Tipping Point: Textiles
In 2004, New York financier Wilbur Ross combined two North Carolina stalwarts, Burlington Industries — once the world’s largest textile maker — and Cone Mills, to form Greensboro-based International Textile Group. He had purchased both companies from bankruptcy the year before. ITG had sales of $769.1 million through the first three quarters of 2007.
The World Trade Organization’s multifiber agreement in 1994 said that at the end of 2005, all the quotas, tariffs and other textile protections would come off. The textile industry had 10 years to prepare for it. Most textile companies, unfortunately, did very little — under the theory that, despite the agreement, government would protect them on an ongoing basis. ITG wanted to operate with a conservative balance sheet, and we wanted to complement our domestic factories with offshore ones. We have built state-of-the-art dyeing-and-finishing and denim operations in China. We also made a joint venture in Vietnam. We are opening a wholly owned venture in Nicaragua. If we hadn’t made those international investments, we would have had to shut down many more domestic facilities than we did. The foreign expansion, in our case, was not at the expense of the domestic plants. It kept them going. We view globalization not as a negative but as a positive. We have opposed some of the initiatives that have been taken in the political sector against China and Vietnam. The jobs that have left are never going to come back anyway. If action is taken to restrict China and Vietnam, those jobs will go to the next-lowest-cost countries — Pakistan, India or wherever. The way the South got the textile business in the first place is that it was the low-cost market, relative to New England. The answer is not restricting things. The answer is trying to right-size your business and balance it enough to retain a domestic presence.