Textiles don't stack up in ATMI comparisons

By Don Hogsett -- Home Textiles Today, 1/22/2001 12:00:00 AM

WASHINGTON -In a relentlessly punishing year for the American textiles industry-the worst in recent memory-textiles shipments slipped for a third straight year, sales declined by 4 percent, prices didn't budge up at all, and the industry as a whole lost money.

And when measured against all of American industry, the U.S. textiles industry, combining home fashions and apparel fabrics, came in a distant second last year, falling behind in every single head-to-head measurement made by the American Textile Manufacturers Institute (ATMI) in its annual take on the state of the business.

Pounded by foreign imports, hobbled by a soft economy, and increasingly confounded by suppliers and retailers both as they step up their off-shore sourcing, the American textiles industry recorded a third straight year of declining shipments, down 1.5 percent from 1999 to $77.1 billion from $78.3 billion in 1999, said ATMI chairman Roger Chastain, of Mount Vernon Mills. According to the textiles trade group, "This was the first three-year decline in textile mill shipments in at least 40 years."

And wherever shipments go, sales and profits surely follow. Sales of U.S. producers were off by 3.5 percent, to $58.2 billion from $60.3 billion the year before, a drop of $2.1 billion. Putting it into perspective, that's roughly the same as WestPoint Stevens or Springs disappearing overnight.

Put another way, that $2.1 billion in sales lost to the American textiles industry, home fashions and apparel, is the equivalent of the combined 2000 home fashions sales of Dan River, Crown Crafts, Croscill, Pacific Coast Feather, Hollander, Maples Rugs, Louisville Bedding, Franco Mfg. and Revman-as if they had all dropped off the edge of the planet.

It wasn't a very good year for making money either. While some did, more didn't, and taken as a whole, the industry posted an after-tax loss of $300 million last year, compared to a profit the year before of $700 million-a daunting one-year drop of $1 billion.

Can't make money? Guess why. The producer price index for all industrial commodities shot up by 6.7 percent last year. But it was flat for the textiles industry as suppliers couldn't convince their customers to pay any more for their products. Indeed, since the benchmark year of 1982, producer prices have actually declined by more than 21 percent, to a reading of 78.6 from a level of 100 in 1982, penalized by competition from low-cost foreign imports.

Measured against all American manufacturing, the textiles industry falls far short, according to the ATMI benchmarks. All American manufacturing posted a return on sales (profits as a percentage of sales) of 6.7 percent last year, making almost seven cents for every dollar of sales. In stark contrast, the textiles industry posted a negative return of 0.4 percent.

All manufacturing recorded a return on stockholders equity of 16.6 percent last year, compared with a negative return of 2.4 percent for the U.S. textiles industry.

In terms of employment, the average number of workers in all manufacturing was virtually flat last year. But the number of workers dropped by 2.7 percent in the U.S. textiles industry.

And the outlook doesn't improve for home fashions producers moving into the new year, according to textiles analyst Bryan Hunt of First Union Securities. "I think all the pain carries over," he said. "I expect continued production curtailments in the first six months of the year, and I think you'll see a lot of the people on Wall Street slashing their earnings estimates for the home fashions companies."

Looking back, said Hunt, "In general terms, it was an extremely difficult year. Four of the top five bed and bath producers saw their revenues decline by 5 to 6 percent, and their operating profits declined substantially."

U.S. TEXTILE INDUSTRY BENCHMARKS 1999-2000

Source: American Textile Manufacturers Institute.

All 2000 data were estimated from latest year-to-date information supplied by the Federal Reserve, U.S. Department of Commerce and the Bureau of Labor Statistics.