing, and weaving 164 2 53 « 2 111 (') Spinning,^ weaving, and finishing 2,579 8 2 847 416' 2 1, 308 « Total 14, 940 36 65 2,314 3, 607 2, 581 2,409 3,928

Throwing and twisting spindles

Throwing and weaving 595 « {') 2 178 313 (') Spinning, throwing, and weaving 199 —(3J — e) Spinning,^ weaving, and finishing 63 — (3J — Total -_- 857 2 16 (') 181 344 2 316 (^) (')

1 Degree of integration determined by type of machinery 3 Data withheld to avoid disclosing information for indi- reported. vidual companies. 2 Combined with data withheld to avoid disclosing infor- ^ Includes spinning and throwing. mation for individual companies. Adapted from Census of Manufactures.

industry and 5 percent by companies classified in The size of establishments operated by multiunit other industries (table 28). The corresponding companies, as indicated by the number of em- proportions in 1954 were about the same as in ployees, averaged more than five times that of 1958. Single-unit companies accounted for about companies operated as single units. The number 64 percent of these establishments in 1958 and 65 of employees per establishment classified in this percent in 1954. Of the establishments operated industry averaged slightly less for those operated by companies classified in this segment of the tex- by companies classified in other industries than for tile industry, about 36 percent in 1958 and 29 per- those operated by companies classed in the same cent in 1954 were classified in other industries. industry (table 28). They included manufacturers of other textile mill Of the 1,555 establishments primarily engaged products, manufacturers of apparel and related in the manufacture of narrow fabrics and miscel- products, and wholesale and retail distributors of laneous textile mill products in 1958, about 92 textile products. percent were operated by companies classified in 55 TABLE 26.—Number of hroadwoven cotton and MANUFACTURING METHODS (7 79) narrow fabric mills by number of employees^ united States, 19J¡7 and 1958 Preparation of Yarn

Broadwoven Narrow The weaving of gray goods in mills combining cotton fabric fabric mills spinning and weaving operations necessitates the Employees per plant mills preparation of warp. Winding and warping are usually the functions of yam departments or of 1947 1958 1947 1958 yam mills, but the slashing and drawing in of the warp are functions of weaving departments or weaving mills. Combining several warper beams, Number Number Number Number 1,000 and more 105 61 1 each of which contains from 350 to 600 ends of 500 to 999 ___ 147 104 5 5 yam, into a single sheet for weaving and coating 250 to 499 _ ___ 147 121 9 7 the yarn with a sizing of starches, gums, softeners, 100 to 249 66 57 60 55 pénétrants, preservatives, and sometimes inert 50 to 99 - 41 22 72 75 20 to 49 _ __ 47 30 114 100 loading agents constitutes an important step in 10 to 19 - 24 24 98 89 preparing warp for weaving. 5 to 9 18 23 54 62 Warp yarns for fabrics from the sheerest to the 1 to 4 .__ 7 54 66 95 heaviest weight, if of single yams, are given warp Total - ___ 602 496 479 488 sizing or slashing. The main purpose is to in- crease loom production by giving the warp yam a protective coating so that it can withstand the Adapted from Census of Manufactures. chafing action of the loom parts and adjacent this industry and 8 percent by companies classified strands of yam. Sizing is sometimes applied to in other industries (table 28). Single-unit compa- give additional weight to the fabric. nies accounted for about 80 percent of these estab- The crosswise thread of a fabric must be on lishments in 1958 and 83 percent in 1954. Of the relatively small bobbins to fit into the shuttle, the establishments operated by companies in this seg- device used to carry the filling back and forth be- ment of the textile industry, about 14 percent m tween and across the warp threads. In mills with 1958 and 12 percent in 1954 were classified in other both spinning and weaving operations, most filling industries. is spun directly into bobbins suitable for the The number of employees per establishment shuttle. Weaving mills that buy their yarns usu- averaged about five times as great in 1958 for ally buy their filling in large packages and rewind establishments operated by multiunit companies as it onto filling bobbins. The fairly recent introduc- for those operated by single-unit companies. Em- tion of automatic filling winders has made it desir- ployees per establishment averaged more for able for many mills with both yarn and weaving establishments in this industry operated by com- operations to spin their filling yams on larger panies in other industries than for those operated packages and rewind them onto filling bobbins. by companies in this industry (table 28). This helps to increase production in the weaving

TABLE 27.—Share of total shipments of cotton broadwoven and narrow fabrics manufacturing industry accounted for by largest companies, united States, 1958,195^, and 191^7

Concentration ratio : Proportion of total shipments accounted Primary Com- Value of for by 3— product Industry and year panies 1 shipments ^ special- ization * 4 largest 8 largest 20 largest companies companies companies

Cotton broadwoven fabric mills : ^ Number 1,000 dollars Percent Percent Percent Percent 1958__ _ __ -- -- - 321 2,719,432 25 40 59 94 1954 ______413 2, 789, 621 18 29 49 94 Narrow fabric mills i^ 1958 455 289, 110 16 26 41 94 1954 _ _ _ _ 489 250, 162 13 21 37 96 1947_ -_- -- _-- -- 445 215, 194 17 25 41 95

1 See footnote 1, table 14, p. 41. of changes in the 1947 classification of plants or products 2 See footnote 2, table 14, p. 41. in the industry. 3 See footnote 3, table 14, p. 41. 6 See footnote 7, table 14, p. 41. * See footnote 4, table 14, p. 41. 5 Comparable data are not available for 1947 because Adapted from (IW). 56 TABLE 28.—Number of companies and estahlish- goods, and for special bags, such as those for fruits ments^ average employees per establishment^ and and laundries. The terry weave is used for turkish average value added per dollar of payroll by towels and other articles with terry pile. The cam manufacturers of specified products^ United or plain automatic loom is used for most gray States, 1968 goods and other goods of the plain weave. This loom uses up to five harnesses for twill and satin Aver- w^eaves. age Value Weaving consists of interlacing the crosswise em- added or filling threads with many lengthwise or warp Com- Estab- ploy- per Item panies lish- ees dollar threads. In automatic weaving, this is done at a ments 1 per of high speed. The loom does not stop unless a warp estab- pay- end breaks, a filling supply gives out, or a part lish- roll breaks. A loom may run many days without stop- ment ping, and yet produce first-quality goods all the time. The quality of the warp yarn is an inñu- MANUFACTURERS OF YARN, ential factor in preventing loom stoppage. THREAD, BROADWOVEN Speed of operation depends upon the type of FABRICS, AND FINISHING, EXCEPT WOOL loom used, its width, and the construction of cloth Number Number Number Dollars being made. The narrower looms can be operated Companies in this industry 2_ 1, 748 2,245 210 1.58 at faster speeds than the wider ones ; plain looms, Single-unit companies 1,514 1,514 80 1. 53 faster than fancy ones; and those making light Multiunit companies 234 731 477 1.59 construction fabrics, faster than those making heavy construction fabrics. Single-industry 91 145 223 1. 54 Construction is a term indicating type of weave, Multi-industry 143 586 540 1.60 Companies in other indus- width of fabric, warp ends per inch, filling picks tries . 78 115 271 1. 57 (ends) per inch, and weight per yard. One com- mon printcloth construction requires 2,488 separate Total or average 1,826 2, 360 213 1.58 warp ends, but only a single filling end. Filling MANUFACTURERS OF NARROW yarn is inserted when producing fabric at a rate FABRICS AND MISCELLA- of 80 to 260 picks per minute. For a loom operat- NEOUS TEXTILE FABRICS ing at 180 picks per minute, fabric production for Companies in this industry 2_ 1, 352 1,437 43 1.78 printcloth would approximate 5 yards per hour. Preparation of Fabric Single-unit companies 1, 249 1, 249 28 1.75 Multiunit companies 103 188 146 1.84 Fabrics produced usually are rolled automati- cally by the loom onto large rolls on wooden or Single-industry 46 80 110 1. 73 Multi-industry 57 108 172 1.80 steel cores. The length of the roll depends upon Companies in other indus- the space under the loom, the weight of the cloth, tries .. _ 84 118 111 1. 88 and th^ length of cut used by the mill. The rolls of fabric are removed, often without stopping the Total or average 1,436 1, 555 48 1. 80 looms, and taken to the cloth room, where they are sewed end to end, rolled into large rolls, cleaned 1 Establishments in yarn, thread, broadwoven fabrics, (brushed or sheared), and inspected. These rolls and finishing. 2 These companies had 800 establishments in other are either shipped directly to finishing plants or industry categories and 459 in central administrative cut into pieces of specific lengths, folded, and baled offices, auxiliaries, sales branches, and sales offices. for shipment. Adapted from {101). MACHINERY AND EQUIPMENT room, as the bobbins are cleaner and more uni- The total number of looms in place in mills of the cotton manufacturing industry decreased from formly wound. Often, filling is given a steam or 394,000 in 1947 to 302,000 in 1962, a decrease of wetting treatment just before it goes to the loom to about 23 percent within 15 years (table 29). The eliminate the tendency to kink, to make it run number of each kind of loom in place in 1962 was better, and to bring its moisture content up to substantially less than that in 1951. The number standard. active at the end of the year w-as less for the first Weaving Operations and secoiul shifts and gTeater for the third shift m 1962 thíin 11 years earlier. Total loom hours Fabrics are woven with one of three foundation operated varied irregularly from 1947 to 1962, weaves—plain, satin, and twill—or with some com- despite reductions in the number of looms in place. bination of these weaves. Special types include Many cotton looms in operation in the United the leno, terry, plain, and other weaves. The leno States during the 1940's and 1950's w^ere not of the weave is used for such fabrics as marquisette, cur- most improved types. Some apparently were not tain goods, men's summer shirtings, women's dress in good condition. But increased expenditures for

736-806—64- 57 TABLE 29.—Number of looms in place and num^- TABLE 30.—Total expenditures for plant and her active at end of year^ hy shifts^ and total equipment hy manufacturers of cotton hroad- loom hours operated^ hy hind of loom^ for cot- woven and narrow fahrics^ hy industry groups^ ton manufacturing industry^ United States^ United States, 1939, 191^7, 195Ip, and 1958 ^ specified years^ 19Jí7-62 Expenditures Kind of loom Industry, plant, and Year equipment 1939 1947 1954 1958 All Plain Dobby Box Jac- quard 1,000 1,000 1,000 1,000 Broadwoven: dollars dollars dollars dollars New equipment 16, 171 55, 447 45, 802 41, 666 Total looms in place New plant 3,951 23, 325 9, 397 6, 775 All other 2,907 5,665 9,844 7, 775 Number Number Number Number Number Total 23, 029 84, 437 65, 043 56, 216 1947 393, 942 327, 333 32, 379 24, 101 10, 129 322, 239 267, 444 26,914 20, 784 7,097 1959 Narrow fabric: 1961 314, 551 262, 012 25, 666 20, 302 6, 571 302, 388 249, 848 26, 089 19, 902 6,549 New equipment 1,046 3,869 3,626 4,448 1962 New plant 204 1,801 1,176 1, 859 All other . _ 372 238 513 691 Active at end of year, 1st shift Total 1,622 5,908 5,315 6,998

1947 382, 246 318, 691 31, 431 23, 303 8,821 1 In 1958 and 1954 establishments that reported on the 1959 316,013 264, 850 25, 771 19, 738 5,654 short form were asked to show only their total expenditures 1961 308, 357 258, 187 25, 427 19, 366 5,377 for new plant and equipment. Their totals were prorated 1962 292, 820 243, 007 25, 299 18, 848 5,666 on the basis of industry averages of the establishments that reported detailed expenditures by type to obtain separate expenditure figures for new plant, new equipment, Active at end of year, 2d shift and used plant and equipment. Adapted from Census of Manufactures. 1947 - 364, 204 306, 030 28, 907 22, 400 6,867 1959 313, 289 263, 409 25, 650 19, 375 4,855 1961 306, 194 257,011 25, 285 19,019 4,879 Charges or Costs involved 1962 290, 668 241, 734 25, 210 18, 465 5,259 Gross margins of manufacturers of cotton Active at end of year, 3d shift broadwoven and narrow fabrics vary with the kind of fabric produced, from one establishment to another, and from one time to another. They 1947 191, 922 166, 344 15, 596 8,397 1,585 show the spread between costs of raw materials, 1959 297, 408 252, 288 24, 549 17,218 3,353 1961 293, 631 247, 568 25, 241 17, 348 3,474 supplies, parts, and containers and the value of the 1962 281, 315 234, 707 24, 895 17, 824 3,889 products. Census reports relating to cotton broadwoven fabrics show that manufacturers' gross margins as a percentage of the value of prod- Total loom hours operated (in thousands) ucts decreased between 1947 and 1958, averaging about 44 percent of the value in the latter year 1947 2, 002, 486 1, 708, 458 146, 224 113, 597 34, 207 ( table 31). Similar data relating to narrow fabric 1959 1, 985, 542 1, 683, 884 155, 299 117,321 29, 038 mills show decreases in gross margins of from 55 1961 1,911,792 1,617,814 153, 348 112,366 28, 264 1962 1, 871, 263 1, 568, 069 155, 214 117, 948 30, 032 percent in 1947 to about 51 percent in 1958 (table 31). Eaw fibers and yarn consumed accounted for most of the costs included under "materials, sup- Adapted from Bureau of Census Current Industrial Reports. plies, parts, and containers." But the spreads be- tween the costs of these fibers and yarns consumed new plants and equipment indicate that consider- and the value of the fabrics produced were some- able improvements were made during the late what greater than the proportions derived from census data. 1940's and 1950's. Census reports show that total Increases in the proportion of the value of cotton expenditures for plant and equipment by manu- fabrics accounted for by costs of materials used facturers of cotton broadwoven and narrow fabrics since 1939 were attributable in part to advances in increased from $24,651,000 in 1939 to $90,345,000 in the price of cotton. Wages and salaries accounted 1947. It decreased to $63,214,000 in 1958 (table for about 61 percent of the gross margins of manu- 30) and amounted to $116,597,000 in 1962. Ex- facturers of cotton broadwoven fabrics in 1958. penditures for new equipment and new plants in- This proportion was somewhat smaller than the creased from $21,372,000 in 1939 to $84,442,000 in 63 percent in 1954 but substanitally greater than 1947, and amounted to $54,748,000 in 1958. the 46 percent in 1947. For narrow fabrics, the 58 TABLE SI.—Values^ costs, and margins for cotton fabric manufacturers, united States, 194^7 and 1958

Broadwoven fabrics Narrow fabrics Item

1947 1958 1947 1958

1,000 dollars UOOO dollars 1,000 dollars 1,000 dollars Value of products ^ 3, 294, 623 2, 673, 028 208, 116 287, 712 Cost of materials, etc.2 1, 651, 794 1, 498, 667 93, 575 140, 445 Gross margin 1, 642, 829 1, 174,361 114, 541 147, 267 Salaries and wages 764, 532 722, 355 63, 861 85, 923 Salaries 64, 661 77, 726 12, 257 20, 698 Wages 699, 871 644, 629 51, 604 65, 225 Fuel 14, 983 13, 853 973 1,426 Purchased electric energy 32, 683 41, 741 1, 265 2, 103 Contract and commission work. 32, 827 46, 054 5,303 3,439 Other 3 797, 804 350, 358 43,139 54, 376

Proportion of value of products

Percent Percent Percent Percent Value of products 100. 0 100. 0 100. 0 100. 0 Cost of materials, etc.2_ 50. 1 56. 1 45. 0 48.8 Gross margin 49. 9 43. 9 55. 0 51.2 Salaries and wages. 23. 2 27. 0 30. 7 29. 0 Salaries. 2. 0 2. 9 5. 9 7.2 Wages.- 21. 2 24. 1 24. 8 22. 7 Fuel . 5 . 5 . 5 . 5 Purchased electric energy 1. 0 1. 6 . 6 . 7 Contract and commission work. 1. 0 1. 7 Other 3 2. 5 1. 2 24. 2 13. 1 20. 7 18. 9

1 Excludes products bought for resale without further processing. Data for 1958 are adjusted for changes in inventory. mciUQes supplies, parts, and containers. 3 Includes depreciation, interest, insurance, rent, taxes, other expenses, and profits. Adapted from Census of Manufactures. proportions for corresponding years were 58, 61, margins are attributable to the fact that raw ma- and 56 percent respectively. terials used by mills engaged exclusively in weav- Gross margins for individual manufacturers ing were mainly yarns and that these mills limited vary with the kind of raw materials used, the proc- their operations chiefly to weaving, whereas the essing or manufacturing operations involved, and raw materials used by combined spinning and the kind and quality of products manufactured. weaving mills were largely raw cotton and these Some manufacturers buy cotton yarn, weave it mills spun yarn and wove it into fabrics. Data into cloth, and sell the fabrics as gray goods. for 33 cotton textile manufacturing corporations Others buy raw cotton, spin it into yarn, and weave m 1939 and for 56 in 1940 show that gross margins the yarn into cloth. Still others buy raw cotton, for individual corporations ranged from less than spin it into yarn, weave the yarn itno cloth, and 40 percent of net sales for those producing mostly finish or fabricate the cloth into consumer prod- ucts. In addition, differences in quality of raw coarse gray goods to more than 70 percent for cotton, yarns, and fabrics also affect manufac- corporations producing finer products, finished turers' gross margins. goods, and fabricated products (46), Eeports of the Federal Trade Commission show Mill margins, or spread between average whole- that during the first half of 1936, for example, sale prices of 20 constructions of unfinished cotton gross margins for 67 weaving companies averaged cloth and the cost of the cotton used in their manu- 46 percent of net sales of cloth produced, and that facture, during the 9 years ended July 1963, these margins for 264 combined spinning and ranged from about 38 percent of the value of the weaving companies averaged 55 percent of net cloth in 1957-58 to 48 percent in 1959-60, and sales (118), Differences between these average averaged 41 percent in 1962-63. These propor- 59 tions vary irregularly with prices of cotton and of TABLE 33.—Average cost per linear yard of pro- cotton cloth (table 32). ducing sheeting and printcloth in the united Gross margins of manufacturers usually vary States and Japan^ 1960 ^ directly, and costs of raw materials vary inversely with the fineness of the fabrics produced. In Sheeting Printcloth 1944, for example, net costs of cotton averaged 48 percent and manufacturers' gross margins aver- Item of cost aged 52 percent of the net selling price of carded United Japan United Japan cotton yarn fabrics. For combed cotton yarn States States fabrics, net cotton costs averaged 32 percent and manufacturers' gross margins averaged 68 percent Cents Cents Cents Cents of the net selling price {Ji7). Data on the manu- Total cost 14. 60 11.39 18.40 14. 55 facture of textile products in 1950, prepared by Net cost of cotton 8.40 7.81 8.71 8. 23 Barnes Textile Association, Inc., show that for All other costs 6. 20 3. 58 9. 69 6.32 cotton printcloth both the cost of materials and 2.60 7.83 4.49 manufacturers' gross margins each accounted for Operating costs 5. 16 50 percent of total costs. For cotton voile, the cost Labor ^ _ 3.92 1.72 5.58 2. 46 of materials accounted for 34 percent and manu- Materials and supplies 3 .70 .35 1. 22 .91 facturers' gross margins for 66 percent of total Fuel, power, costs {15), and water . 27 .32 .48 .65 In 1960, the net cost of cotton and the total of Depreciation . 27 .21 .55 .47 all other costs of manufacturing sheeting, print- Overhead costs 1.04 .98 1.86 1.83 cloth, broadcloth, and gingham apparently were greater in the United States than in Japan (tables Allowance for seconds . 07 .04 . 15 33 and 34). The proportion of total costs ac- Sales--- .25 . 31 .35 ."Î8 counted for by operating costs, and particularly General operat- by labor costs, was much greater in the United ing expenses *— .20 .31 . 19 1. 05 States than in Japan. In 1959, average hourly Miscellaneous 5-- .52 .32 1. 17 .60 earnings of textile workers in Japan were less than one-sixth of average hourly earnings of similar Proportion (if total cost workers in the United States, according to data provided by the Bureau of Foreign Labor Con- Percent Percent Percent Percent ditions, Bureau of Labor Statistics, U.S. Depart- Total cost - -_ _- 100. 0 100.0 100. 0 100.0 Net cost of cotton 57.5 68.6 47.3 56.6 TABLE 32.—Price of unfinished cloth^ fvice of cot- All other costs 42. 5 31.4 52.7 43.4 ton,^ and mill nuirgin^ united States^ 195^-62 Operating costs 35.2 22.8 42.6 30.8 Labor ^ _ 26.8 15. 1 30.3 16.9 Mill margins ^ Materials and supplies 3 4.8 3. 1 6.7 6.2 Year beginning Cloth Cotton Fuel, power, August prices ^ prices 2 Propor- and water 1.8 2.8 2.6 4. 5 Actual tion of Depreciation 1.8 1.8 3.0 3.2 cloth prices Overhead costs 7.3 8.6 10. 1 12. 6

Cents Cents Cents Percent Allowance for 61.54 36.22 25.32 41. 14 seconds .5 . 4 .8 1954 ___ _ --- 1.7 2. 7 1.9 i."3 1955 - -- 64.05 36.27 27. 78 43.37 Sales 61.22 34 51 26.71 43. 63 General operat- 1956 LO 7.2 56.75 35.33 21.42 37.74 ing expenses *__ 1.4 2. 7 1957--_ 2.8 6.4 4. 1 1958 _- 58. 68 35. 24 23. 44 39.95 Miscellaneous ^-- 3. 7 1959 - --- 63.84 33.47 30. 37 47. 57 1960_ _ _ _ 59. 00 32.87 26. 13 44. 29 ^ Sheeting, carded ; width, 40 inches ; construction, 44 x 1961 - --- 60. 61 35.71 24. 90 41. 08 40 ; weight, 4.25 yards per pound ; 20s-18s ; gray. Print- 1962_ _ _ 60. 52 35. 61 24.91 41. 16 cloth, carded; width, 39 inches; construction, 80 x 80; weight, 4 yards per pound ; 40s-40s ; gray. 1 Average wholesale price for 20 constructions. Prices ^Includes "fringe" labor costs as well as basic wage per yard are converted to the approximate value of cloth costs. obtainable from a pound of cotton. ^Includes chemicals, dyes, and other materials and 2 Average price based on landed quotations (group 201 supplies. mill points) for 4 growths—Southeast, Memphis territory, * Includes overall company administrative and similar Texas-Oklahoma, and California. costs. 3 Difference between cloth prices and prices for the ''Includes property taxes, interest, overhead salaries, average qualities of cotton used in the 20 constructions. and administrative expenses. Adapted from {112), Adapted from (115). 60 TABLE 34.—Average cost per linear yard of pro- ment of Labor and the Northern Textile Associa- ducing broadcloth and gingham in the united tion. Overhead costs averaged greater in the States and Japan^ 1960 ^ United States than in Japan, but the proportion of total costs accounted for by overhead costs were less in the united States than in Japan in three Broadcloth Gingham out of four cases. Item of cost The large proportion of gross margins of manu- United Japan United Japan facturers of cotton fabrics accounted for by wages States States and salaries and recent increases in wage rates emphasize the importance of labor in the manu- Cents Cents Cents Cents facture of these products. Census reports indi- Total cost _ _ 26. 15 18. 35 33. 55 22. 13 cate that average hourly wage rates increased from Net cost of cotton IL 80 10. 29 10.33 9. 05 $1.02 in 1947 to $1.68 in 1962 in cotton broad- All other costs 14.35 8.06 23. 22 13. 08 woven fabric mills and from $1.04 in 1947 to $1.66 in 1962 in narrow fabric mills. Wage rates Operating costs 12. 49 6.23 18.42 10. 50 usually were lowest in Southeastern States, but Labor 2 _ 9.09 3. 18 11.69 4. 57 in broadwoven fabric mills in 1958 they ranged Materials and from $1.31 in Texas to $1.84 in the West (table supplies 3 1. 53 .88 3.79 3.88 35). From 1947 to 1958, average value added by Fuel, power, and water .67 .74 L 05 .61 manufacture increased per hour of labor but de- Depreciation 1. 20 L43 1. 59 1. 44 creased per dollar of wages and per dollar of payroll in broadwoven fabric mills (table 35). Overhead costs 1. 86 1. 83 4.80 2. 58 Average value for all three measures then in- Allowance for creased, averaging $3.15, $1.88, and $1.66 respec- seconds . 10 . 08 .27 . 10 tively in 1962. Sales .37 .33 . 67 . 34 In narrow fabric mills, average value added per General opera- hour of labor increased from $2.19 in 1947 to $4.09 ting expenses ^_ . 68 .74 .80 . 91 Miscellaneous ^__ . 71 .68 3. 06 L23 in 1962. But average value added per dollar of wages and per dollar of payroll increased from $2.10 and $1.69 in 1947 to $2.47 and $1.87 respec- ProiDortion (3f total cost tively in 1962. The decreases in both types of mills from 1947 to 1954 occurred despite substan- Percent Percent Percent Percent tial improvements in equipment used as indicated Total cost- 100. 0 100.0 100. 0 100 0 Net cost of cotton __ 45. 1 56. 1 30. 8 40. 9 by expenditures for new plant and equipment. All other costs 54. 9 43.9 69. 2 59. 1 Value added by manufacture per dollar of pay- roll, per dollar of wages, and per hour of labor Operating costs 47.8 33. 9 54.9 47.5 varied considerably from one State or region to Labor 2___ 34.8 17.3 35. 7 20 6 another (table 35). The influence of differences Materials and in wage rates on costs of labor were offset, at supplies 3 5.8 4.8 IL 3 17.6 least to some extent, by differences in value added Fuel, power, per hour of labor. Value added per dollar of and water 2.6 4. 0 3.1 2.8 Depreciation 4.6 7.8 4.8 6.5 wages and per dollar of payroll by broadwoven fabric mills in Southern States averaged higher Overhead costs 7. 1 10.0 14. 3 n. 6 than that by similar mills in New England but Allowance for lower than that by mills in Middle Atlantic and seconds . 4 . 4 . 8 . 4 North Central States. For narrow fabric mills, Sales 1. 4 L8 2.0 1. 5 General operat- value added per dollar of wages and per dollar ing expenses *. 2. 6 4. 0 2. 4 4. 1 of payroll averaged highest in Southern States Miscellaneous ^-- 2.7 3.8 9. 1 5.6 in 1947 and in 1958 but averaged highest in North Central States in 1954. 1 Broadcloth, combed; width, 40 inches; construction, Geographic differences in value added per hour 136 X 60; weight, 3.65 yards per pound; 40s-40s; gray. of labor by manufacturers of broadwoven cotton Gingham, combed, two color; width, 47 inches; con- struction, 90 x 60; weight, 4.25 yards per pound; 40s-40s; fabrics, when related to corresponding differences gray. in average wage rates per hour, gave correlation 2 Includes ''fringe" labor costs as well as basic wage costs. coefficients of 0.16 in 1947, 0.94 in 1954, and 0.72 3 Includes chemicals, dyes, and other materials and in 1958. Regression coefficients indicate that from supplies. one geographic area to another a difference of 1 ^ Includes overall company administrative and similar costs. percent in value added per hour of labor was asso- ^ Includes property taxes, interest, overhead salaries, ciated, on the average, with a corresponding dif- and administrative expenses. ference in wage rates per hour of 0.40 percent in Adapted from {115). 1954 and 0.21 percent in 1958. 61 TABLE 35.—Value added hy cotton fabric manufacturers^ per dollar of payroll^ per dollar of wages^ per hour of labor^ and average wage rates per hour^ hy region and State^ 1947 and 1958 ^

Value added by manufacture Wage rates Type of mill and area Per dollar of— per hour Total Per hour of labor Payroll Wages

1947 BROADWOVEN COTTON MILLS 1,000 dollars Dollars Dollars Dollars Dollars Northeast and North Central 281, 534 1.80 2. 02 2.24 1. 11 Massachusetts 112,473 1. 77 1. 94 2. 14 1. 10 South and West 1, 280, 802 2. 11 2.29 2.28 1. 00 North Carolina 325, 586 2. 23 2. 41 2. 41 1. 00 South Carolina 376, 334 2. 15 2.31 2.29 . 99 Georgia 269, 332 1. 99 2. 16 2. 16 1. 00 Alabama _ _ 156, 601 2. 10 2.26 2.33 1. 03 United States 1, 562, 336 2. 04 2. 23 2. 27 1. 02

1958

New England 69, 029 1.21 1.38 2. 16 1. 57 Maine. _ __ 25, 519 1.31 1.48 2.32 1. 57 Massachusetts _ __ 25, 487 1. 02 1. 17 1. 82 1. 56 Middle Atlantic.. 19, 255 1.72 2.22 3.96 1. 78 North Central __ 1,875 1. 82 2. 56 3.52 1. 38 South Atlantic 849, 831 1. 52 1. 69 2.47 1. 46 North Carolina. . 246, 143 1.55 1. 71 2. 55 1. 49 South Carolina. 354, 407 1. 54 1.70 2.47 1. 45 Georgia ._ 178, 012 1.43 1. 61 2.24 1. 39 South Central 138, 085 1.46 1. 61 2. 24 1. 39 Alabama. 88, 505 1.42 1. 57 2. 23 1. 42 Texas ...... 23, 869 1.53 1. 66 2. 17 1. 31 West - 517 1.82 2. 62 4. 83 1. 84 United States _ . _ . 1, 078, 592 1.49 1. 67 2. 43 1. 46

NARROW FABRIC MILLS 1947

New England. ._ 40, 755 1. 57 1.93 2. 05 1. 06 Middle Atlantic ...... 46, 546 1. 71 2. 12 2.27 1. 07 North Central 5, 158 1. 71 2. 42 2. 17 . 90 South . ... 15, 600 2. 39 2.48 2.24 . 90 Pacific. . 142 1. 73 2. 12 2.33 1. 10 United States ______108, 201 1.69 2. 10 2. 19 1. 04

1958

New England . . 54, 412 1. 58 2.06 3. 16 1. 53 Middle Atlantic __ 48, 804 1. bb 2.20 3. 61 1. 64 North Central. __ 4,635 1. 73 2. 21 3. 41 1. 54 South .____._._ 34, 631 2. 02 2. 41 3.33 1. 38 Pacific . ._ _- 156 .90 1. 17 2. 03 1. 73 United States 142, 638 1. 66 2. 19 3.35 1. 53

1 For 1958, value added is adjusted by taking into account value added by manufacturing operations and net change during the year in inventories of finished goods and work-in-process. Data for 1947 are unadjusted. Adapted from Census of Manufactures.

62 Data for 1958 show that wage rates per hour or value added per dollar of wages (table 37). and value added by manufacturers of cotton fab- In 1954 and 1958, value added per dollar of pay- rics per dollar of payroll, per dollar of wages, and roll by manufacturers of yam, thread, broadwoven per hour of labor varied irregularly with the size fabrics, and by establishments finishing textiles of the company, as indicated by the number of (except wool) appeared to vary directly with de- production workers {120), Similar data, on a gree of integration. Value added per dollar of plant basis, for 1947 and 1954 show that wage payroll averaged more for multiunit companies rates per hour and value added per dollar of wages than for single-unit companies, and that for multi- and per hour of labor also varied irregularly with industry companies averaged more than that for the size of plants {120). single-industry companies (table 28, p. 57). For Value added per dollar of payroll in 1958 av- manufacturers of narrow fabrics and miscellane- eraged less for cotton broadw^oven and narrow ous textile mill products, value added per dollar fabric mills owned or controlled by corporations of payroll in 1958 varied directly with degree of than for those owned or controlled by any other integration. In 1954, value added per dollar of agency (table 36). Value added per dollar of payroll averaged greater for single-unit companies payroll by broadwoven fabric mills operated as and single-industry companies than for multiunit single units averaged less than that added by mills companies and multi-industry companies (table operated as multiunits. Value added per dollar 28, p. 57). of payroll by narrow fabric mills operated as sin- gle units averaged greater than that added by Means and Importance of Improvement mills operated as multiunits. Data on degree of specialization among manu- Improvements in the quality, suitability^ and facturers of specified kinds of cotton broadwoven attractiveness of cotton faorics, from the point of fabrics do not show any consistent relationship view of consumer preference, and adequate sup- between degree of specialization and value of ship- plies of these products at attractive prices are im- ments per plant, value added per dollar of payroll, portant means of expanding outlets for cotton products. Special chemical treatments and fin- TABLE 36.—Value added hy cotton hroadwoven ishes, along with improved mechanical processing, and narrow fabric mills,^ iy type of ownership offer great possibilities of improving the quality and operation^ united States^ 1958 of cotton products so they can compete more effec- tively with the ever-increasing supplies and im- Total Per dollar of proved qualities of manmade fibers. Additional payroll information is needed to show the changes in con- struction, weight, finishes, and other character- Type of ownership istics required for cotton fabrics to compete most and operation Fabric mills Fabric mills effectively and to serve as a basis for developing suitable equipment and techniques for manufac- Broad- Nar- Broad- Nar- turing improved products efficiently. woven row woven row

1,000 1,000 Means of Improvement Ownership : dollars dollars Dollars Dollars Corporate. 1, 074, 342 136, 270 1.49 1. 65 The problem of increasing efiiciency in the man- Partnership 3,224 3,627 1.68 2.23 Individual 1,026 2,741 1.86 1.76 ufacture of cotton fabrics, as well as cotton yarn Other. 0 0 0 0 (p. 45), may involve consideration of such factors as the location, size, organization, and control of All 1, 078, 592 142, 638 1.49 1. 66 operating imits ; kinds and arrangement of build- Operation: ings, machinery, and equipment used ; labor used : Single Unit: operating methods and practices; and kinds and Corporate 161, 224 (0 1.39 qualities of raw materials used. Since most of Other. ___ _ _ 4,250 0) 1.72 (1) the yarn used in cotton fabrics is produced by All .- 165, 474 75, 797 1.39 1. 68 manufacturers of these fabrics, the section on "Adjustments in Quality" (p. 46) applies to the Multiunit: yarn production phase of the manufacture of cot- Corporate 913, 118 1.51 (0 Other._ _ 0 0 0) ton fabrics. In recent years integration has re- i? sulted in changes in the organization and control All 913, 118 66, 841 1.51 1. 64 of some plants manufacturing cotton fabrics. All - ... 1, 078, 592 142, 638 1.49 1. 66 But adequate information is not available to indi- cate whether, or to what extent, these changes 1 Withheld to avoid disclosing figures for individual affect the efficiency of the manufacturing opera- companies. tions, the quality and suitability of the fabrics pro- Adapted from Census of Manufactures. duced, or the competition among fibers.

63 TABLE 37.—Number of establishments^ value of shipm^ents^ and value added by manufacturers of speci- fied kinds of cotton broadwoven fabric per plant^ per dollar of wages^ and per dollar of payroll^ by degree of specialization^ united States^ 1958

Value added by manufacture per- Establish- Shipment Product class and degree of specialization ment per plant Dollar of- Plant Pavroll Wages

Cotton broadwoven fabric: Number 1,000 dollars 1,000 dollars Dollars Dollars 90 percent or more 403 5,702 2,228 1.47 1.65 75 to 89 percent 32 5,887 2, 197 1.48 1. 65 Less than 75 percent 60 4,234 1,786 1. 63 1. 86 All 495 5,536 2, 173 1.49 1. 67 Duck and allied fabrics: 90 percent or more 17 1, 532 614 1.65 1. 90 75 to 89 percent 9 4,401 1, 772 1. 36 1. 51 Less than 75 percent 5 6,036 2,524 1. 54 1. 72 All 31 3, 092 1, 258 1.49 1.67 Sheeting and allied fabrics: 90 percent or more 48 4, 066 1, 374 1.25 1.38 75 to 89 percent 15 8, 336 2, 807 1.32 1.44 Less than 75 percent 28 9,366 3, 443 1.38 1.51 All 91 6,401 2,247 1. 32 1.45 Printcloth yarn fabric (gray goods) : 90 percent or more 52 5, 528 2, 191 1.43 1. 58 Less than 90 percent 13 11,763 4, 506 1.40 1. 54 All 65 6,775 2, 654 1.42 1. 56 Colored yarn fabric: 90 percent or more 21 7, 584 3, 196 1. 86 2. 04 75 to 89 percent 5 3, 367 1,398 1.66 1.83 Less than 75 percent 11 8,526 2,812 1.46 1.66 All 37 7,294 2,839 1.71 1.90 Fine goods, gray: 90 percent or more 37 5, 655 2,468 1. 52 1.69 75 to 90 percent 7 9, 301 3,869 1.26 1.36 Less than 75 percent 10 9, 398 3, 737 1. 53 1. 69 All 54 6, 821 2,885 1.47 1. 62

Adapted from Census of Manufactures.

Reports indicóte that increased use of improved in 3 to 5 years, and 16 percent in 6 or more years machinery and equipment, suitably organized and {63), In 1958, data on age of equipment showed operated, would result in substantial improve- that only 23 percent of textile manufacturing ments. As indicated in another section of this facilities were installed since 1950 and that 59 per- report (p. 45), during the 10 years ended with cent were installed prior to 1946 {63). 1957, the textile industry spent $3.5 billion for Case studies reported in 1958 indicated that the machinery and equipment. During the same installation and use of modern, high-speed warper period, productivity per man-hour, based on yards and drawing-in machines, for example, enable of broadwoven goods produced, increased 67 per- some mills to increase warping speeds greatly, to cent. Nevertheless, it was estimated that about make drawing-in labor savings of more than 75 two-thirds of the textile manufacturing machinery percent, and to bring about other improvements in place in 1957 was obsolete {63), In 1958, 37 {63). Modernization of slashing equipment was percent of the operators who were replacing old said to pay off more rapidly than modernization facilities with new plant and equipment indicated of equipment in any other department of a tex- that they expected these replacement expenditures tile mill {63). Slashers may be modernized by to pay for themselves in 1 or 2 years, 47 percent rebuilding old ones or by replacing the old with 64 new ones. In some instances, rebuilt slashers de prepared on the basis of cost-engineering data and liver twice as much and new slashers deliver u; other information. These specifications would to three times as much yarn per minute as oL show the more desirable buildings, machinery and ones (63). Weaving mills were said to be increas- equipment, floor plans, labor requirements, operat- ing productivity per man-hour up to 30 percent ing programs, and production data. Detailed cost by replacing old looms with modem ones. A data for the different processes and operations wide sheeting loom introduced in 1956 was said would need to be developed for the model plants. to be increasing production 26 percent at each of A comparison of data on one representative es- four mills. Other mills had rebuilt old looms for tablishment with that of others and with data de- an average gain of 11 percent in productivity {6S). veloped for the model, low-cost plants would indi- Improved equipment reported in 1961 include cate the nature and extent of changes needed to the new Draper x-3 single-shuttle loom; Cromp- increase efficiency and reduce costs of producing ton and Knowles pick-and-pick automatic bobbin, specified fabrics. Similar information on manu- multiple-shuttle loom; the Warner and Swasey facturers of carded cotton yam in 1950 indicated weaving machine; the Fletcher high-speed, auto- the possibility of reducing manufacturing costs for matic narrow fabric loom; and the Draper shut- some mills by as much as 40 percent {105), It tleless loom (1). The use of any of this equipment was reported in 1951 in connection with comments is said to result in considerable increases in pro- on the carded yam study that, although cotton- ductivity and substantial reductions in unit costs spinning mills were among the industry's most of the products. One of the modern single- progressive mills, the average spinning mill was shuttle looms reported in 1958 is said to increase operating 10 to 20 years behind the times, as far as weaver productivity 300 percent and fixer pro- costs and efficiency were concerned. It was also ductivity 130 percent, and to reduce w^eaving and reported that a similar study in other branches of fixing payroll 66 percent. The new single-shuttle the textile industry very likely would turn up an loom reported in 1961 is expected to increase pro- even more striking picture {93), This situation ductivity and further reduce unit costs (i). apparently indicates that economic applications One of the most dramatic machines developed were lagging far behind technological develop- since the early 1950's is said to be the automatic ments in the cotton textile manufacturing indus- loom winder, a device which may be a part of a try. Manufacturing costs, therefore, were sub- new modem loom or installed on an old model stantially higher than they would have been if loom. It eliminates 10 steps in the handling of teclinological developments had been fully utilized. yam preparatory to weaving, including two ma- Case studies of developments in the late 1950's chine processes, thereby freeing valuable floor and early 1960's and data on age of machinery in space for additional machinery. In mills having place in 1960 indicate that some manufacturers looms with this device, payroll savings may be of cotton broadwoven fabrics can improve their as much as 45 percent, depending upon fabric con- efficiency and substantially reduce costs by the use struction. But only about 15 or 20 percent of the of improved machinery and equipment suitably looms in place are reported to have undergone this organized and operated. For such modernization type of modernization (i). Of the looms in place to be economically feasible, prospective benefits in 1960 only 25 percent were installed since 1950 would need to be great enough to equal or exceed and 45 percent w^ere installed prior to 1940 (/). costs of the new equipment, losses from scrapping Results of these developments suggest the possi- the old and obsolete equipment, and the expenses bility of further substantial improvements in the of making the changes. Reports indicate that an manufacture of cotton fabrics. The conditions un- increasing number of textile executives partially der w^iich and the extent to w^hich these and other solve the problem of financing the modernization developments could be most feasibly utilized in in- of plants by leasing equipment and thus conserv- creasing efficiency and reducing costs of individual ing their working capital {4). plants may need to be based on information similar to that developed for manufacturers of carded Importance of Improvement cotton yarns, as indicated on pages 46 and 47 (IOS). To obtain such information for manufac- The importance of increasing efficiency and re- turers of cotton fabrics would require the assembly ducing labor costs is emphasized by the fact that and analysis of detailed cost data for a representa- the proportion of the gross margins of manufac- tive sample of manufacturers. The purpose of this turers of cotton broadwoven fabrics increased from data would be to show the influence of various about 43 percent in 1947 to 55 percent in 1958, factors on costs of labor, overhead, and other items according to census reports. Hourly earnings of at each stage or process in the manufacture of laborers in this industry in 1962 averaged 55 per- specified kinds of fabrics under actual operating cent more than those in 1947 and were about four conditions. In addition, detailed specifications for times as great as those in 1939. Apparently the model low-cost establishments for manufacturing efficiency of laborers could be increased and unit typical kinds of cotton fabrics would need to be costs of labor reduced by more general use of im-

736-806—64- 65 proved automatic machinery and equipment and 1950's gross margins for rendering these services better adjustments in the organization and opera- averaged almost as much as gross returns to grow- tion of manufacturing establisliments. ers for production of the cotton used, about three The relative importance of increasing efficiency times as much as total costs of ginning and mer- and reducing the costs of manufacturing cotton chandising the cotton, and about 12 percent of the fabrics, including dyeing and finishing, may be costs to consumers of finished apparel and house- indicated by data which show that during the late hold goods.

WOOL PRODUCTS MANUFACTURING

Establishments primarily engaged in manufac- cotton decreased from about 10 percent in 1947 turing wool products include scouring and comb- to less than 2 percent in 1962. ing plants ; yarn mills, including those producing In worsted combing, the proportion of fibers carpet and rug yarn; and woolen and worsted consumed that was wool decreased from about 92 fabric mills. percent in 1947 to 84 percent in 1958 and then in- Wool scouring and combing plants are primarily creased to 92 percent in 1962. The proportion of engaged in processing wool fibers for spinning. fibers consumed in the manufacture of carpet and Important processes included in this industry are rug yarns accounted for by wool decreased from 97 wool scouring and carbonizing, and combing and percent in 1947 to 78 percent in 1958 and then in- converting wool and manmade fibers into top. creased to about 84 percent in 1962. Similar pro- Wool yarn mills, including those producing car- portions for manmade fibers increased from about pet and rug yam, are primarily engaged in spin- 1 percent in 1947 to 21 percent in 1962 (table 38). ning, twisting, winding, or spooling yarn wholly Production of woolen and worsted fabrics, or chiefly by weight of wool, mohair, or similar except felts, from blended yarns or mixtures of two animal fibers. These mills produce both weaving or more fibers increased from about 58 million and knitting yams. linear yards in 1958 to 62 million in 1962, or about Broadwoven wool fabric mills include establish- 25 and 23 percent respectively of total yardage ments primarily engaged in weaving fabrics over produced. Of total wool blends produced in 1962, 12 inches in width wholly or chiefly by weight of about 35 percent were wool and nylon, 28 percent wool, mohair, or similar fibers; those dyeing and were wool and one other manmade fiber, and 37 finishing woven wool fabrics or dyeing wool, tops, percent were wool and two or more fibers, accord- or yam ; and those shrinking and sponging wool ing to census reports. goods for the trade. In 1958, the value of shipments and other re- ceipts of 150 wool yarn mills, operated by 142 com- Nature and Practices panies, totaled $274 million. Of this total 79 per- cent was accounted for by wool yarns ; 14 percent A variety of products are produced by establish- by secondary products, such as other yams, tops, ments in the wool products manufacturing indus- and noils ; and 7 percent by miscellaneous receipts, try. In 1958, the value of shipments and other mainly from contract work on materials owned by receipts of 81 scouring and combing plants oper- others. Shipments of wool yarns accounted for ated by 78 companies totaled $88 million. Primary 85 percent of total shipments by this industry and products, consisting of scoured wool, wool tops, for 78 percent of total shipments of these products and noils, constituted 60 percent of this amount; by all industries. Weavmg mills produce large secondary products, consisting principally of yam proportions of wool yarns for their own use. spun on the woolen and worsted systems and In 1958, yarn spun on woolen and worsted sys- woolen and worsted apparel fabrics, about 6 per- tems was shipped mainly to other manufacturers ; cent; and miscellaneous receipts, mainly from other plants of the same company ; and sales of- commission scouring or combing of wool owned fices, branches, and administrative offices of the by others, 34 percent. In 1958, shipments of same company (table 39). Considerable amounts scoured wool, wool tops, and noils valued at $90 were distributed to merchant wholesalers, retailers, million represented 59 percent of the products and other customers not specified. Sales offices, shipped by all industries. Large quantities of branches, and administrative offices, in turn, dis- scoured wool, wool tops, and noils are produced by tributed their products mainly to other manufac- turers. yarn mills and by integrated spinning and weav- In 1958, there were 469 broadwoven fabrics ing mills for their own use. mills, wool, including those engaged in dyeing and The proportion of fibers consumed in woolen finishing. These mills were owned by 411 com- spinning accounted for by virgin wool decreased panies. This industry includes a large number from about 84 percent in 1947 to 32 percent in 1962 of integrated mills which convert raw fibers into (table 38). The proportion accounted for by man- finished fabrics. The value of shipments and other made fibers increased from about 5 percent in 1947 receipts of this industry in 1958 totaled $929 mil- to 22 percent in 1962, and that accounted for by lion Of this total, 91 percent was accounted for

ßß TABLE 38.—Fibers consumed on woolen and TABLE 39.—Distribution of manufacturers'^ ship- worsted systems^ united States^ specified years^ ments of yarns spun on woolen and worsted sys- 1H7-62 tems and of wool carpet and rugs^ by class of customer and outlet^ united States^ 1958 Item 1947 1959 1961 1962 Yarn Carpets and rugs Woolen spinning: 1,000 1,000 1,000 1,000 Shorn and pulled pounds pounds pounds pounds Customer outlet wool 189, 555 122, 478 112, 597 109, 935 Pro- Pro- Other wool ^ 147, 385 152,010 130, 032 142, 362 Value por- Value por- Cotton 38, 952 7,200 6,590 5,794 tion tion Manmade fibers 2 20, 652 71, 408 67, 788 74, 384 Other fibers 2 2,738 4,825 5,533 6,091 Manufacturer to— Million Million Total 399, 282 357, 921 322, 540 338, 566 Sales ofiäces, branches, dollars Percent dollars Percent etc _ 33 8.8 114 31. 5 Worsted combing: Other plants, same com- Shorn and pulled pany 81 21. 6 0) (0 wool __ 336, 345 142, 452 150, 475 170, 312 Other manufacturers 203 54. 1 9 2.5 Mohair _ 13, 880 « e) (?) Merchant wholesalers 14 3.7 118 32.6 Manmade fibers 2 5,920 10, 105 6,148 4,577 Retailers, not owned 9 2.4 93 25.7 Other fibers 2 8,539 (?) Another 35 9.4 28 7.7 Total 364, 684 160, 613 164, 796 185, 916 Total 375 100.0 362 100.0 Carpet and rug yarns: Sales offices, branches, Shorn and pulled etc. to— wool _ _ 168, 644 170, 404 149, 057 148, 853 Other manufacturers 32 97.0 Other wool ^ 26, 979 (?) Merchant wholesalers 0) 37 32. 2 Manmade fibers 2 2, 384 37, 433 42, 450 45, 003 Retailers, not owned 0) 75 65. 2 Other fibers 2 3,619 (?) (?) (?) Another- ______«1 3.0 3 2.6 Total ._. 201, 626 233, 482 212, 579 214, 325 Total -_ 33 100.0 115 100.0 Total all types. _ 965, 592 752, 016 699, 915 738, 807 1 Withheld to avoid disclosure of figures for individual companies. *As defined in Wool Products Labeling Act of 1939. 2 Prior to 1953, manmade fibers other than rayon and Adapted from Census of Manufactures. acetate were included in other fibers. * Withheld to avoid disclosure of individual company administrative offices of the same company (ta- information. ble 39). Distribution by sales offices, branches, Adapted from Bureau of Census reports. and administrative offices was mainly to retailers and merchant wholesalers. by primary products, consisting of wool gray and finished cloth, and wool blankets; 6 percent by SIZE AND ORGANIZATION secondary products, consisting of wool yams, scouring and combing mill products, and other Changes in the size and organization of the wool secondary products; and 3 percent by miscellane- products manufacturing industry are indicated ous receipts. Shipments of wool gray and finished by information on the number of employees, the cloth and wool blankets in 1958 accounted for amount and kind of machinery and equipment about 94 percent of the industry's total shipments used, ownership and operation of establishments, and for 96 percent of shipments of these products and mergers and acquisitions. by all industries. The woven carpets and rugs industry comprises Number of Employees, Spindles, and Looms establishments primarily engaged in weaving car- pets and rugs from any textile yarn. The value The number of wool scouring and combing es- of shipments and other receipts of this industry tablishments increased from 56 in 1947 to 81 in in 1958 totaled $336 million. Of total shipments 1958, but the total number of employees in these and other receipts, 86 percent were primary prod- establishments decreased 28 percent during this ucts, 12 percent were secondary products, and 2 period. The quantity of tops and noils produced percent were miscellaneous receipts. In 1958, ship- by this industry decreased from 367 million ments of woven carpets and rugs by this industry pounds in 1947 to 133 million in 1958. Total ship- represented 87 percent of its total shipments and ments of scoured wool for sale decreased from 97 percent of shipments of these products by all 23 million pounds in 1947 to 11 million in 1954 industries. and then increased to 22 million in 1958, according In 1958, manufacturers of carpets and rugs to census reports. shipped their products mainly to merchant whole- The number of worsted combs in place in 1962 salers ; retailers ; and to sales offices, branches, and was about 52 percent less than the number in

67 1949. The number of woolen and worsted spin- cent in 1962. Of the total number of worsted dles in place in 1962 was 81 percent less than that combs the proportion increased from 4 percent in in 1939 and 77 percent less than that in 1949 (ta- Southern and North Central States in 1939 to ble 40). Annual fiber consumption by establish- about 29 percent in Southern States in 1962. That ments engaged in woolen spinning and worsted in New England and the Middle Atlantic States combing, mcluding carpet and rug yarn mills, de- decreased markedly (table 40). creased from 966 million pounds in 1947 to 621 Sizes of establishments in the wool manufactur- million in 1958 and then increased to 739 million ing industry, as indicated by the number of em- in 1962. A part of the reduction in mill consump- ployees, vary widely (table 41). Of the total tion of wool and cotton since 1947 was offset by number of plants, the proportion with 250 or more increases in consumption of manmade fibers (ta- employees decreased markedly from 1947 to 1958. ble 52, p. 82). Yarns spun on woolen and worsted That with fewer than 50 employees each increased systems, except carpet yams, in 1958 totaled about markedly during this period. Average number of 342 million pounds and were about 42 percent employes per establishment decreased about 50 less than the total in 1947. Production of carpet percent from 1947 to 1958. and rug weaving yarns spun on the wool system decreased from about 179 million pounds in 1947 Ownership and Operation to 130 million in 1958. The number of looms in woolen and worsted In 1958, establishments under corporate owner- mills decreased from 36,337 in 1950 to 11,407 in ship or control accounted for about 82 percent of 1962. The total number of hours looms were op- the total number of establishments and 96 per- erated decreased from 124,800,000 in 1950 to 51,- cent of the total number of employees in the 625,000 in 1962. Despite an increase of more than woolen and worsted fabrics manufacturing indus- 50 percent in average linear yards of fabrics pro- duced per loom-hour, fabric production decreased try (table 42). These proportions were less than from 470,513,000 linear yards in 1950 to 286,883,000 those in 1954 and 1939. The proportion of estab- linear yards in 1961, a decrease of 35 percent, and lishments operated from central administrative amounted to 309,861,000 linear yards in 1962. offices as multiunits decreased from 39 percent in Locations of machinery and equipment used in 1939 to 29 percent in 1954 and then increased to the manufacture of wool products have changed 39 percent in 1958. Of total employees of the in- considerably since 1939 (table 40). The propor- dustry, the proportion accounted for by employees tion of total woolen spinning spindles located in of multiunits decreased from 64 percent in 1939 the South increased from 8.5 percent in 1939 to to 55 percent in 1954 and then increased to 59 about 28 percent in 1962. The proportion of total percent in 1958. The average number of employ- worsted spinning spindles located in the South ees per plant for each type of ownership decreased increased from 2 percent in 1939 to about 62 per- markedly from 1939 to 1958.

TABLE 40.—Number of spindles^ combs^ and looms in place in the wool manufacturing industry^ by geographic divisions^ specified years^ 19S9-S2 ^

Item and year New Middle North South All other United England Atlantic Central States

Woolen spinning spindles: Number Number Number Number Number Number 1939 986,253 464,451 175,065 154,024 31,976 1,811,769 1959 336,211 132,966 55,007 174,584 13,104 711,872 1961 301,564 113,125 51,433 172,398 8,976 647,596 1962 280,970 92,084 41,669 167,312 8,976 591,011 Worsted spinning spindles: 1939 1,564,044 484,930 40,856 40,448 10,780 2,141,058 1959 246,000 68,482 {') 359,160 14.884 688,526 1961 224,374 41,440 (') 375,840 15,236 656,890 1962 192,192 43,268 (') 408,184 15,021 658,665 Worsted combs: 1939 1,823 674 (') 95 « 2,592 1959 ______924 189 (') 379 34 1,526 1961 917 185 {') 438 35 1,575 1962 926 174 (?) 475 (^) 1,614 Woolen worsted looms : 1939 34,146 9,058 2,870 3,095 510 49,679 1958.__ 5,817 2,136 631 4,748 13,332

1 Data for 1939 are for May; all other data are for 3 Included in ''South." December. 2 Data included in "all other" to avoid disclosing infor- Adapted from Census of Manufactures and Current In- mation of individual companies. dustrial Reports.

68 TABLE 41.—Number of wool scouring and conibing TABLE 42.—Number of establishments and average plants^ wool yarn mills^ except carpet^ and number of employees per establishment for woolen and worsted fabric plants^ by number manufacturers of woolen and worsted fabrics^ of employees^ United States^ 194,7 and 1958 by type of ownership and organization^ united States, 1939 and 1958 Scouring Wool Woolen and yarn and Average combing mills, worsted Establish- employees Employees per plant plants except fabric Type of ownership and ments 1 per estab- carpet plants operation lishment 2

1947 1958 1947 1958 1947 1958 1939 1958 1939 1958

Num- Num- Num- Num- Num- Num- Ownership: Number Number Number Number ber ber ber ber ber ber 1,000 and more _ _ _ Corporate 519 387 362 139 2 24 2 Partnership. 500 to 999 5 3 14 '~2~ 27 16 31 38 40 250 to 499___ . Individual 32 43 33 5 5 29 14 82 52 Other 100 to 249-_ 14 8 45 42 137 89 1 1 50 to 99 11 9 32 28 66 64 All 20 to 49-__ - 12 21 30 36 60 88 583 469 240 119 10 to 19 10 8 11 12 42 53 5 to 9 _ 6 Operation: 5 24 5 22 41 Single Unit: lto4_- _ 11 22 13 11 35 64 Corporate. _ 301 281 157 (^) Other___ _ Total 74 81 200 150 495 469 57 79 49 «\ / All 358 360 140 64 Adapted from Census of Manufactures. Multiunit: Corporate 218 106 407 (3) Mergers and Acquisitions Other.. __ „_ 7 3 150 {') Mergers and acquisitions in the textile industry All 225 109 399 301 in recent years, as previously indicated (p. 38), apparently have resulted in changes in organiza- All 583 469 240 119 tion and management of some operating units in the wool manufacturing industry. In 1958, about 78 percent of the mills with 79 percent of the looms 1 Data for 1939 relate only to regular factories or jobbers had equipment for both spinning and weaving engaging contractors. 2 In 1939 only wage owners are included; in 1958 all (table 43). These proportions were slightly employees are included. greater than those in 1954 (^). A larger pro- 3 Withheld to avoid disclosing figures for individual portion of the larger mills than of the smaller companies. ones had both spinning and weaving equipment. Adapted from Census of Manufactures. Many woolen and worsted mills have equipment for performing all operations from the processing increased from 83 percent in 1954 to 92 percent in of raw fibers through the finishing of fabrics. 1958. The degree of concentration in wool products Similar data for wool yam mills, except carpet, manufacturing industries, on a company basis, is show that in 1958 mills operated by 20 of the indicated by the proportion of the total value of largest companies, or 16 percent of the total, ac- shipments accounted for by specified numbers of counted for 58 percent of total shipments of the the largest companies in these industries. In the industry (table 44). Mills operated by 50 of the scouring and combing industry in 1958, plants largest companies, or 40 percent of the total, ac- operated by four of the largest companies, or counted for 88 percent of total shipments. The about 5 percent of the total, accounted for 58 per- proportion of total shipments accounted for by cent of the value of shipments of the industry establishments operated by specified numbers of (table 44). Twenty of the largest companies, or the largest companies varied irregularly from 1947 26 percent of the total, accounted for 89 percent to 1958. But the number of companies decreased of total shipments; and 50 of the largest com- from 181 in 1947 to 125 in 1958. Consequently, the panies, or 64 percent of the total, accounted for degree of concentration of shipments by specified 99 percent of total shipments of the industry. The proportions of the largest companies decreased degree of concentration of shipments in specified from 1947 to 1958. numbers of the largest companies increased from Data for the woolen and worsted fabrics manu- 1954 to 1958, despite an increase in total number facturing industry show that in 1958 establish- of companies. The proportion of total shipments ments operated by 20 of the largest companies, or of products regarded as primary to the industry less than 8 percent of the total, accounted for 59 69 TABLE 43.—Number of woolen and worsted mills segment of the textile industry, and 11 percent by and looms^ hy size of mill and degree of inte- companies engaged in other segments of the textile gration^ united States^ 1958 industry or in other industries (table 45). The size of establishments, as indicated by the Looms per mill number of employees, averaged more than three Type of machinery i times as much in 1958 and more than twice as much in 1954 for those operated by multiunit as for those All 1-49 50-99 100-499 operated by single-unit companies. The number of employees per establishment classified in the Fabric mills wool manufacturing industry averaged more for those operated by companies classified in other Number Number Number Number industries than for those operated by companies Weaving only 44 23 14 7 classified in the same industry (table 45). Spinning and weaving. 157 78 53 26 Total 201 101 67 33 MANUFACTURING METHODS (723) Raw wool may be sorted and must be scoured Looms operated before it is ready for carding on the woolen or worsted systems. Wool used in woolens is Weaving only 2,745 684 965 1,096 blended, carded, and spun into yam. That used Spinning and weaving- 10, 587 2,471 3,729 4,387 in worsteds is carded, combed, made into top, and Total 13, 332 3,155 4,694 5,483 spun into yarn. Woolen and worsted yarns are woven into cloth, which when finished is ready for fabricators of apparel, household goods, and indus- Proportion of total trial products. Wool Sorting Percent Percent Percent Percent Wools lacking uniformity may be sorted on the Fabric mills basis of the fineness, length, soundness, and color of the fibers, and the amount of vegetable matter Weaving only 21. 9 22.8 20.9 21.2 included. Manufacturers' requirements, which Spinning and weaving- 78. 1 77.2 79. 1 78.8 vary with the type of yarn and cloth to be pro- duced, are used as a guide in sorting. The higher 100.0 100.0 100.0 100.0 Total the quality of goods to be produced, the more care- fully the sorting is done. Looms operated Wool Scouring Weaving only 20.6 21. 7 20.6 20.0 Spinning and weaving- 79.4 78.3 79.4 80. 0 Grease wool contains large proportions of im- purities, which account for wide variations in Total 100.0 100.0 100.0 100.0 shrinkage. These impurities are divided into three categories: (1) natural impurities, including 1 Degree of integration determined by type of machinery reported. Data for small plants reporting on short form the various oils and fats secreted by the sebaceous not included. glands in the animal skin, referred to as wool fat, Adapted from Census of Manufactures. and the water-soluble salts from dried perspira- tion, which are designated as suint; (2) acquired percent of total shipments of the industry (table impurities, including sand, dirt, burs, pollen, and 44). Mills operated by 50 of the largest com- other forms of vegetable matter picked up by the panies, or 19 percent of the total, accounted for sheep from its environment; and (3) applied im- 78 percent of total shipments. The proportion of purities, consisting of tar, pitch, and paint which total shipments accounted for by specified num- are used in small quantities for identification pur- bers of the largest companies increased from 1947 poses, or chemicals used to prevent or treat disease. to 1958, but the total number of companies de- Impurities are removed from raw wool by the creased and the degree of concentration in speci- detergent process of scouring, an intricate and fied proportions of the largest companies de- important operation. Many of the difficulties in- creased. volved in the dyeing, carding, combing, drawing, Of the 703 establishments primarily engaged in spinning, and finishing processes are attributable manufacturing and finishing broadwoven wool to improperly scoured wool. Most of the wool in fabrics and yarns in 1958, about 89 percent were this country is scoured with nonionic detergents or operated by companies primarily engaged in this soap and soda ash.

70 TABLE U.—Share of total shipments of the wool manufacturing industry accounted for hy largest companies^ united States^ 1958^ 195^^ and 191^7

Concentration ratio : Proportion of total shipment accounted for by ^— Primary Industry and year Com- Value of product panies ^ shipments ^ speciali- 4 largest 8 largest 20 largest zation * companies companies companies

Number 1,000 dollars Percent Percent Percent Percent Scouring and combing plants: ^ 92 1958 _ --_- -- 78 85, 683 58 73 89 1954 __ _ __ 70 64, 168 53 68 87 83 Yarn mills, wool, except carpets : ^ 1958 _____ 125 262, 823 20 34 58 89 157 251, 614 20 32 57 93 1954 __ - - 90 1947 181 336, 956 21 34 55 Woolen and worsted fabric mills : ^ 263 770, 884 36 46 59 w 1958 -- 92 1954 - - 285 890, 281 27 38 55 90 1947 - - 427 1, 355, 209 28 40 56

1 See footnote 1, table 14, p. 41. 5 See footnote 5, table 27, p. 56. 2 See footnote 2, table 14, p. 41. 6 See footnote 7, table 14, p. 41. 3 See footnote 3, table 14, p. 41. Adapted from (120). 4 See footnote 4, tablt 14, p. 41.

Bur-Picking and Carbonizing Blending and Woolen Carding Wool usually contains varying quantities of Virgin wools may be blended with other raw vegetable matter, such as burs, seeds, straw, twigs, matreials, such as noils, reused and reprocessed or leaves, picked up by the sheep in grazing. If wools, manmade staple fibers, and cotton and silk these contaminants are not removed, they are broken up into small pieces during processing or TABLE 45.—Number of companies and establish' manufacturing operations, mainly in carding. ments^ average number of employees per estab- When present in large quantities, they cause diffi- lishment^ arid average value added per dollar culties in manufacturing processes and reduce the of payroll by manufacturers of wool broad- quality of the products. It is highly desirable, woven fabrics^ yam and finishing^ except wool^ therefore, to remove all vegetable matter from wool United States^ 1958 early in its processing. These removals may be Aver- made immediately after scouring and drying by age Value the mechanical or bur-picking method, or by the em- add- chemical method. The choice of method depends Com- Estab- ploy- ed per upon the purpose for which the wool is to be used. Item panies lish- ees dollar ments 1 per of pay- If the wool is to be blended with vegetable fibers, estab- roll such as cotton, rayon, or acetate, the chemical lish- method is used. But if it is to be blended with ment other wool, it may be sufficient to remove most of the vegetable matter by the mechanical or bur- Number Number Number Number picking method. Companies in this industry 2_ 585 623 86 1.66 Eemoval of vegetable matter from wool by Single-unit companies 544 544 68 1.60 chemical means is known as carbonizing. Vege- Multiunit companies 41 79 210 1.79 table matter is reduced to carbon by means of acids, Single industry 16 31 207 1.90 such as sulfuric or hydrochloric, or by salts such Multi-industry 25 48 212 1.73 as aluminum chloride. After it is so reduced, it Companies in other indus- is removed from the wool by mechanical action. tries 34 80 312 1.60 The chemical method is superior to the bur-picking Total or average 619 703 112 1.64 method in removing all vegetable matter, but car- bonizing tends to degrade and discolor the wool 1 Establishments in wool broadwoven fabric, yarn, and fibers so that losses in weight of the wool occur fiinishing industry. during mechanical processing. Furthermore, 2 In 1954 these companies had 48 establishments in other industry categories and 40 central administrative carbonizing tends to reduce the wear resistance of offices, auxiliaries, sales branches, and sales offices. In the final product, and sometimes adversely affects 1958, the corresponding categories had 46 and 17 tlie dye receptivity, felting properties, and other respectively. useful properties of wool. Adapted from {101). 71 noils, and must be properly prepared for wool ing is designed mainly (1) to straighten and sep- carding and spinning operations. These prepara- arate the fibers and, in general, to make long wool tions may include such operations as bur-picking fibers lie parallel; (2) to clean the fibers by re- for burry wool, opening for tacky wools or other moving burs, shives, and other extraneous vegeta- materials, dusting, oiling, mixing or blending, and ble matter; (3) to blend, distribute, and mix the garnetting for thread waste, depending upon the different lengths and qualities of fibers harmo- nature and condition of the stocks. The purpose niously into one uniform quality; and (4) to ar- of blending or mixing is to amalgamate such pro- range the fibers into a continuous and convenient portions of the different raw materials used as are sliver of definite weight and thickness. required to produce economically satisfactory Worsted carding is performed on one long card, yarn or cloth. Stocks of wool or mixtures of wool as contrasted with the three different cards used and other fibers are oiled to minimize breakage in the woolen system. Three types of worsted of the wool fibers in opening processes such as rag- cards in general use in the United States are (1) picking and carding; to reduce fly, waste, and the single-cylinder worsted card with four licker- static electricity in carding; and to increase the ins for long-staple wool (Bradford system), (2) cohesion of the fibers in loose slivers. This in- the double-cylinder worsted card with two licker- crease in the cohesion of fibers facilitates drafting, ins and dividers for medium crossbred wools condensing, and spinning. The purpose of gar- (French and Bradford systems), and (3) the netting is to break up hard-twisted waste to be double-cylinder worsted cards with bur breast included in woolen mixtures by opening the twist workers and strippers for fine burry wool (French in the thread completely, by blending the fibers system). Worsted mills in the United States pre- perfectly, and by delivering the stock in a fluffy, fer the double-cylinder card for fine and crossbred opened condition ready for mixing. wools, regardless of the system of drawing or After these stocks have been thoroughly mixed, spinning used. cleaned, oiled, garnetted, and otherwise prepared, they are ready for the carding process. The prin- Worsted Combing cipal functions of woolen carding are to open Card slivers may be backwashed to remove im- further the stocks as a whole, disentangle locks purities, oiled, and otherwise prepared for the and bunches, straighten the individual fibers to the combing operations. The functions of worsted extent required to remove natural impurities, combing are to remove and separate the short wool to mix further the stocks and the component parts, fibers below a predetermined length, to straighten and to deliver the stocks in convenient form for the retained long wool fibers and make them lie transfer to the next card or spinning machine. as parallel as possible, and to remove foreign im- Spinning and Woolen Yarn purities. In such combing, the long fibers are retained and made first into comb slivers and later When wool stocks are converted into roving by into worsted top; whereas the shorter fibers are the carding processes, they are ready for spinning separated out as a fibrous mass known as noils and into yarn of the required nm or cut. Woolen used as raw material in the manufacture of woolen spinning involves three principal operations: yarns and fabrics. drafting, twisting, and winding-on. Drafting, or final drawing-out, is the last reduction or attenua- Worsted Drawing tion of the roving itself to that weight or thickness Worsted drawing constitutes a series of opera- required in the final woolen yarn. In the old tions designed to convert top slivers into rovings mule system, this was accomplished by a so-called small enough to be spun conveniently into fine, spindle draft instead of a roller draft, as it is done even yams on spinning machines. Parallelization on the woolen ring spinner or in worsted spinning. of the wool fibers is continued in these operations. Twisting, or insertion of twist in the drafted rov- Drafting operations are used to the extent neces- ing, gives the yarn sufficient strength for use in sary to reduce the slivers gradually so they can be knitting or in weaving. On the mule, this process spun readily into single worsted yarns. Doubling is partiV combined with drafting, but it is mainly is extensively done to equalize irregularities in accomplished by spindle twisting. On the woolen thickness or weight of the slivers, which otherwise ring frame, twisting is done with a ring or traveler would result in uneven yarn. Open, cone, and and is termed ring twisting. Winding-on, or porcupine drawing are systems of drawing gen- packaging, consists of putting the spun yarn into erally recognized in the United States. Regard- a form, such as cops or bobbins, suitable for weav- less of the system used, however, all drawing ing or knitting operations. processes depend upon two or more pairs of draft- ing rolls and packaging of the reduced sliver. Worsted Carding Wlien the wool used in worsted has been graded, Worsted Spinning sorted, scoured, dried, and otherwise prepared, it The types and sequences of operations involved is ready for the carding processes. Worsted card- in worsted spinning, regardless of the system em-

72 ployed, include final drawing out or drafting, in- other. Woolen and worsted yarns used in the sertion of twist, and winding on or packaging. pile of carpets and rugs are much heavier in size The main function of this spinning is the produc- than those used in wearing apparel. Yams made tion, from rovings prepared from drawing opera- of cotton, wool, jute, and linen are used in the back tions, of uniform yarns of the desired thickness structure of carpets and rugs. Filling, warp, and and requisite strength, surface, handling, and "stuffer" yams form the back structure and con- appearance, ]3ut up in convenient forms such as stitute the weave. After weaving, carpets and bobbins, spools, cops, or packages for later ma- rugs receive several finishing processes before they nipulation, inspection, and use for knitting or are shipped from, the mill. weaving. MACHINERY AND EQUIPMENT Weaving Woolens and Worsted The number of machines in place in the wool Woolen and worsted yarns spun for weaving manufacturing industries decreased markedly purposes may require certain preparatory pro- during the late 1940's and 1950's. Apparently not cesses, which include rewinding, beam warping, all of the machinery and equipment in use in the warp slashing and sizing, reeding the warp, twist- early 1960's was of the most improved types or ing in, and drawing in, before they are ready for in good condition. Much of it was overworked weaving operations. The function of weaving is during World War II, and the replacement of the formulation of cloth or fabrics by interlacing, badly worn and obsolete machinery and equip- at right angles to each other, of two sets of yarns, ment w^ith new and improved types was delayed by one set running lengthwise in the loom and termed shortages. In the postwar period, considerable the "warp," and the other running crosswise in improvements have been made. Census reports the loom and termed the "filling" or "weft." show that expenditures for plant and equipment These fabrics are made up of weaves in a variety by the industry increased from $9,307,000 in 1939 suitable for specified uses, such as men's and wom- to $51,117,000 in 1947, and amounted to $22,683,000 en's wear fabrics. To establish and correct any in 1958 and to $33,677,000 in 1962. A large pro- imperfections in woolen fabrics, manufacturers portion of these expenditures was for new equip- subject them to numbering, perching, picking, ment (table 46). burling, and mending before they are dyed and Eeports indicate that in the late 1940's and otherwise finished. 1950's wool mills set the textile pace in construct- ing modem buildings and installing new machin- Dyeing and Finishing ery {63). This modernization probably resulted in greater changes in worsted spinning than in Wool fibers contain yellowish pigment which is any other segment of the textile manufacturing removed by tinting or bleaching. Dyeing may be industry. Indications are that significant im- done at any stage of manufacture—^to loose wool provements are in prospect for woolen mills. In- or stock, to slubbing or top, to yarn, or to fabrics troduction and use of the American system of or piece goods. Wool may be printed in the form worsted spinning and the long-draft machines of either yarn or piece goods, but printed wool have been important developments in recent years. materials comprise a minor portion of finished Total worsted spindles in place decreased from wool articles. After woolen and worsted goods about 1,920,000 in 1947 to fewer than 700,000 in leave the loom, they are subjected to various types 1961, but modern American-system spindles in of finishes, involving wet and dry finishing opera- place rose from less than 118,000 in 1951 to more tions, designed to improve the quality, appear- than 450,000 in 1957 {63). Older Bradford and ance, and attractiveness of the fabrics {123), In French systems are still used for some specialty wet finishing, operations include dry cleaning, yams and fibers, but more and more worsted mills singeing, crabbing, piece scouring, filling, car- are swinging over to the American system {63). bonizing, scutching, beaming, wet decating, blow- ing, and raising. In dry finishing they include Charges or Costs extracting, drying or tentering, shearing, brush- ing, dry decating, damping, pressing, steaming, Gross margins of scouring and combing plants, which averaged only about 37 percent of the value sponging, examining, stamping, measuring, weigh- of the products in 1947, increased during the next ing, folding, inspecting, and shipping. decade and averaged 49 percent in 1958 (table 47). Carpets and Rugs Proportions of these margins that were accounted for by salaries and wages also increased, averaging Wools used in the manufacture of carpets and 56 percent in 1958. rugs are imported from countries where the native The relatively small proportion of gross margins sheep have coarse, wiry, tough ñeeces. Several accounted for by salaries and wages and the rela- grades of this wool are blended to obtain the de- tively large value added by manufacture per dol- sired characteristics of the yarn and to keep these lar of payroll in 1947 are accounted for largely characteristics constant from one period to an- by narrow gross margins and by the large propor- 73 TABLE 46.—Expenditures for plant mid equip- Gross margins of manufacturers of wool fabrics ment hy wool scouring and combing plants^ wool decreased moderately during this period and yarn mills^ and woolen and worsted fabric mills^ amounted to 41 percent in 1958 (table 47). United States, 1H7, 195Jf, and 1958 ^ Costs of manufacturing specified wool products in 1950, as reported by Barnes Textile Associates, Expenditures Inc., show that materials accounted for 46 per- Industry, plant, and cent of the total costs for wool covert and 53 per- equipment 1947 1954 1958 cent of costs for worsted twill (^7). Labor ac- counted for about 30 percent of the total costs for wool covert and 29 percent of the total costs for Scouring and combing 1,000 1,000 1,000 plants : dollars dollars dollars New equipment 2,032 1,929 1, 136 TABLE 47.—Values, costs, and margins for wool New plant _ _ _ 1,186 462 139 All other 36 738 (') Tnills, by function, United States, 1958 ^ Total -- _ 3,254 3,129 3 1, 275 Scouring, Weaving Yarn mills: worsted and Yarn New equipment 4,922 2,959 4,138 Item combing, finishing mills New plant __ __ 1,691 343 1,011 tow to mills All other _ .__ 337 856 3, 032 top mills Total- _ 6,950 4, 158 8, 181 1,000 1,000 1,000 dollars dollars dollars Fabric mills: Value of products ^ 82, 734 911, 924 271, 641 New equipment _ 27, 418 8,626 7, 853 New plant 11,831 3,087 1,849 Cost of materials, etc. 3_ _ 42, 217 534, 131 172, 707 All other 1,664 2,721 3,525 Gross margin _ 40, 517 377, 793 98, 934 Total 40, 913 14, 4.34 13, 227 Salaries and wages 22, 663 209, 094 54, 202

1 In 1958 and 1954 establishments that reported on the Salaries 4,759 42, 905 9 124 short form were asked to show only their total expenditures Wages 17, 904 166, 189 45, 078 for new plant and equipment. Their totals were prorated on the basis of industry averages of the establishments Fuel 1,350 8,773 1 217 that reported detail expenditures by type to obtain sepa- Purchased electric en- rate expenditure figures for new plant, new equipment, and ergy ___ 932 7,233 2,342 used plant and equipment. Contract and commis- 2 Less than $500,000. sion work 376 25, 296 4, 251 3 Expenditures for new plant and new equipment only. Other* 15, 196 127, 397 36, 922 Adapted from Census of Manufactures. Proportion of value of products tion accounted for by contract and commission work. The relatively large proportion of gross Percent Percent Percent margins accounted for by payroll and the rela- Value of products ^ 100.0 100. 0 100.0 tively small values added by manufacture per Cost of materials, etc. 3„_ 51.0 58. 6 63.6 dollar of payroll in more recent years are ac- Gross margin 49. 0 41. 4 36. 4 counted for mainly by substantial increases in costs of salaries and wages. Salaries and wages 27.4 22. 9 20.0 Selling prices, costs, and margins for wool tops Salaries 5. 8 4.7 3. 4 in 1942, the latest date for which such data are Wages 21. 6 18. 2 16. 6 available, indicate that manufacturers' gross mar- gins averaged about 31 percent of the average sell- Fuel 1. 6 1. 0 . 4 Purchased electric en- ing price (^7). Almost 70 percent of topmakers' ergy 1. 1 .8 . 9 gross margins were accounted for by conversion Contract and commis- costs; more than 9 percent by overhead, general, sion work .5 2.8 1. 6 and administrative expenses; and about 21 per- Other* _ _ __ 18.4 13. 9 13. 5 cent by other items. About 12 percent of conver- sion costs were accounted for by the cost of sort- 1 Data on manufacturers of woolen and worsted fabrics, ing, 46 percent by the cost of combing, 22 percent include data on finishing wool textiles and on the manu- by losses on noils, 16 percent by losses on waste, and facture of some other products. 2 Excludes products bought for resale without further 4 percent by losses on offsorts (^7). processing. Figures for 1954 and 1958 adjusted for Gross margins of manufacturers of wool yarns, changes in inventory. which generally ranged between 30 and 40 per- 3 Includes supplies, parts, and containers. cent of the value of the products in the late 1940's * Includes depreciation, interest, insurance, rent, taxes, and the early 1950's, amounted to 36 percent of the other expenses, and profits. value of products in 1958 (table 47). Adapted from Census of Manufactures. wool twill. The corresponding proportions for aged less than those of manufacturers in the United selling expenses were 7 and 6 percent respectively. Kingdom and higher than those of manufacturers In 1960, costs of producing specified worsted and in Japan. woolen fabrics per linear yard averaged substan- Manufacturers' costs per linear yard of high- tially higher in the United States than they did in grade finished woolen ñannel averaged 30 percent the United Kingdom, Japan, and Italy (table 48). more for fibers in the United States than for those For worsted sharkskin, total cost of fabric in the in the United Kingdom, 8 percent more for labor, United States averaged 9 percent higher than that and 12 percent more for total fabric costs (table in the United Kingdom and 37 percent higher 48). Gross margins of manufacturers in the than that in Japan. Net costs for fiber in the United States, as proportions of total costs of these United States averaged 35 percent higher than fabrics, averaged less than those of manufacturers those in the United Kingdom and 15 percent in the United Kingdom. For lower grade finished higher than those in Japan. Labor costs in the woolen flannel, manufacturers' costs per linear United States averaged 7 percent higher than those yard averaged almost three times as much for in the United Kingdom and twice as high as those fibers in the United States as for those in Italy, in Japan. Gross margins of manufacturers in the 42 percent more for labor, and 148 percent more United States, as proportions of total costs, aver- for total fabric costs. Gross margins of manu-

TABLE ^S,—Average cost per linear yard of producing specified worsted and woolen fairies in the United States, United Kingdom, Japan, and Italy, 1960

Finished woolen ñannel Worsted sharkskin

Item of cost High grade Lower grade

United United Japan United United United Italy States Kingdom States Kingdom States

Dollars Dollars Dollars Dollars Dollars Dollars Dollars Total cost of fabric -- - 3.62 3.31 2.64 2. 77 2. 48 1.91 0.77 Net fiber cost _ L42 L05 L23 L28 .98 .85 .22 All other costs 2.20 2.26 L41 L49 1. 50 L06 .55 Labor ^ » _ L 10 L07 . 55 . 66 .61 . 47 .33 Other _ 1. 10 L 19 .86 .83 .89 .59 .22 Materials, chemicals, and dyes 2.__ . 08 . 17 .31 .08 . 16 .07 .03 Other supplies * . 10 r .01 .08 .01 .07 .01 . 15 .05 .08 . 04 .05 Fuel, power and water . 07 S.89 Depreciation . 11 .04 .09 .08 .06 .03 Other overhead * _ _ . 46 I . 22 .24 .46 .21 .06 Sales _ - - .28 . 13 . 13 .29 . 10 . 14 .04

Propor tion of total cost

Percent Percent Percent Percent Percent Percent Percent Total cost of fabric - 100.0 100.0 100.0 100.0 100. 0 100.0 100.0 Net fiber cost _ 39.2 3L 7 46.6 46. 2 39. 5 44. 5 28.6 All other costs - 60.8 68.3 53.4 53.8 60. 5 55. 5 7L 4 Labor ^ 30. 4 32. 3 20.8 23. 8 24. 6 24. 6 42.8 Other 30. 4 36.0 32. 6 30.0 35.9 30. 9 28.6 Materials, chemicals, and dyes 2___ 2.3 5.2 n. 7 2.9 6.5 3.7 3.9 Other supplies ^ 2.8 f • 4 2.9 . 4 3. 7 L3 5.8 L8 3.2 2. 1 6.5 Fuel, power and water __ L9 5 26. 9 Depreciation 3.0 1. 5 3.2 3.2 3. 1 3.9 Other overhead ^ _ 12. 7 I 8. 3 8.7 18. 6 IL 0 7.8 Sales -.- 7. 7 3.9 4.9 10. 5 4.0 7. 3 5.2

Ï Includes cash wages plus all "fringe" labor costs. 5 More detailed breakdown not available. 2 Includes materials directly used in fabric manufacture. Adapted from (115). 3 Includes maintenance and other general supplies. * Includes allowance for seconds, property taxes, interest, overhead salaries, miscellaneous overhead expenses, and company general operating expenses. 75 facturers, as proportions of total costs of these wool scouring and combing plants increased from fabrics, averaged less in the United States than in an average of $1.20 in 1947 to $1.78 in 1962, accord- Italy. ing to census reports. Value added by manufac- In 1958, average hourly earnings of textile work- ture in this industry per dollar of wages decreased ers in the united States averaged about 178 percent from $2.55 in 1947 to $1.74 in 1954, increased to higher than the earnings of comparable workers $2.27 in 1961, and amounted to $2.19 in 1962. in the United Kingdom, 241 percent higher than Wage rates per hour and value added by manufac- those in Italy, and about 7 times as high as those ture per hour of labor usually were higher in New in Japan, according to data provided by the Bu- England and the Middle Atlantic States than in reau of Foreign Labor Conditions, Bureau of La- other parts of the United States, but value added bor Statistics, U.S. Department of Labor; and the per dollar of wages and per dollar of payroll Northern Textile Association. varied irregularly from one geographic area to Large proportions of gross margins of manufac- another (table 49). turers of wool products accounted for by wages Hourly earnings of laborers in wool yarn mills and increases in wage rates since 1947 emphasize increased from an average of $1.07 in 1947 to $1.68 the importance of labor costs in the manufacture in 1962, according to census reports. Average value of these products. Hourly earnings of laborers in added by manufacturers of wool yam per dollar

TABLE 49.—Value added hy wool processing^ scouring^ and combing plants^ per dollar of payroll^ per dollar of wages^ and per hour of labor^ and average wage rates per hour^ by region^ 1958 ^

Value added by manufacture

Wage rates Type of plant and region Per dollar of— per hour Total Per hour of labor Payroll Wages

SCOUEING AND COMBING PLANTS 1,000 dollars Dollars Dollars Dollars Dollars New England 22, 085 1.61 1. 97 3. 24 1 64 Middle Atlantic _ __ 7,915 1. 48 2. 09 3.78 1 81 All other _ _ 6,073 1.68 2.08 2.66 1 28 United States _ _ 36, 073 1.59 2. 01 3. 22 1 60

YARN MILLS

New England _. 43, 048 1.63 1. 92 3. 04 1 58 Massachusetts 11,673 1.94 2. 40 3.82 1. 59 Rhode Island 22, 083 1. 50 1.76 2.80 1 59 Middle Atlantic . _ 23, 345 1. 67 1. 98 3.43 1. 74 Pennsylvania 12, 584 1. 66 2.03 3. 61 1 77 South ___ 19, 526 1.93 2.32 3.04 1 31 South CaroHna _ _ _ 11,812 2. 20 2.60 3.46 1. 33 All other _ _ _ 5,293 1. 43 2.15 3. 16 1 47

United States __ _ _ 91,212 1.68 2.02 3. 14 1 55

WEAVING AND FINISHING MILLS

New England 147, 660 1. 68 2. 01 3.39 1 68 Massachusetts 64, 985 1.71 2. 06 3. 62 1. 76 Rhode Island» _ _ _ 12, 017 1.48 1.84 3. 16 1. 70 Middle Atlantic 65, 779 1. 49 2.02 4. 17 2 07 New York _ 31, 930 1. 57 2. 34 5. 12 2. 19 Pennsylvania. 22, 718 1. 45 1.80 3.40 1. 89 North Central 13, 947 1. 41 1. 94 3. 13 1. 61 South ______101, 343 1. 71 2. 06 3. 09 1. 50 North Carolina _ 19, 381 1. 69 2. 03 3. 07 1. 51 South Carolina- 16,715 1.81 2.39 3.32 1. 39 Georgia 27, 451 1. 50 1. 71 2.68 1. 56 West 7,889 1. 62 2. 01 3. 79 1. 88 United States. _ 336, 618 1.63 2.03 3.41 1. 68

1 Value added is adjusted to take into account value added by manufacturing operations and net change during the year in inventories of finished goods and work-in-process. Adapted from Census of Manufactures. 76 of wages decreased from $1.92 in 1947 to $1.79 in ization had higher average volume added per 1954, increased to $2.02 in 1958, and amounted to dollar of wages and per dollar of payroll than $2.01 in 1962. Wage rates per hour usually aver- establishments of higher or low^er degrees of spe- aged less in the South than in any other geographic cialization. Value added per dollar of payroll by area, but value added by manufacture per hour establishments operated by multiunit companies of labor, per dollar of wages, and per dollar of pay- averaged more in 1958 and less in 1954 than that roll varied irregularly from one State or region added by establishments operated by single-unit to another (table 49). companies. In 1958, as in 1954, value added per In wool weaving and finishing mills, average dollar of payroll by establishments operated as hourly earnings of laborers increased from $1.20 multiunits by single-industry companies averaged in 1947 to $1.87 in 1962. Average value added more than that added by establishments operated per dollar of wages decreased from $2.04 in 1947 as multiunits by multi-industry companies (table to $1.81 in 1954 and then increased to $2.32 in 1962. 45, p. 71). Wage rates and average value added by manufac- Differences in value added by manufacture in ture in this industry varied irregularly from one the wool products manufacturing industries per State and region to another (table 49). For the hour of labor, per dollar of wages, and per dollar 3 years 1947,1954, and 1958 combined, hourly wage of payroll from one establishment to another, from rates and value added by manufacture per hour of time to time, and from one State or region to labor averaged less and value added by manufac- another may be influenced by differences in such ture per dollar of payroll averaged more in the factors as kinds and amounts of machinery and South than in any other major geographic divi- equipment used; amounts of commission or con- sion. Wage rates and value added per hour of tract work ; and wage rates, salaries, and bonuses labor averaged more in the Middle Atlantic States, to managers or operators. Adequate information and value added per dollar of wages and per dollar of payroll averaged less in the West than in any is not available to indicate how and to what extent other major geographic division. the differences shown in value added by manufac- Geographic differences in value added per hour ture in these industries were influenced by each of of labor by manufacturers of woolen and worsted these factors. fabrics, when related to corresponding differences in average wage rates per hour, gave correlation TABLE 50.—Value added hy %oool yam and fabric coefficients that ranged from 0.30 in 1954 to 0.84 in TTiills^ hy type of ownership and operation^ 1958. The regression coefficient for 1958 indicates that a difference of 1 percent in value added per United States^ 1958 hour of labor from one geographic area to another was associated, on the average, with a correspond- Total Per dollar of ing difference of about 0.59 percent in wage rates payroll Type of ownership per hour. and operation In 1958, values added by scouring and combing Yarn Fabric Yarn Fabric plants per hour of labor, per dollar of wages, and mills mills mills mills per dollar of payroll varied directly with the size of the company, as indicated by the number of 1,000 1,000 Ownership: dollars dollars Dollars Dollars employees (120). But similar values added by Corporate 89, 468 323, 830 1,68 1. 62 wool yarn mills and by wool weaving and finishing Partnership 1, 377 8,687 1. 60 1. 72 mills varied irregularly with the size of the com- Individual _ _ 367 0) 1.77 0) pany. Average wage rates per hour varied irreg- Other 0 0) 0 0) ularly with the size of the company operating All 91, 212 336, 618 1. 68 1. 63 scouring and combing plants, wool yarn mills, and Operation: wool weaving and finishing mills {120). Single unit: In 1958, value added by w^ool yarn mills per Corporate 42, 924 0) 1. 60 0) dollar of payroll averaged most for plants owned Other -_ _ 1,744 0) 1.63 (0 or controlled by individuals (table 50). For wool All 44, 668 135, 957 1.60 1.62 fabric mills, value added by manufacture per dol- lar of payroll averaged most for establishments Multiunit: Corporate 46, 544 0) 1.77 0) owned or controlled by partnerships. Value Other. __ 0 0) 0 0) added by both w^ool yarn and w^ool fabric mills per dollar of payroll averaged more for establishments All 46, 544 200, 661 1. 77 1. 64 operated as multiunits than for those operated as All 91,212 336, 618 1.68 1. 63 single units. Data on degree of specialization show that in 1 Withheld to avoid disclosing figures for individual 1958 w^ool w^eaving and finishing establishments companies. with 75 to 89 percent of primary product special- Adapted from Census of Manufactures. 77 Means and Importance of Improvement ing techniques and equipment for measuring some quality factors of wool, but at least some of the Improvements in the manufacture of wool yarns known quality factors need to be more accurately and fabrics, as previously indicated for cotton evaluated and perhaps other important quality yarns and fabrics (pp. 45 and 63), can result from elements need to be identified and evaluated. the use of qualities of wool that are relatively best Apparently one of the quickest and most satis- adapted, physically and economically, to the pro- factory means of relating the various quality ele- duction of various products and from other means ments of wool to processing performance and to of increasing the efficiency of the manufacturing the quantity, quality, and value of the resultant operations. Attempts to bring about such im- products is by carefully controlled pilot plant provements would necessitate the evaluation of a studies in which commercial equipment for proc- number of variables, separately and in combina- essing the w^ool and reliable measures for indicat- tion. These variables may include (1) differences ing differences in quality or value of the products in all important quality elements and costs of are used. The size, equipment, organization, and wool; (2) type and condition of the manufactur- operation of the pilot plant would need to be such ing machinery and equipment used, layout or or- that the results obtained would be readily con- ganizational setup of this machinery and equip- vertible to the equivalent of similar results obtain- ment, labor used, operating speeds, settings, and able in commercial plans using comparable quali- draft organization; (3) class and quality of yarns ties of wool in the production of comparable and fabrics produced; and (4) the interactions products. Any differences between pilot plant among these factors. and commercial results may be accounted for by the influence of differences in such factors as size ADJUSTMENT IN QUALITY of the operating units, type and condition of equipment, layout or organizational setup, labor Better adjustments in the quality of wool used used, operating speeds, settings, and draft organi- in the manufacture of specified types and qualities zation. Accurate measures of the influence of of yams and fabrics, as indicated in an earlier these factors would be needed for converting pilot section for cotton (p. 46), would need to be based plant results to commercial plant equivalents, and on results of adequate experiments or tests de- the cooperation of operators of commercial plants signed to provide accurate evaluations of all sig- would be required for developing these measures. nificant quality elements of wool. Such evalua- Without such conversions, results of pilot plant tions would show the influence of differences in operations may be of limited usefulness. the various combinations of quality elements of Variations in kinds and combinations of ma- wool used on (1) the quantity, quality, and market chinery and equipment and in organizational set- value of the yams and fabrics produced; and (2) up of commercial plants, particularly over short manufacturing costs of the yarns and fabrics, in- periods, may not be feasible for developing all cluding labor, overhead, and reasonable returns the information needed to show the influence ojE to management and capital. For manufacturing these factors on the value of wool of specified qual- purposes, differences in quality or value of wools ities in the manufacture of specified products. that are of different combinations of quality ele- But some indications of the influence of such vari- ments but usable in the manufacture of the speci- ations may be obtained by comparing results of fied products would be indicated by differences the use of similar qualities of wool in the manu- in the spread between the value of the products facture of similar products by different plants at and manufacturing costs. The quality of wool the same time and by the same plant at different relatively best adapted to the manufacture of a times, where differences in equipment, organiza- specified type and quality of yarn and fabric is tion, and operations were involved. Manufac- that with the lowest net cost, adjusted for waste, turers of wool products, textile research agencies, in relation to its value to mills for that purpose. and possibly others may have developed informa- In addition to supplying an improved basis for tion on the influence of these and other factors making needed adjustment in the quality of wool on differences in values among wools of various used, accurate evaluations of all important quality combinations of quality factors for use in the man- elements of wool would provide a basis for setting ufacture of specified products. This information up adequate standards for the various quality ele- would need to be assembled and evaluated for ments of wool and pricing wool on the basis of dependability and adequacy as a basis for formu- these standards throughout marketing channels, lating plans for developing additional information including prices to producers. Such evaluations needed. would require suitable equipment and methods for Variations in equipment, operating speeds, set- accurately measuring differences in all important tings, and draft organization might well be made quality elements of wool and the influence of these in pilot plants, and possibly in some commercial differences on the processing performance and on mills, as a means of evaluating the influence of the quantity, quality, and value of the products. these changes on differences in value among wools Considerable progress has been made in develop- of various combinations of quality elements for 78 use in the manufacture of specified products. nations for commercial purposes. Such standards Measures of differences in value of wool of various would facilitate better adjustments in quality of combinations of quality elements for use in the wool to mill requirements. manufacture of specified products, based on re- Manufacturers of wool and of other textile sults from the use of the same kinds of machinery products presumably have considerable informa- and equipment, operating speeds, settings, and tion on the influence of differences in some quality draft organization, may not accurately reflect the elements of wool on processing costs and on differences in potentials of the various quality quality of the products. But better adjustments combinations. One combination of quality ele- in the quality of wool to mill requirements would ments may give best results when one type of need to be based on more nearly complete infor- machinery and equipment, operating speeds, set- mation showing more sepcifically the influences ting, and draft organizations is used in the man- of differences in the various quality elements of ufacture of specified products. Other combina- wool on its value for use in the manufacture of tions of quality elements may give best results specified products, on cost to mills, and on price when other types of machinery and equipment, and costs to producers of wool. This informa- operating speeds, settings, and draft organization tion, if reasonably complete and integrated, are used. would supply a basis for arriving at approxi- A means of minimizing or eliminating such mations to the best adjustments in quality of wool discrepancies and of obtaining more accurate to mill requirements. But developments in tech- measures of differences in the quality of wool nology, in animal breeding, and in other areas would be, first, to ascertain the optimum kinds may result in considerable changes in the quali- of equipment, operating speeds, settings, and ties of wool relatively best adapted to the pro- draft organization for each quality of wool used duction of particular products. Such changes in the manufacture of the specified products. would necessitate réévaluations from time to time Then, differences in quality or value of the wools on the basis of the changed conditions. used for this purpose, under these conditions, With differences in all important quality ele- would be reflected in differences in the extent to ments of wool accurately measured and evaluated which the value of the products exceeded proc- in terms of uniform standards, differences in essing costs, adjusted for the value of waste. prices of wool to mills as a result of differences in The term "wool products" may refer to the out- quality, under perfect market conditions, would put at au}^ stage of manufacture—from wool tops reflect differences in costs of producing wool of to fabricated apparel and other products ready different qualities. But not all important quality for ultimate consumers. Differences in quality or elements of wool have been so measured and use vahie of intermediate products, as indicated evaluated. Furthermore, the market mechanism above for wool, are reflected in variations in the apparently is such that prices to wool producers, spread between the value of the products they especially for the smaller clips, reflect only a part are used to produce and costs of manufacturing of the differences in value, for mill purposes, them under optimum conditions. Ideally, it attributable to differences in the quality elements might be logical to start with the evaluation of that have been measured and evaluated. Under differences in quality or value of the finished such conditions, price incentives to producers, fabrics used in the manufacture of specified ap- particularly to the smaller ones, would be at vari- parel or other consumer goods and to work in ance with the best adjustments in quality of wool reverse order back to the evaluation of differences produced to mill requirements, in accordance with in quality or value of wool. But because of prac- the principle of comparative advantage. tical considerations, it may be advisable, first, to Better adjustments in the quality of \yool used measure differences in quality of wool on the basis and improvements in the quality, suitability, and of differences between the value of tops or yarns attractiveness of wool yarns and fabrics may be produced and costs of processing them, despite an important means of expanding outlets for wool the fact that these measures may not accurately products. Special chemical treatments and im- reflect differences in potential values of the wool. proved finishes offer great possibilities for im- Measures of differences in physical characteris- proving the quality of wool products so that they tics of wool fibers and economic evaluations of may be in a better position to meet the ever- these differences Avould supply a basis for setting increasing competition of manmade fibers. Im- up uniform standards for the quality factors of provements can be made also in mechanical proc- wool. Graduations of differences based on physi- essing of wool into yarns and fabrics. But addi- cal measurements and on experiences and prac- tional information is needed (1) to show the tices in the industry may need to be adjusted on changes in construction, weight, finishes, and other the basis of ecomonic evaluations, so the gradua- characteristics required, if yarns and fabrics made tions would approach as nearly as practical, dif- of wool are to meet this competition most effec- ferences small enough to reflect all significant tively and (2) to supply a basis for developing differences in use value to mills and large enough suitable equipment and techniques for manufac- for reasonably accurate and expeditious determi- turing the improved products efficiently. 79 IMPROVEMENTS IN MANUFACTURING In addition to the information developed for the OPERATIONS representative sample of establishments, detailed specifications for low-cost plants for manufactur- Problems of increasing the eificiency of manu- ing specified kinds of yarns and fabrics would facturing wool yarns and fabrics, like those for need to be developed. These specifications might cotton (pp. 48 and 64), involve consideration of well be based on cost-engineering data, results of such factors as the location, size, organization, analysis of data for the sample establishments, and control of the operating units; kind and ar- and other information. They should show the rangement of buildings, machinery, and equip- more desirable buildings, machinery and equip- ment used ; labor used and operating methods and nient ; floor plans ; labor requirements ; raw mate- practices ; and kinds and qualities of raw materials rials used; operating programs; and production used. Integration in recent years has resulted in data. Detailed data on unit costs of labor, over- considerable changes in the organization and con- head, and other items at each stage or process in trol of some manufacturers of wool products, but the manufacturing operations involved would also adequate information is not available to indicate need to be developed for the model plant. whether or to what extent these changes affect the A comparison of data for one sample establish- adequacy and efficiency of wool manufacturing ment with that of another and with that specified operations, the quality and suitability of the yarns for the model, low-cost plants would indicate the and fabrics produced, or the competition among nature and extent of changes needed to increase fibers. efficiency and reduce costs of producing the speci- A 1958 report on modernization in the textile fied yarns and fabrics. Case studies cited above industry indicated that the use of improved ma- (pp. 48 and 64) and data on the age of machinery chinery and equipment, suitably organized and in place indicate that great improvements in ef- ficiency and substantial reductions in costs for some operated, results in substantial improvements plants could be made through the use of improved (63). Modernization and further expansion of tlie machinery and equipment, suitably organized and American system of worsted spinning with long- operated. To be economically feasible, prospec- draft machines that eliminate processes would tive benefits from modernization of individual result in fewer machines, fewer workers, and lower plants would need to be great enough to equal or costs. Case studies show that pin drafters and exceed costs of new machinery, losses from scrap- high-speed gill reducers, autolevelers to correct ping the old and obsolete, and expenses of making variations in sliver thickness, new high-draft rov- the changes. Reports indicate that an increasing ing frames, and modern superdraft spinning number of executives in the textile industry find frames reduce spinning costs without impairing a partial solution to the problem of financing mod- the quality of yarn (6S). More recent improve- ernization by leasing equipment, which permits ments in spinning and weaving, some of which are them to conserve their working capital (^). applicable to wool, are indicated in sections on The importance of using labor more efficiently is cotton yarns and fabrics (pp. 48 and 63). emphasized by the fact that in 1958 wages ac- Adequate information is not available to in- counted for about 44 percent of gross margins of dicate specifically the conditions under which and manufacturers of woolen and w^orsted fabrics, ac- the extent to which these and other means might cording to census reports. Hourly earnings of feasibly be used to increase the efficiency and laborers in this industry in 1962 averaged about 56 reduce costs of manufacturing wool yarns and percent higher than those in 1947 and about 11 per- fabrics. The development of information needed cent higher than those in 1958. Apparently labor for this purpose might require the assembly and might be used more efficiently and unit cost of labor analysis of detailed cost and other data for a rep- reduced by increased use of improved automatic resentative sample of establishments engaged in machinery and equipment and better adjustments the manufacture of typical kinds and qualities of in the organization and operation of the manu- yarns and fabrics. Data for each establishment facturing establishments. would need to show detailed unit costs of labor, The relative importance of reducing costs of overhead, and other items at each stage or process manufacturing woolen and worsted fabrics is in- in the manufacturing operations involved. Infor- dicated by data which show that gross operating mation would also need to be assembled to show margins of manufacturers of these products in how differences in these costs are related to such 1958 averaged (1) more than 50 percent greater factors as location, size, organization, and control than gross returns to producers for the wool used ; of the operating units ; kind and arrangement of (2) more than six times as much as total costs of the buildings, machinery, and equipment used; merchandising the raw wool used, including trans- labor used and operating methods and practices; portation; and (3) about 15 percent of cost to kinds and qualities of raw materials used; and consumers of finished apparel and household number and kinds of products manufactured. fífoods made of wool. 80 MANMADE FIBER AND SILK PRODUCTS MANUFACTURING

Industries considered in this section include TABLE 51.—Oonsumption of cellulose and produc- yarn-throwing, winding, and broadwoven fabric tion of rayon and acetate^ united States^ sj>eci- mills. Yarn-throwing and winding mills include fted years, 1931-62 establishments primarily engaged in throwing, twisting, winding, or spooling yarn wholly or Cellulose consumption Rayon and acetate chiefly of manmade fibers, silk, or cotton. Broad- production woven fabric mills, manmade fiber and silk, in- Year clude establishments primarily engaged in weav- Wool Linters Fila- Staple ing fabrics over 12 inches in width wholly or pulp pulp Total ment fiber Total chiefly of manmade fibers and silk. yarn Materials for these industries are mainly man- made fibers, but some silk, cotton, and other fibers Million Million Million Million Million Million are used. Consumption of cellulose in the United pounds pounds pounds pounds pounds pounds 1931 106 62 168 151 152 States in the manufacture of rayon and acetate 1961 1,034 42 1,076 642 453 1,095 filament yarns and staple fibers increased rather 1962 1, 216 32 1,248 726 546 1,272 steadily from less than 200 million pounds in the early 1930's to 1,248 million pounds in 1962 Adapted from {9Ï). (table 51). The proportion of this cellulose ob- tained from wood pulp increased from about 60 finishing plants. Some also operate cotton, woolen percent in 1933 to 97 percent in 1962. The re- and worsted, or knitting mills. The extent of inte- mainder was obtained from linters pulp. gration, as indicated by the type of machinery Production of rayon and acetate filament yam reported for cotton, manmade fiber, and related and staple fiber in the United States also^ rose broadwoven fabric mills, was shown in an earlier sharply, increasing from less than 200 million section of this report (table 25, p. 55). pounds in the early 1930's to 1,272 million pounds Yarns consumed by manmade fiber and silk in 1962 (table 51). The proportion accounted for weaving mills incdude spun and filament yarns of by staple fiber increased from less than 1 percent manmade fibers, carded and combed cotton yarns, in 1933 to 43 percent in 1962. Production of non- and other yarns made of various fibers, including cellulosic fibers in the United States increased from blends. Most of these yarns were manufactured about 50 million pounds in 1946 to 1,160 million in establisliments in the same industry for their pounds in 1962. own use or for transfer to other manufacturmg establishments. Total consumption of yarns in Nature and Practices this industry increased from about 575 million pounds in 1947 to 904 in 1962 (table 52). The pro- Yam-throwing and winding mills produce a va- portion accounted for by rayon and acetate de- riety of products. Value of shipments and other creased from about 87 percent in 1947 to 48 percent receipts of this industry in 1958 totaled $175 mil- in 1962. The proportion accounted for by nylon lion. Of this amount 87 percent was accounted for filament increased from less than 1 percent in 1947 by thrown and textured yam, 5 percent by ship- to about 6 percent in 1962. Cotton yam consump- ments of other products, and 8 percent by miscel- tion increased from less than 4 percent of the total laneous receipts. Although shipments of thrown consumed in 1947 to 11 percent in 1962. Consump- and textured yam by the yam-throwing and wind- tion of other yams, including blends, increased ing industry accounted for 77 percent of these from about 9 percent in 1947 to 34 percent in 1962. products shipped by all industries, large quantities Production of manmade and silk broadwoven of thrown yams are produced for their own use fabrics from blended yams or mixtures of two or by establishments classified in other industries, more fibers increased from about 763 million linear principally the broadwoven fabric mill industry. yards in 1958 to 1,117 million in 1962, or about In 1958, approximately half of the throwing and 36 and 48 percent respectively of the total yardage twisting spindles were in mills with machinery for produced. Of the total production of manmade throwing and weaving; spinning, throwing, and fiber blends in 1962, about 42 percent was man- weaving ; and spinning or throwing, weaving, and made fiber and cotton, 3 percent was manmade finishing. fiber and wool, and about 55 percent was one man- Broadwoven fabric mills, manmade fiber and made fiber blended with another or with two or silk, include mainly establishments with machinery more fibers, according to census reports. for weaving only; spinning, throwing, and weav- Value of shipments and other receipts of weav- ing; and spinning or throwing, Aveaving, and fin- ing mills, manmade fiber and silk, in 1958 totaled ishing. Integration is important at the company $1,226 million. Of this total about 83 percent was level as well as at the mill level. Some of the accounted for by gray and finished manmade fiber larger companies in the industry operate several fabrics and blankets, 14 percent by secondary prod- fabric mills weaving manmade fibers, along with ucts, and 3 percent by miscellaneous receipts, 81 TABLE 52.—Yam consumed by manmade fiber and sUk weaving mills, by type of yam, united States, 19!¡r and 1959-62 / ^ ' >

Type of yarn 1947 1959 1960 1961 1962

Rayon and acetate: 1,000 pounds 1,000 pounds 1,000 pounds 1,000 pounds Spun 1,000 pounds 161, 988 193, 975 154, 911 Filament 161, 232 194, 285 337, 336 244, 515 233, 987 239, 713 243, 532 Total 499, 324 438, 490 388, 898 400, 945 437, 817 Cotton : Carded 12, 330 43, 775 41, 128 Combed 37, 284 34, 890 11, 223 60, 165 60, 166 63, 305 67, 336 Total 23, 553 103, 940 101, 294 100, 589 102, 226 Nylon filament _ . 3,494 45, 496 48, 214 44, 663 54, 325 All other: i Cotton 2___ _ 2,312 3,247 4,395 Rayon and acetate 2 2,595 3, 793 25, 612 66, 675 54, 624 55, 549 71, 395 Wool 3 13, 666 13, 344 Silk 21, 682 24, 488 11, 988 (^) 5,689 6, 130 4,856 5, 873 Glass __ __ 53, 776 Plastic _ 63, 781 64, 664 78, 277 Others « 4, 771 5,037 4,329 4, 095 7,467 102,311 108, 452 113, 702 134, 144 Total 49, 057 249, 813 264, 101 270, 183 309, 565 Total all types 575, 428 837, 739 802, 507 816, 380 903, 933

^ Includes blends and mixtures. 5 Includes acrylic fibers, polyester fibers, paper, saran, 2 Used as part of blends or mixtures. olefin, and others. 3 Includes wool, alpaca, mohair yarn, and content in blends and mixtures. Adapted from Bureau of Census Current Industrial * Not available. Reports. mainly for contract work on materials owned by facturing industries increased from 1,884,000 in others. This industry's shipments of gray and 1947 to 2,629,000 in 1954 and then decreased to finished manmade fiber fabrics and blankets in about 1,729,000 in 1958, about half of which were 1958 represented 85 percent of its total product in plants with weaving equipment (table 15, p. 43). shipments and 88 percent of these products shipped Thrown filament yams produced increased from by all industries, according to census reports. 144,111,000 pounds in 1947 to 176,111,000 pounds In 1958 these products were distributed mainly in 1958, according to census reports. to merchant wholesalers, sales offices and branches The average number of employees per yam- of the same company, other manufacturers, and throwing mill decreased from 122 in 1947 to 60 in other plants of the same company (table 53). 1958. The proportion of mills with 100 or more Main outlets for manufacturers of carpets and employees decreased from 43 in 1947 to 17 percent rugs were retailers, merchant wholesalers, and sales in 1958 (table 54). The proportion with less than offices and branches of the same company. Sales 20 employees increased from 14 percent in 1947 offices and branches distributed broadwoven gray to 39 in 1958. goods mainly to merchant wholesalers and to other In 1958, about 13 percent of the yarn-throwing manufacturers. Carpets and rugs were redistrib- mills and 9 percent of the employees were in New uted by sales offices and branches mainly to re- England ; 63 percent of the mills and 55 percent tailers and merchant wholesalers. of the employees were in the Middle Atlantic SIZE AND ORGANIZATION States ; and 24 percent of the mills and 36 percent of the employees were in other States, mainly Changes in size and organization of yarn-throw- those in the Southeast. From 1947 to 1958, the ing and winding mills and of broadwoven fabric proportion of mills and employees in the Middle plants may be indicated by the number of spindles, Atlantic States decreased, but the corresponding looms, and employes; ownership and operation of proportions in New England and in all other plants ; and mergers and acquisitions. States combined increased. The proportion of Number of Spindles, Looms and Employees total value added by manufacture accounted for by mills in New England and the Middle Atlantic The number of throwing and twisting spindles States decreased from about 73 percent in 1947 in the cotton, manmade fiber, and related manu- to 61 percent in 1958; whereas the proportion

82 TABLE 53.—Distribution of manufacturers'^ ship- TABLE 54.—Number of yarn-throwing arid syn- ments of manmade hroadwoven gray goods and thetic broadwoven fabric mills^ by number of carpets and rugs^ except wool^ hy class of cus- employees^ united States^ 191^1 arid 1958 tomer and outlet^ united States^ 1958 Yarn- Broadwoven throwing fabric Broadwoven Carpets mills mills gray goods and rugs Employees per plant

Customer outlet 1947 1958 1947 1958 Pro- Pro- Value por- Value por- tion tion Number Number Number Number 1 000 and more 20 11 500 to 999 4 ______39 40 Million Million 56 Manufacturers to— dollars Percent dollars Percent 250 to 499 _____ 9 48 Sales offices, branches, etc- 214 2L6 57 18.7 100 to 249 - _ _ _ _- 39 22 74 75 Other wholesalers, same 50 to 99 _ _- 32 35 97 61 campany 96 9.7 0) 20 to 49 - 21 51 85 67 Other plants, same com- 10 to 19 -- - 8 25 52 36 142 14. 3 5 to 9 5 20 45 13 pany _ __ « 0) 42 Other manufacturers 184 18.6 C) lto4 _ ___-- 4 31 47 Merchant wholesalers 289 29.2 87 28.5 Retailers, not owned 45 4.5 139 45. 6 Total ____ 122 195 507 401 All other. _ .. . 21 2. 1 22 7.2 Adapted from Census of Manufactures. Total - -- 991 100.0 305 100.0 Sales offices, branches, etc. ployees per mill decreased from 517 in 1947 to 406 to— Other manufacturers 72 29.6 in 1958. The proportion of total value added by Merchant wholesalers 159 65.4 18 29. 5 manufacture in this industry that was accounted Retailers, not owned 6 2.5 41 67.2 for by mills in New England and the Middle All other 6 2.5 2 3.3 Atlantic States decreased from about 49 percent Total 243 100.0 61 100.0 in 1947 to 27 percent percent in 1958; that ac- counted for by mills in other States, mainly those 1 Withheld to avoid disclosure of figures for individual in the Southeast, increased from 51 percent in 1947 companies. to 73 percent in 1958, according to census reports. Adapted from Census of Manufactures. Ownership and Operation accounted for by mills in other States, mainly Type of ownership and the operation of some those in the Southeast, increased from 27 percent mills that manufacture broadwoven fabrics made in 1947 to 39 in 1958, according to census reports. of manmade fibers and silk have changed in recent The number of looms in place in the manmade years (table 55). The proportion of these mills fiber broadwoven fabric industry increased from 106,695 in 1947 to 118,523 in 1951 and then de- that were under corporate ownership or control creased to 92,783 in 1962, according to census re- increased from 78 percent in 1939 to 89 percent in ports. Manmade fiber broadwoven fabrics pro- 1958. The proportion operated by partnerships, duced increased from 2,038 million linear yards in individuals, and other agencies each decreased 1947 to 2,627 million in 1955, and amounted to during this period. The number of employees per 2,755 million in 1962. The average number of establishment averaged substantially more for employees per establishment decreased from 193 those operated by corporations than for those oper- in 1947 to 188 in 1954 and then increased to 204 in ated by other agencies. The proportion of total 1958. From 1947 to 1958 the proportion of estab- employees accounted for by establishments oper- lishments w^ith 250 or more employees increased ated by corporations increased from about 95 per- and the proportion with less than 50 employees cent in 1939 to about 99 percent in 1958. decreased (table 54). Of these mills the proportion operated from The number of manmade fiber broadwoven central administrative offices as multiunits de- fabric mills in New England decreased from 91 in 1947 to 79 in 1958, and the average number of creased from 44 percent in 1939 to 38 percent in employees per mill decreased from 295 in 1947 to 1954 and then increased to 43 percent in 1958 127 in 1958. In the Middle Atlantic States, the (table 55). The number of employees per estab- number of mills decreased from 325 in 1947 to 177 lishment averaged much more for multiunits than decreased from 73 in 1947 to 72 in 1958. In all for single units. The proportion of total number other States, mainly those in the Southeast, the of employees in the industry accounted for by total number of mills increased from 91 in 1947 multiunits increased from 63 percent in 1939 to to 145 in 1958, and the average number of em- 82 percent in 1958. 83 TABLE 55.—Number of establishments and average shipments of the industry (table 56). Fifty of number of employees per establishment for the largest companies accounted for 92 percent of manufacturers of synthetic broadwoven fabrics^ total shipments of the industry. The proportion by type of ownership and operation, united of total shipments of the industry accounted for States, 1939, 195^, and 1958 by 4, 8, and 20 of the largest companies increased from 1947 to 1954 and then decreased to 1958. Average Similar data for broadwoven fabrics, manmade Establishments employees per fiber and silk, show that in 1958 mills operated by Type of ownership establishment ^ and operation 20 of the largest companies, or about 6 percent of the total number, accounted for 62 percent of the 1939 1954 1958 1939 1954 1958 shipments of the industry (table 56). Fifty of the largest companies, or about 15 percent of the total Num- Num- Num- Num- Num- Num- number, accounted for 78 percent of total ship- Ownership: ber ber ber ber ber ber Corporate ___ ments of the industry. The proportions of the 307 411 357 248 214 226 total value of shipments accounted for by 4, 8, and Partnership 34 30 22 {') 59 31 Individual 50 35 21 23 (') (') 20 of the largest companies in 1958 were greater Other 3 2 1 ^/'2^ ; than those in 1947 and 1954, but the total number All of companies w^as less. 394 478 401 202 188 204 Information on number of establishments, aver- Operation: age number of employees per establishment, and Single unit: average value added by manufacture per dollar Corporate. __ _ 150 232 184 181 Other (2) of payroll for yarns and fabrics, including those 71 65 43 29 made of manmade fibers, is presented in an earlier All 221 297 227 132 74 68 section of this report (p. 57). Similar informa- tion on manufacturers of floor coverings, some of Multiunit: which are made of manmade fibers, shows that of Corporate 157 179 173 311 (2) Other 16 2 1 95 the 282 establishments in this industry in 1958, about 80 percent were operated by sincrle-unit All 173 181 174 291 375 381 companies (table 57). The average number of All 394 478 employees per establishment was substantially 401 202 188 204 greater for multiunit than for single-unit com- panies, and the average number of employees per ^ In 1939 only wage earners are included; in 1954 and 1958 all employees are included. establishment was greater for multi-industry than 2 Withheld to avoid disclosing figures for individual for single-industry companies. Similar differ- companies. ences are indicated for 1954. Adapted from Census of Manufactures. MANUFACTURING METHODS Mergers and Acquisitions Manmade staple fibers are processed on the cot- ton, worsted, and woolen systems, and the methods Mergers and acquisitions in the textile industry in recent years, as indicated in a preceding section employed were outlined in earlier sections of this report (pp. 56 and 70). Differences in uniformity of this report (p. 38), apparently have resulted of staple, in content of foreign matter, and in other in changes in organization and management of characteristics of manmade fiber as compared operating units in the manmade fiber and silk with natural fibers require, for best results, some products nianufacturing industry. Data on the differences in manufacturing methods. Further- degree of integration in cotton, manmade fiber, more, throwing operations for continuous filament, and related broadwoven fabric mills in 1958, as involving doubling and twisting of these filaments indicated by the types of machinery reported, into yarns of various sizes in preparation for show a substantial amount of vertical integration looms, also differ from operations in processing (table 25, p. 55). About two-thirds of the mills cotton and wool products. Detailed information were integrated, and in 1958 the number of looms on processes involved in the manufacture of man- per mill in integrated plants averaged more than made fibers and on other developments in the man- four times as many as in plants with weaving equipment only. made fiber industrj^ is presented in a report on "The Rayon Industry" by the United States Tariff The degree of concentration in the manmade Commission (12£) and m "Eayon Technology— fiber and silk manufacturing industry, on a com- A. Handbook for Textile Mills" {9£). pany basis, may be indicated by proportions of total value of shipments accounted for by speci- MACHINERY AND EQUIPMENT fied numbers of the largest companies in the indus- try. In 1958, yarn-throwing and winding mills As indicated earlier (pp. 43 and 58), the number operated by 20 of the largest of the 106 compa- of cards, combs, spindles, looms, and other ma- nies accounted for 69 percent of the total value of chinery and equipment used in the cotton, man- 84 TABLE 56.—Share of total shipments of manmade fiber manufacturing industry accounted for hy largest companies^ united States^ 1958^ 195Jf^ and 19^7

Concentration ratio: Proportion of total shipments accounted Primary Com- Value of for by 3— product Industry and year panies 1 shipments 2 specializa- tion ** 4 largest 8 largest 20 largest companies companies companies

Yarn-throwing mills: ^ Number IfiOO dollars Percent Percent Percent Percent 1958 106 112,180 35 48 69 1954 - - -- 118 99,227 39 52 73 93 1947 __ 96 64,173 30 43 66 e) Synthetic broadwoven fabric mills: 1958 328 1,230,724 34 44 62 85 1954 _-__ _- --- 396 1,142,629 30 39 55 87 1947 432 1,002,923 31 39 56 85

1 See footnote 1, table 14, p. 41. ^ See footnote 7, table 14, p. 41. 2 See footnote 2, table 14, p. 41. ^ Data not available. 3 See footnote 3, table 14, p. 41. Adapted from (IW). * See footnote 4, table 14, p. 41.

TABLE 57.—Numiher of companies and establish- diameter increased 49 percent and the number of ments^ average number of employees per estab- those 1.75 inches and shorter decreased 56 percent lishment^ and average value added per dollar of from 1942 to 1958. The number of doubling and payroll by manufacturers of floor covering^ twisting ring spindles larger than 3.5 inches in- united States^ 1958 creased markedly from 1942 to 1958, but the num- ber of smaller spindles decreased during this Aver- period. age Value In 1947 the number of looms in place in man- Estab- em- added made fiber and silk fabric mills totaled 106,965, Item Com- lish- ployees per in the early 1950's it increased and then decreased panies ments 1 per dollar estab- of to 92,783 in 1962 (table 58). From 1947 to 1962, lish- payroll the number of plain and box looms decreased ment markedly, that of jacquard increased, and that of dobby varied irregularly. During this period, Number Number Number Dollars substantial proportions of these looms were active Companies in this industry 2_ 250 271 109 2. 06 at the end of the second and third shifts. The Single-unit companies._ 225 225 53 2. 18 total number of loom hours operated ranged from Multiunit companies 25 46 384 2.00 518 million in 1957 to 606 million in 1951, and amounted to 567 million in 1962. Single-industry 11 15 156 1. 75 Multi-industry 14 31 494 2.04 In recent years, substantial im_provements have Companies in other indus- been made in machinery and equipment used in 9 380 2. 52 tries. _ - _ 11 the manufacture of manmade fiber and related products. Total expenditures for plant and equip- Total or average 259 282 119 2. 11 ment for yarn-throwing and manmade broadwoven fabric mills increased from $9.5 million in 1939 1 Establishments in floor covering category. to $49.9 million in 1947, and amounted to $36.6 2 In 1954, these companies had 45 establishments in other industry categories and 166 central administrative million in 1962. Expenditures for new machinery offices, auxiliaries, and sales branches and offices. In 1958 and equipment increased from $6.5 million in 1939 the corresponding categories had 25 and 171 respectively. to $32.5 million in 1947, and amounted to $18.2 Adapted from Bureau of Census report, Enterprise million in 1958 (table 59). Expenditures for new Statistics (101). capital equipment by broadwoven fabric mills in made fiber, and related manufacturing industries 1962 totaled $33.4 million and was 157 percent has changed considerably in recent years. The greater than expenditures in 1958 and 78 percent proportion of roving spindles accounted for by greater than those in 1947, according to census improved long-draft spindles increased from about reports. 23 percent in 1942 to 75 percent in 1958. Corre- Charges or Costs Involved sponding proportions of ring-spinning spindles ac- counted for by improved long-draft spindles were Gross margins of manufacturers of yams, 51 and 93 percent respectively. The number of mainly thrown, and broadwoven fabrics composed ring-spinning spindles larger than 1.75 inches in mainly of manmade fibers vary considerably from 85 TABLE 58.—Number of looms in place and nuTrîber TABLE 59.—Expenditures for plant and equipment active at end of year^^ hy shifts^ and total loom iy yarri'throwing mills and manufacturers of hours operated^ iy kind of loom^ for manufac- synthetic iroadwoven fahrics, united States. turers of manmade fabrics^ United States^ sped- 1939,1947,1964, and 1958 ^ ßed years, 19Ifl-62 Expenditures Kind of loom Industry, plant, and equipment Year 1939 1947 1954 1958 All Plain Dobby Box Jac- quard 1,000 1,000 1,000 1,000 Yarn-throwing mills: dollars dollars dollars dollars New equipment 1, 192 2, 840 2, 694 2, 746 Total looms in place New plant 270 1, 819 516 418 All other 522 786 588 710 Number Number Number Number Number Total 1,984 5,445 1947 106, 695 32, 086 35, 892 34, 727 3, 990 3,798 3,874 1959 94, 266 18, 284 47, 397 21, 460 7,125 1961 93, 088 20, 322 46, 595 18, 843 Broadwoven fabric mills 7,328 New equipment 5,270 29, 655 10, 369 1962 92, 783 20, 869 46, 528 18, 263 7, 123 12, 952 New plant 1, 142 13, 226 2, 626 2,091 All other 1, 130 1,619 4, 396 3,429 Active at end of year, first shift Total 7,542 44, 500 17, 391 18, 472

1947 101, 038 30, 575 34, 755 32, 470 3,238 1 In 1958 and 1954 establishments that reported on the 1959 86, 814 16, 972 46, 898 17, 049 5,895 short form were asked to show only their total expendi- 1961, 87, 951 15,910 49, 259 16, 935 5,847 tures for new plant and equipment. Their totals were 1962. 80, 930 17, 790 41,917 15, 462 5,761 prorated on the basis of industry averages of the estab- lishments that reported detail expenditures by type to obtain separate expenditure figures for new plant, new Active at end of year, second shift equipment, and used plant and equipment. Adapted from Census of Manufactures. 1947. 94, 346 29, 191 34, 145 28, 998 2,012 1959. 85, 333 16, 779 46, 869 16, 376 5, 309 1961. 86, 220 15, 678 49, 238 15, 926 5,378 Value added by manufacture per dollar of payroll 1962. 79, 616 17, 747 41, 829 14, 780 5,260 increased from $1.62 in 1947 to $1.92 in 1962. Gross margins of manufacturers of broadwoven fabrics composed mainly of manmade fibers also Active at end of year, third shift declined in the late 1940's and 1950's, amounting to only 42 percent of the value of products in 1947 66, 648 19, 377 28, 862 17, 689 720 1958 (table 60). The proportion of gross mar- 1959. 79, 333 16, 262 45, 625 14, 121 3,325 gins accounted for by salaries and wages increased 1961. 81, 947 15, 122 49, 205 13, 790 3,830 1962. 75, 493 17,261 41, 721 12, 669 3,842 from 44 percent in 1947 to 61 percent in 1954 and then decreased to 54 percent in 1958. That ac- counted for by "other" expenses, including depre- Total loom hours operated (in thousands) ciation, interest, rent, taxes, profits, and other items, decreased from about 47 percent in 1947 to 1947. 542, 464 155, 098 210, 334 164, 271 12, 761 30 percent in 1954 and then increased to 37 percent 1959. 544, 673 102,683 302, 390 111,266 28, 334 in 1958. Value added by manufacture per dollar 1961. 536, 483 121,769 290, 917 94, 710 29, 087 1962. of payroll decreased from $2.10 in 1947 to $1.50 566, 587 130, 270 308, 756 97, 698 29, 863 in 1954, and amounted to $1.90 in 1962. The distribution of costs to manufacturers of Adapted from Bureau of Census Current Industrial Reports. typical rayon-twill fabrics, based on average costs in profitable mills in the United States, shows that in 1950, materials accounted for 68 percent, labor product to product and from one time to another. 15 percent, selling 3 percent, defectives 1 percent, In 1958 gross margins of manufacturers of yam, and all other expenses 12 percent of the total cost mainly thrown, averaged 44 percent of the total of 29 cents a yard {15). value of products (table 60). This represented a In 1960, total cost per linear yard of producing sharp decline from the high level of the late 1940's. spun rayon challis in the United States averaged The proportion of gross margins accounted for less than total costs in Italy, but substantially by salaries and wages decreased from 58 percent more than those in Japan (taíble 61). Fiber costs in 1947 to 52 percent in 1958. "Other" expenses, averaged more in the United States than in either including depreciation, interest, rent, taxes, prof- Italy or Japan, but the total for all other costs in its, and other items, increased from 36 percent of the United States averaged less than that in Italy gross margins in 1947 to 43 percent in 1958. and more than that in Japan. TABLE 60.—Values^ costs^ and margins for manu- TABLE 61.—Average cost per linear yard of pro- facturers of synthetic hroadwoven fabrics and ducing spun rayon challis in the united States^ throiaing and winding mills^ United States^ Italy^ and Japan^ 1960 1958^ Production cost in— Throwing Synthetic Item Item broad- and Italy Japan winding United woven States mills mills

Cents Cents Cents 1,000 dollars 1,000 dollars Total cost 1 21. 88 23.81 14. 82 Value of products ^ _ 163, 332 1, 209, 240 8.35 7.39 6. 81 91, 060 697, 298 Fiber cost _ _ __ Cost of materials, etc.^ All other costs 13.53 16,42 8.01 Gross marsin __ __ 72, 272 511, 942 Spinning ^ __ _ _ 5. 90 s 2.20 276, 655 3.49 Salaries and wages 37, 580 Weaving ^ 8. 13 7.61 5 5. 81 Other 4 __ 1.91 2.91 Salaries __ _ 8, 881 42, 690 Wages _ 28, 699 233, 965 Proportion of total Fuel _- - __--- 658 5,357 Purchased electric energy. _ 2,428 12, 650 Contract and commission Percent Percent Percent work ______1, 723 27, 756 Total cost 1 _ _ - _ 100.0 100. 0 100.0 Other * _ 29, 883 189, 524 Fiber cost __ 38. 2 31.0 46. 0 All other costs 61.8 69. 0 54. 0 Proportio n of value of pre)ducts Spinning ^ __ 16.0 24. 8 5 14. 8 Weaving^ 37. 1 32.0 » 39. 2 Other 4 _ _ 8.7 12. 2 Percent Percent Value of products 2 100.0 100.0 1 Challis-width, 45 inches; construction, 54 x 54; weight, Cost of materials, etc.^ 55. 8 57.7 3.8 yards per pound; 30's single warp; 20's single filling; Gross margin 44. 2 42.3 gray. 2 From rayon staple through yarn stage. Includes labor, Salaries and wages 23.0 22.8 overhead, and any materials, chemicals, and dyes. 3 From yarn through gray cloth. Includes labor, over- Salaries _ 5.4 3. 5 head, and any materials, chemicals, and dyes. Wages 17.6 19.3 * Includes ''general operating expenses," allowance for seconds, and sales costs, none of which is allocable to Fuel .4 . 4 stages of processing. Purchased electric energy._ 1.5 1.0 Ö Includes all items specified in footnote 4. Cannot be Contract and commission segregated. work 1. 1 2.3 Other ^ - 18.2 15.8 Adapted from (115).

1 As a result of revisions introduced in the 1957 Standard $1.89 in 1947 to $2.36 in 1958, and amounted to Industrial Classification, the data for 1958 are not com- $2.46 in 1962. parable to those for earlier years. During the 3 years, 1947, 1954, and 1958, wage 2 Excludes products bought for resale without further manufacture. Data are adjusted for change in inventory. rates usually averaged lowest in Southeastern 3 Includes supplies, parts, and containers. States and highest in New England. Value added * Includes depreciation, interest, insurance, rent, taxes, per hour of labor averaged highest in New Eng- other expenses, and profits. land and lowest in the Middle Atlantic States. Adapted from Census of Manufactures. Value added per dollar of w^ages averaged highest in Southeastern States and lowest in the Middle Atlantic States (table 62). Large proportions of gross margins of manuf ac- Average hourly earnings of workers in manmade Lurers of manmade fiber and related products that fiber broad woven fabric mills increased from $1.05 are accounted for by labor costs and recent in- in 1947 to $1.76 in 1962. Average value added by creases in wage rates emphasize the importance of these mills per hour of labor increased from $2.51 labor in the manufacture of these products. in 1947 to $3.72 in 1960, and amounted to $3.99 in Hourly earnmgs of laborers in yarn-throwing 1962, according to census reports. Average value mills increased from 91 cents in 1947 to $1.53 in added per dollar of wages decreased from $2.38 in 1962. Average value added per hour of labor by 1947 to $1.80 in 1954 and then increased to $2.28 yarn-throwing mills increased from $1.71 in 1947 in 1962. to $3.31 in 1958, and amounted to $3.33 in 1962. During the 3 years, 1947,1954, and 1958, hourly Value added per dollar of wages increased from earnin^-s of laborers avera^red less in the South- 87 TABLE ^l.—Value added hy processing inanmade ßhers, per dollar of payroll, per dollar of wages, and per iiour of labor, and average wage rate per hour, hy region and State, United States, 1968 ^

Value added by manufacture—

Type of processor and area Per dollar of- Wage Total Per hour rates of labor per hour Payroll

YARN-THROWING MILLS 1,000 dollars Dollars Dollars Dollars Dollars New England 6,783 1.83 2.58 4. 14 Middle Atlantic 1. 60 34, 673 1.66 2. 27 3.25 1.43 Pennsylvania 23, 867 1.60 1. 98 2.82 South Atlantic 1.42 23, 228 2. 05 2. 49 3.39 1.36 North Carolina 15, 866 2. 14 2. 77 3.74 All other 1. 35 2,964 1. 73 2. 07 2. 73 1. 32 United States 67, 648 1.80 2.36 3. 34 1. 42 WEAVING MILLS New England 56, 973 1. 63 1. 92 3.05 Massachusetts 1. 59 25, 079 1. 63 1. 82 2.87 1.58 Rhode Island 12, 692 1.83 2. 25 3. 64 Middle Atlantic 1. 62 79, 899 1. 67 2. 02 3.44 1. 70 New Jersey 17, 181 1. 96 2. 45 5. 07 2. 07 Pennsylvania 52, 897 1. 57 1. 84 South 2.98 1. 62 327, 695 1. 71 2. 01 3. 04 1. 51 North Carolina 158, 587 1.61 1. 91 2. 90 1. 52 South Carolina 103, 886 1 78 2.08 3. 17 All other 1. 52 4,016 1.72 2.07 3. 82 1. 85 United States 468, 583 1. 69 2. 00 3. 11 1. 55

1 Value added is adjusted by taking into account value added by merchandising operations and net change during the year m mventories of finished goods and work-in-process. Adapted from Census of Manufactures.

eastern States than in any other geographic divi- establishments owned or controlled by corpora- sion. Vakie added by manufacture per hour of tions, whereas that for weaving mills averaged labor, per dollar of wages, and per dollar of pay- highest for establishments owned or controlled by roll varied irregularly from one State or region partnerships (table 63). For yarn-throwing and to another (table 62). Geographic differences in winding mills, value added per dollar of payroll value added per hour of labor by manufacturers averaged higher for establishments operated as of broadwoven fabrics composed of manmade fi- multiunits than for those operated as single units, bers, when related to corresponding differences in whereas for weaving mills, value added per dollar average wage rates per hour, gave correlation co- of payroll was about the same for establishments efficients that ranged from 0.52 in 1947 to 0.94 in operated as multiunits as for those operated as 1958. The regression coefficient for 1958 indicates single units (table 63). that a geographic difference of 1 percent in value in 1958, value added per dollar of wages and added per hour of labor was associated, on the per dollar of payroll by manufacturers of broad- average, with a corresponding difference in wage woven fabrics composed of manmade fibers aver- rates per hour of about 0.49 percent. aged more for establishments with 75 to 89 percent In 1958, value added per dollar of payroll, per primary product specialization than for those with dollar of wages, and per hour of labor by manufac- a lower or higher degree of specialization. Sub- ture of yarns and fabrics composed mainly of man- divisions of these manufacturers, on the basis of made fibers and wage rates per hour varied irregu- larly with the size of the company as indicated the fabrics produced, show considerable irregular- by the number of employees (120), Similar data ities in the relationship between degree of special- for 1947 and 1954, on an establishment basis, show ization and value added per dollar of wages and that wage rates per hour, and values added per per dollar of payroll. For throwing and winding dollar of wages and per hour of labor varied ir- mills, value added per dollar of wages and per regularly with the size of the establishment, as dollar of payroll averaged less for establishments indicated by the number of employees (44)- with 75 to 89 percent specialization than for estab- Value added by yarn-throwing and winding lishments w^ith higher or lower degree of special- mills per dollar of payroll averaged highest for ization. TABLE 63.—Value added hy yam-throwing^ and textile industry spent $4.4 billion for new plant winding mills^ and weaving ndlls^ synthetic^ hy and equipment, and productivity per man-hour type of ownership and operation^ United States^ increased 67 percent {6S). Yet it was pointed out 1958 that fully 65 percent of the textile manufacturing equipment in place in 1957 was obsolete {6S). A study of the textile industry, department by Total Per dollar of payroll department, was made to obtain information on possible further reductions in labor costs. Re- Type of ownership sults of case studies reported in 1958 show that, and operation Yarn- Yarn- Weav- through the use of improved machinery and equip- throw- Weaving throw- ing ing mills ing mills ment and of improved methods of operation, labor mills mills costs can be reduced 10 to 33 percent in carding, 75 to 80 percent in drawing, 60 to 70 percent in rov- 1,000 1,000 ing, 40 to 60 percent in spinning, 65 to 70 percent Ownership: dollars dollars Dollars Dollars in slashing, and up to 30 percent in weaving (63). Corporate 65, 459 460, 657 1. 80 1.69 Partnership 888 4,878 1.74 2.06 A foUowup report in 1961 indicated the possi- Individual 1, 301 Q) 1. 75 0) bility of further improvements (1). Other 0 0) 0 (') New machines and methods for treating man- 1.69 made fibers were said to be opening up vast All __- 67, 648 468, 583 1. 80 possibilities for throwers who have felt the tech- Operation : nological impact of newer fibers more than most Single unit: processors of textile fibers. Modernization of Corporate 25, 753 0) 1.63 0) 2, 189 1. 75 throwing mills has been directed toward the in- Other. _ _ _ 0) stallation of machinery to make stretch and bulk All 27, 942 94, 217 1.63 1.71 yarn. The new single-process, stretch-yarn ma- chines have eliminated four processes and reduced Multiunit: man-hours 36 percent. Other improved machines Corporate 39, 706 0) 1.94 0) Other 0 0) 0 (0 were being developed in 1958 {6S), A report in 1962 indicated that in earlier years All -- _-- 39, 706 374, 366 1.94 1.69 the accepted standard speed for sizing high- All 67, 648 468, 583 1. 80 1.69 shrunk polyester and acrylic blend yams was 9 yards per minute. In 1961, the speed was increased 1 Withheld to avoid disclosing figures for individual to 13 yards per minute. Running quality in slash- companies. ing was not affected and running quality in weav- Adapted from Census of Manufactures. ing was improved. Labor, overhead, and total cost per yard were reduced about 24 percent as a result of this increase. A proposed additional increase Means and Importance of Improvement to 15 yards per minute would reduce further the As manmade fibers are processed on cotton, total cost per yard by about 9 percent (79), woolen, and worsted systems, many of the sug- The importance of further improvements in the gestions for improving the manufacture of cotton manufacture of products of manmade fibers is yarns (p. 45), cotton fabrics (p. 63), and wool indicated by data which show that gross margins products (p. 78) would apply also to the manu- of manufacturers of these products in 1958 aver- facture of manmade fibers and need not be re- aged about 42 percent of the value of the yarns peated here. As pointed out earlier (p. 49), the and fabrics at mills and about 12 percent of the re- possibility of modernization was indicated by re- tail value of apparel and household goods made ports that during the 10 years ended with 1957 the of these fibers.

DYEING AND FINISHING

Information presented in this section relates ing. Thus, integrated mills producing yarns or mainly to nonintegrated finishing plants, except fabrics are classed as yarn or fabric mills, even wool finishing plants, which are included in the though a large part or all of their shipments con- section on weaving and finishing mills, wool sist of finished products. Similarly, nonweaving (p. 66) ; and plants for finishing knit products, plants finishing fabrics and fabricating them into which are included in the section on the manu- sheets and pillowcases are classed as manufactur- facture of knit goods (p. 95). In the classifica- ers of housef urnishings. tion of textile establishments, as shown in census Total quantity of finished broadwoven goods reports, preference was given to spinning, weav- made of cotton, manmade fibers, and silk, which ing, knitting, or fabricating as opposed to finish- had apparently been high in the mid-1950's.

736-806—64- 89 amounted to 9,918 million linear yards in 1962 (ta- rics. Dyeing is most commonly performed, and ble 64). Of the total finished in 1962, about 37 printing is almost invariably performed in the percent was bleached and white finished, 43 per- fabric stage. cent was plain dyed and finished, and 20 percent In 1958, the value of shipments and other re- was printed and finished. These proportions ceipts of the finishing plant, cotton, industry varied considerably from one year to another. In totaled $686 million. Of this amount, about 83 1958, establishments in the finishing industry ac- percent was accounted for by finished cotton counted for about 58 percent of the value (about fabrics ; 14 percent by finished manmade fiber and $1,361 million) of finished cotton, manmade fiber, silk fabrics and other secondary products; and 3 and silk fabrics shipped by all industries. Most percent by miscellaneous receipts. The primary of the remainder of these products were shipped product specialization ratio w^as 85 percent. Ship- by weaving mills. In addition, weaving mills and ments of finished cotton fabrics by this industry other plants finished large quantities of these in 1958, valued at $1,008 million, represented 57 products for their own use. percent of these products shipped by all industries. In 1958, the value of shipments and other re- TABLE 64.—Cotton^ silh, and manmade -fiber hr o ad- ceipts of the finishing, manmade fiber and silk, in- woven goods finished^ hy type of fabric and dustry totaled $211 million. Of this amount 91 finish^ United States^ specified years^ 19^7-62 percent was accounted for by finished manmade fiber and silk fabrics and commission receipts for Type of fabric and 1947 1959 1961 1962 such finishing, 7 percent by shipments of secondary finish products, and 2 percent by miscellaneous receipts. This industry's primary product specialization ratio was 93 percent. Shipments of finished man- Bleached and white Million Million Million Million finished: yards yards yards yards made fiber and silk fabrics by this industry in 1958, Cotton _ 3,616 3,337 3, 171 3, 371 valued at $353 million, represented 54 percent Manmade and silk 199 254 325 318 of these products shipped by all industries. Total 3, 815 3, 591 3,496 3, 689 The industry dyeing and finishing textiles not elsewhere classified comprises establishments pri- Plain dyed and finished: marily engaged in bleaching; dyeing; printing; Cotton __ 1, 757 2, 650 2,613 2 662 Manmade and silk 1,419 1,650 1,491 1, 549 and finishing raw stock, yarn, braided goods, and narrow fabrics, except wool. These establish- Total 3, 176 4,300 4, 104 4, 211 ments perform finishing operations on purchased Printed and finished: ^ textiles or on a commission basis. The value of Cotton 1,571 1,903 1,693 1,702 shipments and other receipts of this industry in Manmade and silk 353 318 284 316 1958 totaled $158 million, of which 74 percent was accounted for by finished yarn, raw stock, and Total- 1,924 2,221 1, 977 2, 018 narrow fabrics, 4 percent by secondary products ; All finished: and 22 percent by miscellaneous receipts, mainly Cotton__ 6,944 7,891 7,477 7, 735 from commission finishing of yarn, raw stock, and Manmade and silk 1,971 2, 221 2, 100 2, 183 so forth. This industry's primary product special- Total 8,915 10, 112 9,577 9, 918 ization ratio was 95 percent. Shipments of fin- ished yarn, raw stock, and narrow fabrics by this industry in 1958, valued at $160 million, repre- ^ Includes roller, screen, flock, and block printed. sented 73 percent of these products shipped by all Adapted from Current Industrial Reports. industries. Some establishments finish, on a commission Nature and Practices basis, fabrics, yarns, and raw stocks owned by others ; the rest finish their own materials. A sub- The dyeing and finishing textile industry in- stantial amount of fabrics, particularly those made cludes finishers of broadwoven fabrics of cotton; of cotton and manmade fibers, is finished on com- finishers of broadwoven fabrics of manmade fibers mission for converters who buy gray goods from and silk; and dyers and finishers of textiles not weaving mills, arrange to have them finished, and elsewhere classified, such as raw stocks, yarn, sell the finished cloth. Styling and finishing the braided goods, and narrow fabrics, except wool. cloth are controlled mainly by converters or mills, The finishing operations include bleaching, dye- with or without collaboration of manufacturing ing, printing, and other mechanical finishing such users. Converters occupy a key position in this as preshrinking, calendering, and napping. In connection. They have gray goods finished to addition, chemical finishings for water repellency, their order in many designs, styles, and finishes. fire resistance, and mildew proofing also are in- A large percentage is bleached in various finishes cluded. Textiles may be dyed during the forma- from soft to hard: some goods are dyed in various tion of fibers (manmade fibers only) as staple fibers colors, tints, and shades; and substantial propor- before being spun into yarn, as yarn, and as fab- tions, particularly print cloth, are finished in 90 many colors or designs. Converters keep in close Employees and Establishments touch with the fluctuating requirements of the According to census reports, establishments pri- market and, within the limits of changes in fash- marily engaged in finishing textiles, except wool, ion, they influence the seasonal drift of style goods totaled 809 in 1958, compared with 641 in 1947. {121). The 1957 edition of the Standard Industrial Clas- Distribution of finished yarns and fabrics, ex- sification split out three separate finishing indus- cept wool, in 1958 was mainly from finishers to tries from the old industry, finishing textiles, sales offices, sales branches, and administrative except wool. The 1958 data show that 798 estab- offices of the same company ; other manufacturers ; lishments in the three new industries were operated and merchant wholesalers (table 65). The largest by 760 companies (table 66). The proportion of outlet for other finished textile products was to the establishments with 100 or more employees de- other manufacturers ; but considerable proportions creased from about 30 percent in 1947 to 20 percent were distributed to retailers, merchant whole- in 1958. The proportion with less than 10 em- salers, other plants, and sales offices and branches ployees increased from 21 percent in 1947 to 35 of the same company (table 65). Sales offices and percent in 1958. branches, in turn, distributed these products In 1958, about 60 percent of these finishing mainly to other manufacturers, but considerable plants were in the Middle Atlantic States, 16 per- proportions were distributed to merchant whole- cent in New England, 15 percent in the South, 5 salers, retailers, and others. percent in the North Central States, and about 4 percent in the West (table 67). From 1947 to SIZE AND ORGANIZATION 1958, the number of establishments in each region increased, but decreases in proportions of the Changes in size and organization of the finishing plants in New England and the Middle Atlantic textile industry are indicated by the number of States were offset by increases in the Southern, employees and establishments, ownership and oper- North Central, and Western States. Size of plant, ation of plants, and mergers and acquisitions. as indicated by the number of employees, averaged much more in the Southern and New England TABLE 65.—Distribution of manufacturers'^ ship- States than in other areas. Average number of ments of finished hroadiooven fairies^ yarns^ employees per establishment decreased from about and other items^ except wool^ and other textile 122 to 1947 to 92 in 1958. products., hy class of customer and outlet^ united States^ 1958 Ownership and Operation Types of ownership and operation and average Finished Other fabrics, yarns. textile number of employees for establishments finishing except wool products textiles, except wool, have changed somewhat in Customer outlet recent years. The proportion of all establishments Pro- Pro- that were under corporate ownership or control Value por- Value por- decreased from 86 percent in 1954 to 84 percent in tion tion 1958 (table 68 ). The average number of employees

Million Million Manufacturer to— dollars Percent dollars Percent TABLE 66.—Number of establishments finishing Sales offices, branches, etc_ 396 43.1 292 13.8 textiles.^ except wool and hnit goods^ by num- Other wholesalers, same ber of employees^ united States^ 19I¿1 and 1958 company 20 2. 2 0) 0) Other plants, same com- pany. 74 8.0 217 10.3 Establish- Proportion Other manufacturers 273 29. 7 640 30.3 ments of total Merchant wholesalers 96 10.5 318 15.1 Employees Retailers, not owned 7 .8 337 15.9 All other __ 52 5. 7 309 14.6 1947 1958 1947 1958 Total 918 100.0 2,113 100.0 Number Number Percent Percent Sales offices, branches, etc. .^00 or more - 37 34 5.8 4.3 to- 250 to 499 44 38 6.9 4.8 other manufacturers 449 72. 5 198 65.6 100 to 249 - 109 89 17. 0 11. 1 Merchant wholesalers 69 11. 1 20 6.6 50 to 99 --- 87 97 13. 6 12. 1 Retailers, not owned 33 5.3 47 15.6 20 to 49 - - - 131 127 20.4 15. 9 All other-______- 69 11. 1 37 12.2 10 to 19 -- - 97 133 15. 1 16.7 5 to 9 ------84 115 13. 1 14. 4 Total - - 620 100.0 302 100.0 lto4 -- --- 52 165 8. 1 20. 7 641 798 100. 0 100.0 1 Withheld to avoid disclosure of figures for individual All _ __ - - companies. Adapted from Census of Manufactures. Adapted from Census of Manufactures. 91 TABLE 67.—Number of establishments and aver- TABLE %S,—Number of establishments and aver- age^ number of employees per establishment for age number of employees per establishment for finishers of textiles^^ except wool and knit goods, finishers of textiles, except wool and knit goods, by geographic region, United States, 1947 and by type of ownership and operation. United Ih/OO States, 1939 and 1958

Establish- Employees Average ments per estab- Region Establish- employees lishment ments per estab- Ownership and operation lishment 1 1947 1958 1947 1958 1939 1958 1939 1958 Nwmber Number Number Number New England-_ 111 131 205 121 Ownership : Middle Atlantic 423 Number Number Number Number 474 69 43 Corporate 399 670 149 North Central.._ _ _ 22 40 107 60 26 Partnership. 29 52 19 South 68 123 354 289 West Individual 39 75 11 17 30 32 17 Other __ 1 1 (2\ United States 641 798 122 92 All 468 798 129 92 Adapted from Census of Manufactures. Operation : Single unit : Corporate _ _ 281 519 Other per establishment under corporate ownership or 66 125 (2) \ ) control decreased from 149 in 1939 to 123 in 1954 and to 107 in 1958. The number of establishments All 347 644 80 36 and the average number of employees per estab- Multiunit: lishment were substantially less each year for Corporate _ 118 151 (2) Other plants operated by partnerships and by individ- 3 3 (2) (2) uals than for those operated by corporations. All 121 154 268 327 The proportion of the establishments operated from central administrative offices as multiunits All 468 798 126 92 decreased from 26 percent in 1939 to 19 percent in 1954 and 1958. The average number of employees 1 Tn 1939, only wage earners were included; in 1958 all per multiunit establishment decreased from 360 in employees were included. 1954 to 327 in 1958. For single-unit establish- 2 Withheld to avoid disclosing figures of individual ments, the average number of employees per plant companies. decreased from 52 in 1954 to 36 in 1958. In 1958, Adapted from Census of Manufactures. the number of employees per multiunit plant aver- aged most for finishers of cotton textiles, and those ning, weaving, and finishing, or for weaving and for single-unit plants averaged most for finishers finishing (table 25, p. 55). Establishments with of manmade fiber textiles (table 68). 17 percent of the spindles in cotton and manmade fiber weaving mills had spimiing, weaving, and Mergers and Acquisitions finishing machinery and equipment. Mergers and acquisitions in the textile industry The degree of concentration in industries finish- in recent years, as indicated previously (p. 38), ing textiles, except wool and knit goods, on a apparently resulted in some changes in the organi- company basis may be indicated by data showing zation and management of operating units in fin- that in 1958 plants operated by 20 of the largest ishing textile industries. The degree of vertical companies, or less than 3 percent of the total, ac- integration in industries finishing textiles, except counted for 51 percent of total shipments of the wool and knit goods, is indicated by census data industry (table 69). Plants operated by 50 of the showing that in 1958 about 42 percent of finished largest companies, or less than 7 percent of the textiles shipped, plus large quantities of the prod- total, accounted for 66 percent of total shipments ucts finished for their own use, were finished by of the industry. The proportions of the value of other establishments manufacturing yams, fab- shipments accounted for by plants operated by rics, and fabricated products. These establish- 4, 8, and 20 of the largest companies increased ments are classified as yarn mills, fabric mills, or markedly from 1947 to 1958, despite substantial fabricators of apparel and related products. increases in the total number of companies. Data for cotton, manmade fiber, and related broad- In 1958, finishers of wool textiles operated by woven fabric mills show that in 1958 about 13 per- four of the largest companies, or about 6 percent cent of the weaving mills, operating 16 percent of of the total, accounted for about 75 percent of the the looms, had machinery and equipment for spin- total shipments. Plants operated by 20 of the 92 largest companies, or about 28 percent of the total, Finishing fabrics, however, is a rather compli- accounted for 93 percent of total shipments cated process, particularly for fabrics intended (table 69). for wearing apparel. An outline of the more im- portant treatments usually given to a representa- METHODS AND PRACTICES (7 79) tive woven garment fabric, such as a broadcloth or high-grade print cloth, in coverting it from All treatments or processing received by textiles the loom to the finished state, is given here for to fit them for consumer use, after their mechani- illustrative purposes. cal structure has been completed, are included in When gray goods are received at the finishing the general field of finishing. Although details plant, they are made up into lots of perhaps 40,000 of the processing may vary somewhat for different yards by sewing together the individual pieces or products and plants and are necessarily inñuenced cuts shipped from the mill. The cloth is then by the different construction and physical charac- passed in open width at high speed over gas flames teristics of the textiles handled, the common pur- to burn off loose fiber ends. It then goes through pose of all finishing operations is to convert the a quenching bath, which contains an enzyme solu- raw material represented by manufactured yarns tion that converts to water-soluble products the or fabrics into products suitable for specific end starch used in warp sizing. After steeping for a uses. This usually involves a preliminary clean- few hours in the enzyme solution, the cloth is ing to remove both natural and extraneous impuri- washed and run into large cylindrical steel tanks ties. A preliminary cleaning is followed by or kiers, in which it is boiled under pressure with special treatments, such as mercerizing, dyeing, a caustic alkali solution. Next, the cloth is thor- printing, and starching, which are designed to im- oughly washed and then bleached white by treat- prove both the attractiveness and the usefulness ment with an oxidizing agent, usually sodium of the final products. hypochlorite or hydrogen peroxide. At this Most yarns and fabrics are given some degree of stage, purification is completed, and the goods, finishing before they are sold to consumers. For after being dried, are ready for the final finishing operation. yams, the treatments involved are relatively sim- If the goods are to be mercerized to increase ple. Little more than cleaning and dyeing is re- their luster and dye affinity, the cloth is passed quired for yarn that is to be a component in goods in open width through a concentrated solution woven of colored yam, although some additional of caustic soda and held briefly under tension to handling, such as mercerizing, polishing, and complete the mercerizing reaction. Then the spooling, may be required for the part sold as caustic soda is removed by washing and neutrali- sewing thread. zation. If intended for sale in the white state, the cloth TABLE 69.—Share of shipments of finishing tex- is next lightly starched or softened, calendered, tile industries accounted for hy largest com- sanforized to reduce residual shrinkage, folded, panies^ United States^ 1958^ 195%^ and WJpï inspected, and packed. If it is to be dyed or printed, these operations usually follow merceriza- Concentration ratio : tion. After that, the handling is substantially the Proportion of total same as for white goods. shipments accounted Modern finishing practice has tended toward for by 3— continuous processing by eliminating intermittent Industry and Com- Value of year pa- ship- or batch treatments wherever possible. Along nies Ï ments 2 4 larg- 8 larg- 20 with this development has gone a more complete est est larg- mechanization of plants, with the substitution of com- com- est mechanical operations for manual ones. Although panies panies com- panies much progress has been made in this direction, with resulting improvement in uniformity of treat- Finishing tex- ment and speed of production, the many types of tiles, except processing required by the widely varied demand wool: Number 1,000 dollars Percent Percent Percent apparently will not permit the adoption of straight 1958 758 1, 058, 411 26 36 51 production-line methods throughout the finishing 1954 680 998, 144 24 32 48 industry. 1947 599 531, 400 14 22 37 Finishing wool Several special finishes or finishing processes textiles : ^ developed since World War II are of interest be- 1958 71 143, 271 75 85 93 cause of their importance in improving quality and extending the utility of textiles. Sanforizing 1 See footnote 1, table 14, p. 41. 2 See footnote 2, table 14, p. 41. is particularly important in the field of garment 3 See footnote 3, table 14, p. 41. fabrics. It is a process by which uneven tensions 4 Data for 1954 and 1947 not comparable to 1958. in the yarns of woven fabrics are mechanically Adapted from {120). corrected and the shrinkage of garments when they 93 are laundered is practically eliminated. Durable finishers of textile products, except wool, increased finishes of a modified cellulose type improve the from $7.1 million in 1939 to $30.7 million in 1947, appearance and handling qualities of fabrics. At and amounted to $33 million in 1962, according the same time they increase their resistance to to census reports. In 1958, expenditures of the in- abrasion and washings. Resistance to mussing or dustry dyeing and finishing textiles, except wool creasing may be increased by the use of synthetic fabrics and knit goods, totaled $24.9 million, resin finishes which slightly stiffen the cloth so of which about 86 percent was for new plant and that it tends to maintain or regain its original equipment (table 70). shape instead of creasing {17). Water-repellent finishes that wñll resist many launderings are Charges or Costs Involved widely used, and a finish that, by a chemical modi- fication of the fabric, renders it resistant both to Census reports on manufacturers in 1947 and in flame and to biological rotting has appeared on the 1954, as they relate to finishing textiles, show market. Additional useful products may be ex- neither the value of gray goods finished during the pected as the result oí research by many organiza- year nor the value of the products finished by tions. establishments included in finishing industries. Application of color to yarns and fabrics is a Consequently, census data for these years are not complex and highly developed business, wliicli re- adequate for calculating the finisher's gross mar- quires special equipment and techniques. Several gins or the spread between the value of materials classes of dyes are commonly used. They range used and the value of the finished products. from the ordinary direct colors to the very fast In census reports for 1958, the value of the fibers, vats and azoics. Each class requires special yarns, or fabrics processed by commission finishers methods of application. A recent development was not included in the cost of materials or in the in color technique is the application to fabrics of value of products shipped. Total cost of mate- insoluble but finely dispersed pigments by the use rials reported for the finishing industry, therefore, of film-forming resins as the binding medium includes the cost of the goods finished only for which attaches the color particles to the fibers. establishments finishing for their own account. This method of mechanically applying color in Total value of shipments includes receipts for fin- dyeing or printing avoids problems of dye aíRnity ishing by commission finishers and value of the and promises to be increasingly important in the finished goods shipped or sold by^ independent textile industry. Yarns are dyed in skeins, in finishers. Consequently, costs, margins, and value package form, on beams, or continuously as chain added by finishers of textiles other than wool and warps; while knitted or woven fabrics may be knit goods, based on census reports, are not strictly dyed in the rope or in open width, with the use comparable to those shown for other segments of of a considerable variety of dyeing machines. The the textile industry. tendency has been to develop continuous dyeing In 1946, gross margins of commission finishers methods, with resulting savings in material and of cotton fabrics ranged from 9 percent of the labor costs. value of gray goods for plain white print cloth and sheeting to 49 percent for heavy twill (^7). MACHINERY AND EQUIPMENT During the 3 years ended with 1944, converters' Improvements in machinery and equipment, as gross margins for cotton fabrics averaged 29 per- well as in methods and practices, for finishing tex- cent of the selling price for bleached fabrics, 35 percent for dyed, and 43 percent for printed (^7). tile products continued in the early 1960's (7). Costs of finishing operations averaged 35 percent Total expenditures for plant and equipment by of the gross margins for bleached fabrics, 49 per- cent for dyed, and 65 percent for printed. Dur- TABLE 70.—Expenditures for plant and equip- ing the same 3-year period, converters' gross mar- ment hy finishers of textiles^ except loool and gins for rayon and acetate fabrics averaged 37 knit goods^ united States.^ 1939^ 191^7^ and 1958 percent of the selling price for dyed fabrics and 51 percent for printed (|7). Cost of finishing oper- Expenditures in— ations averaged 37 percent of converters' gross Item margins for dyed fabrics and 50 percent for 1939 1947 1958 printed. As indicated in preceding sections of this report, hourly earnings of laborers in the textile industry 1,000 dollars 1,000 dollars 1,000 dollars New equipment. _ 4,922 22, 068 17, 573 have increased markedly since 1939, and wages ac- New plant _ _ 1, 431 7,600 3,823 count for large proportions of gross margins of All other 1 706 1,047 3, 524 manufacturers of textile products. Wage rates Total. __ _ 7,059 30, 715 24, 920 per hour of production in textile finishing, except wool, plants increased from $1.19 in 1947 to $1.96 1 Expenditures for used plant and equipment. in 1962, according to census reports. Value added Adapted from Census of Manufactures. by these finishers per dollar of wages increased 94 from $2.04 in 1947 to $2.32 in 1962, according to should eventually mean more uniform products census reports. Average wage rates per hour and and probably lower costs. average value added per dollar of wages varied Progress has been made in developing finishes irregularly with the size of the plant as indicated designed to impart increased attractiveness and by the number of employees. Wage rates per utility to textiles, and considerable improvements hour and value added per hour of labor averaged in standards of quality may reasonably be ex- less in the South than in any other geographic pected. Better mercerizing and calendering region, but value added per dollar of wages varied techniques are being employed to improve the irregularly from State to State and from one re- luster and other qualities of fine-grade fabrics. gion to another, according to census reports. The development and increased use of practical Median profits to converters of cotton goods, and effective crease-resistant finishes for piece after reserves for Federal income and excess- goods improve the appearance and usefulness of profit taxes and for renegotiation in the case of the fabrics, particularly in the garment field. war contracts, increased early in the 1940's. They Finishes that provide wash-and-wear qualities in reached a high point of 4 percent of net sales in fabrics used in men's shirts and in other apparel 1946, declined to less than 1 percent of sales in are an example of a development that has greatly 1953, advanced to 1.6 percent of sales in 1956, and strengthened the competitive position of cotton then declined to less than 1 percent in 1959, 1960, (9). Specific suggestions regarding the most and 1961 (33). These profits, as proportions of effective means by which, and the extent to which, tangible net worth, declined from 8.2 percent in it would be feasible to increase the efficiency and to 1948 to 4.2 percent in 1961 (33), reduce the costs of these services probably would need to be based on detailed data relating to costs, Means and Importance of Improvement as indicated for other segments of the textile in- dustry {105), Operating efíiciency in the dyeing and finish- Results of modernization since World War II ing industry could be increased most effectively indicate that some mills have cut unit labor costs through the perfection and expansion of continu- in dyeing operations by 50 percent. Others have ous processing methods. In bleaching cotton sharply reduced warehousing and materials- piece goods, for example, it is possible to move handling costs. Improved continuous bleaching methods save up to 50 percent in costs of materials. gray cloth steadily forward through specially de- Automation in color control, coupled with con- signed machines that complete the cleaning tinuous dyeing, improves quality and reduces and bleaching processes within a few hours, as costs {63), A report in 1963 indicates that, in compared with the several days usually required. addition to automatic machinery to provide bene- Similar advances have been made in dyeing with fits from feeding to the finishing of quality textiles, the fast vat colors, the installation of special equip- a suitable system for ventilation protects the ment making it possible to dye fabrics by a con- health and safety of workers, promotes production tinuous method. The results are more uniform efficiency, improves the quality of the products, shades and reduction in costs of materials and reduces fire and explosion hazards, and improves labor. Improved processing methods of this kind plant housekeeping {8),

KNIT-GOODS MANUFACTURING

The knit-goods manufacturing industry is com- percent was accounted for by seamless hosiery, 21 posed of establishments primarily engaged in percent by knit fabrics, 37 percent by knit outer- knitting, dyeing, and finishing textile products. wear, 13 percent by knit underwear, and 1 percent These establishments consume yarns made from by other products. basic materials such as cotton, wool, and manmade fibers. Census data for 1958, for example, show Nature and Practices that machine knitting yarns amounted to about 499 million pounds, or about 10 percent of the total Knitting industries include establishments pri- produced on the cotton system and 14 percent of marily engaged in (1) knitting products from the wool yarn, other than carpet. In addition, yarn owned by the knitting establishment or in machine knitting yarn that year included about 10 dyeing and finishing knit products for their own percent of the thrown filament yarn, except that use; (2) knitting fabrics from yarns owned by which is textured. others or dyeing and finishing knit products Principal products of the knit-goods industry owned by others; and (3) purchasing yarns or are hosiery, knit fabric, knit outerwear, and knit gray goods and employing contract knitters or underwear. In 1958, the value of products dyers to process the materials. Some establish- shipped by this industry, excluding full-fashioned ments operate as both manufacturers and con- hosiery for which data are not available, totaled verters or as both manufacturers and contractors. about $2,220 million. Of this shipment, about 27 Hosiery mills engage in knitting, dyeing, and 95 finishing, but in 1958 about a third of their prod- sented 91 percent of its total shipments and 74 ucts were shipped in the gray. Data on the value percent of these products shipped by all industries. of total shipments of full-fashioned hosiery are Knit underwear mills knit underwear and not available, but the value of shipments and other nightwear, or manufacture these products from receipts of seamless hosiery mills in 1958 totaled knit fabrics produced in the same establishment. $597 million, of which about 89 percent was seam- The value of shipments and other receipts of these less hosiery, 7 percent secondary products, and 4 mills in 1958 totaled $292 million. Of total ship- percent miscellaneous receipts. This industry's ments and receipts, about 82 percent were primary shipment of seamless hosiery in 1958 represented products, 11 percent were secondary products, and 93 percent of its total shipments and 90 percent 7 percent were miscellaneous receipts. This in- of these products shipped by all industries. These dustry's shipments of knit underwear in 1958 rep- products were distributed mainly to retailers and resented 88 percent of its total shipments and 35 merchant wholesalers. About 11 percent were dis- percent of these products shipped by all industries. tributed through manufacturers' sales offices and Knit fabric mills knit tubular or flat fabrics, and branches to retailers and merchant wholesalers dye or finish these products. The value of ship- (table 71). Hosiery, valued at $161 million, was ments of this industry in 1958 totaled $487 million. shipped unfinished mainly to other plants of the Of total shipments, about 86 percent were knit same company or to other manufacturers, accord- fabrics, 5 percent were secondary products, and ing to census reports. 9 percent were miscellaneous receipts, mainly from Knit outerwear mills comprise establishments contract work. This industry's shipments of knit primarily engaged in knitting outerwear or in fabrics in 1958 represented 94 percent of its total manufacturing outerwear from knit fabrics pro- shipments and 90 percent of these products duced in the same establishment. Important shipped by all industries. These products were products of this industry include sweaters, knit distributed in 1958 mainly to other manufacturers jackets, jerseys, shirts, and other outerwear. The and to merchant wholesalers (table 71). About value of shipments and other receipts of knit out- 12 percent were distributed through the manufac- erwear mills in 1958 totaled $814 million. Of turers' sales oiSces and branches mainly to other total shipments and other receipts, about 75 per- manufacturers. cent were knit outerwear, 7 percent were secondary products, and 18 percent were miscellaneous re- SIZE AND ORGANIZATION ceipts, mainly from contract work. This indus- try's shipments of knit outerwear in 1958 repre- Changes in size and organization of knit-goods manufacturing industries may be indicated by TABLE 71.—Distribution of manufacturers' ship- number of employees, ownership and operation, ments of finished full-fashioned and seamless and mergers and acquisitions. hosiery and knit fairies^ hy class of customer and outlet^ united States^ 1958 Number of Employees Average sizes of establishments in knit-goods Hosiery Knit fabrics industries vary greatly from one industry to another and from one time to another. The num- Customer outlet ber of employees per full-fashioned hosiery mills Pro- Pro- Value por- Value por- decreased from an average of 95 in 1947 to 78 in tion tion 1958; whereas the average for seamless hosiery mills remained practically unchanged at 105. The average number of employees per knit outer- Million Million Manufacturer to— dollars Percent dollars Percent wear mills increased from 29 in 1947 to 54 in Sales offices, branches, etc_ 86 11.7 54 11. 7 Other plants, same com- 1958. The average number of employees per knit pany. _ 4 . 5 29 6. 3 underwear mill decreased from 236 to 199 and Other manufacturers 2 .3 181 39. 1 that for knit fabric mills increased from 44 to 51. Merchant wholesalers 243 33.2 143 31.0 Within each industry in the knit-goods manu- Retailers, not owned 359 49. 1 11 2. 4 All other _ _ facturing group, size of individual mills, as indi- 38 5. 2 44 Q ^ cated by the number of employees, varied widely, Total 732 100. 0 462 100.0 and the proportion in the various size groups changed considerably from 1947 to 1958. Eeflect- Sales offices, branches, etc. to— ng the shift in size of establishments, plants with Other manufacturers- 52 94 5 less than 250 employees dominated both the full- Merchant wholesalers 15 16. 9 3 5. 5 fashioned and seamless hosiery segments of the Retailers, not owned 72 80.9 industry in 1958 (table 72). Another 2 2.2 In the 10-year period before 1958, the propor- Total 89 100. 0 bb 100 0 tion of knit outerwear and knit fabric mills with 100 or more employees increased but that of knit Adapted from Census of Manufactures. underwear and other knit-goods mills decreased. TABLE n.—Number of specified types of knitting mills, hy number of employees per plant, united States, 1958

Full- Seamless Knit Knit Knit Other fabric knit Employees per plant fashioned hosiery outer- under- hosiery- mills wear wear mills goods mills mills mills mills

13 20 12 11 3 1 500 or more. 44 34 17 9 0 250 to 499.- 17 52 128 90 38 40 5 100 to 249-- 160 33 40 11 50 to 99 62 143 97 154 337 23 89 21 20 to 49 204 7 70 17 10 to 19 68 70 64 46 145 2 47 9 5 to 9 54 141 9 59 11 1 to 4 59 140 357 75 Total 432 659 1, 123

During this period, the proportion of knit outer- for by these mills decreased during this period. wear and knit fabric mills with fewer than 20 The proportion of the mills that were operated employees decreased and that of knit underwear from central administrative ofläces as multiunits and other knit-goods mills not elsewhere classified decreased markedly, but the proportion of total employees in the industry that was accounted for Geographic distribution of knit-goods mills by multiunits decreased to 1954, and then in- shows that in 1958 a large proportion were in the creased to 1958. Middle Atlantic, Southern, and Western States Of seamless hosiery mills, the proportion oper- (tables 73). Knit outerwear and knit fabric mills ated by corporations decreased from 70 percent were concentrated particularly in Middle Atlantic in 1939 to 65 percent in 1958 (table 74). The pro- States, whereas seamless hosiery mills were concen- portion operated by partnerships and individuals trated mainly in the Southern and Western mcreased. The average number of employees per States. The number of full-fashioned hosiery mill was much greater for those operated by cor- mills decreased markedly from 1954 to 1958, par- porations than for those operated by partnership ticularly in Middle Atlantic States. The number and by individual owners. The proportion of the of seamless hosiery mills increased from 1954 to mills that were operated as multiunits and the pro- 1958, particularly in the South and West. In portion of total employees of the industry that 1958, the average number of production workers were accounted for by multiunits decreased dur- per mill ranged from 44 in knit fabric mills to 176 ing this period. in knit underwear mills ( table 73 ). In knit under- The proportion of knit underwear mills oper- wear mills, for example, it ranged from 48 in ated by corporations averaged 83 percent in 1939 New England to 371 in the South and West. The and 86 percent in 1958 (table 74). The proportion number of mills and the average number of produc- of mills operated as multiunits decreased slightly tion workers per mill changed considerably from from 1939 to 1958 ; whereas the proportion of total 1947 to 1958 (table 73). For most of the knit- employees of the industry that was accounted for goods industries in most of the geographic divi- by multiunit mills increased. sions, the number of establishments and the aver- The number of knit outerwear mills, in contrast age number of production workers per establish- to those of other segments of the knit-goods indus- ment decreased from 1947 to 1958. An outstanding try, increased markedly from 1939 to 1958. The exception is knit outerwear mills in the South. proportion accounted for by mills operated by cor- They increased markedly in number of plants and porations increased from 47 percent in 1939 to in average number of production workers per about 71 percent in 1958 (table 74). That for mills plant. operated by partnerships and individual owners Ownership and Operation decreased. Average number of employees per mill The proportion of full-fashioned hosiery mills operated by corporations, and the proportion of that were under corporate ownership or control total employees of the industry accounted for by decreased from 80 percent in 1939 to 67 percent in these mills increased markedly from 1939 to 1958. 1958 (table 94). The proportion operated by part- The proportion of knit outerwear mills operated nerships and individual owners increased during as multiunits increased from about 3 percent in this period. The average number of employees 1939 to 6 percent in 1958 and the number of em- per mill operated by corporations and the propor- ployees per mill averaged more than for those tion of total employees of the industry accounted operated as single units.

7 36-806—64 8 97 TABLE 73.—Number of establishments and aver- and nightwear and manufacture these garments age number of production workers per plant for from knit fabrics produced in the same establish- manufacturers of^ knit goods^ by industry and ments. Some mills knit fabrics and dye or finish geographic division^ united States, 1917 and them. 1958 The degree of horizontal integration of knitting mills, on a company basis, may be indicated by Establish- Average proportions of total shipments of the industry ac- ments production counted^ for by specified numbers of the largest Industry and geographic workers division companies. In 1958, seamless hosiery mills oper- ated by 20 of the largest companies, or about 3 1947 1958 1947 1958 percent of the total, accounted for 42 percent of the value of total shipments of the industry, a marked increase from 32 percent in 1947; and 50 Full-fashioned hosiery : Number Number Number Number New England __" 11 6 119 86 of the largest companies, or 8 percent of the total, Middle Atlantic. _ 437 189 62 30 accounted for 57 percent of the value of total ship^ North Central___ _ 35 11 212 71 ments (table 75). South 249 215 116 106 Pacific 6 11 64 28 In 1958, knit outerwear mills operated by 20 of the largest companies, or less than 2 percent oí United States 738 432 88 70 thQ> total, accounted for 20 percent of total ship- Seamless hosiery: ments of the industry, a smaller percentage than New England __ 21 20 71 4-7 m 1947 (table 75). Mills operated by 50 of the Middle Atlantic ______103 89 72 57 largest companies, or less than 5 percent of the North Central _ 27 17 128 165 total, accounted for 35 percent of total shipments. South and West. 466 533 105 104 In 1958, knit undervrear mills operated by 20 of United States 617 659 99 98 the largest companies, or 15 percent of the total, accounted for 63 percent of total shipments of th^ Knit outerwear: industry, an increase from 57 percent in 1947 New England . _ _ 56 49 54 107 (table 75). Mills operated by 50 of th^ largest Middle Atlantic __ 982 912 21 •^Q North Central 71 45 51 71 companies, or about 38 percent of the total, ac- South _ . _ 21 52 47 130 counted for 87 percent of total shipments. West 71 65 31 26 In the same year, knit fabric mills operated by United States 1,201 1, 123 20 of the largest companies, or 6 percent of the 25 47 total, accounted for 51 percent of total shipments Knit underwear: of the industry (table 75). Mills operated by 50 New England 15 7 183 48 of the largest companies, or 15 percent of the total, Mi ddle Atlantic _ 99 89 163 103 North Central. __ 24 9 242 23*^ accounted for 72 percent of total shipments. South and West . 34 35 378 371 Of the establishments primarily engaged in the manufacture of knit goods in 1954 and 1958, about United States 172 140 218 176 97 percent were operated by companies chiefly en- Knit fabric: gaged in this industry and 3 percent were operated New England _ _ _ _ 39 38 37 69 by companies primarily engaged in other indus- Middle Atlantic _ _ 210 247 28 28 tries {101). Single-unit companies accounted for North Central 10 10 42 65 South and West __ _ 88 percent of the establishments in 1954 and in 49 62 96 89 1958. They accounted for about 60 percent of the United States 308 357 41 44 value added by manufacture in 1954 and 57 percent in 1958. The number of employees per establish- Adapted from Census of Manufactures. ment averaged substantially greater for those op- erated by multiunit than for those operated by Mergers and Acquisitions single-unit companies. Employees per establish- nient averaged greater for those operated by multi- Integration in the textile industry, as indicated industry companies than for those operated by previously (p. 38), apparently lias resulted in some single-industry companies. changes in the size, organization, and management Of the total number of establishments operated of operating units in the knit-goods manufacturing by companies classified in the knit-goods manufac- industry. The degree of vertical integration of turing category, 13 percent were classified in other knitting mills, on an establishment basis, may be categories in 1958 and 7 percent were classified in indicated by these facts: Some knitting mills other categories in 1954. Data on distribution of manufacture the yarns used in knitting; some employees of establishments operated by compa- hosiery mills knit, dye and finish hosiery, and sell nies classified in the knitting mills category show a substantial proportion of the finished products that in 1958 about 72 percent were in establish- to wholesalers and retailers. Some knit outerwear ments classified in the knitting mills category, 7 and underwear mills knit outerwear, underwear, percent in establishments classified in the textile 98 TABLE n^.-NumUr of establishments ard average number of ^t^î'^XLT^iCf äT^Ä"' facturers of hnit clothing, ly type of ownersUf and oyeratton, united States, 1939 and Wbii

Average employees Average employees Establishments per establish- Establishments per establish- ment ^ Type of ownership and operation ment 1

1939 1958 1939 1958 1939 1958 1939 1958

Full-fashioned hosiery mills Knit underwear mills

Number Number Number Number Number Number Number Number Ownership: 231 109 165 119 223 227 402 289 57 45 49 18 14 10 34 19 11 ^^^39 30 TnHiviHnfll 50 93 n 1 1 0 Other - 2 432 195 78 199 140 194 199 All 499 Operation : Single unit: 242 201 161 113 83 197 Cînrnorate - -- 44 30 20 54 Other. 83 140 131 39 143 103 167 128 All 325 341

Multiunit: 52 36 279 r^oTTiorii te 160 88 337 46 4 1 39 {) Other 14 3 314 225 56 37 262 398 All 174 91 199 140 194 199 All ____--- 499 432 195 78 1

Seamless hosiery mills Knit outerwear mills

Ownership : 428 182 145 334 793 43 66 305 34 52 96 58 44 141 182 32 T^fl rt.npr^hir) - 24 234 148 16 14 TnHivîrlniîl - 76 135 42 0 0 0 0 0 Other 0 0 0 143 105 709 1,123 32 54 All 433 659 i Operation : Single unit: 219 317 157 95 314 728 dornorate 32 374 328 Other 121 226 49 688 1,056 30 41 All -- 340 543 118 69

Multiunit: 86 111 248 288 20 65 ("^nrDorate 1 2 Í2\ Other 7 5 48 47 ir) 21 67 97 253 All 93 116 233 278 1,123 32 54 All 433 659 143 105 709

1 In 1939 only wage earners are included; in 1958 all employees are included. 2 Witheld to avoid disclosing figures for individual companies. Adapted from Census of Manufactures. TABLE 1^.—Shave of shipments of hmt^goods rrmnufactuHng industry accounted for ly largest com^ pames^ TJmted States^ 1958 amd 19J^7

Concentration ratio: Proportion of total shipments accounted Primary Com- Value of for by 3— Industry and year product panies 1 shipments 2 specializa- tion^ 4 largest 8 largest 20 largest companies companies companies

Seamless hosiery: Number 1958 1,000 dollars Percent Percent Percent Percent 611 584, 396 23 31 42 93 1947 565 327, 007 Knit outerwear : ^ 13 19 32 96 1958 1, 111 774, 251 10 20 91 1947 1, 196 330, 474 Knit underwear : ^ 13 24 91 1958 132 280, 541 29 41 63 1947 140 295,411 Knit fabric : 21 34 57 87 1958 336 486,116 1947 18 30 51 94 297 197, 454 27 37 56 93

1 See footnote 1, table 14, p. 41. value of shipments. Includes value of primary and 2 See footnote 2, table 14, p. 41. secondary products made and miscellaneous receipts, such 3 See footnote 3, table 14, p. 4L as those for contract and commission work on materials * See footnote 4, table 14, p. 41. owned by others, scrap, and other salable refuse. 5 Value of production shown for this industry rather than Adapted from {120).

mill products category, 13 percent in the apparel coarser fabrics. Because of its inherent nature, and related products industry, almost 2 percent in the latch-type needle, with its positive action in retailing, 3 percent in wholesaling, and small pro- forming loops, in some instances may damage deli- portions in service and other categories {101). cate yams. Either weft-knitting or warp-knitting machines MANUFACTURÍNG METHODS equipped with two sets of needles can make fabrics Machine knitting is the process of constructing in which some of the wales appear on the front a fabric or article from yam by the formation of and some on the back to form ribbed fabrics. Cer- connected loops produced on a series of needles. tain types of flat machines having two sets of New loops or "stitches" are drawn through those needles can be equipped to knit plain-stick tubular already formed on the neddles until the desired fabric instead of ribbed fabric. length of knit material has been attained. In knit As knit fabrics are made of one yarn or a series fabric (of simple stitch) the rows of loops running of yarns, the extensive intermingling effect of lengthwise and having the appearance of chains of yarns that tend to cover up irregularities in woven loops are called "wales." Eows formed by the goods is not present. It is, therefore, necessary to same loops across the fabric, at right angles to the have high-quality yarn of uniform construction to wales, are called "courses." In plain knitting, each prevent readily apparent irregularities in knit active needle in the machine forms a wale, and fabrics. A common practice in production of qual- every complete action of all the needles forms a ity knit goods is to use ply yarns. Plying par- course. The number of wales determines the width tially compensates for the irregularities that occur of the fabric, the number of courses determines its m single yarns, and makes a stronger yarn with length. greater resistance to wear. Knit fabrics are generally classified according Lisle is an example of plied yarn that is widely to type, such as weft knit or warp knit. The terms used for knitting hosiery. It is made of relatively "nylon tricot" and "rayon jersey" are becoming long-staple combed cotton and spun into fine more widely used when referring to certain warp- counts that are plied and frequently mercerized. Two-ply mercerized yarn made from long-staple knit fabrics. The weft knit is tiiQ more common. cotton IS another example of plied yarns used in Fabrics are also described as latch-needle or manufacturing knit goods. spring-needle knit, depending upon the type of In addition to uniformity or evenness of yarns, needles employed in the knitting machines. Al- knitting requires flexible yarn that will readily though spring-needle fabrics are usually consid- conform to the serpentine shape required to form ered slightly superior to latch-needle fabrics, the ^ series of loops. Harsh-fibered cottons are needles of the latter type have been widely used avoided, except for coarse fabrics, as they do not m this country, especially in the manufacture of readily form into loops and tend to kink and form 100 distorted loops of irregular size. Flexibility in Some circular machines knit seamless ho- knitting yarus is obtained by using relatively flex- siery; others knit wide fabric for overcoating. ible raw cotton and inserting a soft twist at the Straight-bar machines (for example, full-fash- spinning frame. A twist multiplier of 2.75 is ioned hosiery machines) and flat machines, with widely used for manufacturing knitting yarns. needles arranged in a straight line, usually pro- This results in 16.5 turns per inch in 36s yarn, duce a flat fabric with selvages. Certain types of whereas approximately 25 turns per inch might flat machines, however, are sometimes used to pro- be required to spin the same cotton into the same duce tubular fabric. Needles on a straight-bar yarn count having maximum strength. Although machine operate simultaneously ; those on circular this lower twist sacrifices some strength, it results or flat machines operate individually. in a more pliable and, within certain limits, a more Gage is the term usually employed by the knit- elastic knit fabric. The better grades of knitting goods industry to indicate the number of needles yarns are spun from combed stock and may be in a given length of the needle bed or bar. When gassed and mercerized to give a more attractive applied to full-fashioned hosiery machines, gage appearance. indicates the number of needles in 1.5 inches of the A survey of cotton mills by the U.S. Department needle bar and rmis in multiples of 3, such as 45, of Agriculture to learn the grade and staple length and 51. When the term "gage^' is applied to most of cotton used in the 1944^5 season showed the other types of knitting machines, it is used to des- proportions of knitting yam and of all yarns made ignate the number of needles per inch. Unfortu- of cotton of specified grades and lengths of staple nately, a uniform system for designating gage has (65), The survey included more than 300 mills not yet been adopted. having an annual consumption of about 4.5 million Two fundamentally different principles of bales, and the results from one phase showed that machine knitting are weft knitting and warp manufacturers of knitting yarns use better grades knitting. Weft knitting, the oldest form, is not of raw cotton than the average used for all types usually identified by special designation. In prin- of yarn. Only 4 percent of the raw cotton used ciple, a weft-knitting machine can produce fabric in carded knitting yarns graded Low Middling and from a single end of yam fed to the different below^, and all raw cotton consumed in combed needles in the machine. Actually, for purposes knitting yarns graded above Low Middling. But of speed or decoration, weft-knitting machines 8 percent of the cotton consumed in all types of are usually built to utilize numerous ends of yarn yarn graded Low Middling or below. Raw cotton simultaneously. For example, a circular machine that graded Strict Middling or above accounted for 20 inches in diameter is made to knit 64 ends of 36 percent of the total consumption for knitting yam into 64 courses at every revolution of the yarn, but only 8 percent of the yarns spun for all machine. purposes were made from cotton which graded that Warp-knitting machines (of many types) are high. straight-bar machines on which gage designates Cotton consumed in the manufacture of knit- the number of needles to the inch. Production of ting yarns, especially combed yams, averaged warp-knit fabrics requires multiple yam ends. longer in staple than that used in other yarns. A plain single-bar fabric knit on a machine 80 None of the combed yarns was made of cotton inches wide, with 28 needles to an inch, requires shorter than 1 inch, and about two-thirds of this 2,240 ends of yam. Only one course is knit at yam was made of cotton longer than l^^ inches. each revolution of the machine. If each needle About a fifth of the carded yams were made of operated always on the same yam end, the ma- cotton shorter than 1 inch, and small proportions chine would produce 2,240 separate chains. were made of cotton longer than ly^g inches. A Fabric is formed, however, by moving all the warp study of market outlets for cotton in knit goods ends over at each course for two or three needles showed that from 1948 to 1950 about 97 percent in one direction and back in the other direction. of the cotton used by manufacturers of carded Two sets of warps (4,480 ends on this machine) knitting yarn was of staples 1 inch and longer. can be used to make a practically run-proof fabric. Seventy-one percent of the cotton used in the man- One set of warps uses one guide bar to direct the ufacture of combed knitting yarn was of staples yarn to the needles, and the resultant fabric is 1%2 inches and longer (65), called "single bar' fabric. Two guide bars are necessary to utilize two sets of warps for two-bar MACHINERY AND EQUIPMENT fabric. Considerable improvements in plant and equip- Classified according to arrangement of needles, ment have been made in recent years and further the types of knitting machines employed in the progress is anticipated. Total expenditures for U.S. knitting industry are circular machines, plant and equipment by knitting mills increased straight-bar machines, and flat machines. Circu- from $25 million in 1939 to $85 million in 1947, lar machines, with needles set in the circumfer- and amounted to S66 million in 1962. Expendi- ence of a cylinder, knit tubular fabrics which vary tures for new equipment increased from $19 mil- in width according to the diameter of the cylinder. lion in 1939 to $65 million in 1947, and amounted 101 to $36 million in 1958. Expenditures for new Charges or Costs Involved plants increased from $4 million in 1939 to $17 in 1947, and amounted to $7 million in 1958. All Gross margins of knitting mills, or the spread segments of the knitting industry participated in between the value of the products and the cost of these expenditures (table 76). materials, supplies, parts and containers, have changed considerably over the years, according to TABLE 76.—Expenditures for plant and equipment census reports. Data on costs for full-fashioned hy 7nanu facturer s of knit goods^ hy industry hosiery mills are incomplete. For seamless ho- groups, 1939,19Ii7,195^, and 1958 siery mills, gross margins varied by only 2 per- centage points in earlier available census periods Expenditures from the 53 percent of value of products prevail- Industry, plant, and ing in 1958 (table 77). The proportion of these equipment 1939 1947 1954 1958 margins accounted for by payrolls decreased from 65 percent in 1939 to 58 percent in 1958. A part of this increase may be accounted for by improve- 1,000 1,000 1,000 1,000 All industries: ^ dollars dollars dollars dollars ments in machinery and equipment used. New equipment 18, 838 64, 808 34, 350 36, 336 Gross margins of knit outerwear mills, which New plant 4, 326 16,957 5,632 7, 282 rose during the 1940's and early 1950's, averaged All other i 7,040 6,484 1, 977 3,218 56 percent of the value of products in 1958 (table Total 25, 141 84, 983 47, 022 50, 102 77). The proportion of these margins accounted for by payrolls decreased from about 50 percent 1 Expenditures for used plant and equipment in 1939 to 45 percent in 1947, and then increased 2 Other knitting mills not elsewhere classified. to 48 percent in 1958. The^ decrease from 1939 Adapted from Census of Manufactures. is accounted for mainly by increases in contract

TABLE 77.—Valves, costs, and margins of 7namifacturers of knit goods. United States, 1958

Item Knit Knit Knit Seamless outerwear underwear fabric hosiery mills mills mills mills

IfiOO dollars IfiOO dollars i,000 dollars 1,000 dollars Viîlnp of nrndnnts l 769, 868 280, 151 482, 385 584, 480

rînst nf matprinls p.tn ^ 342, 959 130, 037 313, 835 277, 150 Gross margin 426, 909 150, 114 168, 550 307, 330 73, 871 177, 104 Snliirip«^*W»*^W,^ ^ur\r\ WîICTPH »^Q 203, 998 81, 183

?líílflríps 49, 194 16, 735 18, 178 25, 342 Wages 154, 804 64, 448 55, 693 151, 762 Fuel - 2,006 1,104 2,579 2,734 Purchased electric enerev 2,579 910 2,420 2,578 Oontract and commission work 91, 090 15, 985 16, 251 11,213 Ot.hpr 3 127, 236 50, 932 73, 429 113, 701

P roportion of v alue of produc ts

Percent Percent Percent Percent Value of products i 100. 0 100. 0 100. 0 100.0

Cîocit of materials etc.^ - - - - 44. 5 46.4 65. 1 47.4 Gross margin 55.5 53.6 34.9 52.6 Salaries and wages 26. 5 29. 0 15. 3 30.3 Salaries 6. 4 6. 0 3.8 4.3 Wages 20. 1 23. 0 11. 5 26.0 Fuel .3 .4 .5 .5 Purchased electric enerffv - _ -- .4 .3 .5 . 4 Contract and commission work _ 11.8 5. 7 3. 4 1.9 Other 2 -- -- 16. 5 18.2 15.2 19. 5

1 Excludes products bought for resale without further 3 Includes depreciation, interest, insurance, rent, taxes, processing. Data are adjusted for changes in inventory. other expenses, and profits. 2 Includes supplies, parts, and containers. Adapted from Census of Manufactures. 102 and commission work. The increase from 1947 from year to year, from one segment of the in- occurred despite a substantial increase in contract dustry to another, and from one geographic divi- and commission work. sion to another (table 78). Average wage rates For knit underwear mills, gross margins also in- per hour in 1962 ranged from $1.50 in knit under- creased, averaging almost 54 percent in 1958 (table wear mills to $1.89 in knit fabric mills. In 1947, 77). This change was accompanied by substantial they ranged from 80 cents in seamless hosiery increases in other expenses and profits as well as in- mills to $1.24 in full-fashion hosiery mills. creases in commission and contract work. The In 1958, average w^age rates per hour in full- proportion of gross margins accounted for by fashioned hosiery mills ranged from $1.31 in New payrolls increased from 56 percent in 1947 to 69 England to $1.68 in Pacific States. Wage rates percent in 1954 and then decreased to 54 percent in in knit outerwear mills ranged from $1.28 in 1958. These changes varied inversely with pro- Southern to $1.66 in Middle Atlantic States. portions accounted for by overhead expenses and Considerable variations are indicated in other seg- profits. ments of the knit-goods industry and in other In contrast, gross margins of manufacturers of years (table 78). knit fabrics decreased during the 1940's and early These variations in wage rates, when related to 1950's and averaged only 35 percent in 1958 (table corresponding variations in value added by manu- 77). The proportion of these margins accounted facture per hour of labor, gave correlation coeiR- for by payrolls decreased from about 52 percent cients that ranged from 0.52 for 1958 data to 0.70 in 1939 to 44 percent in 1958. This reduction may for 1954 data. These variations also gave correla- be accounted for mainly by improvements in equip- tion coefficients ranging from 0.40 for full-fash- ment used. ioned hosiery mills to 0.73 for seamless hosiery Adequate information is not available to show mills, and averaged 0.59 for all years and all knit- the influence of the degree of specialization on goods mills combined. An increase of 1 percent gross margins of knitting mills. Census data on in value added per hour of labor from one geo- value added by manufacture, payrolls, and wages graphic division to another was associated, on the show that value added by these mills per dollar average, with increases in wage rates per hour. of payroll for establishments with 75 to 89 per- These rates decreased from 0.34 percent in 1947 to cent of primary product specialization averaged 0.21 percent in 1958 for all mills combined ; ranged more than that for establishments with higher or from 0.17 percent for full-fashioned hosiery mills lower degrees of specialization. Value added by to 0.34 percent for seamless hosiery mills for 1947, full-fashioned hosiery, knit outerwear, and knit 1954, and 1958 combined ; and averaged 0.29 per- underwear mills per dollar of wages averaged cent for all mills combined for all years. greatest for establishments with 75 to 89 percent Variations in wage rates, w^hen related to cor- primary product specialization. Value added by responding variations in value added per dollar of seamless hosiery and knit fabric mills per dollar wages, show considerable irregularities, but for all of wages averaged greatest for establishments with years and all mills taken as a group, value added less tiian 75 percent primary product specializa- per dollar of wages averaged higher in geographic tion. divisions with the higher average wage rates than Large proportions of gross margins of manu- in those w^ith the lower ones. This relationship facturers of knit goods accounted for by payroll may be accounted for in part by the use of more and increases in wage rates in recent years em- improved machinery and equipment in areas phasize the importance of labor in the manufac- where wage rates are relatively highest. Value ture of these products. Increases in average added per dollar of payroll varied irregularly hourly earnings of production workers in knit- from one geographic division to another (table 78). goods" plants from 1947 to 1958 ranged from 24 In 1958, wage rates per hour and value added percent in full-fashioned hosiery mills to 79 per- by manufacture per hour of labor, per dollar of cent in knit fabric mills. From 1947 to 1954, wages, and per dollar of payroll varied irregularly average hourly earnings of production workers with the size of the knitting company, as indicated increased relatively more than average value by the number of employees {120), Despite con- added by manufacture per hour of lahor, and siderable irregiüarities, wage rates per hour and average value added per dollar of wages and per value added per hour of labor, per dollar of wages, dollar of payroll decreased. But from 1954 to and per dollar of payroll in hosiery mills and in 1962 average hourly earnings of production knit underwear and' knit fabric mills averaged workers increased relatively less than average more for companies with 500 or more employees value added per hour of labor, and average value than for the smaller companies. For knit outer- added per dollar of wages and per dollar of pay- wear mills, the reverse was true. Similar data for roll increased. 1954, on an establishment basis, show that value Average hourly earnings of production workers added by knit-goods manufacturers per dollar of and average value added per hour of labor, per wages, per hour of labor, and wage rates per hour dollar of wages, and per dollar of payroll by also varied irregularly with size of establishment, manufacturers of knit goods varied considerably as indicated by number of employees (^^). 103 TABLE 78.—Vdlioe added hy manufacturers of knit goods^ per dollar of payroll^ per dollar of wages^ per hour of Idbor^ and average wage rates per hour^ hy geographic division^ united States, 1958 "^

Value added by manufacture

Wage rates Processor and geographic area Per dollar of— per hour Total Per hour of labor Payroll Wages

FULL-FASHIONED HOSIERY MILLS 1,000 dollars Dollars Dollars Dollars Dollars New England 2,830 1.67 2. 18 2.86 1.31 Middle Atlantic 32, 212 1.53 1.98 3.02 1.53 North Central _ 8,941 1.79 3.63 5. 94 1.64 South 126, 888 1.69 1.94 2. 99 1.54 Pacific». 2, 125 1.72 2.45 4.12 1.68 United States 172, 996 1.66 2.01 3.08 1.54

SEAMLESS HOSIERY MILLS

New England 4,210 1.41 1. 82 2.53 1.39 Middle Atlantic 24, 534 1.53 1.86 2. 60 1.40 North Central 19, 148 1. 97 2. 59 3.71 1.43 South 242, 933 1.64 1.88 2. 51 1.33 United States 290, 825 1.64 1.92 2.58 1.34

KNIT OUTERWEAR MILLS

New England 31, 843 1. 64 2. 20 3.30 1. 50 Middle Atlantic 247, 541 1.75 2. 27 3.77 1.66 North Central 19, 439 1.51 2.02 3. 12 1. 55 South 33, 164 1.64 2.03 2.60 1.28 West 7,927 .82 1.48 2.44 1. 64 United States 339, 914 1.67 2. 20 3.48 1.59

KNIT UNDERWEAR MILLS

New England 3,340 2.35 3.36 5.71 1.70 Middle Atlantic 47, 219 1.64 2.04 2.85 1.40 North Central 18,016 1. 57 2.68 4.39 1.64 South and West 67, 128 1.70 2.00 2.78 1.39 United States 135, 703 1.67 2. 11 2.99 1.42

KNIT FABRIC MILLS

New England _ 27, 687 2.13 2.81 5.08 1.81 Middle Atlantic __ 70, 744 1.92 2.61 4.89 1. 87 North Centrai 7,976 2.07 3. 31 6.07 1.83 South and West _ 40, 987 2.04 2.51 3. 71 1.48 United States 147, 394 2.00 2. 65 4.56 1 79

1 Value added is adjusted by taking into account value added by merchandising operations and net changes during the year in inventories of finished goods and work-in-process. Adapted from Census of Manufactures.

Means and Importance of Improvement hosiery mills, 90 percent for seamless hosiery mills, 70 percent for knit outerwear mills, 63 percent for The large part of manufacturers' gross margins knit underwear mills, and 82 percent for knit accounted for by wages emphasizes the importance fabric mills. Labor may be more efficiently uti- of the most effective utilization of labor to increase lized and costs of labor reduced by increased use efficiency and to reduce costs in the knit-goods of improved machinery with more automatic industry. From 1947 to 1962, increases in aver- controls. age hourly wage rates in the knit-goods industry Reports indicate that considerable progress has amounted to about 22 percent for full-fashioned been made in the development of high-speed, auto- 104 matic knitting machines. Introduction of high- ing knitting and finishing operations under one speed machines has focused attention upon the roof, increased production by 40 percent, reduced need for research designed to develop yarns of im- overhead costs by 10 percent, and improved the proved knitting qualities required for most efficient quality of the products. A report in 1961 indi- use of this equipment. Research designed to indi- cated that a knitting mill integrated by erecting cate fiber properties relatively best adapted for use its own dye house and spinning plant so that wool in the various types of yam might well be carried tops were received at one end of the plant and on in connection with that relating to manufactur- beautiful, high-quality, double knit dresses were ing techniques. The combined results would then shipped out at the other end. Results were that indicate the most desirable combinations of fiber dresses which formerly sold at $19.75 to $32.75 properties and construction of yarn for use by could be sold after integration at $14.75 to improved machines in the manufacture of speci- $22.75 (^). j&ed products. Improved yarns, relatively trouble In some instances, groups of small manufac- free, developed to minimize stoppages attributable turers of knit goods might find it advantageous to such factors as excessive accumulations of lint to form federations to consume the entire output on machines and tangled and broken yarns are of a spinning mill. Economies in the purchase necessary for the most effective utilization of labor of yams would be favorable to such federations, and high-speed machines. but perhaps more important would be advantages Reports in 1958 indicated that modernization of of greater efficiency in sales organization. In- knittmg mills could reduce labor costs by more creased sales might be expected to result from in- than 60 percent in full-fashioned knitting, 50 per- creased promotional advertising by such a fed- cent in warp knitting, and 75 percent in sweater eration. Combinations might also be made in knitting (63). Other advantages of using modern such a way that the centralized agency could offer equipment are wider style ranges that put mills in retailers a greater variety of products. stronger competitive positions. Case reports in- Developments in the 1950's and early 1960's in- dicated that a full-fashioned hosiery mill, for ex- dicate that substantial improvements in plant ef- ample, added two 30-section, 60-gage automatic ficiency and reductions in costs for at least some machines in 1956 and increased production per manufacturers of knit goods could be made knitter by more than 100 percent (63), A knit through the use of improved machinery and equip- outerwear manufacturer increased the scope of his ment suitably organized and operated. The con- patterned knit fabrics with 32-feed, pattern-wheel ditions under which and the extent to which mod- machines equipped with 4-color stripers at each ernization and other means can be most feasibly feed, with the result that production per machine utilized in increasing the efficiency and reducing was increased 75 percent as compared with produc- costs of individual plants may need to be based on tion on the old 16-feed machines (63). A report information of the types indicated for manufac- in 1961 indicated that 35 autoboard machines were turers of yarns and fabrics (p. 48). For mod- leased to 9 hosiery mills in recent years, that each ernization to be economically feasible, prospective machine was estimated to increase production per benefits, as indicated by this information, would employee by 35 to 50 percent, and that they would need to be great enough to equal or exceed cost of the new equipment, losses from scrapping the old pay for themselves in less than 2 years (^). and obsolete equipment, and expenses of making As indicated above (p. 95), manufacturers of the changes. knit goods usually sell large proportions of their The relative importance of increasing efficiency products as finished apparel, and substantial pro- and reducing costs of manufacturing faiits goods portions are sold directly to retailers. Develop- is indicated by the fact that in 1958 gross mar- ments in recent years indicate that further inte- gins of these manufacturers averaged more than gration may result in more economical operations. twice as much as the farm value of the cotton and A report in 1962 indicated that a mill producing wool used and many times more than the total fine ladies full-fashioned sweaters, by consolidat- cost of merchandising^ the raw fibers.

MANUFACTURING FABRICATED PRODUCTS Textile mill products, the output of industries than 40 purposes, and that they may be classed as considered in earlier sections of this report, may consumer, industrial, or cutter goods, depending on be grouped, on the basis of the uses made of them, who uses them (£7). into three main classes: consumers' goods, indus- Mill products classed as consumers' goods come trial goods, and cutters' goods. Distinctions from manufacturing establishments ready for sale among them are based more upon differences in to ultimate consumers. They include piece goods, users than upon the characteristics of the goods sheets and pillowcases, bedspreads and blankets, themselves. The same kind of goods may be in- tablecloths and napkins, rugs, towels, bath mats, cluded in all three groups. It has been estimated washcloths, and diapers. In addition, many knit that drills, for example, are used for no fewer goods, such as hosiery and knit outerwear and 105 underwear, leave the mill as completed consumers' Contractors report their employment and receipts goods. for contract work instead of the value of the Textile products classed as industrial goods come finished products, and. they report the cost of their from manufacturing establishments ready for use own operating supplies instead of cost of raw by business houses outside the textile industry. materials which they process. Consequently, the Most of these products are woven fabrics. They ratio of wages and salaries to value added by include many types of ducks, osnaburgs, so-called manufacturers averaged more for jobbers tlian for multiple fabrics, and leno fabrics; a considerable contractors. But many of the establishments en- part of the output of sheeting, twills, drills, and gage in more than one type of operation. sateen; and small proportions of fine goods such JMost apparel and related products apparently as voiles, organdies, lawns, broadcloths, and print are distributed directly by manufacturers or in- cloths. Industrial fabrics are incorporated di- directly through wholesalers to retailers. Census rectly into finished products such as sails, tarpau- reports of manufacturers for 1958 do not show the lins, tents, awnings, bags, and upholsteries. They distribution of manufacturers' sales of these are consumed in products of various kinds, such products, but census reports on class of customers as filters and screens, and buffing-wheel devices for of wholesalers in 1958 show that most of the ap- inking, moistening, pressing, and steaming. In parel and related products and general-line dry addition, they are combined with other materials goods were distributed to retailers. to make new products, such as hose, tires, rubber footwear, imitation leather, and abrasives (^7). SIZE AND ORGANIZATION Cutters' goods, which are the principal materials Changes in size and organization of manufac- used in the manufacture of apparel and related turers of fabricated products may be indicated by products, are mainly finished fabrics. Industries the number of employees, ownership and operation making apparel and related products include estab- of plants, and mergers and acquisitions. lishments that produce clothing and related fabri- cated textile products by cutting and sewing Number of Employees purchased woven or knit textile fabrics and related materials such as leather, rubberized fabrics, Fabricators of apparel and related products plastics, and furs. Excluded from these industries range from small family shops to large companies are knitting mills primarily engaged in manufac- operating several establishments, as is common in turing apparel from yarns knitted in the same the manufacture of men's shirts. Census reports establishment, custom tailors and dressmakers show that the proportion of all establishments in who manufacture and sell apparel in the same re- the apparel and related products industry w^ith tail establishments, and establishments which are fewer than 10 employees decreased from about 41 primarily wholesalers or dealers. percent in 1947 to 39 percent in 1958 (table 79). The proportion with fewer than 10 employees averaged more for manufacturers of men's and Nature and Practices boys' wear than for manufacturers of women's, Types of establishments which operate in ap- misses*, and children's vrear, but less for manufac- parel and related product industries include regu- turers of men's and boys' wear than for manufac- lar factories or manufacturers, apparel jobbers, turers of other fabricated textile products. The and contract factories or contractors. Manufac- proportion with 100 or more employees increased turers purchase fabrics, employ production from about 7 percent in 1947 to 9 percent in 1958, workers in their own plant to cut and sew the Of all establishments, the proportion with 100 or material into apparel, and sell the finished prod- more employees was larger for manufacturers of ucts, thus performing all the usual manufacturing men's and boys' wear than for manufacturers of functions within their own establ Ishment. Jobbers women's, misses', and children's wear and of other fabricated textile products. mainly perform entrepreneural functions of a manufacturing company, such as buying raw Proportions of establishments with specified materials, designing and preparing samples, ar- numbers of employees varied widely from one in- dustry or product to another. In'l958, the pro- ranging for the manufacture of garments from materials, and selling the finished products. The portion of establishments with fewer than 20 actual processing, such as cutting and sewing, employees ranged from about 20 percent for manu- facturers of men's and boys' underwear to 85 per- usually is performed on contract by apparel cent for canvas products, and averaged about 47 contractors, although many jobbers perform cut- percent for all industries and products combined ting operations in their own establishments. (96). The proportion with 100 or more employees Census data for manufacturers show figures on ranged from less than 2 percent for establishments employment, cost of raw materials, and value of manufacturing canvas products to 42 percent for products made. Apparel jobbers report data com- those manufacturing men's and boys' underwear, parable to that of manufacturers on cost of raw and averaged about 11 percent for all establish- materials and on value of products, but most labor ments combined. The average number of em- costs are included in the cost of contract work. ployees per establishment for all industries 106 TABLE 7^,—Number of establishments manufac- combined increased from 42 in 1917 to 49 m 1958 (96). In 1958, the average number of employees turing apparel and related products and pro- per plant ranged from 12 for manufacturers of portion of total, by number of employees and canvas products to 135 for manufacturers of men's by type of products, United States, 19Ii7, 195^, and boys'underwear. . and 1958 A large proportion of establishments primarily engaged in the manufacture of apparel and related Establishments Proportion products are in the Middle Atlantic States. Cen- Employees of total sus reports for 1958 show that about 51 percent of per plant the manufacturers of men's and boys' wear; 72 1947 1954 1958 1947 1954 1858 percent of manufacturers of women's, misses', and children's wear ; 40 percent of the manufacturers of other apparel and related products; and 63 per- Apparel and related products cent of all manufacturers in this industry were m the Middle Atlantic States (table 80). Smaller Per- Per- Per- Number Number Number cent cent cent proportions are located in New England, North 500 or more_ 140 166 175 0.5 0.5 .6 Central, Southern, and other States. Changes 250 to 499-_ 422 502 543 1.4 1.6 1.9 from 1954 to 1958 varied considerably from one 100 to 249 __ 1,700 1, 920 1, 941 5. 5 6. 1 6.6 50 to 99 2, 979 3,408 3, 307 9. 6 10.9 11.3 industry to another. But for all apparel and 20 to 49 219 7, 283 7, 042 23.3 23.2 24. 0 related industries combined, the proportion of 10 to 19 5,826 5; 249 4,938 18. 8 16. 7 16.9 establishments in the Middle Atlantic and North 5 to 9 5, 327 4, 535 4,221 17.2 14. 5 14.4 Central States decreased and those m Southern, 8, 309 7, 130 23. 7 26.5 24.3 1 to 4 347 New England, and other States increased. AIL 30, 960 31,372 29, 297 100. 0 100.0 100.0 The size of establisliments, as indicated by the number of employees, varies widely from one geo- Men's and boy's wear graphic division to another. In 1958, the average number of employees per establishment ranged from about 26 in the Pacific to 178 in East South 500 or more. _. 94 111 109 L7 2.3 2.4 250 to 499 247 274 293 4.4 5.7 6.5 Central States. Averages for other regions were 100 to 249 755 747 732 13. 5 15. 4 16.3 49 for New England, 30 for Middle Atlantic, 48 50 to 99 854 770 699 15.2 15. 9 15.6 807 20. 0 18. 0 18.0 for East North Central, 58 for West North Cen- 20 to 49 1,124 875 tral, 91 for South Atlantic, 68 for West South 10 to 19 738 544 552 13.2 11.2 12.3 5 to 9 720 525 495 12. 8 10. 8 11. 1 Central, and 27 for Mountain States. 1 to 4 1,080 1, 003 798 19.2 20. 7 17. 8 Ownership and Operation AIL 5, 612 4,849 4,485 100. 0 100. 0 100. 0 Data on the type of ownership or control of Women's, misses', and children's wear establishments making apparel and related prod- ucts show that the proportion of the total number 500 or more_ 32 40 46 . 2 .3 . 4 operated by corporations increased from 45 per- 250 to 499 _ 116 167 183 '. 9 1.2 1.4 cent in 1947 to 57 percent in 1958 (table 81). The 100 to 249-- _ 638 857 875 4.6 6. 1 6.6 proportion oi)erated by partnerships decreased 50 to 99 1, 539 1,991 1, 985 11. 1 14. 1 14.9 20 to 49 4, 398 4,669 4, 521 31.8 33. 0 33.9 from 29 percent in 1947 to 18 percent in 1958. That lOto 19 2, 925 2, 724 2,493 21.2 19. 3 18.7 operated by individuals decreased from 31 percent 5to 9 2, 034 1,712 1,538 14.7 12. 1 11.5 13.9 12.6 in 1939 to 25 percent in 1958. The average num- 1 to 4 2, 141 1,964 1, 683 15.5 ber of employees per establishment usually was AIL... 13, 823 14, 124 13, 324 100.0 100.0 100. 0 more for establishments operated by corporations than for those operated by individuals or part- Other fabricated textile products nerships. The proportion of establishments operated from central administrative offices as multiunits 500 or more.. 14 15 20 . 1 . 1 .2 250to499_.. 59 61 67 . 5 . 5 .6 decreased from 7 percent in 1947 to 6 percent in 100 to 249_- 307 316 334 2.7 2.6 2.9 1954 and then increased to 8 percent in 1958 (table 50 to 99 586 647 623 5.1 5.2 5.4 81). Multiunits had, on the average, about five 20 to 49 1,697 1,739 1,714 14.7 14. 0 14.9 times as maiiy employees per establishment in lOto 19 2, 163 1,981 1,893 18.8 16. 0 16. 5 5to 9 2, 573 2,298 2, 188 22.3 18.5 19.0 1947 and six times as many in 1954 and 1958 as 1 to 4 4, 126 5,342 4,649 35.8 43. 1 40. 5 single units. The proportion of total number of 11,525 12, 399 11, 488 100.0 100. 0 100. 0 employees in the industry accounted for by multi- AIL units increased from 23 percent in 1947 to 33 per- Adapted from Census of Manufactures. cent in 1958.

107 TABLE ^^.-ProfOTÜon of apparel and reUted products manufacturing establishments, hy geogravhic division and hy industry, united States, 1958 ^ y y y y

Industry Estab- New Middle North South All others lishment England Atlantic Central

Men's and boys' wear: Number Percent Percent Percent Percent Suits and coats 1,365 8.9 Percent Dress shirts and nightwear 61. 8 11.9 11.6 5.^ 880 4. 2 46. 8 6.3 30.9 Underwear 91 11.8 2. 2 43. 9 13.2 39. 6 1. 1 Separate trousers. 748 5.3 Work clothing 49. 7 13.8 23.7 7.5 1,039 6.8 34.2 18. 1 31. 5 Neckwear 362 9.4 6.4 67.7 6.3 10.8 AllAll 4,485 6.6 50.6 12.3 22. 1 8.4 Women's and misses' wear: Blouses 1,260 5.6 Dresses 71. 9 3.7 6.0 12. 8 4,653 6. 2 72. 9 5.7 6.0 9.2 Suits, coats, and skirts _ 2,683 7.6 Other outerwear 73.0 5.7 3.0 10. 7 1, 155 8.1 54.3 10.1 12.0 15.5 A n All 9,751 6.8 70.6 5. 9 5.9 10.8 Women's and children's wear: Underwear 1, 231 5. 6 73.8 4. 9 11.6 4. 1 Corsets and allied garments 414 8.7 64. 3 8.9 9. 2 8.9 Hats and caps__> _ _ 446 9.6 Children's dresses___ 56. 1 20.4 9.0 4. 9 802 4. 2 73.5 3.6 11.5 7.2 Children's coats. 370 3.0 Other 87. 3 3.2 2. 4 4. 1 1,559 4.9 73.3 7. 2 8.7 5.9 All 4,822 5.6 72. 1 7. 1 9.5 5.7 Miscellaneous products: Fabric gloves 228 3. 1 45. 2 Robes and dressing gowns 32.0 14.9 4.8 278 7.6 75. 5 3.2 9.4 4. 3 Waterproof garments 277 15.5 65.0 Curtains and draperies. _ 7.2 4.3 8.0 783 9. 2 35.6 20.1 11.0 24. 1 Textile bags 237 6.3 Canvas products 31.7 25.7 26.6 9.7 851 8.2 26. 1 31. 1 19.9 14. 7 All 2,654 8.6 40.3 22.0 14.7 14.4 Grand total 21, 712 6.7 63. 1 9.5 11. 1 9.6 Adapted from Census of Manufactures

Mergers and Acquisitions Census data on manufacturers' sales branches Mergers and acquisitions in the textile industry, and offices in 1954 are not strictly comparable with as indicated earlier in this report (p. 38), may data for 1948. These data indicate that the pro- have resulted in changes in organization and man- portion of total sales of apparel and related prod- agement of operating units in industries making ucts accounted for by manufacturers' sales apparel and related products. The degree of ver- branches and offices did not change much from tical integration of manufacturers of apparel and 1948 to 1954. The proportion of these sales that related products, on an establishment basis, may were made to retailers decreased from about 86 be mdicated by census data showing that in 1954 percent in 1948 to 72 percent in 1954. The pro- (the most recent year for which such data are portion of total sales of these products that were available) sales through sales branches and offices made through agents and brokers increased from owned by manufacturers accounted for about one- about 45 percent in 1948 to 47 percent in 1954. fifth of the value of the apparel and related prod- The proportion of sales of these agents and brokers ucts manufactured. More than 70 percent of that were made to retailers decreased from about these sales were to retailers and more than one-fifth 84 percent in 1948 to 79 percent in 1954. were to wholesale organizations. Merchandise Changes in degree of horizontal integration of agents and brokers primarily engaged in market- manufacturers of apparel and related products, mg merchandise at wholesale for others accounted on an establishment basis, may be indicated by for sales of more than two-fifths of the total. census data on number of employees and value More than three-fourths of their sales were made added by manufacture by type of organization of to retailers. the establishments. These data show that the pro- portion of total number of employees in this in- 108 TABLE 81.—Nurnher of establishments and aver- engaged in the manufacture of apparel and related age number of employees per plant for manu- products fall within this range in number of com- facturers of apparel and related products^ by panies, and show wide variations in the proportion type of ownership and operation^ united States^ of total shipments accounted for by specified num- m7, 196J^, and 1958 bers of the largest companies. The proportion of total shipments accounted for by 20 of the largest companies increased for 12 Average EstabHshments employees industries with total sales in 1958 of $5,769 million, Ownership and per plant decreased for 6 industries with total sales of $1,913 operation million, and remained unchanged for 3 industries 1947 1954 1958 1947 1954 1958 with total sales of $570 million. Primary product specialization in 1958, as indicated by the pro- portion of the value of shipments accounted for Num- Num- Num- Ownership: Number Number Number ber ber ber by products regarded as primary to the industry, Corporate 14, 031 16, 559 16, 727 54 55 57 ranged from 78 percent for work shirts to 97 per- Partnership 8,941 6, 569 5, 135 23 26 26 cent for corsets and allied garments. From 1947 Individual 7,913 8,158 7,421 14 14 13 Other -- _ 75 86 14 31 36 68 to 1954, primary product specialization increased in 10 industries, decreased in 7, and remained un- All 30, 960 31, 372 29, 297 35 38 40 changed in 4. For two industries, data for 1947 were not reported. From 1954 to 1958, primary- Operation: Single unit: product specialization increased in eight indus- Corporate 12, 362 14, 772 14, 498 41 39 39 tries, decreased in four, and remained unchanged Other 16, 527 14, 662 12, 370 18 19 18 in two. In nine of them data for 1958 were not reported (table 82). All 2q 28, 889 29, 434 26, 869 28 29 Employees per establishment averaged substan- Multiunit: tially less for single-unit than for multiunit com- Corporate 1, 669 1,787 2,228 152 179 170 panies. For multiunit companies, employees per Other 402 151 200 52 84 67 establishment averaged less for single-industry All 2,071 1,938 2,428 133 172 161 than for multi-industry companies. In 1958 the proportion of the number of establishments ac- All 30, 960 31, 372 29, 297 35 38 40 counted for by single-unit companies ranged from 90 percent for manufacturers of men's and boys' Adapted from Census of Manufactures. clothing to 97 percent for manufacturers of wom- en's and children's clothing. Similarly, the pro- dustry accounted for by establishments operated portion of number of employees accounted for by from central administrative offices as multiunits single-unit companies ranged from 53 percent for increased from 25 percent in 1947 to 33 percent in manufacturers of men's and boys' clothing to 79 1958. The proportion of the value added by manu- percent for manufacturers of women's and chil- facture by these establishments increased from 22 dren's clothing {101). percent in 1947 to about 34 percent in 1958. About 99 percent of the establishments classified The data on the proportion of the value of total in the apparel and related products manufacturing shipments accounted for by specified numbers of category in 1958 were operated by companies clas- the largest fabrication companies (in these indus- sified in that category. Of the establishments tries) show a wide range in changes in the number operated by companies in that category, the pro- of companies per industry and in the proportion portion classed in other categories ranged from of total sales accounted for by 4, 8, 20, and 50 of about 2 percent for companies in the fabricated the largest companies (table 82). In 1958, estab- products (not elsewhere classified) category to 16 lishments operated by 20 of the largest companies percent for companies in the men's and boys' cloth- engaged in manufacturing unit-price dresses, the ing category. It averaged about 5 percent for the industry with the largest number of companies, or combined apparel and related products category. less than 0.6 percent of the total, accounted for 12 Multi-industry companies classified in the ap- percent of the value of shipments of the industry. parel and related products manufacturing indus- Establishments operated by 50 of the largest com- try showed a wide range of vertical integration. panies, or about 1.4 percent of the total, accounted They had about 78 percent of their employees in for 20 percent of the value of shipments. At the establishments in the same category as the com- other extreme, establishments operated by 20 of the pany, 4 percent in other categories of the apparel largest companies engaged in the manufacture of and related products manufacturing industry, 4 work shirts, the industry with the smallest number percent in textile mill products manufacturing of companies, or about 46 percent of the total, ac- categories, 4 percent in retailing, 4 percent in counted for 88 percent of the value of shipments wholesaling, and small proportions in service and of the industry. Proportions for other industries other categories. 109 TABLE 82.—Share of shipments of apparel and other fahricated textile products accounted for hy larg- est companies^ United States^ 1958 and 19%7

Concentration ratio: Proportion of total shipments accounted for Primary Com- Value of by3— product Industry and year panies ^ shipments ^ specializa- tion ^ 4 largest 8 largest 20 largest companies companies companies

Men's and boys' suits and coats: Number 1,000 dollars Percent Percent Percent Percent 1958 1,275 1, 260, 920 11 19 32 91 1947. ______1,761 1, 412, 782 9 15 26 92 Men's dress shirts and nightwear:^ 1958_ 737 942, 073 16 26 41 88 1947_ _ 922 731, 277 19 29 43 94 Men's and boys' underwear: ^ 1958 80 119, 203 41 55 82 1947__ 94 49, 753 47 59 80 95 Separate trousers : ^ 1958 720 442, 058 9 17 30 89 1947______956 334, 039 12 18 29 86 Work shirts : ^ 1958______43 49, 157 52 68 88 78 1947 _ 60 95, 378 52 68 88 77 Blouses: ^ 1958 _ 1,222 414, 649 10 14 24 e) 1947______1,356 276, 575 7 11 20 93 Dresses, price per unit: ^ 1958 3,606 1, 626, 612 4 7 12 {') 1947 4, 165 1, 359, 030 3 5 9 95 Dresses, price per dozen: ^ 1958 _ 1,137 505, 322 12 20 35 96 1947 828 348, 785 13 21 35 89 Women's and children's underwear:5 1958 . _ 1, 170 804, 870 8 13 24 96 1947 1,467 575, 679 6 11 19 95 Corsets and allied garments: ^ 1958___ _.. 363 462, 235 29 43 59 97 1947 _ 493 277, 791 16 30 47 94 Children's dresses: ^ 1958 __ 747 336, 583 13 20 34 96 1947 627 174, 827 15 22 37 93 Robes and dressing gowns : ^ 1958 ._ 278 132, 548 14 23 43 94 1947 __ ___ . 370 103, 024 10 19 38 89 Curtains and draperies: 1958 __ 757 206, 459 26 34 45 {') 1947 __ _- 379 109, 640 18 29 49 97 Textile bags: 1958______217 186, 340 40 51 66 86 1947 __ __ 198 355, 981 53 63 77 93

1 See footnote 1, table 14, p. 41. 5 See footnote 5, table 75, p. 100. 2 See footnote 2, table 14, p. 41. 6 Data not available. 3 See footnote 3, table 14, p. 41. Adapted from {120). * See footnote 4, table 14, p. 41.

MANUFACTURING METHODS (72, 87, 102) but in many establishments the pressing and box- ing operations are performed in one combined Methods employed in fabricating textile prod- department. ucts vary with the nature of these products. Methods employed in the manufacture of men's CutHng Department dress (business) shirts are outlined here briefly After the cloth is inspected, sorted, and matched for illustrative purposes. The processes involved for color, it is spread on cutting tables which are include cutting the shirt parts from purchased about 4 feet wide and range from 100 to 200 feet yard goods, sewing or joining the parts into the long. The cloth is spread in layers by hand or by complete shirt, folding and pressing, and boxing some type of machine spreader. The number of the shirts for shipping {102), Fully integrated layers depends upon the thickness of the cloth and shirt plants usually are organized into four depart- whether hand or machine cutting is used. The ments on the basis of these processes or fmictions, maximum number of layers for hand cutting is 110 about 48, but for machine cutting the usual number tion organization are in use in sewing depart- is from 250 to 400 and in some establishments the ments. These are the bundle, the progressive number may be as great as 500 layers. Different bundle, the straight-line, and the combination sys- types and colors of cloth may be included in the tems. The particular system in use determines lay, with each type separated by tissue paper or almost entirely the layout of the physical facilities markers or stamped for identification purposes. of the sewing department and the flow of work. When the cloth is spread on the cutting tables, The bundle system is the oldest production patterns are marked or stenciled on the top ply. method, and until recently it was the most popular. Traced-paper top layers or brass-bound fiber pat- Bundles, composed of groups of parts of a number terns are used as a guide to cutters. The cloth is of shirts bundled together and identified, serve as cut either with a short hand knife or with an elec- work units. Each operator performs a designated trically driven cutting machine. Hand cutting is number of operations in the assembly of the shirts. confined mainly to high-grade shirts and to small- The number of operations into which the work of lot w^ork. Electric knife cutters are used for large- the sewing department is divided ranges from 20 ply lays. Many plants employ a combination of to 35. Sewing machines are not necessarily ar- hand and macliine cutting, utilizing hand knives ranged in the order of flow of work, but, in most of when only a few shirts of a particular type are re- the establishments that use this system, the ma- quired. Small parts, such as collars, yokes, and chines are set up side by side on long benches cuffs, are cut with hand knives, with die-stamping which run the entire length or width of the sewing machines which cut up to 60-ply lays, or with small room. This arrangement—the only practicable rapid-action "clicker" presses which handle up to one for machines powered from a central shaft— 25-ply lays. is not necessarily followed with individually The lot number, size, type, and other identifying powered machines. marks are customarily stamped on the shirt parts Methods of supplying bundles to operators vary after they are cut with either power-driven or widely. In some plants, the girls go to a central hand-operated machines. In plants that use the location to pick up bundles; in others, they pick bundle system for all or part of the sewing opera- them up from the operators who precede them in tions, tlie shirt parts are sorted, classified, and tied the sequence of assembly operations. Some estab- into bundles containing parts for as many as 50 lishments employ boys to move bundles to oper- shirts. Each bundle is marked as to size, lot, and ators, and in some instances the supervisors, or style, and then taken by handcart or sent through floor ladies, supply the bundles to the proper oper- chutes to the sewing department. In some esta}3- ators. In establishments that use the bundle lishments, regular bundles are not made up for system, bundles must make from 20 to 40 separate the parts of the shirt which are to be sewed on a moves, and they rarely travel in accordance with line-assembly basis, but the shirt parts are classi- any predetermined flow of work. In many estab- fied according to lot, size, and type. lishments, operators are required to move about the plant to procure their own bundles in order to Sewing Department provide a break in the steady routine of the sewing operations. Shirt parts from the cutting room are joined The bundle system requires more handling of together in the sewing department to form the materials than any other, both in the moving of finished shirts. Large and small parts are sewed bundles and on the part of operators in taking together, linings (when used) are sewed together, shirt sections out of the bundles, in positioning linings are sewed in, buttonholes are made, and them for work, in removing work tickets, and in buttons attached. These operations, which in- replacing parts in the bundle. The system is flex- volve an extended series of separate steps, are ible, so changes in production organization and in usually organized into a number of major shirt- type of work performed can be readily made. assembly sections, such as those for collars, cuffs, Temporary shortages of materials or employees yokes, sleeves, and backs and fronts. These sec- affect the average efficiency very little. Individ- tions are joined in a sequence of final assembly ual operators are not limited in their output by the operations. slowness of others in the shop and, under an incen- The mimber of individual sewing operations tive pay system, they tend to work rapidly. into which the manufacture of shirts is divided The progressive bundle system is, in effect, varies considerably from one plant to another, and an adaptation of the bundle system to straight-line depends upon considerations which include size of production principles. The unit of Avork is the plant, type of shirt, physical facilities, and pro- bundle, which moves from one operator to another duction system in use. Usually the number of in accordance with the sequence of work. Each operations is somewhat greater in establishments operator performs only one or two assigned tasks which use the straight-line system for all or a on the units included in the bundle, which is then major part of their production sequence than in routed to the next operator in the work sequence. those which use some form of the bundle system. Machines are grouped or alined to permit the flow Four principal systems or methods of produc- of the bundles from each operator to the next sue- Ill cessive one. This arrangement necessitates the proportion of the total operations allotted to the use of individually powered machines. line and to the bundle systems. This system shares to a considerable extent in Many believe that the combination system, when the saving of man-hours inherent in the line sys- properly implemented, provides many of the bene- tem, since the bundles flow smoothly from one fits inherent in the line system and avoids most of operation to another, traveling the smallest pos- its limitations. The combination system is more sible distance. It is often possible to utilize labor- flexible than the line organization and is more saving troughs or chutes down which the bundles readily adapted to changes in style or type of travel from one operator to another. But both shirt produced. The introduction of inexperi- the progressive bundle system and the bundle enced employees does not present as severe a system require that operators withdraw parts from problem as the line system, since these employees the large bundle, position them at the machines, can be assigned to and can gain experience in the and then replace them in the bundle. It shares area of production that uses the bundle systems. with ^ the line system the disadvantages of As only a small proportion of the total operations rigidity and the reliance of each operator upon and employees are under straight-line methods, completion of work by the preceding operator substitute employee assignments may readily be in the sequence. Balancing the operations to made. provide a steady, smooth flow of work from one Processing and Boxing operator to another is important. The straight-line system, which was devel- When shirts have been completed, assembled, oped in 1932, substitutes a single garment for and inspected in the sewing room, they are moved the bundle as the basic unit of work. Under this by truck, chute, or conveyor to the "laundry," system, the sewing machines, individually driven, where they are pressed, folded, given a final in- are arranged in groups of from one to four in spection, and boxed. Methods of operation and accordance with a carefully predetermined se- machinery used vary widely. In some of the quence of operations, and the units of work move smaller establishments, all pressing and folding along troughs or chutes from one work station to operations are performed by hand by one operator. the next. Assembly of the shirts is usually sub- In the larger plants, pressing and boxing are divided into a greater number of operations under divided into several operations, with a number of the straight-line than under the bundle or pro- workers performing each task. Machines are gressive bundle systems. The work flows in the widely used to press collars and cuffs and, to a single units to a designated station beside each more limited extent, the body of the shirt as well. operator's machine table and the operator picks In some establishments, the shirts move through up the unit, performs her operations, then shoves the sequence of pressing operations on conveyors. it along a chute or on to the next operator's work In the simplest and most widely used form of space. team specialization, one worker machine-presses Reductions in the movement of work within collar and cuffs, another presses the shirt body by the plant, and greater division of labor are the hand, a third buttons and folds the shirt, and a major factors that lead to savings in man-hour fourth gives it the final inspection. In most estab- requirements under the line system. The rigidity lishments, all of these operations, except machine of the straight-line system, which makes it dif- pressing of collars and cuffs, are performed on a ficult to adjust or to balance the time require- bench, with the work passing from one worker to ments for all operators in squence, has prevented another along the bench. After the final stages this system from developing the savings in man- of folding and inspection, the shirts are moved hour requirements which were expected of it. to the boxing section, either by hand, by mobile Productivity in the line system depends chiefly carts or trucks, or by conveyors. They are then upon the smooth flow of materials and the regular sorted, classified, and boxed. From one to six attendance of all operators. The balance of the shirts are packed in each box. line may be upset and many of the operators may have periods of idleness enforced by a temporary MACHINERY AND EQUIPMENT shortage of materials or by the absence of an Spreading, cutting, and sewing machines and operator. Each operator in the line depends upon supplementary facilities make up the basic equip- the individual eíBciency of all the others. The ment used in the manufacture of men's shirts and slowest worker serves as a bottleneck and limits other apparel. In the 1950's, spreading machines the possible output of the entire line, regardless were more widely employed than other machines, of the potential efficiency of the other workers. and the trend toward increased use of electric The combination system, as generally applied, knifes and the replacement of some types of hand involves the manufacture of parts such as cuffs, cutters with dies or clickers for small pieces has collars, yokes, and bodies by either the bundle or continued. Overhead rails are more generally progressive bundle method and the final assembly employed over cutting tables to increase the flexi- of these parts into the shirt by the straight-line bility of the cutting machines and to permit the method. Considerable variations exist in the use of more cutting machines at the same time. 112 In the sewing department, basic equipment con- to improvement of plant layout and to flow of sists of sewing machines of various types, mounted work in the pressing and boxing operations. either on individual tables or on long benches Some indication of the extent of improvement placed in parallel rows the length of the sewing in machinery and equipment used in the manu- room. These are supplemented by special-purpose facture of apparel and related products may be equipment, which includes collar and cuff trim- obtained from census data showing that total ex- mers, collar turners, inspection tables, and mark- penditures for plant and equipment by these ing devices. Specialization of machines for manufacturers increased from about $14 million production in the sewing department has reached in 1939 to about $98 million in 1958 (table 83) high levels. Many machines are designed espe- and then decreased to $95 million in 1962. Most cially for one type of operation. Typical examples of the increases in expenditures were for new are devices for sewing on buttons, making button- equipment, but substantial increases were made in holes, attaching labels, and for making center expenditures for new plants. Expenditures by pleats. In addition, many special attachments employed for particular operations, are used on manufacturers of apparel and related products in standard production machines. 1958 for new plant and equipment totaled more Operators, not machines, largely determine the than $89 million, of which $64 million were for volume of output in the sewing department. The new machinery and equipment and $25 million necessity for exact positioning of work in the sew- were for new structures and additions to plants ing machine and frequent stopping during the (table 83). operations to make adjustments in the position of the cloth means that the machines are run less TABLE 83.—Expenditures for plant and equipment than a third of the total working time. Con- hy manufacturers of apparel and related prod- sequently, improvements in the speed of machines ucts^ hy industry^ United States^ 191^7 and 1958 may inflluence output per man-hour much less than changes in methods of handling and position- ing the cloth and improvement in the moving of Expenditures for- work from one operator to another. Industry No revolutionary changes in machinery and New New All Total equip- plant other equipment in the sewing department occurred in ment the 1950's, but a number of mechanical improve- ments have been widely adopted in the industry. 1947 Use of the self-oiling, high-speed sewing machines capable of running up to 5,000 revolutions per 1,000 1,000 1,000 1,000 minute has increased, and the use of double-needle Men's and boys' suits and dollars dollars dollars dollars machines has been extended. Automatic or man- coats 12, 066 7,898 3,063 1, 105 Men's and boys' furnishings. 19, 275 12, 913 4,953 1,409 ually controlled thread-cutting and clipping ma- Women's and misses' outer- chines have been used in many cases as replace- wear 20, 064 15, 466 3, 141 1,457 ments for cruder methods of cutting thread. Women's undergarments— 10, 893 7,853 2, 581 459 Children's outerwear 3,678 2,567 866 245 Special guides and attachments have been Other apparel and acces- widely introduced throughout the industry to sim- sories 6, 555 4, 366 1,453 736 plify and speed up the sewing operations. Turn- Other fabricated textiles 19, 054 10, 768 6,057 2,229 ing and folding machines have been improved, use Total 91, 585 61,831 22, 114 7, 640 of automatic ruffling machines has increased, and the practice of using buttonhole or button-sewing 1958 machines in tandem has become more general in recent years. Other improvements which have Men's and boys' suits and been expanded include the use of glass tabletops coats 4,906 3,609 1,297 (0 with fluorescent lighting underneath to facilitate Men's and boys' furnishings- 18, 032 12, 203 4,757 1,072 inspection, the more frequent use of chutes and Women's and misses' outer- wear 24, 432 15, 513 6,744 2, 175 bins to improve work and reduce handling, im- Women's undergarments._> 8,821 5,910 2,233 67 provements in interior lighting to eliminate shad- Children's outerwear 5,014 4, 174 840 0) 8 ows, and provision of more electrical outlets to Other apparel and acces- sories 10, 324 7,226 1, 508 1,590 make the arrangement of machines more flexible. Other fabricated textiles— 26, 009 15, 365 8,071 2,573 Relatively few changes in pressing and boxing equipment were made during the 1950's. Pressing Total- 97, 538 64, 000 25, 450 ,088 machines have been more widely utilized and con- veyor systems have been introduced in a few 1 Less than $500,000. plants. Attention has been given in many plants Adapted from Census of Manufactures. 113 Charges or Costs Involved These results are based on the combined totals of manufacturers, jobbers, and contractors, as re- Gross margins of manufacturers of apparel and ported in Census of Manufactures. Data pre- related products are indicated by the spread be- sented in this way tend to increase total amounts tween costs of materials, supplies, parts, and con- shown for value of products, gross margins of tamers used and the value of the products manu- manufacturers, value added by manufacture, cost factured. These margins vary with the kinds of of contract and commission work, "other" costs, materials used and the products fabricated, from and proportion of gross margins accounted for one mdustry to another, from one establishment to by salaries and wages. These increases result another in the same industry, and from one time to from including in total value of products, receipts another. Census reports show that, for apparel of contractors for contract work done for jobbers and related products as a whole, manufacturers' and from including in cost of contract work most gross margins increased from about 48 percent of of the labor costs of manufacturing products re- the value of the products in 1939 to almost 57 per- ported by jobbers (p. 106). Information available cent in 1958 (table 84). is not adequate for making accurate adjustments The proportion of the value of the products that for the influences of these inclusions. was accounted for by salaries and wages de- Gross margins of all manufacturers of men's creased from more than 25 percent in 1939 to less and boys' apparel combined increased from about than 24 percent in 1947, and then increased to 50 percent of the value of the products in 1939 almost 27 percent in 1954 and 1958. Cost of con- to 57 percent in 1958. The proportion of the value tract and commission work increased from about of these products accounted for by salaries and 7 percent of the value of the products in 1939 to wages decreased from more than 27 percent in 12 percent in 1958. 1939 to about 25 percent in 1947, increased to 29

TABLE 84.—Values^ costs, and margins of manufacturers of apparel and related products. United States, 1939, m7, 1954, and 1958

Item 1939 1947 1954 1958

1,000 dollars 1,000 dollars 1,000 dollars 1,000 dollars Value of products ^ 3, 107, 622 9, 480, 727 10, 926, 022 12, 156, 594 Cost of materials, etc.^ 1, 605, 714 4, 511, 104 5, 018, 027 5, 260, 615 Gross margin 1, 501, 908 4, 969, 623 5, 907, 995 6, 895, 979 Salaries and wages 789, 969 2, 257, 739 2, 931, 877 3, 262, 505 Salaries 186, 294 462, 686 620, 294 710, 408 Wages 603, 675 1, 795, 053 2, 311, 583 2, 552, 097 Fuel 3, 003 8, 362 3, 070 13, 448 Purchased electric energy 10, 576 18, 459 21, 713 29, 394 Contract and commission work 224, 141 972, 881 1, 214, 594 1, 461, 495 Other 3 474, 219 1, 712, 182 1, 736, 741 2, 129, 137

Proportion of value of products

Percent Percent Percent Percent Value of products ^ 100. 0 100. 0 100.0 100. 0 Cost of materials, etc.^ 51.7 47. 6 45. 9 43. 3 Gross margin 48. 3 52. 4 54. 1 56. 7 Salaries and wages 25. 4 23. 8 26. 8 26.8 Salaries 6. 0 4.9 5. 7 5.8 Wages 19. 4 18. 9 21. 1 21. 0 Fuel . 1 . 1 (') . 1 Purchased electric energy .3 . 2 . 2 . 3 Contract and commission work 7.2 10. 3 11. 2 12. 0 Other 3 15. 3 18. 0 15. 9 17.5

1 Excludes products bought for resale without further 2 Includes supplies, parts, and containers. manufacture. Data for 1954 and 1958 are adjusted for 3 Includes depreciation, interest, insurance, rent, taxes, changes in inventory. Schiffli machine embroideries, other expenses, and profits. trimmings and stitching, and fabricated textile products * Less than 0.05 percent. not elsewhere classified are not included. Adapted from Census of Manufactures. 114 percent in 1954, and amounted to almost 29 per- contract and commission work increased from 10 cent in 1958. Costs of contract and commission percent of the value of the products in 1939 to 15 work increased from 7 percent of the value of the percent in 1958. Fuel and purchased electric products in 1939 to almost 12 percent in 1958. energy were relatively small items of cost, but Fuel and purchased electric energy were relatively costs of unspecified items, including depreciation, small items of cost, but costs of unidentified items, interest, insurance, rent, taxes, other expenses, and including depreciation, interest, insurance, rent, profits ranged from 15.5 percent of the value of taxes, other expenses, and profits ranged from the products in 1939 to about 19 percent in 1947, about 14 percent of the value of the products in and amounted to 18.5 percent in 1958. 1954 to 18 percent in 1947, and amounted to more The proportion of gross margins of manufac- than 16 percent in 1958. turers of women's, misses', and children's apparel The proportion of gross margins of manufac- accounted for by salaries and w^ages decreased turers of men^s and boys' apparel accounted for by from about 50 percent in 1939 to 44 percent in 1947, salaries and wages decreased from about 55 per- increased to 47 percent in 1954, and amounted cent in 1939 to 47 percent in 1947, increased to 53 to 44 percent in 1958. Decreases in these propor- percent in 1954, and amounted to 50 percent in tions from 1939 to 1947 and from 1954 to 1958 1958. The decrease from 1939 to 1947 was asso- were associated with increases in proportions ac- ciated with substantial increases in the proportion counted for by costs of contract and commission accounted for by cost of contract and commission w^ork and by costs of unspecified items, including work and by costs of unidentified items. The in- depreciation, interest, insurance, rent, taxes, other crease from 1947 to 1954 and the decrease from expenses, and profits. The increase from 1947 to 1954 to 1958 were about offset by decreases and 1954 w^as associated with a decrease in costs of the increases respectively in proportions accounted for unspecified items, which occurred despite improve- by costs of unidentified items, while the propor- ments in machinery and equipment used. tions accounted for by costs of contract and com- In 1958, gross "margins of manufacturers of mission work remained about the same. women's, misses', and children's apparel, by indus- In 1958, gross margins of manufacturers of try, ranged from about 52 percent of the value of men's and boys' apparel, by industries, ranged the products for women's and children's under- from 47 percent of the value of the products for wear to 66 pei-cent for women's and misses' men's and boys' underwear to almost 64 percent dresses (96), In that year, the proportion for for men's and boys' suits, coats, and overcoats each industry, except women's and misses' dresses, (96). The proportion in 1958 averaged greater averaged higher than that in 1939,1947, and 1954. than that in 1939 and 1954 in all industries and Salaries and wages in 1958 ranged from about 25 greater than that in 1947 in all industries, except percent of the value of the products for manufac- men's and boys' underwear. Salaries and wages turers of women's and children's underwear to in 1958 ranged from an average of 24.5 percent 28 percent for manufacturers of women's and of the value of men's and boys' w^ork clothing, misses' blouses. For most of the industries, the sport garments, and other apparel not elsewhere proportion in 1958 averaged as high or higher than classified to almost 33 percent of that for men's that in 1939,1947, and 1954. and boys' suits, coats, and overcoats. The propor- Costs of contract and commission work on wom- tion for each industry averaged substantially en's, misses', and children's apparel in 1958 ranged greater in 1958 than in 1947, despite improvements from about 9 pei'cent of the value of women's and in machinery and equipment. children's underwear produced to almost 19 per- Costs of contract and commission w^ork on men's cent of that of women's and misses' blouses. For and boys' apparel in 1958 ranged from less than each industry, the proportion in 1958 was greater 4 percent of the value of underwear to about 14 than that in 1939, 1947, and 1954. Costs of un- percent of that for dress shirts and nightwear. In specified items in 1958 ranged from 15 percent 1958 the proportion for all industries, except men's of the value of suits and coats to more than 27 per- and boys' underwear, was greater than that in cent of the value of women's corsets and allied 1939 and 1947. Costs of unidentified items in 1958 garments. In 1958, the proportion for all indus- ranged from about 15 percent of the value of tries, except for women's corsets and allied gar- work clothing, sport garments, and other men's ments, was greater than that in 1939. It was the and boys' apparel not elsewiiere classified to 20 per- same or less than that in 1947, except for women's cent for neckwear. For most of these industries, and misses' suits, coats, and skirts; it was the same the proportion in 1958 was less than that in 1947, or larger than that in 1954, except for women's and but greater than that in 1939 and 1954 (96). misses' blouses and for suits and coats (96), Gross margins of manufacturers of women's, Gross margins of manufacturers of miscellane- misses', and children's apparel increased from ous apparel, accessories, and other fabricated about 52 percent of the value of the products in products increased from about 36 percent of the 1939 to 61 percent in 1958 (96). Salaries and wages value of the products in 1939 and 1947 to almost increased from about 25 percent of the value of the 43 percent in 1958 (96). The proportion of the products in 1947 to 27 percent in 1958. Costs of value of the products accounted for by costs of 115 salaries and wages decreased from about 20 per- for 50 percent of the industries, and greater than cent m 1939 to less than 18 percent in 1947 and then those m 1954 for 80 percent of the industries. increased to about 23 percent in 1954 and 1958. Large proportions of gross margins of manufac- Costs of contract and commission work increased turers of apparel and related products accounted from 1.5 percent of the value of the products in for by wages and increases in wage rates emphasize 1939 to 3.6 percent in 1954 and then decreased the importance of labor in the manufacture of slightly to 1958. Costs of unidentified items, in- these products. Hourly earnings of laborers in cluding depreciation, interest, insurance, rent, the apparel and related products industries in- taxes, other expenses, and profits increased from creased from an average of about 53 cents in 1939 about 15 percent of the value of the products in to $1.65 in 1962. Average value added by manu- 1939 to 16 percent in 1947, decreased to 15 percent facture per dollar of wages paid increased from in 1954, and amounted to more than 16 percent in 1958. ^ $2.07 in 1939 to $2.20 in 1947, decreased to $2.04 The proportion of gross margins of manufac- m 1954, increased to $2.24 in 1961, and amounted turers of miscellaneous apparel, accessories, and to $2.21 in 1962. The decrease from 1947 to 1954 other fabricated products accounted for by salaries occurred despite improvements in machinery and and wages decreased from about 50 percent in 1939 equipment used, and the increase from 1954 to 1961 to 48 percent in 1947, increased to 55 percent in may be accounted for in part by further improve- 1954, and amounted to 53 percent in 1958. The ments in machinery and equipment used. Value added per hour of labor increased from $2.45 in decrease from 1939 to 1947 was associated with 1947 to $3.27 in 1958 and to $3.64 in 1962, but value increases in proportions accounted for by costs of added per dollar of payroll decreased from $1.76 contracts and commission work and of unidentified m 1947 to $1.61 in 1954, increased to $1.78 in 1961, items. The increase from 1947 to 1954 was asso- and amounted to $1.71 in 1962. ciated with an increase in the proportion accounted Average wage rates per hour and average value for by costs of contract and commission work and added by manufacturers of apparel and related by a decrease in the proportion accounted for by products per hour of labor, per dollar of wages, costs of unidentified items. The decrease from and per dollar of payroll varied considerably from 1954 to 1958 was associated with a decrease in the one geographic division to another (table 85). proportion accounted for by costs of contract and In 1947, 1954, and 1958, wage rates per hour and commission work and by an increase in the pro- value added per hour of labor averaged lowest in portion accounted for by costs of unidentified items. Southern and highest in Middle Atlantic, North Central, and Pacific Coast States. Value added In 1958, gross margins of manufacturers of mis- per dollar of wages and per dollar of payroll cellaneous apparel, accessories, and other fabri- varied irregularly from one geographic division cated textile products, by industry, ranged from to another (table 85). about 27 percent of the value of the products for textile bags to 60 percent for waterproof outer Geographic variations in wage rates per hour, when related to corresponding variations in value garments {96), The 1958 proportions equaled or added by manufacture per hour of labor, gave a exceeded those in 1939 for 80 percent of the indus- correlation coefficient of 0.97 for each of the years tries, those in 1947 for 90 percent of the industries, 1947, 1954, and 1958. An increase of 1 percent in and those in 1954 for 60 percent of the industries. Salaries and wages in 1958 ranged from 16 percent value added per hour of labor from one geographic of the value of the products for manufacturers division to another was associated, on the average, of textile bags to 30.5 percent for manufac- with an increase in wage rates per hour of 1.1 per- turers of fabric and dress gloves. The 1958 pro- cent in 1947, about 0.8 percent in 1954, about 0.6 portions for salaries and wages equaled or percent m 1958, and 0.9 percent for all 3 years exceeded those in 1939 for 60 percent of the indus- combined. Apparently the relationship between tries, those in 1947 for 80 percent of the industries, wage rates and value added per hour of labor and those in 1954 for 40 percent of the industries. largely account for the irregular variations in Costs of contract and commission work on mis- value added by manufacture per dollar of wages cellaneous apparel, accessories, and other fabri- and per dollar of payroll from one geographic cated products ranged from less than 1 percent of division to another (table 85). the value of textile bags to more than 11 percent of In 1958, wage rates per hour paid by manufac- the value of robes and dressing gowns. The 1958 turers of apparel and related products and value proportions equaled or exceeded those in 1939 for added per hour of labor, per dollar of wages, and all the industries, those in 1947 for 60 percent of per dollar of payroll varied irregularly with the the industries, and those for 1954 for 40 percent number of employees per company. The averages of the industries. Costs of unidentified items in were lower for companies with 250 to 499 employ- 1958 ranged from about 10 percent of the value ees than for companies with smaller and larger of textile bags to more than 20 percent of the value numbers of employees {96), Similar data on of waterproof outer garments. The proportions in establishments in 1947 and 1954 show like rela- 1958 were greater than those in 1939 for ^0 per- tionships {U). The relatively high average values cent of the industries, greater than those in 1947 added by the smaller establishments may be ac- 116 counted for by larger proportions of active pro- wear. Similar data for women's and children's prietors to employees for the smaller than for the wear show a range from $1.54 for hats and caps to larger establishments. $2.04 for corsets and allied garments. For miscel- In 1947, 1954, and 1958, value added by man- laneous products, value added per dollar of payroll ufacturers per dollar of payroll varied consider- ranged from $1.53 for canvas products to $1.85 for ably from one kind of product to another {96), robes and dressing gowns. Similar variations in In the men's and boys' wear industry, average value added per dollar of payroll are indicated for value added per dollar of payroll in 1958 ranged other apparel and related product industries and from $1.56 for separate trousers to $1.82 for neck- for other years {96).

TABLE 85.—Value added iy manufacturers of apparel and related products per dollar of payroll^ per dollar of wages^ per hour of labor,, and wage rates per hour,, iy geographic division,, 19Jf7, 1964, and 1958 ^

1947

1,000 dollars Dollars Dollars Dollars Dollars New England 279, 981 L77 2. 21 2. 23 LOI Middle Atlantic 2, 695, 194 L74 2. 18 2.74 1. 26 East North CentraL 505, 872 1.74 2. 29 2.39 L04 West North Central. 187, 519 L75 2. 31 2.07 .90 South Atlantic 327, 314 L87 2.25 L91 .85 East South CentraL, 132, 696 1. 80 2. 12 1.50 .71 West South Central. 98, 203 1. 96 2.53 L76 .70 Mountain 9,824 1. 82 2. 34 1. 86 .80 Pacific 206, 770 1.70 2. 11 2. 65 1. 26 United States 4, 443, 373 1.76 2. 20 2. 45 L 11

1954

New England 362, 163 1.60 1.96 2.56 1. 30 Middle Atlantic 2, 879, 632 1. 61 2.05 2. 99 L46 East North CentraL 495, 060 1. 56 2. 14 2.93 L37 West North CentraL 212, 260 1. 58 2.08 2. 54 1. 22 South Atlantic 468, 739 1.60 L93 2. 07 L07 East South CentraL. 256, 962 1. 62 L87 L82 .97 West South CentraL 143, 844 1. 61 2. 03 2.04 L 00 Mountain 16, 539 1. 62 2. 14 2. 31 Pacific L08 312, 172 L71 2.23 3.25 1. 46 United States 5, 147, 371 1. 61 2. 04 2. 71 L 33

1958

New England 429, 129 1.63 2.08 3. 14 1. 51 Middle Atlantic 3, 207, 276 1. 70 2. 23 3.67 East North CentraL 1. 64 526, 863 L63 2. 25 3. 60 L 60 West North Central- 234, 363 L67 2. 20 3.09 South Atlantic 1. 40 640, 955 1.66 2. 05 2.60 1. 27 East South CentraL. 373, 604 1. 59 1. 82 2. 20 West South CentraL L 21 203, 411 1.61 1. 99 2. 45 1. 23 Mountain 24, 896 1.63 2. 17 2.93 Pacific 1. 35 363, 356 L74 2. 33 3. 79 1. 62 United States 6, 003, 853 1. 67 2. 17 3. 21 L51

A...^^I?l ^^^^' ^""^^^ ^"^^^^ '^fâ^'"^^^^^ ^^ taking into account value added by manufacturing operations and changes during the year m inventories of finished goods and work-in-process. Data for 1954 and 1947 are unadjusted. Adapted from Census of Manufactures.

117 Value added per dollar of payroll in 1947,1954, 87). In 1962, these profits increased to about 7 and 1958 by establishments owned and operated by percent of tangible net worth, but they also con- corporations averaged less than that for establish- tinued to be relatively lower than median profits ments owned by partnerships and more than that in the late 1940's. for those owned by individuals (table 86). Simi- larly, value added per dollar of payroll averaged Means and Importance of Improvement more for establishments operated as multiunits than for those operated as single units. Gross margins of manufacturers of apparel and In 1958, value added by manufacturers of ap- related textile products increased from about 48 parel and related products per dollar of wages and percent of the value of the products in 1939 to per dollar of payroll varied irregularly with the almost 57 percent in 1958. The proportion of degree of primary product specialization, accord- these margins accounted for by salaries and wages ing to census reports. Establishments \yith 75 to increased from 45 percent in 1947 to 50 percent in 89 percent of primary product specialization 1954 and amounted to 47 percent in 1958.^ Aver- apparently added somewhat more value per dollar age hourly earnings of wage workers in this indus- of wages and per dollar of payroll than those \yith try in 1962 were about 24 percent higher than those a higher or lower degree of product specialization. in 1954 and about 49 percent higher than those in Value added by these manufacturers per dollar 1947. These changes emphasize the importance of payroll in 1954 and 1958 varied irregularly of making full use of technological developments with the degree of integration (96), For manu- and of improving organization and operation so facturers of clothing, value added per dollar of as to increase the efficiency and reduce the costs of payroll varied directly with degree of integration, manufacturing apparel and household textiles. but for manufacturers of other apparel and related Time studies may be useful in making improve- products, the reverse apparently was true. ments. Other means might include further de- Median profits of manufacturers of apparel and velopment of mutual understanding and coopera- household textiles, after Federal income and ex- tion on the part of labor and management in cess-profit tax deductions, increased to 1.4 percent formulating and carrying out plans for the mod- of net sales in 1962, but continued to be substan- ernization and improvement of plant operations. tially lower than those in the late 1940's (table Modernization might include the installation of

TABLE Sñ.—Value added hy manufacturers of apparel and related products, hy type of ownership and operation, united States, 191^7,195Ji,, and 1958 ^

Value added by manufacture

Type of ownership and operation Total Per dollar of payroll

1947 1954 1958 1947 1954 1958

1000, dollars 1,000 dollars 1,000 dollars Dollars Dollars Dollars Ownership : 1.67 OoT'nOT'fl't'iP - - - - 3, 225, 947 4, 006, 547 4, 936, 120 1. 77 1. 60 PartnershiD - - - 857, 078 743, 775 669, 856 1. 80 1.69 1. 75 TnHividiial ------350, 208 382, 299 395, 287 1. 59 1.50 1. 61 1. 12 Other 10, 140 14, 751 2,590 2. 05 1.63 1. 67 AU 4, 443, 373 5, 147, 372 6, 003, 853 1. 76 1.61 Operation: Single unit: r^nmorat/e - 2,311,625 2, 632, 649 2, 981, 458 1. 73 1. 56 1. 62 Other 1, 152, 089 1, 090, 687 1, 008, 619 1. 73 1. 62 1. 69 1. 64 All 3, 463, 714 3, 723, 336 3, 990, 077 1. 73 1. 57 Multiunit: CorDorate 914, 322 1, 373, 899 1, 954, 662 1. 86 1. 70 1.75 Other 65, 337 50, 137 59, 114 1. 75 1.71 1. 76 1. 75 All 979, 659 1, 424, 036 2, 013, 776 1. 85 1. 70 All 4, 443, 373 5, 147, 372 6, 003, 853 1.76 1. 61 1. 67

1 For 1958 value added is adjusted by taking into account value added by merchandising operations and changes during the year in inventories of finished goods and work-in-process. Data for 1954 and 1947 are unadjusted. Adapted from Census of Manufactures. 118 TABLE 87.—Median net profits of manufacturers of apparel and household textiles as proportions of net sales and of tangible net worthy hy kind of products^ united States^ specified years^ 1933-62

N et profits ^ as proportion of net sales ' Product 1935-39 1941 1945 1948 1953 1958 1959 1960 1961 1962

Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent Women's coats and suits 0. 14 1. 42 4. 00 3. 13 0. 36 1. 07 0. 69 1. 13 1. 32 1.37 Dresses, rayon and silk . 37 . 74 3. 27 1. 29 04 . 26 . 36 . 41 . 63 1. 11 Men's and boys' clothing . 61 2. 04 4. 05 2. 47 03 . 70 1. 05 1. 05 . 65 . 80 Men's shirts, underwear, and pajamas . 71 1. 79 2. 26 . 56 62 1. 42 1. 48 1. 50 1. 64 2. 23 Overalls and work clothing 1. 04 3. 84 3. 56 94 2. 01 1. 78 1.08 1. 85 1. 69 Knit outerwear . 79 2. 18 3. 96 2. 06 14 . 96 . 97 .84 . 90 1. 20 Hosiery 1. 65 3.35 3. 42 6. 65 87 1. 11 2. 83 1. 46 2. 91 1. 56

Net profits as proportion of tangible net worth ^

Women's coats and suits 1. 15 9. 56 21.96 13. 00 3.52 8.95 6. 65 8. 98 9. 71 11.80 Dresses, rayon and silk 2. 75 8. 57 17. 85 10. 50 9. 04 2. 92 4. 26 4.20 6. 26 8. 53 Men's and boys' clothing 93 10. 79 16. 04 10. 10 4. 81 2. 81 5. 06 5.35 3.49 5. 49 Men's shirts, underwear, and pajamas 35 9. 68 10. 73 2. 81 7. 29 6. 00 7. 70 8. 15 9. 10 6.96 Overalls and work clothing 14 14. 49 11. 80 7. 16 5. 88 5. 79 5. 18 7.35 6. 57 Knit outerwear 99 10. 70 17. 41 8. 51 8.62 5. 27 4. 52 4. 69 6. 44 7. 25 Hosiery 04 11.90 10. 75 10. 41 3. 63 3.95 5.93 4. 25 6. 97 5. 05

1 Profit after full depreciation on buildings, machinery, 2 The sum of all outstanding preferred or preference equipment, furniture, and other assets of a fixed nature; stocks (if any) and outstanding common stocks, surplus, after reserves for federal income and excess-profit taxes; and undivided profits, less any intangible items in the after reductions in the value of inventory to cost or market, assets, such as goodwill, trademarks, patents, copyrights, whichever is lower; after charge-offs for bad debts; after leaseholds, mailing lists, treasury stock, organization all miscellaneous reserves and adjustments, but before expenses, and underwriting discounts and expenses. dividends or withdrawals. 2 The dollar volume of business transacted for 365 days Adapted from {S3). net after deductions for returns, allowances, and discounts from gross sales. more improved macliinery and equipment, organi- numJDer of operations was suggested as one of zation of the plant so as to utilize the machinery the improvements needed. Through the use of and equipment to best advantage, and develop- such operators, a high rate of production can be ment of improved working conditions so as to at- maintained despite the high rate of turnover of tract and hold competent workers. Moderniza- employees and the specialized training needed. tion of plants might well be supplemented by Many manufacturing establishments apparently in-service training programs to improve the skill are too small to make full use of the more efficient of employees and by the assignment of the right operating methods and equipment. Census re- men to the right jobs so as to utilize fully the ports show that in 1958 about 24 percent of the natural capacities and developed skills of the em- establishments in the apparel and related prod- ployees. It may also be supplemented by sys- ucts industry had fewer than 5 employees, more tematic advancements in accordance with ability than 39 percent had fewer than 10 employees, and demonstrated performance to encourage ini- about 56 percent had fewer than 20 employees, and tiative and eíRciency and by prompt and effective about 72 percent had fewer than 50 employees. It means for locating and removing causes of labor is apparent from these data that the size of many turnover and costly slowups in production. Mod- of the establishments would have to be increased ernization of plants and utilization of workers to before they could fully utilize improvements in their full potentialities, to the mutual benefit of technology and methods. But large mechanized workers and management, are apparently impor- factories operated on a mass production basis are tant means of reducing the cost of manufacturing limited by the demands of fashion, particularly apparel and household textiles. for women's wear, which require wide ranges in A report from the research department of the and frequent changes of styles. Amalgamated Clothing Workers of America indi- Some indication of the effects of styling on cost cates that improvements in management represent of women's dresses, for example, may be obtained the easiest road to increased efficiency, since the from the following situation. From 1940 to 1942, garment industry is not highly mechanized {119). average gross margins of manufacturers ranged The training and maintenance of an adequate from about 42 percent of the value of the products staff of "utility" operators who are skilled in a for price lines up to $3.75, for which styling was 119 of relatively small importance, to more than 60 be of considerable size—too large to establish percent for price lines $29.76 and above, for which plants that would be able to use the fabric pro- styling was of relatively great importance {Jf7), duced. An additional problem is faced by the Style is an important consideration also in con- cutter, since, because of the nature of denim, nection with men's and boys' clothing, girls' and integration cannot be limited to converting, as in children's w^ear, and other apparel and household the shirt industry, but must include both weaving textiles. Designers and manufacturers constantly and spinning facilities. Apparently this problem create new styles, but it is reported that only about is not insurmountable, but a substantial additional 15 to 25 percent of the new designs in women's investment is required, as well as sufficient man- garments sell in quantity and that fully half rep- agerial skill to cover the wide range of operations resent pure waste {2Ji). Manufacturers are said i^i)- ... to defend this waste as a variety of research that Vertical integration has been infrequent in the is necessary to find out what consumers want. If garment industry, but it does exist in many house- consumers were willing to use products made by hold textile manufacturing industries {31), the same or similar pattern in large quantities and Whether the firm is integrated or specialized de- to change styles only at infrequent intervals, sub- pends mainly upon the importance of variety in stantial reductions in costs of manufacturing the product and how this variety is obtained. would be possible. Integration is common in the sheet industry, as Information available indicates the possibility variety is of little importance and no distinctive of reducing some costs through integration. Cen- features are added in the fabrication. The sus data for 1954 and 1958 show that the value jacquard bedspread industry is almost entirely in- added by manufacture of women's and children's tegrated at the mill. Jacquard spreads are varied, clothing, except millinery and fur goods, per dol- but this is not a result of fabricating. The variety lar of payroll, averaged about 13 percent more for is obtained during preceding processes. Other multiunit than for single-unit companies. For household textiles of which this is true are blan- multiunit companies, value added per dollar of kets, towels, table linens, and lace curtains {31). payroll averaged about 17 percent more for multi- A different situation is found in firms manufac- industry companies than for single-industry com- turing a few household textiles, such as novelty panies. Similar data for manufacturers of men's curtains, tailored bedspreads, and draperies. Lit- and boys' clothing show smaller proportions in tle integration is found in these firms, as the dis- favor of multiunit and multi-industry companies. tinctive features desired are added after the weav- Apparently opportunities for integration in the ing and converting processes {31 ). women's ready-to-wear industries are limited by It is evident from the foregoing that effective in- the pyramiding of style risks and the inability formation is not adequate to indicate specifically to provide the variety demanded by retailers {31). the most effective means to increase the efficiency lEven in making housedresses, which are made on and to reduce the cost of manufacturing apparel a relatively large scale, integration of the con- and household textiles. Detailed analyses of cost verters and fabricators is difficult because the de- data for a representative sample of the establish- gree to which any one fabric design is used seldom ments in each important segment of the industry justifies the garment manufacturer's entrance into are needed to show the influence of the various fac- the converting field. tors on the costs of labor, overhead, and other items Manufacturers of shirts have had more success at each stage or process of manufacturing specified in combining converting with cutting than have kinds of products. Detailed specifications also are manufacturers of dresses. Variety in styles and needed, on the basis of cost-engineering data and patterns of shirts is less important, and the con- other information^ for model, low-cost establish- verting of plain and bleached fabrics has been ments manuf acturnig typical kinds of apparel and imdertaken with relatively small risk. Large household textiles. These specifications would cutters of branded shirts particularly have been show the most desirable buildings, machinery and able to control both cost and quality by converting equipment ; floor plans ; labor requirements ; oper- their own gray goods. Mills producing fabrics ating programs; and production data. Detailed have had less success in their attempts in forward cost data for the processes and operations involved integration, as competition in the market is keen also are needed. and margins are small. However, a few textile As this information is mainly for the use of companies that sell a variety of fabrics have gone operators in the particular segment of the indus- into shirtmaking as a sideline. The most difficult try involved, their advice and assistance in plan- problems reported thus far have been in distribu- ning and developing the research may be used to tion rather than in manufacture. advantage. The nature of the industry manufac- In the overalls manufacturing industry, inte- turing apparel and household textiles is such that gration has seldom been successful {31), Widely the research would require the services of per- different scales of operations must be held to in sonnel with broad training and experience in cost producing the fabric and in cutting the gar- engineering relating to the particular segment of ments. To produce denim at low cost, mills must the industry under consideration. The approach 120 proposed was used in research relating to the man- consumer's dollar paid for the finished products, ufacture of carded cotton yarn {105), Eesults about 21/^ times the returns to growers for produc- indicate that the methods and techniques devel- tion of the cotton and wool used, and more than 12 oped, with appropriate modifications, may be ap- times total costs of merchandising the raw fibers. plicable to other segments of the textile industry. A reduction of 10 percent, for example, in these From the viewpoint of costs, the relative impor- margins would exceed an increase of 25 percent in tance of increasing efficiency and of reducing the returns to growers for farm production of the cost of manufacturing apparel and household tex- cotton and wool used, and would also exceed the tiles may be indicated by data on manufacturers' total cost of merchandising the raw cotton and gross margins. In the early 1950's and 1960's, wool, including the ginning and baling of cotton these margins averaged about 29 percent of the but not the scouring of wool.

WHOLESALING TEXTILE PRODUCTS

Textile products are distributed to consumers METHODS AND PRACTICES through several combinations of agencies. They are sent from spinning and weaving mills, dyers Information on methods and practices in dis- and finishers, manufacturers of knit goods, and tributing yarns and fabrics as intermediate prod- manufacturers of apparel and related products. ucts is presented here. An important channel of distribution, particu- larly in earlier years, was from manufacturers Yarn to wholesalers to retailers to consumers. In recent As indicated earlier (p. 35), about three-fourths years, the manufacture and distribution of textile of the yam produced on the cotton system is products have been integrated to a considerable retained by producers for weaving into fabrics. extent. Price and production regulations dur- The yarns shipped in 1958 were distributed by ing World War II apparently favored the exten- the manufacturer mainly to other plants of the sion of unified control (ö"^), and mergers in the same company or to other manufacturers. Less textile industry reached a high rate in 1947. than 10 percent were distributed to merchant From 1948 through the early 1950's th^, rate de- wholesalers and to others (table 8, p. 35). clined. Following this decline in rate of mergers, Integrated weaving mills try to maintain a another wave of mergers started in 1953 and, ex- balance in their manufacturing operations by cept for some letup in 1957 and 1958, continued buying yarns needed in addition to their spinning to the early 1960's. capacity or^ by selling surplus yarns produced. Wholesale distribution of textile products ap- Knitting mills apparently can operate economi- plies to intermediate or partially manufactured cally when they are too small to use all the yarn products as well as to finished products to ulti- turned out by an efficient spinning mill. Con- mate consumers. Information on wholesaling sequently, most knitters find that they can buy methods, practices, charges, and costs is presented yarn more cheaply than they can make it. In separately for partially manufactured products addition, some types of yarn require specialized and for products ready for ultimate consumption. skills {27). This grouping is not entirely satisfactory be- Yarns of uniform quality usually are manu- cause the same wholesalers may handle both kinds factured in larger quantities than are required by of products, and in many instances adequate in- individual customers. A basic problem in market- formation is not available to indicate differences ing this yam is to break up these large lots into in methods, practices, charges, and costs for dif- smaller lots needed by customers and to distribute ferent kinds of products. to users small quantities of the types and grades needed. To make such distribution economically, Partially Manufactured Products substantial stocks of yarn, made up of a great many different types and grades, are brought to- Intermediate or partially manufactured prod- gether under the control of one marketing agency. ucts include yarns and fabrics, but some yams This arrangement tends to reduce the customer's and fabrics are ready for distribution to ulti- trouble and expense by enabling him to obtain his mate consumers when they leave the mill. In- requirements from one or a few sellers. It also formation presented here on partially manufac- benefits sellers, in that it reduces the cost of selling tured products is limited mainly to wholesale by enabling one seller to handle yarns from many distribution services of manufacturers, finishers spinners. or converters, and merchant wholesalers. Most Producers of yam for sale usually do not limit of these agencies also handle products ready for themselves to any one basis of operation in selling distribution to ultimate consumers, and any dif- their products. They use different agencies and ferences in methods, practices, charges, and costs processes in dealing with different purchasers. in distributing the two kinds of products are not Procedures and agencies involved in distributing always clearly indicated. sales yam include: (1) direct sales of yam by

736-806—^64- 121 Spinners through their own sales staJïs and offices, the fabric is sold. But considerable quantities of with or without the services of brokers; (2) sales gray goods made of cotton and manmade fibers, to merchants or dealers, who in turn resell to con- and some woolen and worsted fabrics, are finished sumers; (3) sales b}^ spinners exclusively through by establishments primarily engaged in finishing agents who maintain offices and sales staffs in operations. Manufacturers' sales of finished central marketing centers; and (4) distribution fabrics usually are made directly or through their through a combination of sales through agents sales offices and branches to other manufacturers, and direct sales to users. mainly cutters. Gray-goods markets for knit goods are rela- Fabrics tively unimportant, as most knit goods are finished by mills before they are sold. Piece dyeing was A large proportion of fabrics, as they leave the developed for full-fashioned hosiery as early as mill, represent intermediate products ready for 1918, but a gray-goods market for these products converters, fabricators, or industrial users. Some, was not developed until the early 1930's. In more however, are fabricated by mills into such items recent years, considerable proportions of full- as sheets, pillowcases, towels, and bedspreads ; and fashioned hosiery have been finished by mills other some are sold as finished piece goods ready for than those that do the knitting, but only a small sale to ultimate consumers. Manufacturers sell part of the finishing is done through converters. textile fabrics largely to converters, fabricators, Most of the unfinished hosiery is sold to or knit industrial users, and wholesalers and jobbers; but on commission for other mill operators who usually considerable proportions, particularly of piece finish it in their own plant, but some hosiery is goods and fabricated products, are sold to retailers, sold unfinished to converters and others, v/ho have including chains, and through manufacturer it finished on commission. Gray-goods markets owned and operated outlets. for seamless hosiery are limited to relatively Substantial proportions of broadwoven fabrics small quantities that are knit on commission for made of cotton and manmade fibers are sold in the hosiery mills. Some knit underwear fabrics are gray to converters, but usually woolen and worsted sold in the gray, but the volume is relatively small. fabrics are finished before they are sold by the manufacturer. The marketing of gray cloth to CHARGES OR COSTS INVOLVED converters is concentrated mostly in the hands of a few selling agents and brokers whose main offices Information relating to charges and costs in- are in New York City. Sales to converters usually volved in the wholesale distribution of yarns and are made by selling agents or mill selling offices fabrics as intermediate textile products is pre- through cloth brokers. The function of these sented here. brokers is to bring converters and mill selling Yarn representatives together. Mill sales of gray goods Charges or costs involved in wholesale distribu- to industrial users usually are made directly by tion of yarns usually cover selling expenses of yarn mills or through agents, on the basis of specifica- manufacturers, including commissions for selling tions. agents, brokers, and commission merchants, as well Census data show that in 1958 the value of cot- as margins for wholesalers, including wholesale ton broadwoven gray goods distributed by manu- merchants, manufacturers' sales offices and facturers totaled $1,973 million. Of the total branches, and other intermediaries. amoimt distributed, about 25 percent went to other Data on wholesale distribution of yarn in 1958 manufacturers, 22 percent to other plants of the are not available, but commissions received in 1954 same company, 21 percent to merchant wholesalers, for tlie sale of yarns, valued at $263 million, sold 8 percent to other wholesalers of the same com- through merchandise agents and brokers averaged pany, and 18 percent was sold through manufac- 2.5 percent of the selling price. Most of this yarn turers' sales offices and branches, mainly to other was sold to industrial users and to retailers, but manufacturers and merchant wholesalers. Small 4.5 percent was sold to wholesale organizations for proportions went to retailers and other buyers. further distribution. Operating expenses of mer- The value of broadwoven gray goods made of man- chant wholesalers for selling industrial yarns, made fibers totaled $991 million. Of the total valued at $192 million in 1954, averaged 6.9 percent amount, 29 percent went to merchant wholesalers, of sales, according to census reports. Almost 10 19 percent to other manufacturers, 24 percent to percent of these sales were made to other whole- other plants and wholesalers of the same company, salers (4^^). and 22 percent was sold through manufacturers' Census data on merchant wholesalers show that sales offices and branches, mainly to merchant operating expenses decreased from 8.3 percent of wholesalers and other manufacturers. Small pro- the value of the yam sold in 1939 to 6.9 percent in portions went to retailers and other buyers. 1948 and 1954. These expenses varied inversely Gray goods usually are bleached, mercerized, dyed, printed, or finished in other ways before they with the size of the establishment as indicated by are used by cutters and others. A large part of the annual volume of sales. In 1954, they ranged finishing is done by or for the manufacturer before from an average of 3.5 percent of sales for estab-

122 lishments with annual sales of $5 million and over size of the operating unit, ranging in 1958 from to 30.4 percent for establishments with annual sales 9.7 percent for establishments with sales of $5 mil- of less than $50,000. These operating expenses lion or more to about 26 percent for establishments include no compensation for active proprietors of with sales of less than $100,000. Payrolls ac- unincorporated businesses or for profits (^-^). counted for about 48 percent of total expenses in Payrolls accounted for about 48 percent of total 1958, about the same as in 1948. In 1958, whole- operating expenses of merchant wholesalers in salers distributed about 56 percent of their piece 1954, about the same as in 1939 and slightly less goods to wholesale organizations, 22 percent to than in 1948. The ratio of the number of active retailers, 14 percent to industrial and commer- proprietors to paid employees decreased and pro- cial users, and smaller proportions to exporters portions of total operating expenses that were ac- and others. counted for by payrolls increased with increases in the size of the establishments, as indicated by TABLE 88.—Number of establishments^ value of volume of sales (^4) • sales^ operating expenses^ and payroll for con- verter wholesalers and merchant wholesalers of Fabrics piece goods^ hy size group^ united States^ 1958 ^

Any evaluation of the charges or costs of distrib- Oper- uting textile products involves consideration of ating Pay- the marketing agencies involved, the kinds of goods Type of wholesaler Es- ex- roll as distributed, and the marketing services performed. and size group by tab- Total penses pro- volume of sales lish- sales as pro- por- Selling expenses of textile manufacturers include (1,000 dollars) ments por- tion of those for selling gray goods to converters, indus- tion of sales trial users, wholesalers, and others ; those for sell- sales ing finished fabrics to fabricators, industrial users, w^iolesalers, retailers, and others; and those for CONVERTER selling fabricated products to wholesalers, retail- WHOLESALERS ers, and others. Number 1,000 dollars Percent Percent Data on operating expenses of manufacturers' All 679 1, 294, 007 10. 2 4.8 sales offices and branches for selling textile mill 5,000 or more 43 667, 090 8.8 4.2 products in 1958 are not available. In 1954, these 2,000 to 4,999 85 268, 925 11.0 5. 1 expenses, valued at $1,810 million, averaged 5.8 1,000 to 1,999 123 177, 395 10.7 4.9 percent of total sales. Operating expenses for sell- 500 to 999 161 117,810 13. 2 6. 6 300 to 499 86 34, 699 13. 1 6.3 ing broadwoven fabrics, valued at $475 million, 200 to 299 ------56 14, 080 14. 6 7.0 averaged 5 percent of total sales. About 45 per- 100 to 199 73 11, 308 17.6 8.9 cent of the sales of fabrics and 27 percent of the 50 to 99 - 25 1,836 22.4 9. 1 sales of all textile mill products combined were Less than 50__ 27 864 26.6 11.9 made to merchant wholesalers. Brokerage, or MERCHANT commissions, received by merchandise agents and WHOLESALERS brokers for sale of piece goods in 1954, valued at $2,521 million, averaged 3.1 percent of sales. All -_- 1,891 1, 257, 738 12.8 6.2 About 35 percent of these sales were made to whole- 5,000 or more _ _ 29 272, 499 9.7 4.5 salers (^|). 2,000 to 4,999 _ __ _ 93 269, 546 11. 2 5. 5 Operating expenses of converter wholesalers of 1,000 to 1,999_ _ - _ 195 273, 101 12. 2 6.0 piece goods increased moderately up to 1958, when 500 to 999______304 218, 629 14.4 7.0 300 to 499 -_ 246 97, 147 16. 0 7.8 they represented 10.2 percent of total sales (table 200 to 299 __ 221 54, 711 16. 8 8.2 88). These expenses varied inversely with the 100 to 199__ 334 48, 649 17.8 8.3 size of the operating units, as indicated by volume 50 to 99 - 231 17, 493 26. 0 11.0 of sales. In 1958, they ranged from 8.8 percent Less than 50 238 5,963 25. 8 11. 1 for establishments with sales of $5 million or more to 26.6 percent for establishments with sales of less 1 Operating expenses include no compensation for active than $50,000. The proportion of expenses ac- proprietors of unincorporated businesses. counted for by payrolls decreased from about 52 Adapted from Census of Business, Wholesale Trade. percent in 1948 to 47 percent in 1958. In 1958, piece good converters sold about 31 percent of their Administrative and selling expenses are the products to wholesale organizations, 31 percent to principal items in total operating expenses of retailers, 25 percent to industrial and commercial wholesalers of piece goods. Census data for 1948 users, and smaller proportions to exporters and (data for more recent years are not available) other customers. show that these two items accounted for about 80 Similar data for merchant wholesalers of piece percent of total operating expenses for converter goods show that their operating expenses also in- wholesalers and 77 percent of these for jobber creased moderately, amounting to 12.8 percent in wholesalers. Operating expenses of corporate 1958 (table 88). They varied inversely with the wholesalers, as proportions of sales, averaged sub-

123 stantially more than those of noncorporate whole- smaller proportion of total sales of the larger salers, particularly for the medium and smaller wholesalers than of the smaller ones indicates that establishments. These differences may be ac- the cost of distributing intermediate textile pjrod- counted for in part by the fact that these expenses ucts might be reduced if the volume of business do not include compensation for active proprietors of many wholesalers were increased. Census re- of unincorporated businesses. ports show that in 1954, for example, total operat- Ratios of operating expenses to sales of piece ing expenses of wholesale yarn merchants ranged goods by converter wholesalers varied widely, ac- from an average of 3.5 percent of total sales for cording to census reports. In 1958, operating ex- concerns with annual sales of $5 million or more penses of about 16 percent of these wholesalers to 30 percent for concerns with annual sales of amounted to less than 7 percent of sales, whereas less than $50,000. Similar data for piece goods in operating expenses of more than 9 percent of the 1958 show that operating expenses of converter wholesalers amounted to 25 percent or more of wholesalers ranged from less than 9 percent of sales. Of the establishments with annual sales of total sales for concerns with annual sales of $5 $1 million or more, about 27 percent had operating million and more to 26 percent for concerns with expenses of less than 7 percent of sales and about annual sales of less than $50,000. For merchant 3 percent had operating expenses of 25 percent or wholesalers of piece goods, these proportions more of sales. For establishments with annual ranged from less than 9 percent of total sales for sales of less than $200,000, about 5 percent had concerns with annual sales of $5 million or more operating expenses of less than 7 percent of sales to 26 percent for those with annual sales of less and 29 percent had operating expenses of 25 per- than $100,000. But it is not known to what ex- cent or more of sales (table 93, p. 129). tent these differences in operating expenses may Of the merchant wholesalers of piece goods, be accounted for by differences in services per- about 8 percent had operating expenses of less formed or in other factors. than 7 percent of sales in 1958 and 21 percent had A comparison of expenses of wholesaling piece expenses of 25 percent or more. Of establishments goods through different agencies indicates the with annual sales totaling $1 million or more, possibility of some reductions in costs of wholesale about 23 percent had operating expenses of less distribution through integration of the manu- than 7 percent, and about 5 percent had operating facturing and distributing functions. Operating expenses of 25 percent or more of total sales (table expenses of wholesaling piece goods in 1958 aver- 93, p. 129). aged 12.8 percent of net sales for merchant whole- Most of the establishments operated by con- salers, 10.2 percent for converter wholesalers, 9.1 verter wholesalers, merchant wholesalers, and percent for manufacturers' sales branches, 4.5 per- agents and brokers of piece goods are operated as cent for manufacturers' sales offices, and 1.6 per- single units, according to census reports. In 1954, cent for merchandise agents and brokers, accord- the average value of annual sales per establish- ing to census reports. But information is not ment and operating expenses, as proportions of available to show the extent to which these differ- total sales, for each type of selling agency were ences may be accounted for by differences in less for establishments operated as single units services performed. than for those operated as multiunits (^4). The possibility of improvements through re- ductions in unnecessary handling of products, the MEANS AND IMPORTANCE OF IMPROVEMENT development and use of quality standards as a basis for sales on description, vertical^ and hori- Means of improving the efficiency and of reduc- zontal integration, and the modernization of ing the cost of distributing partially manufactured equipment and methods need to be explored and or intermediate textile products include increases evaluated as means of increasing efficiency and re- in the general efficiency of individual agencies ducing costs of distributing intermediate textile and concentration of services in the hands of the products. Additional information is needed to agencies that are best adapted to perform them. show the influence of the various factors on the Increasing the general efficiency of individual adequacy and costs of each important process or establishments would involve consideration of such service involved. Some means that might be used problems as the organization and operation of the in obtaining such information are presented in establishments, selection and management of per- another section of this report (p. 132). sonnel, location of place of business, selection and The relative importance of increasing efficiency arrangement of facilities and equipment, kinds of and reducing costs of wholesale distribution of services performed, volume of operation, and pur- intermediate textile products may be indicated by chase and sales policies. Detailed information on the fact that gross margins of wholesalers of piece the influence of each important factor on efficiency goods may average as great or greater than total and costs would be needed to indicate the most costs of merchandising the raw cotton and wool effective means of bringing about improvements. used. But gross margins of these wholesalers Only a part of this information is now available. averaged substantially less than those for manu- The fact that operating expenses represent a facturing and retailing the fiinished products.

124 Products for Ultimate Consumers Many fabricated products are made of two or more kinds of fabrics, and many fabrics are made Textile products for ultimate consumers include of two or more kinds of fibers. Consequently, sewing thread and a wide variety of knitting, most of the data on distribution of products are crocheting, and other yarns used by household con- not segregated to show those made of cotton, wool, sumers ; gray goods, yarn-dyed goods, and finished silk, manmade fibers, or some combination of these goods for sale in the piece to consumers, such as fibers. print cloth, sheeting, drill, chambray, and shirt- METHODS AND PRACTICES ing; household furnishings, such as sheets and pillowcases, bedspreads and blankets, towels and Wholesale distribution of textile products for bath mats, rugs, tablecloths, and napkins; and ultimate consumers involves the services of mer- wearing apparel for men, women and children. chant wholesalers, manufacturers' sales branches Most of the thread, yarn, piece goods, and house- and offices, and merchandise agents and brokers. hold furnishings are ready for consumers when Merchant wholesalers buy and sell merchandise on they leave the manufacturing establishments. In their own account. They sell principally to re- addition, most knit products of hosiery and under- tailers, wholesale organizations, or to industrial, wear factories leave the mill as completed goods commercial, or professional users. Usually they for consumers. carry stocks assembled in large lots and redistrib- Apparel for men, women, and children is mainly ute them through salesmen. They extend credit the product of the cutting trade. The terms "cut- to customers, make deliveries, service merchandise ters" and "cutting-up trade" may be applied to sold, and give advice to the trade. Manufacturers' all branches of the textile industry that charac- sales branches and offices are establishments owned teristically perform cut-and-sew operations on by manufacturers and maintained apart from purchased fabrics (69). The cutting-up trade in- manufacturing plants primarily for selling their cludes several thousand manufacturers of many products at Avholesale. Merchandise agents and kinds. They range from very large companies brokers are operators in business for themselves, that operate several factories, as is common in the and primarily engaged in selling or buying goods manufacture of men's shirts and work clothing, for others. to small family shops, which are common in the In 1958 textile products valued at $5,294 million manufacture of mattresses and some other house- were distributed by 7,968 merchant wholesalers to hold products. These establishments are scattered retailers, wholesale orginazations, industrial users, throughout the industrial districts of the country, and others (table 89). The proportion of total although in some instances manufacturers of par- sales that w^ent to retailers averaged 46 percent, ticular products are concentrated in relatively and ranged from about 12 percent for other spe- small areas. cialty line dry goods to 92 percent for men's and Data on the distribution of apparel and other boys' apparel and accessories. The proportion fabricated products made of cotton, wool, and man- that went to wholesale organizations averaged 31 made fibers usually are not reported separately. percent and the proportion that went to indus-

TABLE 89.—Number of merchant icholesalers of textile products^ total sales^ and proportion of sales to specified customers^ hy kind of product^ united States^ 1958

Proportion of sales to— Establish- Kind of product ments Total sales Industrial Whole- Retailers All other users salers

Number i,000 dollars Percent Percent Percent Percent Dry goods 4, 410 3, 368, 771 21.3 49.2 22. 6 6. 9 General line _ 105 153, 203 3.3 1.8 90. 6 4.3 Piece goods (wholesalers) _ _ 1, 926 1, 269, 673 14. 1 55. 8 21. 5 8.6 Piece goods (converters) 785 396, 442 24. 8 30. 7 30. 9 13. 6 Notions 912 252, 819 25. 4 34. 8 38. 3 1. 5 Other specialty lines 682 1, 296, 634 32. 7 52. 1 11. 6 3.6 Apparel, accessories, etc 3,558 1, 925, 171 1.8 7. 9 85. 4 4.9 Men's and women's 462 370, 483 1. 6 2.9 90. 6 4. 9 Men's and bovs' 1, 025 482, 502 1. 4 1. 7 92. 1 4. 8 Women's and'children's 1, 373 749, 729 . 2 15. 3 79. 6 4. 9 Hosiery and underwear 518 249, 242 . 4 6. 1 88. 1 5.4 Work clothing 180 73, 215 26.8 4. 5 65. 2 3. 5

Adapted from Census of Business, Wholesale Trade.

125 trial and commercial users averaged 13 percent. In more than two-thirds of the instances, sales of Changes from 1948 to 1958 in proportions of sales specified commodity lines averaged 25 percent or that went to specified outlets varied irregularly less of total sales of all commodity lines. In most from one kind of product to another. But, on instances, the degree of specialization decreased the average, the proportions that went to other considerably from 1948 to 1958 (table 90). wholesalers for further distribution increased and The size of establishment, as indicated by the the proportions to other outlets decreased (table vatue of annual sales, varies considerably from one 89). type of wholesaler to another and also from one Similar data for manufacturers' sales branches establishment to another among wholesalers of the and offices and for merchandise agents and brokers same type. In 1958, sales of textile products per in 1958 are not available. Data for 1954 and 1948 establishment averaged $664,000 for merchant are yiven in {J^Ii)» wholesalers, $4,288,000 for manufacturers' sales The degree of specialization of merchant whole- branches and offices, and $2,226,000 for merchan- salers of textile products may be indicated by cen- dise agents and brokers. The average volume of sus data showing proportions of total sales that sales for merchant wholesalers ranged from were accounted for by specified commodity lines. $383,000 for dry goods not specified to $1,901,000 In 1958, the proportion of these sales accounted for piece goods. That for manufacturers' sales for by sales of specified commodity lines ranged branches and offices ranged from $2,769,000 for from less than 6 percent for men's and boys' ho- apparel, accessories, and hosiery to $6,763,000 for siery, underwear, and other garments not specified dry goods and piece goods. Average sales of mer- to about 92 percent for yard goods (table 90). chandise agents and brokers ranged from $1,094,- 000 for apparel not specified to $3,480,000 for piece goods (table 91). The annual volume of sales of TABLE 90.—Proportion of total sales of merchant each type of wholesaler averaged substantially wholesalers of textile products accounted for hy more in 1958 than in 1948. specified commodity lineSj united States, 19J¡S Census reports show that in 1958 about 43 per- and 1968 cent of the wholesalers of textile products had fewer than 4 paid employees and only 9 percent Commodity line 1948 1958 had 20 or more paid employees. The correspond- ing proportions for merchant wholesalers were 50 and 8 percent; for manufacturers' sales branches Clothing and furnishings : Percent Percent 72. 6 53.2 and offices, 32 and 25 percent ; and for merchandise Men's and boys' agents and brokers, 67 and 5 percent respectively. Hosiery, underwear, etc 36. 6 20.3 The proportion of wholesalers with fewer than 4 Suits, coats, and overcoats 56. 1 29.8 paid employees increased from 1948 to 1958 and Work clothing 31. 6 28.2 47.7 19. 7 the proportion with 20 or more paid employees Other- _- - -- -_ decreased, according to census reports. Women's and children's 82.7 64.2 Data on legal form of orginzation of whole- salers of textile products show that in 1958 about Dresses, skirts, and blouses 48. 6 42.1 Suits, and coats (except furs) 51, 2 19. 1 59 percent of the total number were corporations, Hosiery, underwear, etc _ 22. 9 34.4 25 percent were individual proprietorships, 15 Children's and infants' wear 39.1 25.0 percent were partnerships, and about 1 percent were cooperative associations or some other type. Piece goods, domestic 12.9 7.1 From 1954 to 1958, the proportion accounted for Specialty line dry goods: by corporations increased and the proportion Men's and boys' 17.5 14.8 accounted for by every other form of organiza- tion decreased. Of the total sales of textile Hosiery, underwear, etc _ 16. 8 5.6 Suits, coats, and overcoats 13.0 9.4 Çroducts by merchant wholesalers in 1958, about Work clothing 8.9 9.3 9 percent were accounted for by corporations, All other ._ .____ 6.2 5.5 11 percent by partnerships, 9 percent by individual Eroprietorships, and only a small proportion Women's and children's 62.2 17.6 y cooperative associations and other forms of Dresses, skirts, and blouses 12.4 13.5 organization, according to census reports. Suits and coats (except furs) 2.8 10.6 Most of the sales of textile products by mer- Hosiery and underwear, etc 65.2 11.3 chant wholesalers are made on credit. Census Children's and infants' wear 8. 3 6.2 reports show that in 1954 about 97 percent of the Piece goods, domestic _ 85.4 87.0 sales of these products by merchant wholesalers who reported credit sales were made on credit. Yard goods 88.3 91.9 Similar data for more recent years are not avail- Curtains and draperies - 45.6 6.8 Sheets and pillowcases 25.9 7. 9 able. End-of-year receivables averaged about 12 Bedspreads and blankets, etc 20.0 6.0 percent of sales in 1954 and in 1958. Losses from bad debts averaged less than 0.2 percent of sales Adapted from Census of Business, Wholesale Trade. each year. 126 TABLE 91.—Average annual sales per establish- Most of the merchant wholesalers and mer- ment and operating expenses as proportion of chandise agents and brokers for textile products sales^ hy type of wholesaler and iy hind of operate single-unit establishments, but the aver- product sold^ United States^ 19I¡8 and 1958 age annual volume of sales in 1954 was less for single-unit than for multiunit establishments, ac- Average sales Operating cording to census reports. Most of the establish- per establish- expense as ments operated by manufacturers' sales branches ment proportion and offices were multiunits, and the annual volume Kind of product of sales of sales in 1954 averaged more for multiunits than for single units (^^). Similar data for more re- 1948 1958 1948 1958 cent years are not available. Wholesalers supply a ready market outlet to Merchant wholesalers manufacturers for products in rather large volume and relieve the manufacturer of making the many contacts necessary to sell directly to retailers. 1,000 1,000 Dry goods, piece goods, dollars dollars Percent Percent The large-lot purchases made by wholesalers and and notions 672 764 10.9 12 4 the assembly services they perform make pos- sible a reduction in transporation costs by per- General line 2,512 1,459 13.0 13. 8 Piece goods (whole- mitting large-lot shipments over long distances. salers) - 464 659 10. 2 12 8 Wholesalers reduce storage costs and the credit Piece goods (con- risks of manufacturers by advance buying, par- verters) 1, 556 1,901 8.9 10 2 ticularly for goods of seasonal demand. Occa- Other dry goods and notions 283 383 16. 3 15 8 sionally, wholesalers may help finance manufac- turers by advancing funds. They also relieve Apparel, accessories, and them of some of the financial risks which arise hosiery 302 541 13. 9 14 7 in dealing with retailers whose rate of failure is General line 473 802 13. 8 12 3 relatively high. Men's and boys' 277 471 14.2 15. 7 Wholesalers also perform important services Women's and chil- for retailers. The assembly services they render dren's 296 546 15.3 15. 1 enable retailers to obtain their supplies from Hosiery and underwear. 297 481 10. 8 15.2 Work clothing. 219 407 11.4 14 2 relatively few sources. The readily accessible supplies made available by wholesalers to re- tailers enable them to reduce their overhead costs Manufacturers' sales branches by the use of small stocks and more rapid turn- and sales offices over. Total costs of storage are reduced because large-scale storage in a wholesaler's warehouse Dry goods, piece goods, is cheaper than storage on the relatively high-rent and notions 4, 145 6,007 4. 7 5 8 shelves of retailers. In addition, wholesalers pro- Sales branches 5,403 4,677 4.9 9 1 vide credit and other services to retailers. Sales offices 3,204 6,763 4. 4 4 5 It has been suggested that wholesalers could relieve manufacturers of much of their storage Apparel, accessories, and hosiery 1, 552 2,749 8.8 12 8 burdens and their price risks by ordering greater quantities in advance. They might reduce trans- Sales branches 1,619 2, 769 9.8 18 5 portation and selling costs if they bought in Sales offices 1, 514 2,731 8.2 7 8 larger lots at less frequent intervals. They might help in the work of assembling by carrying larger Merchandise agents and lines of merchandise, and they miglit give more brokers aid in the introduction of new products by manu- facturers. Extra care in granting credit might Dry goods, piece goods, avoid keeping in business many incompetent re- and notions 2 ' Q47 ^ ' 4.f^f; 3.0 2. 1 tailers who give no real indication of developing into competent storekeepers {27). Piece goods 3, 579 3,480 3.2 1. 6 Dry goods and notions _ 1, 596 3,401 2. 3 3.3 CHARGES OR COSTS INVOLVED Apparel, accessories, and hosiery 1,017 1,590 3.3 4.0 Gross margins involved in taking finished tex- tile products from manufacturers and delivering Men's and boys' 603 1, 740 4.3 4. 5 Women's and chil- them to ultimate consumers include charges or dren's _ _ 876 1,573 3.3 3. 8 costs for distribution services of manufacturers, Hosiery and underwear. 994 1,765 4. 6 4.2 wholesalers, and retailers. But information on the Other 2, 121 1,094 2. 2 3 4 kind and extent of distribution services performed by the different agencies and the charges made for Adapted from Census of Business, Wholesale Trade. these services is incomplete. In many instances, 127 data on costs of ditsribution services to manufac- total operating expenses that were accounted for turers and to wholesalers are not complete enough by payrolls usually were greater for the larger to show costs for finished consumer goods separate establishments than for the smaller ones. This from those for intermediate products. difference may be accounted for, at least in part, Charges or costs involved in the wholesale dis- by larger ratios of active proprietors of unin- tribution of finished textile products vary with the corporated businesses to total employees for the type of wholesaler, size of the operating unit, kind smaller than for the larger establishments. of product, and from one period to another. Census data show that in 1958 operating expenses TABLE 92.—Number of establishments^ value of averaged 13.2 percent of net sales for merchant sales^ operating expenses^ and payroll for mer- wholesalers, 8 percent for manufacturers' sales chant loholesalers^ iy size group^ United States^ branches and oifices, and 2.7 percent for merchan- 1958^ dise agents and brokers (table 92). These pro- portions varied considerably from one kind of product to another as well as among types of Op- wholesalers. Operating expenses, as proportions erat- Pay- ing roll of sales in 1958, averaged more than in 1948 for ex- as merchant wholesalers and for manufacturers' sales Size group by value of Estab- Total penses pro- branches and offices. They averaged less than in sales (1,000 dollars) lish- sales as por- ments pro- tion 19-48 for merchandise agents and brokers. por- of Data on wholesalers of textile products by tion sales single-unit and multiunit firms show that in 1954 of operating expenses, as proportions of sales and sales of operating expenses that were accounted for by payrolls, varied irregularly with the number of MEN'S AND BOYS' establishments operated per firm (4^). Annual CLOTHING volume of sales per establishment averaged sub- Number 1,000 dollars Percent Percent stantially less for single-unit than for multiunit All 1,001 475, 598 15.6 7.3 firms. Similar data for more recent years are 5,000 or more 11 87, 561 15. 0 6.4 not available. 2,000 to 4,999 20 55, 872 14. 2 7.0 As proportions of sales for merchant wholesalers 1,000 to 1,999 - _- 67 96, 019 14.1 6.4 500 to 999__ . 153 107, 653 15.9 8. 1 of men's and boys' clothing and furnishings (table 300 to 499 145 57, 159 16. 6 8.0 92), women's and children's clothing and acces- 200 to 299 110 27, 190 16.3 7. 9 sories (table 92), and hosiery and underwear 100 to 199 --_ -_ 194 29, 176 17. 6 8. 0 (table 92), operating expenses vary inversely with 50 to 99__ 154 11,570 22. 3 8.8 Less than 50 147 3,398 25.3 IL 1 the size of establishments, as measured by^ annual volume of sales. In 1958, these proportions for WOMEN'S AND wholesalers of men's and boys' clothing and fur- CHILDREN'S CLOTHING nishings averaged 15.6 percent and ranged from All 1,335 733, 202 15. 2 6.9 about 14 percent for establishments with annual sales of $1 to $5 million to 25 percent for estab- 5,000 or more 12 99, 271 12. 2 6.2 lishments with annual sales of less than $50,000. 2,000 to 4,999 47 146, 718 13. 7 6.2 1,000 to 1,999 126 176, 824 15. 6 7.0 Similar proportions for women's and children's 500 to 999 __ 205 145, 858 15. 6 6.7 clothing and accessories averaged 15.2 percent and 300 to 499 - 186 73, 647 16. 3 7.8 200 to 299 _ _ 159 39, 245 17.5 8.3 ranged from about 12 percent for establishments 100 to 199 _ - __- 248 36, 002 17.6 7. 5 with annual sales of $5 million or more to 24.5 50to99__ __ -_ 143 10, 768 23.6 9. 5 percent for establishments with annual sales of Less than 50 _ 209 4,869 24. 5 11.7 less than $50,000. The proportions for hosiery HOSIERY AND and underwear averaged 15.4 percent and ranged UNDERWEAR from about 13 percent for establishments with an- 15.4 7. 4 nual sales of $300,000 to $500,000 to more than 25 All 505 243, 529 percent for establishments with annual sales of 2,000 or more _ _ 22 78, 614 16.3 8.2 less than $50,000. The proportions in 1958 aver- 1,000 to 1,999_ _-_ _- 47 63, 965 14. 4 6.8 500 to 999 54 39, 895 13. 8 6.9 aged more than in 1948 for men's and boys' cloth- 300to498__ 61 24, 211 13. 1 6.2 ing and furnishings, and for hosiery and under- 200 to 299 ___ 56 13, 963 17. 6 7. 9 100 to 199 99 14, 872 18. 1 8.3 wear; but they averaged less than in 1948 for 50 to 99 78 5,781 19. 0 7.8 women's and children's clothing and accessories. Less than 50 __ _ _ 88 2, 228 25.7 12.6 On the average, payrolls accounted for less than half of total operating expenses of wholesalers in ^ Operating expenses include no compensation for 1958—slightly less than the proportion reported active proprietors of unincorporated businesses. a decade earlier (table 92). The proportions of Adapted from Census of Business, Wholesale Trade. 128 Frequency distributions of operating expenses of During the same period, median profit, before merchant wholesalers of dry goods and apparel by federal income tax deductions, averaged 2.46 per- size groups show that in 1958 operating expenses cent of net sales for wholesalers with annual sales as proportions of net sales, varied widely within of less than $500,000 and 1.47 percent of sales for size groups as well as from one group to another wholesalers with annual sales of $2 million or (table 93). Operating expenses ranged from less more. than 7 percent of sales to more than 35 percent. Principal items of cost included in gross margms The proportion of establishments with operating of wholesalers of textile products are selling and expenses of less than 11 percent of sales usually administrative expenses (table 95). During 1960- was substantially greater for the medium and 62, selling expenses accounted for about 6.7 per- larger size groups than for the smaller ones. The cent of net sales, or 40 percent of gross margins, proportion of establishments with operating ex- and 44 percent of total operating expenses. Ad- penses of 25 percent or more of sales usually was ministrative expenses durmg this period accounted greater for the smaller than for the medium and for 4.6 percent of net sales, or 27 percent of gross larger size groups. margins, and 30 percent of total operating ex- Operating expenses of w^iolesalers of textile penses. The proportion of net sales accounted for products, as proportions of sales, varied somewhat by administrative expenses averaged less, and that from one geographic division to another. The accounted for by selling expenses averaged more proportion of net sales of wholesalers of textile for the larger than for the smaller establishments. products accounted for by payrolls also varied con- Buying, receiving and shipping, and occupancy siderably from one region to another (table 94). were relatively small items of expense. As indicated by reports of the National Associa- Operating expenses and payrolls of wholesalers tion of Textile and Apparel Wholesalers, average of textile products accounted, on the average, for gross margins of textile and apparel wholesalers, larger proportions of net sales for establishments which since 1939 had ranged between 15 and 18 operated by corporations than for those operated percent of total sales, amounted to about 17 percent by partnerships or by individual proprietorships, of sales in 1962 (table 95). Total operatmg ex- according to census reports. These differences may penses decreased from more than 14 percent of be accounted for, at least in part, by the fact that sales in 1939 to less than 12 percent in 1947, and operating expenses include no compensation for amounted to about 15 percent in 1961 and 1962. active proprietors of unincorporated businesses. Gross margins and operating expenses usually These reports also show that operating expenses average less for establishments with large volumes and payrolls of wholesalers of textile products of sales than for those with small volumes (table averaged smaller proportions of net sales for the 95). During the 3 years 1960-62, for example, larger than for the smaller establishments. median gross margins for wholesalers of textiles As proportions of net sales and of tangible net and apparel with annual sales of less than $500,000 worth, median profits of wholesalers of apparel averaged 17.6 percent of net sales and those with and household textiles, after federal income taxes annual sales of $2 million or more averaged 16.2 and excess-profit taxes, decreased markedly in the percent of sales. During this 3-year period, me- post-World War II period (table 96). In 1961, dian operating expenses of these wholesalers aver- these profits ranged from 0.86 percent of sales for aged 15.3 percent of net sales for those with annual hosiery and underwear to 2.47 percent for men's sales of less than $500,000 and 14.6 percent for furnishings, and averaged 1.47 percent for all those with annual sales of $2 million or more. products combined. They ranged from 2.81 per-

TABLE 93.—Frequency distribution hy hind of product and operating expense ratios of merchant whole- salers of dry goods and apparel^ United States^ 1958

Proportion of establishments having ratios of operat- Estab- ing expense to sales of— Kind of product lish- ments 7.0 to 11.0 to 17.0 to 25.0 to 35.0 or than 7.0 10.9 16.9 24.9 34.9 more

Dry goods: Number Percent Percent Percent Percent Percent Percent Piece goods (wholesalers) 1,891 8. 1 30.9 21. 1 18.9 12. 2 8.8 Piece goods (converters) 679 16. 2 34. 8 25. 6 14. 1 6.2 3. 1 General line, notions, and other_ 1,731 4.2 6.6 33.5 29. 1 14. 0 12. 6 Apparel, accessories, and hosiery: Men's and boys' clothing 1,001 6. 1 11. 9 43. 4 18. 7 11. 5 8. 4 Women's and children's clothing 1,335 5.8 9. 5 47. 3 18.4 10. 2 8. 8 Hosiery and underwear 505 7. 5 13. 3 44. 5 13.9 13. 9 6. 9

Adapted from Census of Business, Wholesale Trade. 129 cent of tangible net worth for hosiery and under- distribution of finished textile products. Infor- wear to 5.91 percent for dry goods, and averaged mation on operating expenses of existing agencies 4.24 percent for all products combined. In 1962, indicates that costs of wholesale distribution of these proportions averaged less than those in 1961, finished textile products might be reduced by con- but they were higher than those in 1960. centrating larger proportions of the services in the hands of the larger and more efficient concerns. TABLE 94.—Nvmber of merchant loholesale estab- lishments^ average volume of sales^ operating expenses^ and payroll as proportion of sales^ hy TABLE 95.—Medians of gross margins, operating type of product and region, united States, expenses, and profits for textile and apparel 1958-^ ' wholesalers, United States, 1939, 1959S2 ^

Oper- Item 1939 1959 1960 1961 1962 ating Pay- Estab- Average ex- roll as SALES UNDER $500,000 Product and region lish- sales per penses pro- Per- Per- Per- Per- Per- ment establish- cent cent cent cent cent as pro- por- Gross margin 2 ment por- tion of 17. 68 17. 55 18. 50 17.30 16. 96 tion of sales sales Total operating expense- 15.70 15. 75 16.80 13.90 15. 24 Administrative 4. 69 4.80 5. 80 5. 10 4. 60 1.000 Buying 1. 50 1. 00 . 60 . 50 . 86 Piece goods: Number dollars Percent Percent Selling 7. 70 5.95 7. 10 5. 80 6. 10 New England 98 530, 765 12. 8 6. 3 Receiving and ship- Middle Atlantic 1,407 717, 207 11. 9 5. 7 ping 1. 10 2. 15 1. 30 1. 10 1. 96 East North Central. _ 102 408, 176 22. 3 10. 5 Occupancy 1. 27 1. 20 1.30 1. 50 .85 West North Central.. 38 631, 105 17. 2 9. 6 South Atlantic 79 407, 911 14.4 7. 9 Profits 1. 17 1.85 2. 30 2. 60 2. 48 East South Central-, 23 715,217 14. 8 7. 6 West South Central. _ 42 660, 762 12. 6 6. 0 SALES $500,000 TO $1 MILLION Mountain 8 458, 375 15. 0 9. 1 Pacific 129 487, 116 16.7 8.4 Gross margin 2 16. 64 17. 35 17. 30 17. 70 17. 74 United States 1,926 659, 228 12.8 6.2 Total operating expense- 15. 52 15. 00 15. 65 15. 80 15. 10 Men's and boys' cloth- Administrative 4. 34 4.80 5.00 5.40 5.80 ing, etc.: Buying 1.35 . 50 . 40 .40 .50 New England 67 348, 239 15. 6 8.4 Selling 6. 62 6.40 6.20 6. 30 7. 15 Middle Atlantic 515 462, 647 15. 6 6. 9 Receiving and ship- East North Central. _ 127 432, 055 16. 0 8. 2 ping 1. 06 1.05 1. 20 1. 60 1. 70 West North Central.. 54 413, 741 15. 0 8. 2 Occupancy 1. 39 1. 15 1. 30 1. 20 1. 10 South Atlantic 98 527, 408 15.2 8. 0 East South Central. . 27 576, 815 18.4 9. 0 Profit 3 1. 56 2. 50 1. 80 2.00 2. 40 West South Central.. 24 1, 090, 125 13. 1 3. 9 Mountain. __ 11 475, 818 14.5 7 2 SALES $1 TO $2 MILLION Pacific 102 441, 539 17. 1 7 Q Gross margin 2 15. 15 16. 90 17. 20 17.40 16. 10 United States 1,025 470, 734 15.6 7. 3 Total operating expense- 13. 44 14. 20 15.30 14. 50 15. 24 Women's and children's clothing: Administrative 4. 29 4.70 5.20 4. 80 5.00 New England.. _ 86 618, 163 15.4 7. 2 Buying .92 . 70 .90 1. 50 .45 Middle Atlantic 826 552, 753 15. 1 6. 6 Selling 7.05 6. 10 6. 50 6. 20 7. 90 East North Central.. 117 630, 274 15. 2 8. 4 Receiving and ship- West North Central.. 59 393, 695 18. 1 7.9 ping . 94 1.35 1.60 1. 90 1. 55 South Atlantic 82 475, 512 14. 1 6. 6 Occupancy .90 1. 10 1. 40 1. 40 1. 28 East South Central.. 25 411, 320 10. 2 4. 1 West South Central.. 39 399, 641 15.6 7.2 Profit 3_ 1. 69 1. 90 1. 60 1. 50 . 78 Mountain 12 921, 500 16. 2 9 6 Pacific 127 528, 378 15. 1 7 0 SALES $2 MILLION AND OVER United States... 1,373 546, 052 15. 2 6.9 Gross margin 2 15. 40 16. 05 16. 20 16. 00 16. 50 1 Operating expenses and payrolls include no compen- sation for active proprietors of unincorporated businesses. Total operating expense- 14. 29 14. 05 15.00 14. 40 14. 57 Adapted from Census of Business, Wholesale Trade. Administrative 3.27 4. 20 4. 15 4. 10 4. 20 Buying 1. 05 .85 1. 20 . 90 1. 30 MEANS AND IMPORTANCE OF IMPROVEMENT Selling 7. 41 6. 70 7. 20 6. 70 6. 76 Receiving and ship- Most of the factors involved in increasing effi- ping 1. 17 1. 05 1. 10 1. 00 1.06 ciency and reducing costs of distributing interme- Occupancy .99 1. 05 1. 15 1. 10 .93 diate textile products (p. 124) are also important Profits 1. 50 1.40 1. 35 1. 50 1. 55 in connection with improvements in the wholesale See footnotes at end of table. 130 TABLE 95.—Medians of gross ^nargins^ operating erating expenses of merchant wholesalers of men's expenses^ and profits for textile and apparel and boys' clothing and furnishings ranged from wholesalers^ united States^ 1939,1959-62''—Con, an average of less than 15 percent of net sales for concerns with annual sales of $1 million or more to Item 1939 1959 1960 1961 1962 more than 25 percent for those with annual sales of less than $50,000. Operating expenses of whole- salers of women's and children's clothing and fur- ALL STORES Per- Per- Per- Per- Per- nishings ranged from about 12 percent for whole- cent cent cent cent cent Gross margin 2 16. 25 16. 80 16. 80 17. 10 16. 80 salers with annual sales of $5 million or more to about 24 percent for those with annual sales of less Total operating expense. 14. 61 14. 40 15. 30 14. 90 15. 20 than $50,000. For merchant wholesalers of hosiery Administrative 4. 18 4. 50 4. 80 4. 50 4. 46 and underwear, operating expenses ranged from Buying 1. 29 .70 .80 . 80 1. 05 an average of about 13 percent of sales for con- Selling 6.89 6.40 6. 50 6. 50 7. 16 cerns with annual sales of $300,000 to $400,000 to Receiving and ship- about 26 percent for those with annual sales of ping 1. 10 1. 30 1. 20 1. 40 1.35 Occupancy 1. 14 1. 10 1.20 1. 40 1. 10 less than $50,000. From 1939 to 1961, median operating expenses Profit 3 1. 55 1. 90 1. 70 1. 80 1. 90 per dollar of sale for textile and apparel whole- salers averaged about 13 percent more for houses 1 These data are based on annual reports of from 40 to with annual sales of less than $500,000 than for 64 wholesalers, not selected at random, made to National houses with annual sales of $2 million and more. Association of Textile and Apparel Wholesalers. This difference has decreased in recent years. Al- 2 Gross margins for 1956 and 1957 are the sum of net operating profit and total operating expense. though factors other than differences in size may 3 As reported by textile and apparel wholesalers, some also be involved, it appears reasonable to assume before and after federal income tax deductions. After that at least some of the differences in operating 1950, profits are before federal income tax deductions. expenses may be attributed to differences in effi- Derived from unpublished reports of National associa- ciency arising from differences in volume of sales. tion of Textile and apparel Wholesalers. If this assumption is valid, apparently per unit The possibility of reducing operating expenses costs might be reduced by increasing the propor- of wholesalers of finished textile products by in- tion of the total volume of finished textiles handled creasing the volume of business appears to be sup- by the larger wholesalers or by increasing the vol- ported by census data. In 1958, for example, op- ume handled by the smaller ones.

TABLE 96.—Median net profits, after tax deductions, of toholesalers of apparel and household textiles, as proportions of net sales and of tangible net worth, by kind of product, united States, specified years, 1935-62

Net profits ^ as proportion of net sales ^ Type of business 1935-39 1941 1948 1959 1960 1961 1962

Percent Percent Percent Percent Percent Percent Percent Dry goods 108 2.95 1.47 0.78 0. 84 1.34 0.98 Men's furnishings 2.68 1. 26 1. 59 .80 2.47 1.63 Hosiery and underwear_ ,74 3. 97 3.07 .71 . 14 .86 Women's wear ^ ,56 2. 50 2. 84 1. 30 1. 54 1. 22

Net profits as proportion of tangible net worth *

Dry goods 4. 24 13.08 7.63 3.61 3.30 5. 91 4. 23 Men's furnishings 11. 77 4. 57 6. 41 3.93 4.89 5.64 Hosiery and underwear. 3.02 14.67 9.59 3.43 .81 2. 81 Women's wear ^ 3.57 13.59 13. 46 5. 68 4. 26 3.35

1 Profits after full depreciation on buildings, machinery, 3 Includes coats, suits, and dresses. equipment, furniture, and other assets of a fixed nature; ^ The sum of all outstanding preferred or preference after reserves for federal income taxes and excess-profit stocks (if any) and outstanding common stocks, surplus, taxes; after reduction in the value of inventory to cost or and undivided profits, less any intangible items in assets market, whichever is lower; after charge-offs for bad debts; such as goodwill, trademarks, patents, copyrights, lease- after all miscellaneous reserves and adjustments but before holds, mailing lists, treasury stock, organization expenses, dividends or withdrawals. and underwriting discounts and expenses. 2 The dollar volume of business transacted for 365 days net after deductions for returns, allowances, and discounts Adapted from (33). from gross sales. 131 Comparisons of operating expenses for whole- low-cost operating establishments for handling salers of different kinds indicate that reductions in specified products developed on the basis of cost- costs might be made, in some instances at least, by engineering and other information. These speci- the integration of manufacturing and distributing fications would need to show the kinds, amounts, functions. In 1958, according to census reports, and costs of facilities and equipment needed; the operating expenses for wholesaling apparel, acces- organization and operation of the concern; and sories, and hosiery, for example, averaged 14.7 detailed costs, along with the cost items included, percent of net sales for merchant wholesalers, 12.8 for each major service performed (105), percent for manufacturers' sales branches and Such information should supply a basis for in- offices, and 4 percent for merchandise agents and dicating the more feasible means of improvement. brokers. Operating expenses for wholesaling dry But such analyses may require specialized train- goods, piece goods, and notions averaged 12.4 per- ing and experience relating to the particular kinds cent of net sales for merchant wholesalers, 5.8 per- of operations involved. Well-informed operators cent for manufacturers' sales branches and offices, in the business could suggest the kinds of infor- and 2.1 percent for merchandise agents and brokers mation that would be of greatest usefulness to (table 91, p. 127). Information is not adequate to them in reducing their costs, and their advice and show the extent to which these differences are ac- assistance might be used to advantage in planning counted for by differences in services rendered. and developing the required research. An adequate appraisal of the most effective The relative importance of increasing the effi- means of increasing efficiency and reducing costs ciency and reducing the costs of wholesaling tex- of wholesale distribution of finished textile prod- tile products may be indicated by data showing ucts would need to be based on additional informa- that in recent years gross margins for wholesaling tion showing the influences of the various factors cotton products averaged about 8 percent of the on costs. Detailed cost data for a representative retail value of the finished apparel and household sample of each type of wholesaler would be needed goods, almost two-thirds of the returns to growers to show, under actual operating conditions, the for farm production of the cotton used, and more nature and extent of the services rendered, the than twice as much as total costs of ginning and influence of the various factors on the efficiency merchandising the raw cotton. Gross margins for and cost of performing each important service, and wholesaling finished products made of wool were the items of cost included. In addition, it might relatively greater than those indicated for cotton be helpful to have detailed specifications for model. products.

RETAILING TEXTILE PRODUCTS Eetailers of textile products bring together, at in 1958. Stores with annual volume of sales of places convenient to consumers, varied stocks of $1 million or more accomited for 3.6 percent of the goods which satisfy the needs and tastes of the total number of stores and 67 percent of the total community. They also pass back to wholesalers value of sales in 1958, compared with 3 and 64 and to manufacturers information as to the de- percent respectively in 1948. Payrolls, as pro- mands of consumers for use as a guide to further portions of sales, increased from 14 percent in production. Eetailers perform some of the serv- 1948 to 15 percent in 1958, and varied directly with ices of storage, assume some of the risks involved the size of the store, as indicated by annual volume in holding goods until they are needed by con- of sales. sumers, and extend credit to consumers who can- In 1958, department stores accounted for less not afford or do not wish to pay cash. In addi- than 4 percent of the total number of the general tion, they render delivery and other services to merchandise group, 71 percent of the stores with consumers. annual sales of $1 million or more, and 62 percent of total sales. These stores combine under one METHODS AND PRACTICES roof and one management several divisions, each equivalent to a specialized store. They take over In 1958 the number of general merchandise re- some, but not all, of the functions of wholesalers tailers ^ in the United States was 82,419 (table in that they buy some of their products directly 97). According to census reports, the number had from producers. Although the volume of sales increased more than one-fifth during the decade per store averaged $4,260,000 in 1958, orders re- before 1958. Total value of sales increased 29 ceived by manufacturers from department stores percent, and average volume of sales per establish- usually average less than those from wholesalers ment increased from $251,000 in 1948 to $258,000 and cutters. This is accounted for in part by the fact that the number of items handled usually is ® Includes department and variety stores, other estab- lishments primarily selling household linens and dry large and the volume of sales of specific items may goods, and either apparel and accessories or furniture and be no larger than that of other independent re- homefurnishings. tailers with whom they compete. 132 TABLE 97.—Number of specified types of retail stores^ volume of sales^ and payroll as proportion of sales^ hy size group^ united States^ 1958 ^

Stores 2 Sales Payroll as Type of store and size group by volume of proportion sales (1,000 dollars) of sales Total Proportion Total Proportion

1,000 GENERAL MERCHANDISE Number Percent dollars Percent PercetiTût All _ 82, 419 100.0 21, 278 100.0 14.8 1.000 or more 2,997 3.7 14, 302 67. 2 16. 5 300 to 999 --- -- 5,698 6.9 3,038 14.3 14. 5 100 to 299 --- -_ _- 11, 481 13.9 1,949 9. 2 12. 3 50 to 99 ------13, 239 16. 1 924 4. 3 8. 3 30 to 49 - -_ - - 14, 336 17.4 551 2.6 4. 7 10 to 29 - --- _ ___ _ 24, 161 29.3 451 2. 1 3. 1 Less than 10- - - - 10, 507 12. 7 63 .3 2. 1

APPAREL AND ACCESSORY All 113,041 100. 0 12, 075, 471 100.0 13. 7 1,000 or more __ ___ 968 .9 2, 191, 599 18. 1 17. 1 300 to 999 -- - 5,495 4.9 2, 688, 227 22. 3 14. 9 100 to 299 ------23, 644 20. 9 3, 800, 291 3L5 13. 6 50 to 99 ______-_ 29, 339 25.9 2, 081, 393 17. 2 11. 7 30 to 49 ___ - __ 20, 379 18. 0 796, 190 6.6 9. 5 10 to 29 ______- 23, 837 21. 1 463, 243 3. 8 7. 8 Less than 10 _ _ _ _ _ 9,379 8.3 54, 528 .5 5. 8

MEN'S AND BOYS' APPAREL All _-_ _-- _ 21, 050 100. 0 2, 361, 841 100.0 13 9 1,000 or more 170 .8 310, 539 13.2 18 2 300 to 999 _ ___ 1, 136 5. 4 549, 095 23. 2 16 5 100 to 299 - -_ --- 5,312 25.2 852, 145 36. 1 13. 8 50 to 99 _ _ _ _ _ - 6,077 28. 9 434, 804 18.4 10 9 30 to 49 _ __ - 3, 555 16. 9 139, 728 5.9 8 4 10 to 29 _ __ 3,403 16. 2 67, 563 2.9 6 6 Less than 10 ___ 1,397 6.6 7,967 .3 4 8

WOMEN'S READY-TO-WEAR All 25, 224 100. 0 3, 877, 858 100.0 14 8 1,000 or more 477 1.9 1, 134, 056 29.3 17 7 300 to 999 1,843 7. 3 930, 308 24. 0 14 9 100 to 299 _ _ _ 6,312 25.0 1, 029, 025 26. 5 13 7 50 to 99 7,246 28.7 512, 631 13. 2 12 0 30 to 49_ _ _ _ 4,678 18.6 183, 567 4. 7 10 9 10 to 29 __ 4,103 16.3 84, 850 2.2 11 3 Less than 10 __ _ _ _ 565 2. 2 3,421 . 1 20 4

FAMILY CLOTHING All 13, 036 100.0 2, 290, 363 100.0 13.3 1,000 or more______259 2.0 638, 194 27.9 15 7 300 to 999___ 1,327 10.2 662, 935 28. 9 13 0 100 to 299 ___ __ 3,663 28. 1 601, 300 26. 2 12 7 50 to 99______3,758 28.8 267, 926 11. 7 10.6 30 to 49_ _ 2, 150 16. 5 84, 642 3. 7 9.9 10 to 29 1,636 12.5 33, 945 1. 5 11 2 Less than 10 _ 243 1.9 1,421 . 1 24. 8

1 Payrolls include no compensation for active pro- 2 Establishments operated entire year. prietors of unincorporated businesses. Adapted from Census of Business, Retail Trade.

Limited-price variety stores accounted for 24 stores increased about 10 percent from 1948 to percent of the general merchandise stores, 14 per- 1958, and the average volume of sales per store cent of the stores with annual sales of $1 million increased from $85,000 in 1948 to $106,800 in 1958. or more, 17 percent of those with annual sales of Apparel^ and accessory stores with annual sales less than $50,000, and about 16 percent of total of $1 million or more accounted for less than 1 sales, according to census reports. percent of the number of stores in 1948 and in The number of retail apparel and accessory 1958, but the proportion of total sales accounted 133 for by these stores decreased from 20 percent m tne average value of annual sales per single-unit 1948 to 18 percent in 1958. Payrolls, as propor- store decreased 31 percent and that for multiunit tions of sales, increased from about 12 percent in stores increased 33 percent. The proportion of 1948 to almost 14 percent in 1958, and varied the value of total sales accounted for by multi- directly with the size of the store, as indicated by units increased from about 61 percent in 1948 to volume of sales. 75 percent in 1958 (table 99). Data on legal form of organization of retailers For apparel and accessory retail stores, the pro- of textile products show that in 1958 about 57 portion operated as single units decreased from percent of the stores were operated as individual about 80 percent in 1948 to 75 percent in 1958, and proprietorships, 27 percent by corporations, and almost 16 percent as partnerships (table 98). the proportion of the value of total sales accounted From 1948 to 1958, the proportion of general mer- for by single-unit stores decreased from 61 percent chandise stores operated as individual proprietors in 1948 to 56 percent in 1958. During this period, increased, whereas the proportion of apparel and the average value of annual sales per store in- accessory stores that were operated as corpora- creased for both single-unit and multiunit stores. tions increased. Average annual sales per store These data for all apparel and accessory stores \yere much greater for stores operated as corpora- combined are fairly typical of those for men's and tions than for other stores, and the proportions of boys' apparel retail stores and for women's ready- total sales of general merchandise and apparel and to-wear retail stores. accessories stores that were accounted for by cor- The number of mail-order houses with payrolls porations increased from 73 percent in 1948 to 77 engaged in selling general merchandise increased percent in 1958. Only small proportions of the from 60 in 1948 to 128 in 1958, according to census number of stores and of the total sales were ac- reports. These houses accounted for about 7 per- counted for by stores operated as "other" legal forms, including cooperatives, but the proportions cent of total sales of general merchandise stores increased from 1948 to 1958. each year. Most of the sales of these mail-order Large proportions of retail distributors of tex- houses are accounted for by department stores. tile products operate single-unit stores, according The number of mail-order houses handling ap- to census reports. Of the total number of general parel and accessories increased from 92 in 1948 to merchandise stores, the proportion operated as 127 in 1958, and the proportion of total sales of single units increased from about 77 percent in these products accounted for by these houses 1948 to 80 percent in 1958. During this period. amounted to less than one percent each year.

TABLE 98.—Number of retail stores^ average annual sales per store^ and payroll as proportion of sales^ hy hind of business and legal form of organization^ united States^ lOJiß and 1958

Establishments Average annual sales Payroll as proportion per store of sales Kind of business and legal form of organization

1948 1958 1948 1958 1948 1958

General merchandise: Number Number Dollars Dollars Percent Percent Individual proprietorships 27,801 56,299 34,000 37,700 7. 1 5.6 Partnerships 9,120 11,115 80,700 86,700 8.5 8.7 Corporations 15,536 18,962 919,400 990,100 15. 2 16. 1 Other legal forms 87 268 115,600 220,300 10. 9 12. 7 All 52,544 86,644 304,000 252,500 14.4 14. 8 Apparel and accessories: Individual proprietorships 65,303 60,324 37,500 47,400 8. 4 9. 6 Partnerships 23,365 20,757 76,300 89,200 8.7 10. 7 Corporations 26,423 37,502 210,300 208,100 14. 7 15.7 Other legal forms 155 176 104,400 75,300 13. 0 16. 1 All 115,246 118,759 85,100 105,500 12. 0 13. 6 Both: Individual proprietorships 93,104 116,623 36,400 42,700 8.0 7.9 Partnerships 32,485 31,872 77,600 88,300 8. 7 10. 0 Corporations 41,959 56,464 472,800 470,000 15. 1 16. 0 Other legal forms 242 444 108,400 162,800 12. 2 13. 3 All 167,790 205,403 153,600 167,500 13. 5 14.3

Adapted from Census of Business, Retail Trade.

134 TABLE ^^,—Number of specified types of stores, volume of sales, and payroll as proportion of sales, hy number of store units, united States, 1958 ^

Stores Sales Payroll as Type of store and store units proportion Total Proportion Total Average per of sales store

GENERAL MERCHANDISE Number Percent 1,000 dollars Dollars Percent All _ - - - 86, 644 100. 0 21, 879, 106 252, 529 14.8

Single unit 68, 943 79.6 5, 518, 481 80, 044 11. 2 Multiunit 17, 701 20. 4 16, 360, 625 924, 329 16. 0 2 or 3 3, 557 4. 1 1, 730, 996 486, 645 18. 0 4 or 5 1, 151 1. 3 1, 134, 844 985, 964 17. 5 6 to 10 1,010 1. 2 1, 168, 797 1, 157, 225 16. 7 11 to 25 1,377 1.6 1, 083, 322 786, 726 15. 1 26 to 50 1,009 1. 1 2,430, 114 2, 408, 438 17. 2 51 to 100 1, 103 1. 3 946, 432 858, 053 16. 4 101 or more 8,494 9.8 7, 866, 120 926, 080 14. 9

APPAREL AND ACCESSORY All 118, 759 100. 0 12, 525, 451 105, 469 13. 6 Sinefle unit 88, 634 74.6 6, 960, 136 78, 527 12.9 Multiunit 30, 125 25. 4 5, 565, 315 184, 741 14.5 2 or 3 10, 711 9. 0 1, 561, 629 145, 797 16. 0 4 or 5 2, 587 2. 2 506, 802 195, 903 15. 9 6 to 10 - - 2,079 1.8 524, 687 252, 375 16. 4 11 to 25 3,086 2. 6 596, 215 193, 200 14. 7 26 to 50 2, 156 1.8 399, 196 185, 156 12. 8 51 to 100 2, 199 1.8 459, 938 209, 158 14. 5 101 or more 7,307 6. 2 1, 516, 848 207, 588 12. 3

MEN'S AND BOYS' APPAREL All -- - 21, 954 100. 0 2, 459, 484 112, 029 9.8 Siniïle unit 18, 108 82. 5 1, 687, 674 93, 200 12. 9 Multiunit 3,846 17. 5 771,810 200, 679 15.9 2 or 3 _ _ _ 1,892 8.6 288, 543 152, 507 16. 0 4 or 5 347 1. 6 77, 995 224, 769 16. 5 6 to 10 327 1.5 91, 928 281, 125 18. 2 11 to 25 505 2. 3 119, 427 236, 489 14. 4 26 or more 775 3. 5 193, 917 250, 215 15. 4

AVOMEN'S READY-TO-WEAR All 26, 559 100. 0 4, 009, 098 150, 951 14. 7 Single unit 18,411 69.3 2, 019, 777 109, 705 14.6 Multiunit 8,148 30. 7 1, 989, 321 244, 148 14.8 2 or 3 3,249 12. 2 557, 420 171, 567 16. 8 4 or 5 _ _ _ 748 2.8 217, 221 290, 402 15. 9 6 to 10 606 2.3 194, 334 320, 683 16. 0 11 to 25 __ _ 763 2. 9 222, 587 291, 726 16.4 26 to 50 - _ 829 3. 1 210, 525 253, 951 12.3 51 or more _ _ _ _ 1,953 7.4 587, 234 300, 683 7.5

1 Payrolls include no compensation for active proprietors of unincorporated businesses. Adapted from Census of Business, Retail Trade.

Much of the aggregate business done by mail- Charges or Costs Involved order houses is accounted for by a few large com- panies that do a nationwide business of selling to Gross retail margins, or the spread between consumers by mail {27), These are large-scale merchandise costs and net sales for department buyers and apparently they do most of their buy- stores, ranged from 35.4 percent of net sales in 1947 ing direct from manufacturers. The smaller mail- to 36.4 percent in 1959 and 1960, and amounted to order houses buy larger proportions of their re- 36.13 percent in 1962 (table 100). These margins quirements from wholesalers. represent typical performance of department

135 Stores, as reported by the National Retail Mer- increased to 35.95 percent in 1960, and amounted to chants Association. In arriving at these margins, 35.99 percent in 1962. the Association made adjustments in the cumula- Payroll expenses (salaries, wages, and bonuses tive mark-on to allow for markdowns for stock for all employees, including executives), excluding shortages, workroom costs, and cash discounts. pensions and payroll taxes, were by far the largest In 1962, typical gross margins by departments single item of expense for department stores. The ranged from about 28 percent of net sales for bed- proportion of net sales accounted for by payroll ding and domestics to 45 percent for corsets and expenses, which ranged between 15 and 19 percent brassieres (table 101). since the 1930's, amounted to 18.10 percent in 1962 (table 102). Keal estate costs, advertising, and TABLE 100.—Merchandising expense^ profits and other expenses, as proportions of net sales, in- sales data^ expressed as percentage of sales^ creased after World War II, and totaled 17.9 per- showing typical performance of department cent in 1962. Net operating results show improve- stores, United States^ 19^7 and 1959-ß2 ment from losses of more than 6 percent of net sales in 1932 to profits before tax deduction of almost 10 percent of net sales in 1945. In the post- Item 1947 1959 1960 1961 1962 war period, operating profits decreased. In 1962, profits before tax deductions amounted to 5.14 per- Merchandising data: Percent Percent Percent Percent Percent cent of net sales and profits after Federal income Cumulative mark-on 38.2 38. 95 39. 3 39. 05 39. 13 Markdown at retail ^ 6. 6 6.5 6. 9 6. 90 6. 83 tax deductions amounted to 2.6 percent of net sales. Stock shortage 1. 3 1.20 1.4 1. 30 1. 32 In 1950 and in 1957, gross operating margins Workroom net cost . 6 . 55 .6 . 60 . 63 for department stores usually were relatively Cash discount 2.7 2. 70 2.8 2.80 2. 81 greater for stores with the larger than for those Gross margin 35. 4 36. 40 36. 4 36. 25 36. 13 with the smaller volume of annual sales {^^ Jf7). In 1962, average gross margins of these stores Expense data: varied irregularly with annual volume of sales, Total payroll 16. 85 17. 80 18. 25 18. 05 18. 10 but stores with the smallest annual volume of sales Total real estate costs _ _ 2. 2 3. 00 3.25 3. 25 3.20 Total advertising 2. 45 2. 70 2. 7 2. 75 2. 58 had the smallest average gross margin (table 103). All other expense. _ 8. 6 11. 30 11. 75 11. 80 12. 14 Data on typical operating ratios of 240 dry goods and general merchandise stores, as reported Total expense 30. 1 34. 80 35. 95 35. 85 36. 02 by Dun and Bradstreet, Inc., show that in 1957 Accounts receivable ^ e) 1. 75 1. 75 1. 90 1. 96 retailers' gross operating margins averaged 29.5 percent of net sales, compared with 27.5 percent Net earnings from mer- in 1949, and ranged from about 28 percent for un- chandising 5.3 3.35 2. 20 2.30 2. 07 Net other income 2.0 2. 40 2. 40 2. 65 2. 60 profitable stores to almost 32 percent for stores Net gain before taxes— 7. 3 5. 75 4. 6 4.95 5. 14 with profits of 6 percent or more of net sales (.^4) • Federal taxes 2. 75 2.9 2.3 2. 45 2.73 These margins varied irregularly with annual 4. 55 2.85 2.3 2. 50 2. 64 volume of sales and with proportions of sales on Net gain after taxes. . credit and directly with profitableness of the busi- Sales by terms of sale: ness. Owners' compensation, wages, and occu- Cash 42. 0 37.0 39. 5 * 39.45 ^39.59 pancy costs were the main items of expense. Net C.O.D. and layaway 8.0 4. 0 4. 5 Regular charge 43. 5 41. 5 38.0 60. 55 60. 41 profits before income tax deductions averaged less Installment and other than 2 percent of net sales. term accounts 6.5 17. 5 18.0 Typical operating results for 302 children's and infants' wear stores show that in 1957 gross mar- 1 Include employee discounts. gins averaged 32.5 percent of net sales, the same 2 From handling and delivery services only. as in 1950, and ranged from 30.3 percent for un- 3 Data not available. * Cash and c.o.d. profitable and neighborhood stores to 35.7 percent 5 All credit accounts, including layaways. for stores with net profits of 7 percent or more of Adapted from {71). net sales {H), These margins varied directly with proportions of sales made on credit and with Data on operating results of department stores, annual volume of sales. Owners' compensation, as reported by the Harvard Bureau of Business wages, and occupancy expenses accounted for a Eesearch, show that gross margins increased from large proportion of total expenses. Expressed as 33.1 percent of sales in 1932 to more than 38 per- proportions of sales, owners' compensation and cent during World War II, decreased to 35.2 per- occupancy expenses varied directly and wages var- cent in 1949, increased to 36.4 percent in 1956, and ied inversely with volume of annual sales and with amounted to 36.13 percent in 1962 (table 102). the proportion of sales made on credit. Net profits Total operating expenses decreased from 39.5 per- before income tax deductions averaged 1.7 per- cent of sales in 1932, which was 6.4 percentage cent of net sales and varied directly with volume points above gross margins, to 27.8 percent in 1945, of annual sales. 136 TABLE 101.—Merchandising da ta for t ypical performance of depart ment st ores, by depart ments, United States, 1962^

Cumu- Mark- Stock Work- Cash News- Salary De- Other Department lative down short- room dis- Gross paper (sales livery expense mark- at age at net count margin space per- expense and on retail retail cost cost sonnel) profit

Piece goods, household: Textiles: Percent Percent Percent Percent Percent Percent Percent Percent Percent Percent Piece goods. _. 41. 9 8.6 2.2 0.2 1.2 37.0 2.2 9. 1 0.6 25. 1 Patterns 34. 9 .6 . 1 33. 9 .8 13.8 .8 18. 5 Household textiles 36.0 5.3 . 7 . 1 1.7 34.0 2.8 6.3 1.6 23.3 Ready-to-wear accessories : Neckwear and accessories 40.5 7.2 1.4 . 1 4.0 39.8 1.9 9.6 .5 27.8 Women's and children's gloves_ 42.4 4.4 1. 1 . 1 3.0 42.2 1.9 8.2 .3 31.8 Corsets and brassieres 42.9 2. 7 .5 .3 4.5 45.2 1. 6 7.0 .6 36.0 Hosiery - 40. 6 2.8 .3 .2 .4 39. 1 1.8 7.4 . 9 29.0 Underwear and negligees 39.6 4.8 .8 . 1 2.9 39.3 2.0 7.0 . 7 29.6 Lingerie _ _ 39.5 4. 5 .7 . 1 2.6 39.3 1.9 7.0 .7 29.7 Negligees and robes 40. 1 6.6 1.2 . 1 5.0 40.2 2.5 6.6 .9 30.2 Women's and children's outer apparel: Coats and suits 40.8 13.4 1.0 .8 5.3 36.3 2. 9 5.6 .4 27.4 Dresses _ _ 41.5 14.8 1.7 1.0 5.4 35.5 3. 1 6.7 .5 25.2 Blouses and sportswear 40.0 10.9 2.0 .2 5.2 37.4 2.5 7.2 .4 27.3 Infants' apparel, etc 38.7 6.8 .9 . 1 3.4 36.8 2.4 7.8 1. 1 25.5 Aprons and housedresses, etc_- 39.4 9.6 .9 .2 5.3 38. 1 3.3 6.7 1.3 26.8 Furs - 32. 5 6.0 .6 .7 5.7 31. 3 4.2 5.0 . 1 22.0 Men's and boys' wear: Men's furnishings 40.8 4.8 1.2 . 1 1.8 38.6 2. 1 6.8 .6 29. 1 Men's clothing 42. 1 8.8 1.2 4.5 . 6 33. 1 2.7 7.0 .4 23.0 Men's sport clothing, casual___ 41.6 7.0 2.0 1.2 1.4 36.2 2.7 6.6 .5 26.4 Sportswear 41. 6 7.4 1.7 2.0 1.9 37.0 2.6 6.4 .7 27.4 Boys' wear 39.0 6.7 1. 1 .8 1.5 35.2 2.5 7. 1 .8 24. 8 Home furnishings: Curtains _ 42.8 7.3 1. 1 . 1 1.8 38.7 3.3 7.8 1.7 25.9 Draperies, etc _ 43.0 6.0 .8 1.9 1.5 37.7 2.9 8.3 3.2 23. 3

1 Cumulative mark-on is the ratio of difference between accumulated merchandise costs and accumulated merchan- dise retails, expressed in terms of the retail amount. Other items are expressed as percentages of sales. Adapted from {71).

Data for 265 men's furnishing stores show that sales, varied inversely with the volume of annual in 1952 retailers' gross margins averaged 32.8 per- sales and with the proportion of credit sales, varied cent of net sales and ranged within relatively nar- irregularly with most other factors, and averaged row limits {JfJt). Salaries averaged 9.8 percent of highest for 46 stores which were open 60 or more net sales and varied inversely with volume of hours per week. Wages averaged 8.8 percent of annual sales, with proportion of credit sales, and net sales, varied directly with the volume of annual with the price range of the commodities. Wages sales and with the prooprtion of credit sales, and averaged 6.5 percent of net sales and varied di- varied irregularly with most other factors. Profits rectly with the volume of annual sales, with the before income tax deductions averaged 2.9 per- proportion of sales on credit, and with the price cent of net sales, averaged higher in the Far range of the commodities. They varied inversely West than in any other geographic division, and with profits as proportions of sales. Occupancy ranged from an average loss of 2 percent of net expenses averaged 6.4 percent of net sales, and sales for 65 unprofitable stores to almost 10 per- varied directly with the volume of annual sales cent for stores with profits of 7 percent or more of and irregularly with most other factors. Profits net sales. before tax deductions averaged 3.5 percent of net Eeports for 213 women's accessory and specialty sales and ranged from an average loss for some stores show that in 1954 gross margins averaged groups to an average gain of 11 percent for others. 33.7 percent of net sales and ranged from 31.5 Typical operating ratios for 269 women's ready- percent for 65 stores with annual sales of $25,000 to-wear retail stores show that in 1953 gross mar- to $50,000 to 36.7 percent for 73 stores that sold gins averaged 32.3 percent of net sales and ranged mostly underwear and nightwear, including foun- from 30.1 percent for a group of 65 unprofitable dation garments {U). Data for 168 women's ac- ones to 36 percent for the 43 stores in the Far West cessory and specialty stores show that in 1949 gross group (^-4) • Salaries averaged 8.2 percent of net margins averaged 32.4 percent of net sales (^7).

7316-806—64- -10 137 TABLE 102.—Average costs^ margins^ and profits for department stores^ expressed as proportions of net sales^ united States^ 1939^ 19^7^ and 1959-62 ^

Item 1939 1947 1959 1960 1961 1962

Percent Percent Percent Percent Percent Percent Net sales __ 100.0 100.0 100.0 100.0 100.0 100 0 Merchandise cost_ 63.1 64. 6 63.6 63.6 63.80 63 87 Gross margin 36.9 35.4 36.4 36.4 36. 20 36 13 Total expense 35.4 30. 1 34.8 35.95 35.83 35 99 Payroll 17. 8 16.9 17.8 18.25 17. 92 18 10 Real estate cost ____ 4.4 2.2 3.0 3.25 3.23 3 20 Advertising 3.6 2.4 2.7 2.7 2. 72 2 58 Another 9.6 8.6 11.3 11.75 11.96 12 11 Accounts receivable 2_ 1. 68 1.80 1. 9 1 96 Operating profit _ 1.5 5.3 3.34 2.36 2.63 2 46 Other income 2.5 2.0 2.34 2.37 2. 54 2. 60 Gain before tax deductions * 4.0 7.3 5.66 4.64 5.05 5 14 Federal income taxes _ __ .6 2.8 2.93 2.47 2. 52 2. 73 Gain after tax deductions _ _ 3.4 4.5 2.83 2.49 2.53 2 64

Number Number Number Number Number Number Reporting firms 428 383 296 285 216 213

1 Data for 1961 and 1962 are typical figures for stores with sales of $1 million or more. Data for other years include stores with sales of less than $1 million. Data on profits and other income in 1959 and 1960, are adjusted on the basis of data reported in 1963. 2 Handling charges and delivery service charges collected from customers. 3 Data not available. * Figures for these items were revised for the year 1939 for comparability with results for subsequent years in order to reñect uniformly the 4 percent interest rate charges on selected assets. Adapted from (66),

Salaries in 1954 averaged 11.2 percent of net sales sales, and varied directly with gross margins but and varied inversely with the annual volume of inversely with net profits. Net profits before taxes sales, hours per week the stores were open, and were taken averaged 2.7 percent of net sales and the percentage of sales on credit. Wages averaged ranged from an average loss of 1.5 percent of net 5.8 percent of sales and varied directly with the sales to an average profit of 8.7 percent for 40 annual volume of sales and with the percent of stores with pjrofits of 6 percent or more of net sales. sales on credit. Occupancy expenses averaged 7.5 A comparison of the operating results for wom- percent of net sales, and were highest for stores en's accessory and specialty stores reported for with annual sales of less than $25,000. Net profits 1954 and for 1949 {44-) shows that the proportion before income tax was deducted averaged 2.2 per- of net sales accounted for by gross margins, total cent of net sales and ranged from an average loss operating expenses, salaries, occupancy expenses, of 3.9 percent of net sales for 64 unprofitable stores and some other expenses increased, but the pro- to 8.6 percent for 47 stores with profits of 6 percent portion accounted for by wages and profits de- or more of net sales. creased. A comparison of operating results for Data for 192 family clothing stores show that in family clothing stores for 1956 and those for 1951 1956 retailers' gross margins averaged 30.6 percent (44) shows similar results, except that for family of net sales and ranged from 24.8 percent for 50 clothing stores, the proportion of net sales ac- stores with gross margins of less than 28 percent counted for by wages was unchanged and the pro- of net sales to 37.7 percent for a group of 60 stores portion accounted for by occupancy expenses with gross margins of 33 percent or more of net decreased. Advertising expenses, as proportions sales (^^). These margins varied directly with of net sales, were unchanged for women's accessory the percentage of credit sales. Salaries averaged and specialty stores, but they increased for family 9.4 percent of net sales and varied inversely with clothing stores. the annual volume of sales and with profits. They As indicated for department stores and for other varied directly with gross margins earned. Wages kinds of stores (p. 136), salaries and wages are two averaged 7.7 percent of net sales and varied of the chief items included in gross retail margins directly with the annual volume of sales, the per- for textile products. Salaries and wages for 240 cent of credit sales, and gross margins earned. dry goods and general merchandise stores in 1958 Occupancy expenses averaged 4.2 percent of net averaged about 17 percent of net sales, 58 percent 138 TABLE 103.—Typical costs^ margins^ expenses^ and profits of department stores^ as proportions of net sales, hy volume of sales, United States, 1962

Total net sales per store in millions of dollars

Item Less 1 to 2 2 to 5 5 to 10 10 to 20 20 to 50 50 or than 1 more

Percent Percent Percent Percent Percent Percent Percent Net sales 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 Merchandise cost 65.77 64.50 63.62 64.07 64.89 64.07 63.56 Gross margin 34.23 35.50 36.38 35.93 35.11 35.93 36.44 Total expense 33.24 36.04 36.32 36.49 36.76 36.61 35.52 Payroll 18.08 18.35 17.92 Real estate 2.65 3.59 3.01 Advertising 2.11 2.79 2.27 Taxes ^ 1.26 1.52 1.60 Imputed interest 2.11 2.40 2.43 Supplies 1.99 2.15 1.94 Services purchased». .68 1.98 2. 12 Unclassified .36 .60 .67 Traveling .33 .27 .21 Communication .38 .63 .57 Pensions 0 .32 .38 Insurance ^ .60 .37 .50 D epreciation ^ .68 .75 .76 Professional services. .13 .15 .16 Donations .05 .09 .09 Loss from bad debts. .13 .30 .34 Equipment rental- _. 0 .04 .05 Accounts receivable 2 .12 1.06 1.01 1.50 1.84 2.27 Net expense 32.79 35.06 35.29 35.24 35.04 34.70 33.40 Earning on operation 1.30 .32 1.05 1.00 .52 1.06 3.68 Other income 2.16 2.13 2.38 2. 24 2.70 2.64 2.61 Gain before taxes 3.58 2.25 3.48 3.28 3.61 3.63 6.39 Federal income taxes .86 1.42 1.67 1.78 1.77 3.52 Gain after taxes 1.53 1.88 1.81 1.77 1.95 3.24

Number Number Number Number Number Number Number Reporting firms 32 47 32 40 35 27

1 Except on real estate. ^ Data not available. 2 Handling charges and delivery service charges collected from customers. Adapted from {66), of retailers' gross margins, and 62 percent of total States to 15.9 percent in Middle Atlantic States, expenses. For 302 children's and infants' wear and averaged 14.8 percent for the United States stores in 1957, wages and salaries averaged almost (table 104). For apparel and accessory stores, 17 percent of net sales, 51 percent of gross margins, these proportions ranged from 12.5 percent in East and 54 percent of total expenses. For 192 family South Central States to 14.3 percent in New Eng- clothing stores in 1956, salaries and wages aver- land, and averaged 13.6 percent for the United aged about 17 percent of net sales, 56 percent of States. Substantial proportions of these differ- gross margins, and 61 percent of total operating ences in payrolls may be accounted for by differ- expenses. For 265 men's furnishing stores in ences in wage rates. 1952, salaries and wages averaged 16.3 percent of Census reports show that for the week ended net sales, 50 percent of the retailers' gross margins, nearest November 15, 1958, the average weekly and 56 percent of total operating expenses. These wage rate for the group of retailers handling gen- results are fairly typical of those for other kinds eral merchandise ranged from $48.22 in East of retail stores, including women's ready-to-wear South Central States to $69.45 in Pacific States, and women's accessory and specialty stores (4-i)« and averaged $57.00 for the United States. Payrolls, as proportions of sales, vary from one For apparel and accessory stores, these rates ranged geographic division to another. In 1958, payrolls from $46.32 in East South Central States to for operators of general merchandise stores ranged $65.38 in Pacific States, and averaged $57.57 for from 12.3 percent of sales in East South Central the United States. The ratio of active proprietors 139 of unincorporated businesses to full-time em- in part to advantages of direct purchases from ployees and average annual volume of sales per manufacturers. establishment also varied considerably from one Various types of cooperative plans have been geographic division to another (table 104). These worked out by retailers and wholesalers in an effort variations also may have had some influence on the to improve efficiency in buying and selling (69). ratio of payrolls to sales. In 1958, general mer- One phase of this development is said to be group chandise retailers in East South Central States, or syndicate buying, under which department for example, had the lowest ratio of payrolls stores and other retailers with relatively small to sales, the lowest volume of sales per plant, the individual purchases of individual commodities lowest average weekly wage rate, and the highest combine to establish a buying organization that ratio of active proprietors to regular employees. buys for them directly from manufacturers, rather Similar data for other regions show considerable than through wholesalers. Some wholesalers also irregularity. have formed such buying syndicates. But ade- Median profits of retailers of apparel and house- quate information is not available to show to what hold textiles, after federal income and excess- extent the "traditional" channel, from producers profit tax deductions, as proportions of net sales to wholesalers to retailers, has been affected by and of net worth, decreased in the late 1940's and these developments. early 1950's, reached a low point in 1958, and then The efficiency of the smaller retailers might be increased in the early 1960's (table 105). Simple increased through expansion of the activities of averages show that median profits of 1.8 percent large organizations which provide purchasing and of sales in 1962 were lower than those in 1961, merchandising services to the smaller independ- higher than those for any other year since 1958, ently owned and operated stores (6^). These serv- and substantially lower than those in the 1940's ices, by helping smaller operators to obtain better and early 1950's. As proportions of net worth, selections of merchandise, better control of stocks, average median profits of 4.8 percent of sales in and increased rate of turnover, may enable the 1962 were somewhat lower than those in 1961, small stores to approximate the merchandising effi- higher than those in 1958, and substantially lower ciency of the larger distribution outlets. Such in- than those in the 1940's and early 1950's. creased efficiency would tend to affect favorably returns to retailers, costs to consumers, and returns Means and Importance of Improvement to farm producers of cotton and wool. A combination of two or more of the successive A reduction in cost of retailing textile products links in the chain of manufacture and distribution may involve increasing the general efficiency of of textile products may be an effective means of existing agencies, concentrating services in the achieving economies in production and distribu- hands of agencies or combinations of agencies that tion, and a closer linkage between production plan- can perform them most efficiently, and reducing ning and ultimate consumer demands (64), Such unnecessary services. A determination of the most integration may afford better control of the qual- feasible means of improving existing agencies ities of finished goods made available to consumers. would involve consideration of the facilities and It may facilitate sales through standardization of equipment used, organization and operation of the products, branding or informative labeling, and business units, selection and management of per- educational advertising. Experiences before sonnel, location of places of business, number and World War II indicated both the possibility and kinds of commodities handled, volume of opera- the limitation of integration in the textile indus- tion, and purchase and sales policies, among other try (SI), Price and production regulations dur- factors. But the information available is not com- ing the war apparently were favorable at certain plete enough to indicate all of the more effective points to the extension of unified control (64)^ and means of improving the efficiency and of reducing developments after the war indicate continuing the cost of these agencies. and perhaps growing interest in the possibility of Large retail distribution organizations, such as further combinations (6ß). mail-order houses, department store chains, and Considerable savings in cost of retailing might large specialty retail chains, are said to have dem- be made if such services as credit, free delivery, onstrated their ability to handle large-volume return privileges, and perhaps others were limited items on relatively small margins (64,), Some to those willinng to pay the costs of performing economies may result from buying large volumes them. This would necessitate a differential pric- directly from manufacturers. In 1958, according ing system which might be difficult to operate, to census reports, textile mill products valued at especially if competing stores did not adopt a sim- more than $1,350 million were sold through manu- ilar policy. Some progress has been made in this facturers' sales branches and offices to retailers. direction by some stores that concentrate on cash- Retailers usually buy large quantities of apparel and-carry sales while others sell on credit and and related products directly from manufacturers. make deliveries. Retailers have experimented Economies of large retailers may be attributed in with differential pricing on the basis of the services part to savings from handling large volumes and performed, but available information is not com- 140 TABLE \^^,—Number of retail stores, average volume of sales, payroll as proportion of sales, "ffeMj/ wage rate, and ratio of active proprietors to regular employees, hy kind of store and region. United States, 1958 ^ Ratio of Establish- Average Payroll as Weekly active pro- wage rate prietors to Kind of store and region ments sales per proportion establishment of sales 2 total em- ployees

Dollars Percent Dollars Percent General merchandise group: Number 51.93 6.2 New England 4,658 270, 944 15. 3 13, 395 323, 680 15. 9 60.47 6.1 Middle Atlantic 60.05 5.1 East North Central 12, 305 383, 063 15.7 227, 142 14.9 54.72 8.8 West North Central. __ 8, 180 11.0 17, 687 170, 958 13.9 49. 36 South Atlantic 48.22 19.9 East South Central 10, 261 115, 983 12.3 10, 306 188, 207 13. 5 51. 33 11.0 West South Central-__ 57. 13 8.6 Mountain 3,300 250, 656 12. 9 14.6 69.45 5.7 Pacific 6, 552 416, 526 57.00 United States. 86, 644 252, 529 14.8

Apparel and accessory stores: 59.24 16.9 New England 8,339 102, 943 14.3 32, 123 104. 708 13.0 62. 60 20.7 Middle Atlantic 59. 50 19.6 East North Central 22, 331 107, 146 14.0 9,280 100, 920 13.1 53.72 21.3 West North Central 51.14 17. 2 South Atlantic 15, 028 103, 645 13.2 6,048 96, 655 12. 5 46.32 21.4 East South Central 50. 21 17.3 West South Central 9,234 112, 169 13.0 3, 684 103, 382 12.9 57.79 22.5 Mountain 65. 38 22.7 Pacific 12, 692 111, 525 13.9 57.57 19.8 United States. 118, 759 105, 469 13.6

1 Retail stores with payrolls. of unincorporated businesses. 2 Payrolls include no compensation for active proprietors Adapted from Census of Business, Retail Trade.

TABLE 105,—Median net profits of retailers of apparel and household textiles as proportion of net sales and of net worth, hy hind of products, United States, specified years, 1989-62

Net profits ^ as proportion of net sales 2 Type of business 1939 1948 1958 1959 1960 1961 1962

Percent Percent Percent Percent Percent Percent Percent 2.00 1.30 Department stores 2.03 4. 12 1.91 2.03 1.73 2.39 4.06 1. 94 1.96 1.71 2.60 2.78 Men's and boys' clothing 1.28 Men's and women's clothing ^ 3.89 4. 19 2. 10 2.39 1.15 2.03 2.70 2.42 1.09 1.59 2.95 2. 26 1.98 Men's furnishings 1.83 Women's specialty shops 1.31 3. 58 1.53 2.42 1.69 2.26

Net profits as proportion of tangible net worth *

5.30 4.65 Department stores 57 12.40 5.27 5.84 4.89 67 10.47 4.11 4.38 3.71 5.75 5.74 Men's and boys' clothing 6.39 3.66 Men's and women's clothing ^ 77 12.80 5. 16 4. 61 3.80 00 5. 29 2.83 3.57 4.55 4.48 4.99 Men's furnishings 5.05 Women's specialty shops 64 14.45 4.81 7. 23 6. 21 6. 15

1 Profits after depreciation on buildings, machinery, 3 Prior to 1947 classified in the ''clothing, installment" equipment, furniture, and other assets of a fixed nature; category. after reserves for Federal income and excess-profit taxes; 4 The sum of all outstanding preferred or preference after reductions in the value of inventory to cost or stocks (if any) and outstanding common stocks, surplus, market, whichever is lower ; after charge-off for bad debts ; and undivided profits, less any tangible items in the assets after all miscellaneous reserves and adjustments, but such as goodwill, trademarks, patents, copyrights, lease- before dividends or withdrawals. holds, mailing lists, treasury stocks, organization expenses, 2 Dollar volume of business transactions for 365 days and underwriting discounts and expenses. net after deductions for returns, allowances, and discounts Adapted from {33). from gross sales. 141 píete enough for an appraisal of the results. sold in this way, and ready-to-wear specialty stores Progress has been made in reducing costs by set- simplified shopping by displaying merchandise by ting up minimum sizes of packages that will be size. delivered and by limiting the return for credit of Keports indicate that self-service, soft goods products purchased. But if restrictions on these supermarkets emerged as identifiable institutions services are to be feasible, all competing retailers in the middle 1950's {90). Kesults of a survey in the same city probably would have to follow mdicated that by the end of 1960, the number of similar practices. these supermarkets in New England had increased ^ Advertising is generally recognized as an effec- to 140 and annual sales to $400 million, or about 30 tive means of expanding market outlets for par- gercent of total department store sales in that area, ticular makes or brands, as well as the total market ither estimates of sales by these self-service super- outlets for all textile products. Any increases in markets, for the United States as a whole, range volume as a result of advertising may make pos- from $1.5 billio^ to over $4 billion {89). The two sible some reductions in average per unit costs of main characteristics of these stores are said to be distribution. If advertising were made more in- their emphasis on soft goods, especially apparel formative and were placed on a more efficient for women and children, and operation on a com- basis, it probably would be more effective in ex- pletely self-service basis with check-out stands panding market outlets and in reducing costs of {89). distribution {116). Self-service makes possible a reduction of retail Style and changes in fashion are important ele- margins mainly by reducing payroll costs, which ments in the cost of distributing textile products average about half of the total operating expenses as well as of manufacturing them. The large num- of retailers. Keports indicate that markups of ber of styles and frequent changes in fashion in- self-service, soft goods supermarkets range from crease the costs of retailing by necessitating fre- 20 to 30 percent of sales, as compared with depart- quent purchases of relatively small lots of the ment and specialty apparel store markups of 35 to styles m fashion at the time. The alternative is 40 percent {89). Stock turnover is said to be two to bear the risks of substantial losses on stocks of or three times that of department stores and many out-of-fashion goods on hand. Data relating to of their smaller competitiors. New, standard distributors' margins for women's dresses by price goods are handled rather than the closeout and lines show that retailers' margins per dollar of distress merchandise. The range in price lines sales for handling the higher priced dresses, for is typically narrow and is chosen to reach low- which style was an important consideration, were income and lower middle income families, but the m some instances more than 25 percent greater depth and assortment of merchandise within lines than those for handling lower priced lines for is great {89). Accurate labeling to show the qual- which style and changes m fashion were relatively ity and size of the products on the basis of adequate unimportant {27, 119), These data, along with standards would facilitate self-service and tend to other information, indicate that retailers margins reduce costs of retailing. might be reduced considerably if the number of Additional information is needed to indicate styles and the frequency of changes in fashion were more specifically the conditions under which and greatly reduced. But an adequate variety of styles the most effective means by which to reduce the and changes in fashion stimulate increases in con- costs and to improve the adequacy and efficiency sumer demand. of retailing textile products. Meeting this need Developments in recent years indicate that re- would involve analysis of detailed cost data for tailers' margins for textile products might be con- a representative sample of retailers to ascertain siderably reduced by simplification of the selling the influence of the various factors under actual process to permit and encourage self-selection and operating conditions on the unit costs of labor, self-service by consumers. These services may be overhead, and other items for each important serv- facilitated by open display of merchandise, ar- ice rendered. Detailed specifications for model, rangement on the basis of the consumer's primary low-cost units for retailers of specified types and interests, and an arrangement for completing the sizes, based on cost-engineering data and other in- transaction by making payment at a convenient formation, would be helpful as a guide. Such desk set up for that purpose {41). The feasibility models would show the more desirable buildings of simplifying the selling process for textile prod- and equipment, floor plans and arrangements for ucts has been demonstrated in actual practice. display, purchase and sales policies, operating Self-service grocery stores freed the consumer methods and labor requirements, kinds of prod- from the slow process of depending upon the clerk ucts handled, and detailed costs for each major to assemble his purchases and variety stores process or service. demonstrated the expandability of consumer Such information should supply at least a fairly demand as a result of merchandise display. De- adequate basis for ascertaining the nature and ex- partment store chains extended the principle of tent of any improvements needed. But the nature open display to many commodities not heretofore of the retailing business is such that any studies 142 needed to develop this information would require and household textiles averaged almost a third the services of personnel having specialized train- of the cost of the products to consumers, about 10 ing and experience in this kind of business. Well- times as much as the total costs of merchandising intormed operators could suggest the kinds of in- the raw cotton and wool used, and almost three formation that would be of greatest usefulness to times as much as total returns to groovers for the them in improving their adequacy and reducing cotton and wool used. A reduction of 10 percent their costs. Their advice and cooperation in plan- in retailers' gross margins would result in savings ning and developing research to supply the needed about as great as total costs of merchandising the information would be helpful. raw cotton and wool used, including ginning and Some indications of the importance of reducing baling the cotton but excluding scouring of wool. the costs of retail distribution of textile products Such savings would amount to more than a fourth may be obtained from data showing that during of the total returns to growers for production of recent years gross margins for retailing apparel the cotton and wool used.

LITERATURE CITED

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