oNP T woa ner (not A other usepers down his do The W gE, inloa cu o conclude m rld Seadingd fro g en ’s L rch), o postinm AgE lobe t is arges r asg tocon He d di t O allowe anoth Search lp e ue t scov pen A d under the provisions of Fair Use, U.S. Copyriger Internet site, is permitted without permissio may be used for non-commercial purposes an [email protected] http://ageconsearch.umn.edu AgEcon Search Give to AgEcon Search nsure our sustainability. o the work of AgEcon Searc erable and free to research ccess Agricultural & Applied Economics ht Act, Tn from thd person h. ers a Digital itea c L le cl s r ib 17 U.S.opyrightudy on oss t rary C.t ly h . e 1 UCED RESEARCH REPORT EDA UNIVERSITY CENTER 12-2007-01 FOR ECONOMIC DEVELOPMENT South Carolina's Textile and Apparel Industries: An Analysis of Trends in Traditional and Emerging Sectors Prepared by Daniel Eades David L. Barkley Mark Henry Research Associate Co-Director, UCED Co-Director, UCED UCED Professor, Applied Professor, Applied Clemson University Economics & Economics & Statistics Statistics Clemson, SC Clemson University Clemson University Clemson, SC Clemson, SC EDA University Center for Economic Development Department of Applied Economics and Statistics Clemson University, Clemson, South Carolina www.clemson.edu/uced 2 Table of Contents Page I. Overview of Trends in the South Carolina Textile and Apparel Industries …… 2 National Industry Trends…………………………………………………………. 2 South Carolina Industry Trends………………………………………………….. 4 Textiles and Apparel Subsectors………………………………………………….. 7 Related Industries…………………………………………………...…………… 31 II. Identification of Dynamic Industry Clusters ……………………………….……41 Relative Competitiveness of Sectors ………………………………………….….41 Industry Competitive Advantages ……………………………………………… 43 Industry Growth ………………………………………………………………… 47 Geographical Proximity …………………………………………………………. 50 III. Future of Textiles and Apparel in South Carolina ……………………………. 59 3 South Carolina's Textile and Apparel Industries: An Analysis of Trends in Traditional and Emerging Sectors Prepared by Daniel Eades, Research Associate David Barkley, Professor Mark S. Henry, Professor UCED Research Report 12-2007-01 EDA University Center for Economic Development Department of Applied Economics and Statistics Clemson University Clemson, SC 29634 - 0313 www.clemson.edu/uced December 1, 2007 5 Table 1. Measures of Industry Dynamics, Textiles and Apparel (NAICS 313, 314, 315), United States, 1990- 2005 % Change 1990- Establishmentsa 1990 1995 2000 2005 2005 313-Textile Mills 6,006 6,384 6,027 4,249 -29.3% 314-Textile Product Mills 8,681 8,903 8,710 7,611 -12.3% 315-Apparel Mfg. 20,835 21,391 16,816 11,264 -45.9% Total 35,522 36,678 31,553 23,124 -34.9% Employmenta 313-Textile Mills 497,980 463,633 378,420 216,646 -56.5% 314-Textile Product Mills 225,865 225,016 218,444 169,339 -25.0% 315-Apparel Mfg. 956,511 830,189 503,118 257,616 -73.1% Total 1,680,356 1,518,838 1,099,982 643,601 -61.7% Earnings (2005 $)a 313-Textile Mills 15,379,534,713 14,563,641,757 12,731,789,772 7,379,046,178 -52.0% 314-Textile Product Mills 5,888,284,459 6,005,005,433 6,377,368,300 5,163,836,361 -12.3% 315-Apparel Mfg. 20,627,960,571 18,222,709,809 12,483,664,687 7,595,037,354 -63.2% Total 41,895,779,744 38,791,356,998 31,592,822,759 20,137,919,893 -51.9% Earnings/Worker (2005 $)a 313-Textile Mills 30,884 31,412 33,645 34,060 10.3% 314-Textile Product Mills 26,070 26,687 29,195 30,494 17.0% 315-Apparel Mfg. 21,566 21,950 24,813 29,482 36.7% Total 24,933 25,540 28,721 31,289 25.5% % Change 1997- Value Added (x$1,000, 2005 $)b 1997 2000 2005 2005 313-Textile Mills 28,834,978 24,467,916 17,559,848 -39.1% 314-Textile Product Mills 16,564,739 15,493,825 14,834,728 -10.4% 315-Apparel Mfg. 41,104,497 31,646,183 16,318,980 -60.3% Total 86,504,213 71,607,923 48,713,556 -43.7% aQuarterly Census of Employment and Wages (1990-2005). U.S. Department of Labor, Bureau of Labor Statistics. Available online at: http://www.bls.gov/cew/ (accessed June 2007) bStatistics for Industry Groups and Industries (2000-2005). Annual Survey of Manufactures (ASM). U.S. Census Bureau. Available online at: http://www.census.gov/mcd/asm-as1.html (accessed June 2007) 6 2005, real value added (in 2005 dollars) for textiles and apparel dropped from $86.5 billion to $48.7 billion or -43.7%. The decline in real value of output ranged from -10.4% in the Textile Mill Products industry (NAICS 314) to -60.3% in the Apparel Manufacturing industry (NAICS 315). The aggregate industry decline in value added (-43.7%) is less than the 57.6% decline in employment for 1995 to 2005, indicating that cutbacks in the industry were concentrated in the sectors with the lowest value added per worker. South Carolina Industry Trends. Measures of industry activity for South Carolina are provided in Table 2. Comparisons of state and national trends in establishments, employment, and earnings (relative to their respective 1990 values) are presented in Figures 1 and 2. The findings show marked similarities between U.S. and South Carolina trends in the three measures. First, for both the United States and South Carolina, the declines in employment and earnings were relatively mild (5-10%) from 1990 to 1995, and then much more severe after 1995. Second, the decline in establishments for SC and the US was not large until after 1998. The above trends indicate the typical pattern of laying-off workers prior to closing plants as an industry restructures. The SC and US trends in employment, earnings, and value added did differ in intensity during the recent period of industry retrenchment. South Carolina experienced more rapid decline than the nation in all three measures of industry activity (employment, earnings, and value added) in all three industry sectors (textile mills (NAICS 313), textile mill products (NAICS 314), and apparel manufacturing (NAICS 315)). For example, from 1990 to 2005, industry employment in South Carolina declined by 68.2% while U.S. employment in textiles and apparel manufacturing fell by 61.7%. In addition, growth in real earnings per worker for the aggregate industry (NAICS 313, 314, and 315) was slower in SC (23.6%) than in the US 7 Table 2. Measures of Industry Dynamics, Textiles and Apparel (NAICS 313, 314, 315), South Carolina, 1990-2005 % Change Establishmentsa 1990 1995 2000 2005 1990-2005 313-Textile Mills 441 452 476 325 -26.3% 314-Textile Product Mills 205 195 210 182 -11.2% 315-Apparel Mfg. 329 253 178 91 -72.3% Total 975 900 864 598 -38.7% Employmenta 313-Textile Mills 85,990 75,829 59,983 32,492 -62.2% 314-Textile Product Mills 15,583 16,770 13,258 7,281 -53.3% 315-Apparel Mfg. 34,433 25,667 9,987 3,481 -89.9% Total 136,006 118,266 83,228 43,254 -68.2% Earnings (2005 $)a 313-Textile Mills 2,597,061,373 2,353,924,327 2,022,223,365 1,145,249,503 -55.9% 314-Textile Product Mills 380,691,920 422,274,665 357,098,380 198,027,010 -48.0% 315-Apparel Mfg. 653,983,040 526,659,218 235,624,469 84,034,116 -87.2% Total 3,631,736,332 3,302,858,210 2,614,946,213 1,427,310,629 -60.7% Earnings/Worker (2005 $)a 313-Textile Mills 30,202 31,043 33,713 35,247 16.7% 314-Textile Product Mills 24,430 25,180 26,935 27,198 11.3% 315-Apparel Mfg. 18,993 20,519 23,593 24,141 27.1% Total 26,703 27,927 31,419 32,998 23.6% % Change Value Added (x$1,000, 2005 $)b 1997 2000 2005 1997-2005 313-Textile Mills 4,703,969 3,945,894 2,113,464 -55.1% 314-Textile Product Mills 1,001,264 830,512 563,556 -43.7% 315-Apparel Mfg. 946,909 500,284 212,766 -77.5% Total 6,652,142 5,276,690 2,889,786 -56.6% aCensus of Employment and Wages (ES202), 1990-2005. MIG, Inc. 2005 b2000 and 2005 Geographic Area Statistics. Annual Survey of Manufactures (ASM). U.S. Census Bureau. Available online at: http://www.census.gov/mcd/asm-as3.html (accessed June 2007) b1997 Economic Census: Geographic Area Series. U.S. Census Bureau. Available online at: http://www.census.gov/epcd/www/econ97.html#1997 (accessed June 2007) 8 Figure 1. Establishment & Employment Trends in U.S. and SC Textile and Apparel Industries 1990-2005 Source: Statistics for Industry Groups and Industries (2000-2005). Annual Survey of Manufactures (ASM). U.S. Census Bureau. Census of Employment and Wages (ES202), 1990-2005. MIG, Inc. 2005 110 100 90 Establishments 80 Employment 0 0 1 = 0 9 9 70 x: 1 ___ United States e d In …...South Carolina 60 50 40 30 1990 1992 1994 1996 1998 2000 2002 2004 Figure 2. Earnings Trends in U.S. and SC Textile and Apparel Industries 1990-2005 Source: Statistics for Industry Groups and Industries (2000-2005). Annual Survey of Manufactures (ASM). U.S. Census Bureau. Census of Employment and Wages (ES202), 1990-2005. MIG, Inc. 2005 190 170 150 Constant $ Earnings 130 0 Earnings/Worker 0 1 = 0 9 19 110 dex: ___ United States n I 90 …... South Carolina 70 50 30 1990 1992 1994 1996 1998 2000 2002 2004 9 (25.5%). Earnings per worker in textile mills (NAICS 313), however, grew more rapidly in SC (16.7%) than for the nation as a whole (10.3%). Trends in economic indicators for the textile and apparel industries are counter to those of overall industry trends for South Carolina since 1990 (Figures 3-6). The number of establishments in the state increased by more than 50% from 1990 to 2005 while state establishments in textile and apparel manufacturing declined by almost 40%. Similarly, state employment and earnings in textiles and apparel declined by more than 40% while total state employment increased by 20% and real total earnings grew by almost 40%. The positive note in the overall industry trends for South Carolina is that real earnings per worker in textiles and apparel increased more rapidly from 1990 to 2005 (23.6%) than the state average earnings per worker for all industries (13.3%). Textiles and Apparel Subsectors. The earnings, employment, and value added data for the principal manufacturing sectors NAICS 313 (Textile Mills), 314 (Textile Mill Products), and 315 (Apparel Manufacturing) may hide some promising industries within these broader classifications. For example, the Textile Mills Industry (NAICS 313) has seven sub-industries at the five-digit NAICS level (31311: Fiber, Yarn, and Thread Mills; 31321: Broadwoven Fabric Mills; 31322: Narrow Fabric Mills and Schiffli Machine Embroidery; 31323: Nonwoven Fabric Mills; and 31324: Knit Fabric Mills; 31331: Textile and Fabric Finishing; and 31332: Fabric Coating Mills). It is likely that some of these subsectors are prospering while the aggregate Textile Mills Industry is declining. A listing of the 18 five-digit NAICS subsectors for industries 313, 314, and 315 is provided in Table 3. The 2005 South Carolina employment and establishment numbers for each of the industries are provided as measures of relative industry size in the state.