Mr. SULLIVAN. A relatively small number of the employees of co ton and synthetic textile mills are employed in large metropolita areas where there is a diversity of manufacturing. Because of the size, distribution, and location characteristics of these mills, a change or shift in demand for their output causes particular hardship textile workers. The history of numerous New England textile tow is ample proof of the suffering which is occasioned by the loss such employment. The outstanding characteristic of the industry is its highly com petitive character with the resulting low free market price of texti to the consumer. Because of the size of the American industry an the American market, as well as the ease with which new producer enter industry, price levels are determined by the forces of free d mestic competition. Our wage levels would have to bear the burd if unprotected from low-wage world competition. During the 4 years 1942-45, inclusive, 51.4 percent of the produ tion of cotton broad woven goods in the United States was used Because of the decline in production during the war, withdrawa from the military ranks of certain skilled workers became necessa to maintain production. The cotton-textile industry is also noted for its relatively high p centage of labor costs to other costs. In the fine-combed-goods f in which New England mills specialize, costs of production are follows: Labor, 45 percent; cotton, 40 percent; overhead, 15 perce The labor cost is of particular significance when one realizes t raw-material costs vary only slightly from mill to mill, and the Wes ern European mills export fine-combed goods to the United States America. The characteristics of the industry are basically the same throug out the world. All the principal cotton and synthetic textile pro ing countries have access to raw materials, machinery, and technic available to us and have had years of experience in the production goods. The cotton spindles of Western Europe are twice that of United States of America. Japan had 7 million spindles, mostly since the end of the war; India, 11 million spindles; and the Un Kingdom, 28 million spindles. Table IA shows the spindles countries. The significant difference between United States and foreign cor petitors is the vast differences in wages. Our average hourly w is from 200 to 1,200 percent higher than foreign competitors. verage hourly earnings of cotton textile workers, selected foreign countries and All data for foreign countries as of late months in 1952 except India when latest available data is for 1949. tables 2-5 attached. Earnings for France and Switzerland represent the average of a range of earnings as an overall national rage not available. Range in Switzerland is from a high of 56 cents per hour for skilled males to a low of ents per hour for unskilled females. Range in France is from a high of 50.6 cents per hour for skilled males a low of 30.5 cents per hour for unskilled females. United States earnings for broad woven fabric mills, cotton, silk and synthetic fibers-February 1953. ource: Bureau of Labor Statistics, U. S. Department of Labor. The significance of these enormous wage differentials can be underood when one recalls the history of the shift of two-thirds of the cotn-goods industry in the United States. It is a lesson in the ecoomics of the industry which if disregarded in the international field ould result in increased hardship for New England and widespread employment along the whole Atlantic seaboard. We point out this experience, not for the purpose of raising regional sues, but to demonstrate what could happen to the whole United cates cotton textile industry if we fail to understand the importance differences in wages between ourselves and foreign competitors. he Southeast, where 80 percent of the industry is now located, stands lose more than New England. In the free market of this country the industry, being labor oriented, pidly trends (with only a slight timelag) to communities and areas here labor costs and wages are lowest. In the past generation the cotton spindles in New England have clined from 16 million to 4 million, the jobs of 125,000 operatives ere lost and 220 mills have either liquidated or moved in response the lower production costs of other areas of the country. While w England's spindle capacity was shrinking, spindleage in the uth increased. This happened to the largest employer in an industrially mature d competent region simply because wages and significantly higher an those in other States. Compared to the wage differences beeen United States and foreign textile producers, our domestic fferential of about 20 percent seems small. The report on the New England Textile Industry by the Committee Appointed the Conference of New England Governors— blished this month finds that ‣ major explanation of New England's decline in textiles is the large difential between wage costs that area and other parts of the United States. The report further ites highly competitive markets an addition of a few cents a yard in the cost producing cloth in any one area eventually means loss of sales and brings on rating deficits and resultant loss of employment. This is not a theoretical abstraction or history of long ago. Only a year ago when the wage differential in the United States increased by 62 percent, New England mills, faced with a buyers' market, were forced to take drastic measures. Curtailment and unemploy ment were 3 times greater in New England and caused layoffs of 21 percent of the workers and part-time employment for a additional 35 percent. Weekly han-hours dropped 44.2 percent at payrolls by 41.9 percent. Over 25,000 workers in New England text centers had exhausted all employment compensation by February 192 To alleviate the short time and unemployment caused by the disparity in wages, a reduction in New England wages was ordered by arbitrition later in the year. The secondary effects of curtailment and liquidation are borne by everyone in the textile community. It is no exaggeration to say that one textile job lost and not replaced mean a loss to the community of twice the textile wages cut off. (Governors' Refe. p. 20). Table 6 shows the direct impact on the United States textile ind try of a loss of 10 percent, 20 percent, and 30 percent of its marke Additionally many mills would go out of business completely, others dependent on the industry would be so injured as to great; increase the total loss. For many years a favorite myth of the New England publie was assume that its higher wages were merely a reflection of higher e put per man-hour. Although there might have been some truth int statement when the domestic competitive industry was in its infancy. ceased to be true long ago. The highly experienced and well esta lished industry of Western Europe is frequently accused of such a 25 efficiency and productivity as to be no threat to the welfare of our o industry. To New England textile men such assertions have a fan iar and doleful ring. Granted there is higher efficiency among t United States mills, it nevertheless does not follow that it is so mu greater that it can overcome the enormous differences in wage coss There are no complete reports available comparing productivity United States mills with that in other countries, but on the bass the 2 mill departments studied in the United States and in Engl the card room and the spinning room, the excess of OHP (operate hours per 100 pounds of yarn produced) in British mills over Ar can mills is 120 percent-compared with American wages exceede British wages by 232 percent. This data tends to establish the fa that the superior American productivity is not sufficiently great overcome the wage handicap (productivity team report of a visit the United States in 1949 by a group representing the British c spinning industry). Need for interim safeguards. The American cotton and synthet fiber textile industry needs protection from low-wage foreign petition. The present tariff rates resulting from substantial red tions in 1939 and again in 1948 have not been tested under normal ditions of world competition. During the war much of the work industry was destroyed. The postwar period of rebuilding until te cently has been delayed by shortages of raw material. During this abnormal period, American wages have risen further 248 percent since 1939 and 21 percent since 1948. The rapidity with which competition in this volatile industry can cause unemployment must not be underrated. Last year in New Engand in the space of a few months, unemployment increased fivefold. Table 7 demonstrates the swiftness with which disaster strikes, and the snowballing of unemployment. New England will be hurt most by the importation of English, French, Swiss, and German textiles because those countries produce the fine combed goods which are made by northern mills. These countries have the traditional ability and skills to make these fabrics. Furthermore, because these fabrics have the highest relative labor content, differences in wages cause greater differences in cost. Japan, although traditionally not a fine combed goods producer, has recently been importing such fabrics into this country and plans, according to their official announcements, to increase its proportion of such goods. The Kureha Textile Review, March 21, 1953, published in Tokyo States: We must endeavor to manufacture cotton goods of higher process as well as ottons of finer qualities together with devicing to make novel cotton textiles lended with other manmade fibers domestically produced. The impact of the Japanese rebuilt modern textile industry may Foon be felt in this country. Japanese towels are now selling for 80 cents a dozen in New York whereas the American product sells for $1.275. Better grade Japahese towels sell for $1.10 per dozen as opposed to $1.31 for comparable United States towels. English typewriter cloth is now being imported into this country at in average price, with duty, of from 64 to 68 cents per yard, whereas American mills cannot make the cloth for less than 78 cents per yard. At least two New England mills have had to abandon the production of these fabrics. Velveteens are being imported into this country from Italy and Japan in substantial quantities at prices 15 to 20 percent below those of American producers. For example, twill-black velveteen from Italy sells for $1.975 to $2.075 as compared with the American price of $2.275. Japanese plain back velveteens are imported at 872 cents compared with the United States price of $1.225. Japanese lenos, a lightweight open mesh cloth used in the manufacture of shirts, is now being sold in the United States at an average price, including duty, of 29% cents per yard finished, whereas the American selling price is 3334 cents per yard. Japanese broadcloths are being sold duty added in this country from 62 to 7 percent under United States prices. While the problem of foreign trade and tariff policy is reexamined, proper safeguards against the threat of unemployment and injury to American workers and producers should be provided. The purpose of the original Reciprocal Trade Agreements Act of 1934 included restoring the American standard of living and overcoming domestic unemployment. It would be unwise to risk domestic unemployment and the American standard of living during this interim. Failure to provide such safeguards might well lead to a situation in which careful deliberations would become impossible because of the pressures created by unemployment and injury. (The tables referred to follows:) |