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Even in the abnormally high export year 1955 for Japan, none of these fabrics amounted to more than 3.11 percent of the domestic production in that particular cloth. That year, broadcloth and poplins were purchased by American cutters in considerable quantities (compared to previous purchases) to fill a void in the United States market. Other fabrics such as printcloth (80 squares) climbed to only 0.5 percent of American production at its highest point, while twill and sateen rose to only 0.38 percent, sheetings to 1.20 percent, and shirting, printcloth to only 1.39 percent, each in terms of the domestic production in that particular item.

The tables below provide a more graphic comparison of the minor inflow of Japanese cotton fabrics in these occasional items:

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1 Print cloth, 80 square type, is included in shirting print cloth, and poplin broadcloth. Sources: United States production-Facts For Industry, by Bureau of the Census, U. S. Department of Commerce. Japanese Exports-Annual Export Statistics, by Institute of Textile Trade Research and Statistics.

Labor intense fabrics

In this fourth category are those fabrics which utilize a considerable amount of labor, including hand labor, in their production. Such machinery as there is for this type of manufacture is relatively inefficient and expensive in terms of the finished cloth because there are so many seconds.

It is this use of skilled and trained manpower that is Japan's only natural resource. It is to be appreciated, therefore, if Japan enjoys any economic advantages in the production of cotton textiles, they will be in the manufacture of fabrics which require relatively high labor content. This contrasts to the mass-production methods in this country where capital and machinery represent some of the many economic advantages that we enjoy as the most industrialized nation in the world.

Although there are other cloths in this classification, as far as the United States is concerned, the problem quite frankly is with imported velveteens and ginghams. There have been some improvements in the machinery for the production of these fabrics, but especially for velveteens the equipment for cutting purposes cannot cope with hand cutting for either quality or costs.

Velveteens

So much has been mentioned about velveteens that it deserves special attention at this time.

The velveteen industry-if it can be classed as an industry-consists of only 1 weaving and 1 finishing mill in this country, both owned and operated by 1 company, the Crompton Richmond Co.

Five years ago (1953), there were three manufacturers of velveteens. In addition to Crompton Richmond, they were Merrimack Manufacturing Co. and A. D. Julliard. In 1957, the Merrimack Co. began liquidation and no longer produces velveteens, although it is reported that it still holds some inventory of this item. In 1954, Julliard was acquired by the United Merchants & Manufacturers Co. and gave up the manufacture of velveteens.

To those who would look with jaundiced eyes-and many have-the veleveteen picture appears as proof of the impact of imports on a domestic industry.

The evident facts are, however, quite the contrary, as evidence elicited at the public hearings of the United States Tariff Commission on the subject of velveteens in 1956 and other information clearly indicate.

Julliard gave up the manufacturing of this labor-requiring fabric to concentrate on the finishing of velveteens and on the manufacture of other textiles as its contributions to the highly integrated structure of the huge United Merchants organization. When there is a demand-even today-it finishes high-grade fashion velveteens for the trade. This was the situation when the Tariff Commission hearings were held.

The story of Merrimack is the century-old one of a high-cost New England mill attempting to compete with a low-cost producer in the South. Its equipment up to weaving was reputed to be good, but its weaving facilities were known to be old and in poor condition. Its finishing machinery was said to be in better, but not the most modern or efficient, condition.

Its primary problems were in the manufacture of its main item-corduroys. On giving notice of its plan to liquidate, the weakness of the corduroy market was emphasized. Expert authority has declared that Merrimack would have had the same difficulties even had there been no imports of velveteens.

It is a misnomer to separate the velveteen and corduroy industry into two distinct entities. Indeed, the Tariff Commission in a prewar recommendation (report No. 68, 2d series, 1933) concluded that corduroys were the primary product and velveteens the secondary item of the same industry. Factually, the equipment and facilities for the manufacture of velveteens is completely interchangeable with those for the manufacture of corduroys. The only possible difference is that velveteens require a finer-count yarn. It is quite likely that prewar and possibly postwar velveteen mills decided without reference to imports to change over to corduroys because of greater profits in the latter.

To distinguish a velveteen industry as apart from the pile-fabric industry, of which corduroys are also an integral part, is to segmentize what constitutes a small part of the textile industry as such and to recognize that every fabric, no matter how significant or small its production, is a separate and distinct industry in and of itself. Such minute divisions are unrealistic and unjustified. Production statistics going back to prewar averages show an annual output of 2,479,169 square yards in the 1930-39 decade. During and after the war, and because of the war, production from 1940 to 1949, except for 1945, was relatively high; not quite double that of the previous period. Due principally to a fashion trend in 1952, coupled with a complete monopoly of the domestic market, the velveteen producers reached their peak that year with a production achievement of 8,246,496 square yards. There has been a steady decline since that pinnacle in domestic production, but our contention is that Japanese imports, being supplementary and complementary-and not competitive were not responsible for this downward trend.

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Though 1956-57 official production figures are not available (because only one company produces velveteens and such individual information is kept confidential), by culling the only possibility-velvets, plushes, and other pile fabrics, but excluding rayon and wool mixture-we estimated the production for the past biennium. These estimates would show that 1956 domestic production decreased to 3,137,280 square yards, increasing in 1957 to 4,286,970 square yards. This increase in domestic production undoubtedly resulted when Japan voluntarily cut back her exports by more than a half from the previous year to the 2,500,000 square yards imposed by her export quota.

An interesting commentary, documented in the table below, is that in 1957 there was a very sharp decline in the total consumption of velveteens by the domestic market. Two years ago, the total apparent consumption was 11,461,969 square yards, but last year it dropped 2,930,917 square yards to 8,531,052 square yards.

In this same biennium, veleveteen imports from Japan decreased from 6,898,000 square yards in 1956 to 3,163,000 square yards in 1957, for an import loss of 3,735,000 square yards. These statistics, incidentally, include those velveteens that were allegedly transshipped through third countries to the United States. The actual exports certified by the Japanese Government for shipment was 2,395,000 square yards.

Some observations are prompted by the relatively major decline in the velveteen market in 1957 as compared to 1956. With Japan voluntarily relinquishing more than 3 million square yards, why didn't the protesting industry of one company increase its production to take up the surrendered share? Why didn't the other companies, Julliard and Merrimack, reenter the field if they were geared to manufacture velveteens? What about the increased price of velveteens? Who but the consumer paid the higher asking price? Who pocketed the extra profits?

It is not coincidental, though, that the approximate total of imported velveteens given up by Japan approximates the loss in apparent consumption. This simply demonstrates that Japanese and domestic velveteens are not directly competitive, either as to quality, price, or end use. United States velveteens, as brought out in the Tariff Commission hearings, are competitive with velveteen imports from Italy. Japanese velveteens opened up new markets and discovered new uses, thereby enlarging the total velveteen market for both imported and domestic fabrics of this special construction.

Velventeens: United States production-Imports, apparent consumption

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Recapitulating the facts, the extensive publicity given to velveteen imports have distorted the picture out of all perspective, not only for this single item, but more importantly for all imports.

There is only one company in the United States actively producing velveteens. Employing about 900 workers, its total production of velveteens-while larger than the total of the restricted imports from Japan-is only 3 to 4 million square yards a year, or about one two-thousandth of the annual cotton yardage produced in this country.

Velveteens are a specialty fabric that requires high labor content and is most sensitive to labor differentials whether interregional or international. It is uniquely adapted to Japan's type of economy where manpower is the dominant

aspect; from the purely economic sense, its manufacture in this country would seem to be uneconomic.

Moreover, Japanese imports are not competitive with domestic velveteens. When Japan voluntarily surrendered a substantial portion of this specialized market that it helped develop, the lone American company in the field was unable or unwilling to increase production to make up the relinquished yardage.

We wonder whether it is good economics for a single company to enjoy such a monopoly protected by this Government? We wonder too whether a single company's production of velveteens should be tolerated to jeopardize the foreign policy objectives of the whole nation?

Ginghams

Ginghams share with velveteens that labor intense quality that permits its importation from Japan into the United States in relatively substantial quantities.

Currently of wide general appeal and usages, ginghams are usually defined as "cotton colored yarn box loom fabrics commonly known as gingham, whether colored or combed, having yarn sizes 21s or lighter inclusive of fabrics decorated with dobbies, satins, clip sports and push cords, except tissue ginghams." Tissue ginghams are "box loom colored yarn fabrics, whether carded or combed, of lighter yarns than those in regular gingham classification, and known as tissue gingham in the trade."

The number of colored yarns used in its manufacture accounts for its relatively high labor content. Although some new equipment has been designed to reduce the labor requirements in gingham production, in general, it is an American industry that does not enjoy technical advantages over foreign competition by reason of its machinery. It is, however, a fabric that is highly dependent upon styling and fashion trends, and in these respects, the domestic manufacturer retains a marked competitive advantage over Japanese imports.

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Historically, this fabric has been made in this country for over a hundred years. It is primarily an apparel goods fabric used to make women's and girls' blouses, dresses, and aprons, and in men's and boys' sports shirts. Before the 1930's, ginghams represented a large segment of the cotton textile industry. Its decline thereafter has been attributed to changes in the trend of fashions. cently, though, ginghams have been on the upgrade as the fabric again captured fashion's fancy. The two-ply ginghams especially are being used in sections of the apparel trade such as men's jackets and hats. Some authorities have ventured that the introduction of this latest gingham-type has doubled the market potential for ginghams generally.

Inasmuch as fashions dictate the overwhelming use of ginghams, by reasons of the difficulties, obstacles, and risks involved in importations, Japan cannot compete for the first or primary market, which is also the most lucrative and profitable portion. Since the Japanese exporters ship ginghams on order, their fabrics are at a distinct disadvantage.

That they can compete at all for any share of the market stems from the economic character of the cloth; that is, its high labor content. Ginghams from Japan are customarily in the loom state and are finished here by our own mills and plants. They are generally sold to converters and manufacturers in this loom state and thus Americans are employed and American operators profit. The record for Japanese imports was reached in 1956, when 77 million square yards were imported. This represented about 26.2 percent of the apparent domestic consumption of 300 million yards. Lest some misread the implications, it should be explained that the American producers were confronted with a sudden spectacular and unexpected increase in the demand for this particular fabric that they could not meet with their own production. Unable to satisfy their customers, such textile giants as Burlington Industries, through their subsidiaries Ely and Walker, and United Merchants & Manufacturers, Inc., and Lowenstein & Sons, Inc., were forced to import Japanese ginghams to augment their own production. During 1955-56, these 3 companies together ordered 12,905,793 square yards of loom state ginghams.

If the industry leaders could not produce sufficiently to meet the demands of their own clients, it is not difficult to imagine that many of the smaller companies were materially aided by these Japanese imports.

Viewed against this background, Japanese gingham imports helped, not injured the overall domestic gingham industry.

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Recalling the vital role that gingham imports played in 1955 and 1956, it is interesting to speculate whether the availability of Japanese fabrics at that time prevented the immediate and severe contraction of an industry unable to cope with the dictates of fashion. If sufficient gingham cloth had not been made accessible to the trade at that opportune moment, is it possible that the fickle fashion trend might have shifted to another fabric and the current relatively healthy demand for ginghams might not have been triggered?

In spite of the record, however, numerous charges have been made that Japanese imports are forcing American mills into bankruptcy. The most recent of these charges relates to the Victoria Mill in Rock Hill, S. C.

It is common knowledge in the trade, we were told, that this particular mill has been a marginal one for many years. The equipment is antiquated, obsolete, and inefficient. Though it has 9,856 spindles and 246 looms, its facilities limit the weaving to flat goods. There is no machinery for "leno" or "dobby" motions. Usually, less than a hundred workers were employed there.

Ginghams, colored goods, and yarns were manufactured there, but its fabrics were of the low-end variety since the yarns used were from 18s to 30s. Inasmuch as Japanese ginghams are usually 40s or a finer grade, it is doubtful that the ginghams fabricated in this mill competed qualitywise with these imports. Because of the poor state of the equipment, the mill has had difficulties in attempting to sell their output. Our understanding is that the selling agents were changed a number of times in order to promote sales and that the mill lost money for 6 consecutive years before closing its door. Victoria Mill operated in the red in 1952, 1953, and 1954 when little or no ginghams were imported from Japan. Its internal structure was such that it could not compete on the open market, and it was doomed to close down regardless of the import situation. Solomon Barkin, director of research, Textile Workers Union of America, AFL-CIO, testified directly on this matter before this subcommittee in Washington July 9, 1958, as follows:

"You heard Senator Thurmond complain of the closing of the Victoria Mill in Rock Hill. This is not the first southern mill that has closed; it is simply that the South is more aware of the fact that the textile industry is contracting; it is hitting them, and this wave of closing has only begun, gentlemen. The Victoria Mill complains about the tariff. That is not the full story. It hit it, but it was a marginal mill which is closing down as the industry shrinks * Why do mills close down?

Although we intend to delve into this subject in greater detail subsequently in this submission, this is an appropriate place to ask the question: Why do mills close down?

We ourselves are convinced that no mills have been closed down because of Japanese imports. Too often when marginal mills shut down, imports are given as the excuse and the cause. Even when mills that do not compete with imports liquidate, imports are blamed.

We respectfully submit that, in our opinion, this subcommittee could render a real service not only to the textile industry itself and to the importers, but also to the public at large and the Nation, by conducting a searching and impartial investigation into the closing of so many textile mills. The starter might well be the Victoria Mill and the Merrimack Manufacturing Co. Only the Govern

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