Chairman GIBBONS. We do recognize that there have been some decisions that did not quite square with our concept of how the trade laws should work, and we are trying to correct those things for your industry. I recognize that you have had a very high penetration. Your industry requires, I guess ever since people have been wearing shoes, an awful lot of hand and finger assembly in the process.

Mr. SLOSBERG. Yes, sir. It is a difficult thing, but we are making strides in changing the factory layouts and everything to increase the productivity, to make this industry more competitive. It cannot be done unless we have the funds. We cannot generate funds unless we have an industry that is profitable.

Chairman GIBBONS. Now, this is completely irrelevant to the problem, but I think it might help you to understand that I am interested in shoes. I know that at the time that Hadrian built the wall across England the English were having a hell of a time with Italian imports of shoes. That was almost 2,000 years ago. So it is a tough problem, and I do not belittle it at all. I hope we can all do something to help.

Mr. SLOSBERG. Thank you, sir.

Chairman GIBBONS. Now, let us go back to Mr. Roboz's testimony. He said that he had lost half of the market.

Now, Mr. Roboz, in all respect to you, maybe there is something I do not understand about all of this, but I am looking at figures compiled by the U.S. Government-the Census Bureau and the Bureau of Labor Statistics-in a table prepared by the International Trade Commission, dated March 4. And the first thing I notice is that exports really have gone up. Now, not much, not nearly as much as the imports, but they have really gone up. These are in current dollars so we are comparing oranges and oranges. Apparel exports, for example, have gone up from $593 million in 1974 to $1.213 billion in 1986. Now, that is in apparel.

Now, that is the worst impacted part of the area. But the ratio of imports to consumption in apparel has gone from 7.6 percent to 26.2 percent. Now, that is the worst case that I can make for loss of market. In other words, in dollars, in apparel only, you are now penetrated 26.2 percent. That is according to the U.S. Government. Now, you said you lost half your market. What is wrong?

Mr. ROBOZ. One of the things that is wrong is that we are talking about different things as usual. I had the pleasure of debating against you 4 years ago in Boca Raton, and you and I went through

this then.

Chairman GIBBONS. Yes, sir.

Mr. ROBOZ. I am talking on a square-yard basis.

Chairman GIBBONS. All right. Good.

Mr. ROBOZ. For apparel and apparel fabrics. I am basing myself on penetration based on Commerce import figures against Census production figures.

Chairman GIBBONS. Yes, sir. Okay.

Mr. ROBOZ. And the result of that is 52 percent.

Chairman GIBBONS. No, sir; 33 percent.

Mr. ROBOZ. Well, okay. I tell you what we will do, because as I say, I have a certain feeling of deja vu. May I have the opportunity of presenting this data to you in detail?

Chairman GIBBONS. I would be happy to, and I think we need to. You know, I have got the figures, and 1986 was the worst year as far as penetration of imports on a square yard equivalent in apparel, just apparel only, not textiles. And I have got 33 percent. The production was 12 billion square-yard equivalents. The imports were 5.8 billion, and they figure imports as a percent of market share as 33 on a square-yard equivalent. Now, that is way off substantially.

Mr. ROBOZ. Sir, I am a businessman, not a statistician. I respectfully request the opportunity of presenting the basis of my data to

you.

Chairman GIBBONS. Sure, we would be happy to receive it.
Mr. SHEINKMAN. Mr. Chairman?

Chairman GIBBONS. Yes, sir.

Mr. SHEINKMAN. I would like to clarify one aspect of your comment about the increase of exports in apparel. 807, which as you know, Mr. Chairman, means the goods are cut here and assembled elsewhere, are included in those figures. And you had an increase of 807 operations, and that does not mean goods exported made in the United States for sale abroad.

Mr. FRENZEL. It works both ways. It goes back in.

Mr. SHEINKMAN. But that is not an export figure, sir. It does not mean it is an export.

Mr. FRENZEL. It inflates the import.

Mr. SHEINKMAN. It supplements the import, sir. It does not replace it.

Mr. FRENZEL. I said it inflates it.

Mr. SHEINKMAN. It inflates it, right, sir.

Chairman GIBBONS. Let us look at the textiles, because there was a gentleman there who was talking about textiles.

The highest penetration I can get in dollars of textiles-and I am talking about textiles only now-is 7.3 percent of the whole market; 7.3 percent. And I have had Members of Congress get up here-and I am not going to defame or defend all Members of Congress-tell me that 50, 60, 70 percent imported textiles. The highest the Department of Commerce and the Census people could get is 7.3 percent in dollars, and in square-yard equivalents it is 23.8 percent, which must mean we are importing an awful lot of cheap cloth, if I understand it.

Now, let us go to the cotton. Mr. Cline, can you tell me what items you are citing? You said cloth coats.

Mr. CLINE. Mr. Chairman, I think the category numbers, as I will give them to you, if we find what we have is not the correct number, we will supply that information to you for the record in writing.

Chairman GIBBONS. I am just trying to follow them through because I am trying to follow these things out.

Mr. CLINE. Yes, sir. I think on the sport coats, men's sport coats, that is category 333.

Chairman GIBBONS. 333, yes, sir.

Mr. CLINE. The next item I think will be 337.

Chairman GIBBONS. All right, sir.

Mr. CLINE. And then the women's blouses and shirts, woven is category 341 and knit is 339.

It might help if we also explain that the USDA takes the import numbers by category, and then they calculate how much cotton is in the product. If you like, we could also submit to you, Mr. Chairman, the USDA procedure. I understand it is very complex in the way the USDA calculates these numbers that we have used in our testimony.

Chairman GIBBONS. Well, I am not belittling anybody's numbers, but I would like to get talking in the same ball park with each other.

Mr. CLINE. Yes, sir.

Chairman GIBBONS. I do not have enough figures here in front of me to respond to your numbers. I cannot compare what we have been talking about.

Let me ask you, just out of curiosity, I have got on a two-piece suit here. How long does it take to sew this thing? Do you know? Mr. SHEINKMAN. It depends on the make of that suit. I would have to look at the garment, Mr. Chairman, because if you have cheaper made garment, a worker can turn out-you have got to deal differently between the coat and the pant.

Chairman GIBBONS. Well, the whole thing. I do not want to pay for just one part of it.

Mr. SHEINKMAN. It depends on how much hand production there is, but usually they are about anywhere from-depending on the make of the garment and the quality of the garment-anywhere from 110 to 160 operations. In a better made suit, you might have turned out, the worker, an average of maybe 3 to 4 a day. In a cheaper priced suit, it might run 8 to 10 a day. So I just could not give you that.

Chairman GIBBONS. In an 8-hour day?

Mr. SHEINKMAN. Yes, sir.

Chairman GIBBONS. So you are talking about 2 hours to 45 min

utes.

Mr. SHEINKMAN. Well, we have 60-minute coats. A 60-minute coat is essentially a machine operation turned to an outside coat. The pants might take another 20 minutes to 30 minutes. Then you might run to the kind of suit I am wearing, which is a better made suit, that might take up to 2 hours to 3 hours.

Chairman GIBBONS. Would you include a Southwick as being a cheap suit?

Mr. SHEINKMAN. I could not tell looking at that, sir. I did not leave any implication on you. I am just trying to use an example. Chairman GIBBONS. Well, is a Southwick an expensive suit?

Mr. SHEINKMAN. That is a well-made suit; that is a better made suit, sir.

Chairman GIBBONS. About how many hours did it take?

Mr. SHEINKMAN. I could not tell in that particular factor, but that might be in the neighborhood of somewhere about maybe, oh, I would say in the course of a day, three a day per the average worker in terms of a coat.

In a Southwick coat, there are hand operations. That, incidentally, is made in Massachusetts.

Chairman GIBBONS. We will tell Barney Frank that.
So we are talking about, what, how much an hour?

Mr. SHEINKMAN. The average worker in our industry in that shop would be making in the neighborhood of about $7 an hour. Chairman GIBBONS. So $21 is what labor is in this?

Mr. SHEINKMAN. Well, you have got to take the pants. The pants and labor, and usually the rough estimate of labor in a garment is in the neighborhood of about 30 to 35 percent.

on.

Chairman GIBBONS. Boy, I had better check the prices from now

Mr. SHEINKMAN. I might say, I just came back from South America, and I watched some of the products made there. I look at products around the world. You are wearing a very well made suit at a very good price, sir.

Chairman GIBBONS. Well, I will tell you the price I paid for it. Mr. SHEINKMAN. I know the retail price. I do not know whether you got it retail or wholesale. I am just saying in terms of the regular price.

Chairman GIBBONS. I got it downtown in Washington.

Mr. FRENZEL. He bought it in 1947. [Laughter.]

Mr. SHEINKMAN. Congressman Frenzel, judging from the lapels, I would agree with you.

Chairman GIBBONS. I think I just took the bill out of the pocket of this one.

Well, that is interesting. I appreciate your helping me, although maybe I had better do a little bargaining when I go into a clothing store from now on.

Okay. Dick?

Mr. SCHULZE. Thank you, Mr. Chairman. I appreciate the lesson in fashion.

Chairman GIBBONS. This is not about fashion. We are just talking about cost.

Mr. SCHULZE. Well, there was a hint of fashion in there.

Gentleman, I thank you for your testimony. Something you did not allude to and which I asked about earlier-and I do not know whether you are willing or in a position to testify about is the lack of production in this country of machinery and equipment used in the textile industry. I do not know whether any of you or all of you would care to comment on that.

Mr. LAIDLAW. This really relates to a situation from about 20 years ago. At that time there was no investment tax credit. Textile profits were not that great. Depreciation allowances were low, and the textile industry was in a poor position to reequip. And as orders from the textile industry thinned down, so the economics of production in this country deteriorated. One manufacturer after another disappeared.

It was only when the investment tax credit was allowed and better depreciation allowances came in that the textile industry could, in fact, afford to spend the money that it needed and start to reequip. But by then, very large segments of the American textile manufacturing industry had disappeared.

Mr. SCHULZE. Is not this worldwide a billion dollar industry?
Mr. LAIDLAW. Yes.

Mr. SCHULZE. Actually, it has to be a multibillion-dollar one.

Mr. LAIDLAW. Yes, it is. But again, you are looking at situations abroad where, again, various governments granting R&D allowances are fostering local industry.

Mr. SCHULZE. Now, let me say before you go too far. I am probably going to ask you if you say things like that if you will send me the specifics, because I would love to have them. Now, that is the first time that anybody has said to me that they felt that we do not have the production of textile machinery because it was subsidized by other governments. I have heard a lot of other things-technology, engineering, advancement, willing to spend money, willing to invest it but I have not heard government subsidy.

If you can give me information on that, I would love to have it, and if you know it. If you cannot, I would rather you not say it. I would like to hear if you have got it.

Mr. LAIDLAW. It is very hard to determine this. My colleague made the comment today on the Japanese automated sewing development, which is a $120 million project. Incidentally, that figure was calculated when the yen was about 220 to the dollar. And half of that was a straight injection from MITI, the Ministry——

Mr. SCHULZE. Let me ask what to me is a very simple question. Marvelous, let them spend that money on development. Let them develop it. Why cannot we produce it?

Mr. LAIDLAW. If you have not had the experience of actually building the machines and running it in and going through the prototype situation, that technology, in fact, does not get developed in this country.

Mr. SCHULZE. Well, I know it does not, but we are great innovators. We developed robots. Other nations utilized them.

Now, if you are saying that we as a society just do not have either the will or the capacity to do this in reverse, then as far as I am concerned, the future is very bleak.

Mr. LAIDLAW. I think, sir, it is the lack of commitment and particularly long-term commitment. This is a subject which, in fact, is affecting all U.S. manufacturing right now. That is, that so many of our industries are judged on an immediate short-term, quarterby-quarter profit, and that there is an incentive not to invest significant sums in research and development on the short term. Whereas, abroad there is a government attitude to foster research and development.

Many of the innovations that we are seeing that start in the United States are then taken abroad, sometimes by international companies, to complete the development and production. We are quietly giving away technology.

Mr. SCHULZE. That is right. My district is less than 3 percent unemployment. Now, we are on the cutting edge of high tech. That concerns me because other people are telling me most new developments are good for 3 months, 6 months-at the most 18 monthsbefore they are reproduced around the world.

Are we the only ones that are going to come up with this and let other people reproduce? Are those who are successful in the textile industry today so short-sighted that they are not willing to invest some money and get into the next generation of equipment?

Mr. LAIDLAW. I think, sir, that is one of the reasons behind this bill, and that is that both textile machine manufacturers and the