Posted January 18, 2017

 

By Devin Steele (DSteele@eTextileCommunications.com)

 

In this week’s Review and Forecast articles, selected industry leaders of the textile and apparel industry and its supply chain assessed their businesses in 2016 and offered their expectations for 2017 and beyond. In questionnaires provided by eTC, they were also asked for their thoughts on President-elect Donald Trump, particularly related to textiles/apparel production and manufacturing in general in the U.S., and including any movement on/changes to trade deals (i.e., TPP, T-TIP, NAFTA, et al).

 

Following is a summary of responses from those companies that participated in the survey. Note that some participated only on the condition of anonymity, either for proprietary reasons, the fact their companies are publically traded or they are part of an employee-owned company.

 

Manufacturers/brands

 

Many members of the textile/apparel supply chain are non-committal but hopeful about a Trump presidency, including a yarn spinner that desired anonymity.

 

“We are taking a wait-and-see approach,” he said. “However, if he follows through on half of his promises, it could be beneficial to our business.”

 

Another anonymous yarn spinner added: “We are hopeful the new administration will create an atmosphere where our markets can grow without hindrances from taxes and regulations. While we are hopeful, we do not depend on our government to help us at all. We move on with our own plans and initiatives to improve our position in our markets and to look for new ways to do business.”

 

Similarly, the leader of another yarn production company said he does expect changes in trade policy, but they will fall short of most expectations.

 

“TTP (the Trans-Pacific Partnership) is dead but will get back on the table, and well as T-TIP (the Transatlantic Trade and Investment Partnership),” he said, on the condition of anonymity. “The apparel industry will not come back, as many that were in the trade are gone or too old to return. We will not sew enough to make huge differences, and costs in the U.S. will be an issue. Changes in NAFTA could be beneficial. CAFTA has for the most part worked and focus needs to be on this hemisphere. Trade agreements under the new administration are a wild card. Trump has said little specifically about textiles and apparel.”

 

Added another yarn producer: “It is too early to say anything. President-elect Trump will try to change trade deals to our benefit, but we do not know how much that is going to affect us.”

 

C.G. “Leib” Oehmig IV, president and COO of N.C.-based global fabric maker Glen Raven, Inc., is also taking a cautious approach to a new administration.

 

“I feel it is too early for me to have a clear opinion as to how President-elect Trump will address domestic manufacturing and trade-related issues,” he said. “I certainly feel that our industry must continue to actively promote itself at all levels, from consumers to the president’s office, to both change legacy perceptions and to create a better appreciation for the incredible innovations that are occurring in the U.S. textile industry. In addition, continued support for organizations such as the NCTO (National Council of Textile Organizations) will ensure that our industry has a voice in shaping the new administration’s trade policies.”

 

A certain level of optimism exists for New Jersey-based fabric producer Jason Mills.

 

“I’m not an economist, but I think that trade policies that promote free and fair trade are overall good for America,” said President Michael Lavroff. “I think NAFTA and associated agreements – including TPP – will benefit our economy as a whole.”

 

Mike Kingsmore, president of Palmetto Synthetics LLC, Easley, S.C., said Trump set the right tone among his electorate, and follow-through could pay dividends for the U.S. textile and apparel industry.

 

“President-elect Trump realizes that both political parties have had it wrong on trade policies,” he said. “We have encouraged a world economy with free trade being the buzzword for so long, but the only problem is the word “fair” has been left out of that equation. I expect him to get tough on the countries that have been cheating the system. I'll be shocked if you don't see a dramatic pick up in manufacturing jobs in the next few years – not only in our proud industry, but other sectors as well.”

 

Nancy Richardson, CEO of San Antonio Shoemakers (SAS), said it is very difficult to predict what may or may not occur.

 

“After 40 years of manufacturing in the U.S., we know the only consistency is change in the business environment,” she said. “SAS is committed to keeping our manufacturing base here in the U.S. regardless of the changes or the challenges that may arise.”

 

Suppliers

 

Kevin Ahlstrom, president of McCoy Machinery Co., Inc., Monroe, N.C., said his company doesn’t export much, if any, machinery anymore, so it remains to be seen if a Trump presidency will directly affect the company.

 

“What I hope for is better trade deals for our customers so they are more competitive when they export or import their goods,” he said. “If they can benefit from better trade policies, on both sides, then we should see new investments in machinery.”

 

Will Motchar of finishing equipment manufacturer Navis TubeTex, Lexington, N.C., said President-elect Trump could have a positive impact on manufacturing in the U.S. and the Western Hemisphere.

 

“We provide machinery and services to customers all over the world but it is always nice to see positive growth in the U.S.,” he said.

 

Steve Adams, president of specialty chemical supplier Seydel-Woolley, Inc., said Trump’s biggest impact could come in the area of trade agreements.

 

“Trade deals continue to make all the news and we feel this is good for our customers because of the awareness of TPP, NAFTA, etc.,” he said. “Any trade deals to even the playing field will help the U.S. textile industry.”

 

Bill Moody, owner of knitting machine manufacturer Vanguard, said he is looking forward to a Trump presidency, if the president-elect is able to back up his promises.

 

“The single biggest factor for the boom I expect in textiles is the Trump policies and economics in general,” he said. “Textiles and a lot of other manufacturing left this country because of the Bill Clinton policies. He raised personal taxes and enacted NAFTA, GATT, CAFTA and allowed China into the WTO. Trump promises to lower personal and corporate taxes and renegotiate many trade deals. The personal tax drop will put money back into small businesses, which previously and will again comprise a good part of the textile industry. This includes small businesses with 100-200 employees who will have money to put back and invest in their business.

 

“The lower corporate taxes will help create an unbelievable amount of textiles in the U.S, which will include foreign companies that will also benefit from reduced tax rates if they invest capital,” he continued. “The Clinton trade deal effects are self-explanatory and only benefited the very wealthy who had the money to invest offshore when they were enacted.”

 

Roland Zimmer of Zimmer America, Cowpens, S.C., sees a similar rosy environment being created for U.S. manufacturing under Trump.

 

“Business conditions in the USA matter, and the proposed measures should have a positive impact for textile companies, especially highly automated, less-labor-intensive processes,” he said. “There will still be some cut and sew offshore but the percentage of textiles manufactured in USA will be on the increase.”

 

Another U.S.-based capital equipment supplier that exports globally said Trump doesn’t need to fully live up to his promises on trade agreements, existing or proposed, for more success to be realized in the U.S.

 

“I think the existing market forces are moving the reshoring of the right slices of the textile industry,” he said, requesting to remain nameless. “Funding Customs properly and truly enforcing the rules now in place can improve the situation even more without wholesale revocation of signed trade agreements. Unsigned agreements can be renegotiated. Starting a trade war will serve no one.”

 

Robert Reimann, CEO of Switzerland-based equipment provider Jakob Müller AG, Frick, with U.S. operations in Charlotte, N.C., said that with any change, there are positive and negative impacts.

 

“At this time it is hard to predict what effect the new president and his administration will have for the business communities in many parts of the world,” he said. “For the textile industry as a whole, there will likely be changes. For North America itself, the trend is likely more positive. However, the lost infrastructure, to a moderate degree, cannot be rebuilt overnight. It should be in the new administration’s interest, not only in textiles, to very much continue working hand in hand with the international business community.”

 

For Peter Brust, executive vice president of weaving machine manufacturer American Dornier, Charlotte, N.C., there is some anxiety and many open questions about what to expect from the new administration.

 

“As an importer, we are relying and depending on a stable and predictable trade environment,” he said. “There is certainly room for improvement (on trade deals). One can only hope that changes to trade agreements will be made based on facts and necessities.”

 

Patrick Weissgerber, president & CEO of sewing machine supplier DAP America, Inc., Norcross, Ga., said he isn’t keen on much tweaking to existing trade agreements.

 

“While we, of course, appreciate the general idea of bringing jobs back to the U.S., there are also some mutual benefits to trade deals such as NAFTA,” he said. “Coming back to our main clientele, suppliers to the automotive industry, almost all of the seat covers are sewn in Mexico while the assembly of the seat is done in the U.S. Introducing border taxes might not help to create jobs in the sewing industry as during the past years we have seen it to be increasingly difficult to find qualified labor or even find people willing to work as sewing operators at all. In that regard we need to wait what direction the new government will be heading.”

 

Another capital equipment provider, responding anonymously, said U.S. investment in new and expanded textile facilities will continue if projections for financial returns are met, but he is wary of the Trump administration’s trade policies.

 

“With regards to renegotiating trade agreements, the U.S., as a major importer of garments, does have limited choices, at least in the short-to-medium term, as to where we buy our textiles,” he said. “If trade sanctions or limitations are imposed, we would see significant price increases. As it relates to manufacturing in general, not every factory moving abroad is producing solely to import their products back to the U.S. for a higher profit. Other countries have trade agreements outside the U.S., allowing them to ship to their treaty partners without tariffs. U.S. multinationals do and would benefit.

 

“Manufacturing in the U.S. is at an disadvantage if trade agreements are lopsided,” he continued. “These agreements should be revised. We cannot compete with countries that impose major tariffs on imports coming from the U.S., while they have free access to the U.S. market. On the other hand, abstaining from participating in major trade agreements such as TPP is a mistake. If the U.S. is not part of them, other countries such as China would be more than glad to fill the void. That is not in our interest.”

 

Martin Gopman, president of Universal Sewing Machine Co., Miami, doesn’t agree, however.

 

“I view the demise of TPP and T-TIP as a positive act for our market in the Americas because it will remove incentives to move manufacturing offshore,” he said. “Additional protectionist policies and reduced corporate tax and cash repatriation will improve our markets and business in the U.S.”

 

Equally positive is Frank Henderson, president of Andalusia, Ala.-based Henderson Sewing Machine Co.

 

“We look forward to 2017 and beyond under the leadership of President-elect Trump and the new administration committed to a business-friendly environment, less governmental regulations, fair trade deals, a pro-manufacturing environment and pro-U.S. employment.”

 

A supplier to the sewn products industry said he expects a rise in U.S. manufacturing, but not without some angst.

 

“I think there will be increased domestic production but some tense moments as the possibility of renegotiated trade deals loom large,” he said. “In the long term, I am concerned that the balance of increasing domestic production does not negatively affect our export markets, whether it be in textiles or other industries.”

 

Tony Hooimeijer, president of Greensboro, N.C.-based Karl Mayer North America, said the general expectation of a Trump administration is that pro-business changes will occur. “Made in the USA may become a stronger trend, as a result of agreement changes, or at least as a marketing message from brands.”

 

A parts and accessories supplier said he expects a positive outcome for U.S. manufacturing, with a tough businessman serving as president.

 

“We think it will be positive as he is interested in domestic manufacturing and not interested in TPP, and he will be a tougher negotiator for trade deals in general,” he said. “In the end, we don’t expect any major changes in NAFTA.”

 

“Who knows?” answered a representative of a supplier of color standards and color communication tools, when asked the “Trump question.” “I have faith that our retail accounts will still be looking for product to sell and that that product will have color applied to it and that will cause a need for a color standard that we will provide.