Outgoing 2016 National Council of Textile Organizations (NCTO) Chairman Robert "Rob" H. Chapman, III delivered the trade association's 2017 State of the US Textile Industry at NCTO's 14th Annual Meeting on March 23, 2017 in Washington, D.C., USA. The following is his report:
14th NCTO ANNUAL MEETING
2017 STATE OF THE INDUSTRY ADDRESS
DELIVERED BY 2016 NCTO CHAIRMAN ROBERT H. CHAPMAN III
THURSDAY, MARCH 23, 2017
8:30 AM ET
THE CAPITAL HILTON
What a difference one year can make. Consider the following. In March, 2016:
How history went on to unfold reminds us of just how much change can occur in twelve months. And nowhere has change been more dramatic than in Washington, D.C. Unforeseen by most pollsters and pundits, the election of President Trump turned conventional political wisdom on its head and reignited debate on largely stagnant policy issues ranging from trade to tax and immigration reform.
Consequently, if there was ever a time for the U.S. textile industry to fully marshal its resources and decisively engage in Washington, it is now. Thanks to the new Trump policy dynamic, the next twelve months represent the best opportunity in a generation to reorient U.S. manufacturing policy, level the playing field, and usher in a new era of growth for U.S. textile makers.
Before delving into policy matters, however, a statistical recap of how the industry fared in 2016 is in order.
Thanks to a laser-like focus on boosting productivity, flexibility, and innovation, the U.S. textile industry has cemented its position in the global market.
In 2016, the value of U.S. man-made fiber and filament, textile, and apparel shipments totaled an estimated $74.4 billion, an increase of 11 percent since 2009.
The breakdown of 2016 shipments by industry sector is:
Capital expenditures also are healthy. Investment in fiber, yarn, fabric, and other non-apparel textile product manufacturing has climbed from $960 million in 2009 to $1.7 billion in 2015 – an increase of 75 percent.
Our sector’s supply chain employs 565,000 workers. The 2016 figures include:
As we examine these employment figures, it is important to note that the heavy job losses incurred because of massive import surges in the 1995-2008 timeframe, virtually have stopped. Today, like most other U.S. manufacturing sectors, fluctuations in employment figures are generally due to normal business cycles, new investment, or productivity increases.
U.S. exports of fiber, yarns, fabrics, made-ups, and apparel were $26.3 billion in 2016.  Shipments to NAFTA and CAFTA-DR countries accounted for 56 percent of all U.S. textile supply chain exports.
The breakdown of exports by sector is as follows:
The United States is especially well-positioned globally in fiber, yarn, fabric, and non-apparel sewn products markets; it was the world’s 3rd largest individual country exporter of those products in 2015.
The most important U.S. export markets by region are:
Focusing solely on America’s $13 billion in man-made fiber, yarn and fabric exports, the countries buying the most product are:
(see footnote 10 for top 4 export markets by country for entire textile supply chain)
Wrapping up the numbers, the fundamentals for the U.S. textile industry remain sound. This is true even though the U.S. market for textiles and apparel was soft in 2016. For the most part, the sluggishness was due to factors beyond the industry’s control: an underperforming U.S. economy, a weak global economy, and disruption within the retail sector as sales shift from brick and mortar outlets to the internet. With that said, the U.S. textile industry’s commitment to capital re-investment and a continued emphasis on quality and innovation make it well-positioned to adapt to market changes and take advantage of opportunities as 2017 moves along.
Another cause for optimism is President Trump’s forceful call to reinvigorate domestic manufacturing. For decades, U.S. policy has undervalued domestic manufacturing’s importance to America, and President Trump is right to question whether this has been good for the country.
Precisely because they will stimulate manufacturing and kick start job creation, NCTO enthusiastically endorses President Trump’s macro policy objectives of fighting for free, but fair trade, enforcing U.S. trade laws, making the U.S. tax code more internationally competitive, cutting unnecessary regulation, revitalizing infrastructure, buying American, ensuring cheap energy, and fixing health care.
Drilling down to the details, NCTO agrees with President Trump that U.S. trade policy must be changed to reflect the reality of the twenty-first century economy for it to truly benefit a broad swath of American society.
That is why NCTO supported President Trump’s executive action to withdraw the United States from the twelve-country Trans-Pacific Partnership (TPP) even though NCTO had endorsed the agreement just one year earlier.
To better understand the rationale behind this strategic repositioning, please recall that NCTO worked tirelessly to persuade the previous administration that TPP should include all provisions necessary to prevent any sudden surge of imports from Vietnam that would be capable of disrupting the U.S.-Western Hemisphere textile and apparel supply chain. Indeed, NCTO is grateful to the Obama administration for partnering with the U.S. textile industry on TPP to negotiate:
Noting that NCTO had leveraged its prospective support for TPP in return for the Obama administration securing these vital objectives, it was incumbent upon NCTO to be true its word and endorse TPP when the Obama administration kept its end of the bargain.
The 2016 election of President Trump, however, brought about a dramatic change on trade. President Trump’s fundamental opposition to TPP allowed NCTO to revisit its position and communicate to his transition team soon after the election that NCTO supported withdrawal from TPP.
Mindful that President Trump also had signaled interest in pursuing individual bilateral free trade agreements with TPP countries, NCTO further communicated opposition to any bilateral free trade agreement with Vietnam because of that country’s non-market economy and its demonstrated ability to disrupt the U.S. textile market.
Unlike TPP, NCTO strongly supports NAFTA because it is a pillar upon which the U.S.-Western Hemisphere supply chain is built. At $11.5 billion combined, Mexico and Canada are the U.S. textile industry’s largest export markets. Moreover, Mexico provides a vital garment assembly capacity the United States largely lacks.
That said, NCTO agrees with President Trump that NAFTA should be reviewed and can be improved. For example, NAFTA’s yarn-forward rule of origin contains loopholes like tariff preference levels (TPLs) that benefit third-party countries, such as China at the expense of U.S. industry. Closing them would boost U.S. textile production and employment.
NCTO also strongly endorses President Trump’s call for much tougher trade enforcement. Trade deals grant lucrative duty-free preferences to importers, thereby creating significant enticements for would-be wrongdoers. Stopping customs fraud has the twofold benefit of filling Treasury Department coffers and encouraging more production in the NAFTA and DR-CAFTA regions.
Without hesitation, the United States should focus more resources on customs enforcement to aggressively investigate those who purposely undervalue U.S. imports to avoid duties or who illegally circumvent U.S. free trade agreement rules of origin via third-country transshipment or through other fraudulent means. In addition, penalties for customs fraud must be certain, swift, and sufficient to deter this harmful, illegal activity.
Also within the trade enforcement realm, NCTO supports U.S. Commerce Secretary Wilbur Ross’s proposal for the U.S. government to self-initiate anti-dumping and countervailing duty cases. Other helpful actions the U.S. government should take include continued rejection of China’s demand to be recognized as a market economy and cracking down on illegal currency undervaluation.
One final trade priority is the enactment of a Miscellaneous Tariff Bill. NCTO strongly supports duty relief on manufacturing inputs that are unavailable domestically and do not compete with other U.S.-made products.
That said, NCTO is concerned that the MTB process is being abused through the filing of hundreds of petitions on finished goods, particularly apparel. On principle, NCTO opposes MTBs on finished goods because they often compete with like products made with U.S. inputs. Duty reductions on finished textile items from any source can also undermine U.S. free trade agreements that grant duty relief through a yarn forward rule of origin.
Moving on to tax policy, NCTO wholeheartedly agrees that the U.S. tax code is in dire need of reform to make it more competitive internationally. Lowering the corporate rate and allowing the immediate expensing of capital investment would be a significant benefit to NCTO members. NCTO is also carefully studying the border adjustable taxation issue. As a trade association representing U.S manufacturers and exporters, NCTO is keenly aware that foreign border tax schemes, including tax rebates to offshore competitors who export goods to our market, disadvantage U.S. producers. As such, NCTO is poised to engage congressional leadership when any detailed border adjustable taxation legislation is put forth to thoroughly understand how that proposal may impact the textile industry.
NCTO is also pleased with President Trump’s initiative to cut unnecessary regulation and is encouraging its members to take advantage of the public comment period that closes on March 31 to submit ideas to improve the federal regulatory regime.
Rebuilding America’s infrastructure is another NCTO priority. Besides boosting U.S. productivity and facilitating commerce, infrastructure is a growing market for textile products such as workwear, geomembranes, filtration systems, and composites for load-bearing systems.
Fostering a national culture of innovation is important too. In that regard, NCTO urges President Trump to nurture the Advanced Functional Fabrics of America or AFFOA project. This Defense Department program is matched three to one with private dollars and tasked with making it easier to develop and commercialize the next generation of high-performance textiles.
With respect to government procurement policy, NCTO is proud of its steadfast efforts to defend and strengthen the Berry Amendment. This “buy American” provision for the military is an excellent example of how the government and the private sector can work together to the benefit of one another. The U.S. military benefits from guaranteed access to a secure U.S. supply line for thousands of superior, highly-advanced products. In return, the domestic textile sector receives $1.5 to $2 billion in annual Defense Department sales that boost U.S. investment and employment.
Noting that the Trump administration and Congress appear serious about wanting to buy more American, NCTO would aggressively work to make sure textiles are included in any effort to enact commonsense laws or regulations that would strengthen “buy American” requirements applying to infrastructure or other federal spending. As demonstrated by Berry, when the federal government buys “American,” it is good for the U.S. textile industry and even better for America.
Another NCTO priority is ensuring that the U.S. textile industry has uninterrupted access to reasonably priced energy. Most man-made fibers are derivatives of petroleum products. In addition, many textile producers are reliant on natural gas to power manufacturing operations. Noting this, NCTO strongly supports construction of expanded oil and gas pipeline capacity to keep energy prices low.
Finally, the U.S. textile industry must acknowledge that its most valuable resource, its workforce, is aging. To keep thriving long term, American textile manufacturing must recruit a new generation of talented chemists, designers, engineers, skilled technicians, and semi-skilled labor. To this end, U.S. companies must continue to forge links with local leaders, schools, and government, vocational programs, community colleges, universities, and state business lobbies to make sure that state and federal policy produces a labor pool both adequate in size and well prepared to succeed in a hyper-competitive global economy.
OTHER NCTO ACTIVITIES
The industry’s need to attract America’s best and brightest is one reason why NCTO embarked upon the American Textiles: We Make Amazing rebranding campaign two years ago.
NCTO is pleased to report the campaign is slowly but surely challenging outdated perceptions of the U.S. textile sector thanks to the fact that American textile manufacturers have a great story to tell. America’s textile industry is world class thanks to leveraging the most cutting-edge production processes, investing in the best machinery, and leading in sustainability and innovation.
Judging by the earned media and social engagement generated by American Textiles: We Make Amazing marketing efforts, more and more people are hearing the good news and viewing the U.S. textile industry in a new light.
Although the U.S. textile industry has stabilized its position in the global economy, it cannot afford to rest on its laurels. There will always be intense and sometimes unfair competition from abroad, changing consumer demands and inevitable economic downturns.
Again, that is why it is so important for the U.S. textile industry to seize this generational moment to influence federal policies if it wants to usher in a new era of growth. With so much at stake in the next twelve months, members of NCTO and other textile trade associations must stay actively involved in their respective organizations. Moreover, all domestic textile manufacturers who have not been active in Washington, but are serious about wanting a seat at the table to change textile policy for the better, are invited to join NCTO. Good policy does not materialize from thin air, and NCTO must be well financed to affect the changes that will give our sector the best chance to build a stable and prosperous future for U.S. textile companies. That’s a long way of saying the U.S. textile sector’s great workers and their families and communities are depending on the leadership of the industry’s leaders.
Thank you for the opportunity to serve this great industry as Chairman of NCTO for this past year. It has been a privilege.
 Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2016 Data for NAICS 32522 is not yet available. Our 2016 estimate for the value of shipments in that category is $7.4 billion.
 Source: U.S. Census Bureau Annual Survey of Manufactures (ASM). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), 315 (Apparel), and 32522 (Artificial and Synthetic Fibers and Filaments). 2016 Data for NAICS 32522 is not yet available. Our estimate for the value of shipments in that category is based on data from 2015.
 Source: U.S. Census Bureau, Annual Capital Expenses Survey (ACES). Data covers NAICS categories 313 (Textile Mills), 314 (Textile Product Mills), and 315 (Apparel).
 Sources: U.S. Bureau of Labor Statistics, U.S. Department of Agriculture, National Cotton Council, and the American Sheep Industry Association.
 Source: U.S. Bureau of Labor Statistics.
 Source: Data for textiles and apparel is from The Export Market Report produced by the U.S. Department of Commerce, Office of Textiles and Apparel (OTEXA). U.S. export data for cotton, wool, and fine animal hair is calculated from the U.S. International Trade Commission Interactive Tariff and Trade DataWeb using HTS Codes 5101, 5102, 5103 (wool), 5201, 5202, and 5203 (cotton).
 Source: U.N. COMTRADE Database
 Source: U.S. Commerce Department and U.S. International Trade Commission
 The top 4 exports markets by country for the entire textile supply chain are (1) Mexico – $6.3 billion, (2) Canada – $5.2 billion, (3) China, Hong Kong and Macau – $1.8 billion, and (4) Honduras – $1.5 billion respectively.
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Posted January 15, 2020
Round One is Done. The first step is resolving the on-going trade dispute between the US and China is over with after the signing today of the Phase One Deal on 301 Tariffs. Reaction to the agreement in the US textile value chain is mixed. The National Council of Textile Organizations (NCTO) which represents US textile fiber, yarn and material makers, gave out a hesitant endorsement of the agreement, saying the group is still studying the details of the agreement. The American Apparel & Footwear Association (AAFA) issued a press statement after the signing expressing disappointment that the "Phase One" trade deal signed with China contains limited tariff relief fo US companies and consumers.
One of the key concession given by the US to get China to agree to the trade deal was the decision on January 13 by the US Treasury Department to remove the designation of China as a currency manipulator. The US had designated China as a manipulator in August, a goal long-sought by NCTO. BeaverLake6 Report has reached out to NCTO for comment on the change in the US government's position and will update this post as information becomes available.
Posted January 7, 2020
The historic political fight in Washington may actually benefit the US technical textiles industry in 2020.
In more "normal" times, even with bipartisan support of trade deals and building legislation, it's a slow process to get something done in Washington. In a funny way, under the current polar vortex called impeachment, things may actually get done faster. President Donald Trump wants to show he is still able to carry out his campaign promises and impeachment is not hindering his ability to administer. The Democrats, fearful of a bogged down impeachment process that could wear down their public support, are eager to show they can also get something done and avoid a blame they are only consumed with getting rid of the president.
Thus, you see both sides touting what's in the United States/Mexico/Canada Agreement (USMCA). The National Council of Textile Organizations (NCTO) is focused on the impact of what the agreement means in terms of fiber and yarn sourcing; however, I am more interested in the end product markets that benefit from the trade agreement. In the USMCA, the amount of material made in North America that goes into a vehicle increases significantly. The largest single end-market for technical textiles is the automotive industry. The USMCA means more products like headliner material, airbags and seatbelts, acoustical and vibration dampening, carpeting, composites and industrial hoses will be needed. USMCA is a terrific win for the many smaller technical textile parts makers in the US.
As for infrastructure, the current authorization, the Fixing America's Surface Transportation (FAST) Act of 2015, expires at the end of 2020. President Trump wants more than $1 trillion to help fix the country's roads and bridges. There is a bipartisan support for the new legislation because it's passage will benefit so many states. The winners for us? It would hands-down be the geosynthetics industry, as well as those who make construction-used products like tarps and protective covers, and personal protection gear.
So, expect to see some things getting accomplished in Washington in 2020. It is an election year and never underestimate the self-preservation instincts of a politician.
Posted January 7, 2020
December 3, 2019
Thanks to the BeaverLake6 Report's arrangements with China Textile magazine and the China Nonwoven & Industrial Textile Association (CNITA), we have received the report "A Brief Analysis of Economic Operation of the Industrial Textile Industry in the First Half of 2019" writtened by CNITA's market research department.
In the first half of 2019, China's economy faced a complicated development environment. Issues such as the downturn in automotive demand and the US/China trade dispute are having an impact. Production is still growing but the markets are relatively flat. Click here to read the entire report in the China section. Posted
November 24, 2019
The second edition of the Eurasian Geosynthetics Symposium (EAGS 2019) was held November 18-19, 2019 in Beijing, China. Many of the leading experts in geosynthetics delivered presentations. Ms. Flora Zhao, the director of the editorial department for China Textile magazine, has given us an extensive review of the symposium program. Click here to go to our China section to read her report.
The IFAI Expo 2019 was held last week in Orlando, Fla., USA. The exhibition was a smaller event than in years past but it still remains a powerful showcase of industry products. In the Special Report section, you will find analysis of the show, plus news that comes from the Industrial Fabrics Association International's Annual Meeting and the winners of the International Achievement Awards. Click here to read the articles. Posted October 10, 2019
In 2018, China's industrial textile industry maintained a relatively rapid growth. The year, though, also found more complex challenges for the industry, including the tariff issues with the US. Thanks to BeaverLake6 Reports' exclusive arrangement with China Textile magazine, we are presenting the English-translated version of the final 2018 report written by the China Nonwovens & Industrial Textile Association (CNITA). The report included information on fiber and material production, plus selected large end-product markets. Click here to read the report. Posted September 3, 2019
NCTO Members Testifying at US International Trade Commission. Surprisingly, there appears to be a little worry the announced new US tariffs on China (Section 301) may be reaching too far with its scope. The National Council of Textile Organizations (NCTO), which has been firmly behind most of the textile-tariffs against China over the last year, is expressing concern the new Tranche Four retaliatory tariffs may affect US imports on products needed by the US domestic textile industry.
[Read the rest of my editorial that takes NCTO to task for its hypocritical "moral" argument supporting the proposed additional products but excluding its industry's suppliers by clicking here.]
Posted June 17, 2019
Despite the increasingly complex industry demands, the Chinese technical textiles market was relatively stable. Nonwovens output increased over last year. Key specific markets such as tire cord also increased in 2018 over 2017. Overall operating income for industrial textiles used in China reached $34 billion. Click here to read the complete summary provided to BeaverLake6 Report by China Textile magazine through our exclusive relationship. Posted February 15, 2019
INDA, the Association of the Nonwovens Fabrics Industry, has issued its final report on IDEA19. The event held March 25-27, 2019 in Miami Beach, Fla., USA, attracted 6,500+ participants and 509 exhibiting companies from 75 countries. Show floor space was a record 168,600 square feet, a 9% increase over the previous show.
Surprisingly, the people and exhibitor participation figures are not record numbers. The IDEA16 show in Boston, Mass., USA, attracted 7000+ and 555 exhibitors.
So, why was participation down this year from IDEA16? I think an explanation for the decline is the South Florida location of IDEA19. Click here to read more.
BeaverLake6 Report is pleased to provide an exclusive interview with Li Lingshen, Ph.D., Vice President of the China National Textile and Apparel Council, and President of the China Nonwovens & Industrial Textiles Association, the overseeing organization for the technical textiles industry in China. Click here to read the interview.
Positive Reviews but Still Uncertainty. On November 16, 2018, two of the US textile industry associations testified before the US International Trade Commission (ITC) in a special hearing to determine the economic impact of the proposed United States-Mexico-Canada Agreement (USMCA). The leaders of the American Apparel & Footwear Association (AAFA) and the National Council of Textile Organizations (NCTO) provided statements on how they feel the new agreement will affect their member companies.
The two organizations clearly have different biases; however, in looking over the AAFA and NCTO statements, it appears to me that while the organizations both clearly said they were not offering an endorsement yet of the agreement, they gave general overall approval for USMCA, acknowledging the 1992 North American Free Trade Agreement (NAFTA) needed updating. Both organizations are taking a wait-and-see attitude to more fully look at how the agreement impacts the complex supply chain of textiles and apparel. Click here to read more.
NAFTA Replacement Agreement Negotiated. On October 1, President Donald Trump announced the US, Mexico and Canada had reached an agreement whichreplaces the North American Free Trade Agreement (NAFTA) that went into effect in 1994. The new United States-Mexico-Canada Agreement (USMCA) contains provisions and language that has an impact on the technical textiles industry; the most important are 1) a special section covering textiles and apparel and 2) rules of origin that will require 75% of automotive content (under NAFTA 62.5%) be made in North America. Mexico and Canada are the two largest importers of US made technical textiles and the automotive industry is the largest intended end market of these technical textiles. Click here to go to the United States Trade Representative's website and read the "Textiles and Apparel Goods" chapter. Posted October 3, 2018
Are you looking for a quick understanding of the China technical textiles industry? Through our special relationship with China Nonwovens & Industrial Textiles Association (CNITA) and their China Textile publication, BeaverLake6 Report is pleased to post the English-translation of the recently issued "Status Quo of China's Nonwovens and Industrial Textiles Industry, 2017." The report covers the different levels of the industry, geographic export demographics, and forecast the needs in the major end market applications. Click here to read the report in our China Textile website section.
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