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.