Milam
04-18-2005, 23:29
I was gonna put this topic out here and see what you guys thought about it.. I dunno if you care or not, but this is a hot topic in my city. The paper is called the Outlook.
Here ya go and if you would I would like your honest opinions. Heh, I know I set myself up for that one! Thanks.
Russell was founded in Alexander city and has since left us high and dry.. I hope they burn in hell!
:eek:
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Russell Corporation and Avondale differ on what impact CAFTA may have, but both agree vote on trade agreement is crucial
By Laura McAlister
More than a decade ago a free trade agreement was passed that many say closed hundreds of textile plants in the U.S. and cost the country millions of manufacturing jobs, and now there's another on the horizon.
The difference - 11 years later, some textile companies are supporting a new free trade agreement, saying it could save American jobs. However, not all are convinced it's what is needed.
This week, members of the U.S. House of Representatives will hear arguments for and against the Central American Free Trade Agreement, better known as CAFTA. The agreement would form a trade alliance among five Caribbean countries and the U.S., much like NAFTA did with Northern American countries in 1993.
A vote in the house could come before Memorial Day, and it's expected to be a close one with members divided, just as the two major textile industries here are.
Russell Corp., which employs about 3,500 in Alexander City, has said the passage of CAFTA is crucial to the company's future in Alabama as well as the U.S., but Avondale, which employees only about 150 here, but more than 5,000 people nationwide, said the treaty, as is, is a backdoor for China to further dominate the market.
"Avondale is not anti-CAFTA," said Stephen Felker Jr., manager of corporate development for Avondale Mills, Inc. "But we are against CAFTA as it's being proposed currently because we feel there are too many loopholes to allow parties not part of the agreement to benefit from it."
Russell Corporation's deputy general counsel Chris Champion disagrees and argues that a "vote against CAFTA is a vote for Asia."
"We disagree that there are any loopholes in CAFTA," Champion said. "The provisions of the agreement that would allow any Asian products into the U.S. are very limited in scope and were given by design only to Nicaragua, which lags behind the other Central American countries in terms of its apparel industry and economic development. The tariff preference levels for Nicaragua only are a non-issue for Russell and are certainly not worth defeating the agreement over when there are so many jobs at stake. Fundamentally, this issue boils down to whether you want apparel production in this hemisphere that will only exist long-term if CAFTA passes, or you want apparel production in Asia that won't require any U.S. inputs. It's a vote for or against Asia - plain and simple. From our perspective, a vote against CAFTA is a vote for Asia."
Proponents of CAFTA say the agreement would make it easier to trade with the countries in the pact, which include Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. That's because it would allow them to finalize their products in the foreign countries and ship them back to the U.S. for distribution duty free.
The Caribbean Basin Initiative (CBI) already allows them to do this, but it expires in 2008, and Nancy Young, vice president of marketing and community relations for Russell, said without the duty-free shipments the company would have to reconsider its current manufacturing model, which could mean jobs cuts in Alexander City and Wetumpka.
"Given the competitiveness of the market place and those kinds of duties, we couldn't stay in business," she said. "It would make our product cost too much."
Duties on finished textile products shipped back into the U.S. from CAFTA countries without CBI would range anywhere from 18-30 percent.
Felker agrees that's too much. In fact, making CBI permanent, which CAFTA would, is something he supports. It's whether the trade agreement with the Caribbean countries would create a level playing field with China is where he is weary.
Avondale does business with the Caribbean countries included in the pact. Just like Russell, much of the company's cutting and sewing, what he calls the "needle trade" is done in CAFTA countries.
"We're very dependent upon the duty-free needle trade south of the border," he said. "It allows the western hemisphere to compete with the eastern by allowing duty-free access to the needle trade. There is very little of the needle trade left in this country. There really is competition between the hemispheres. In that respect, we're very pro-CAFTA. We believe it accomplishes the goals of free trade with the Caribbean."
But Felker also believes those siding with the current pact need to consider China as well.
U.S. Quotas were lifted on China in January, and since then, the market has been flooded with Chinese goods.
That's nothing new, according to Young. The only difference is now the Chinese are invading all markets, instead of a select few.
"Asia, with the quotas going away, is sending all it wants," she said. "But it used to only make department store type products because it didn't want to use up its quotas on cheap products."
Competition with foreign countries, where labor is cheaper, has caused the cost of products to drop, but that happened before NAFTA and it happened before the Chinese quotas were lifted, Young said.
In 1997 a cotton T-shirt produced by Russell cost about $2.25. Today that cost has plummeted to about 90 cents, according to Young.
If CAFTA doesn't pass Young said Russell couldn't compete with Asia, and in the end, it could be forced to restructure once again, as it did before in 1998, but this time moving its production to Asia instead of Mexico or Honduras.
In 1998, Russell changed its manufacturing model and moved its sewing operations to Mexico and Honduras. The switch cost the Alexander City area alone more than 1,000 jobs, but in the end, Young said it allowed the company to remain in existence and competitive.
"Russell will still survive," she said. "All we have to do is the same we did in 1998. We'll have to look at changing the model, but that's not what we really want."
Changing the model for a second time could mean sourcing jobs to Asia, as opposed to Caribbean countries.
But if the pact passes, Felker said it could also hurt existing textile jobs in America. While the trade agreement may not make it legal, he said it would open loopholes for China to trade duty free with the CAFTA countries.
Although quotas have been lifted on China, Felker said the textile industry still has an advantage on Asia because the country still has to pay duties and tariffs on products imported into the U.S.
So far, both Avondale and Russell say they haven't seen the impact of Chinese quotas being lifted, but only time will tell.
The Bush administration has launched an investigation into the impact Chinese quotas has had on apparel in the U.S. While there is a possibility quotas could be reinstated, neither textile companies is investing in it.
This is not the first time CAFTA has come before Congress. Rep. Mike Rogers, who's in his second term, said the trade pact has been an issue since he's been is office.
Russell has supported it since then, yet Avondale has not.
In the past, Rogers has strongly opposed CAFTA, but now, the congressman is leaning in his no vote.
"Part of the problem is we've got Russell for it and Avondale against it," he said. "We want to have fair trade practices. I've got to adhere to what I said in the campaign. I made an explicit statement in the debate in your town (Alexander City) that I would not vote for CAFTA in absence of Avondale. Avondale has made it very clear that it would be devastating to them."
Rogers said he would be more comfortable with the trade agreement if it would close any loopholes allowing China to benefit from the pact, but he said he would still have to factor in agriculture and other industries in the state that would be affected.
"I would be much closer to yes if we could take care of Avondale's concerns," he said. "I've been very clear to Russell about this. This is not a new position, and they know that."
Although Russell officials say a new manufacturing model would be needed if CAFTA fails, Young said she couldn't promise changes wouldn't be made in Alexander City if the agreement does pass.
As for Avondale, Felker said the company was unsure what impact the trade agreement would have on the company, but if it further opened the gates for Chinese trade, it would hurt the company.
Here ya go and if you would I would like your honest opinions. Heh, I know I set myself up for that one! Thanks.
Russell was founded in Alexander city and has since left us high and dry.. I hope they burn in hell!
:eek:
----------------------------------------------------------
Russell Corporation and Avondale differ on what impact CAFTA may have, but both agree vote on trade agreement is crucial
By Laura McAlister
More than a decade ago a free trade agreement was passed that many say closed hundreds of textile plants in the U.S. and cost the country millions of manufacturing jobs, and now there's another on the horizon.
The difference - 11 years later, some textile companies are supporting a new free trade agreement, saying it could save American jobs. However, not all are convinced it's what is needed.
This week, members of the U.S. House of Representatives will hear arguments for and against the Central American Free Trade Agreement, better known as CAFTA. The agreement would form a trade alliance among five Caribbean countries and the U.S., much like NAFTA did with Northern American countries in 1993.
A vote in the house could come before Memorial Day, and it's expected to be a close one with members divided, just as the two major textile industries here are.
Russell Corp., which employs about 3,500 in Alexander City, has said the passage of CAFTA is crucial to the company's future in Alabama as well as the U.S., but Avondale, which employees only about 150 here, but more than 5,000 people nationwide, said the treaty, as is, is a backdoor for China to further dominate the market.
"Avondale is not anti-CAFTA," said Stephen Felker Jr., manager of corporate development for Avondale Mills, Inc. "But we are against CAFTA as it's being proposed currently because we feel there are too many loopholes to allow parties not part of the agreement to benefit from it."
Russell Corporation's deputy general counsel Chris Champion disagrees and argues that a "vote against CAFTA is a vote for Asia."
"We disagree that there are any loopholes in CAFTA," Champion said. "The provisions of the agreement that would allow any Asian products into the U.S. are very limited in scope and were given by design only to Nicaragua, which lags behind the other Central American countries in terms of its apparel industry and economic development. The tariff preference levels for Nicaragua only are a non-issue for Russell and are certainly not worth defeating the agreement over when there are so many jobs at stake. Fundamentally, this issue boils down to whether you want apparel production in this hemisphere that will only exist long-term if CAFTA passes, or you want apparel production in Asia that won't require any U.S. inputs. It's a vote for or against Asia - plain and simple. From our perspective, a vote against CAFTA is a vote for Asia."
Proponents of CAFTA say the agreement would make it easier to trade with the countries in the pact, which include Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. That's because it would allow them to finalize their products in the foreign countries and ship them back to the U.S. for distribution duty free.
The Caribbean Basin Initiative (CBI) already allows them to do this, but it expires in 2008, and Nancy Young, vice president of marketing and community relations for Russell, said without the duty-free shipments the company would have to reconsider its current manufacturing model, which could mean jobs cuts in Alexander City and Wetumpka.
"Given the competitiveness of the market place and those kinds of duties, we couldn't stay in business," she said. "It would make our product cost too much."
Duties on finished textile products shipped back into the U.S. from CAFTA countries without CBI would range anywhere from 18-30 percent.
Felker agrees that's too much. In fact, making CBI permanent, which CAFTA would, is something he supports. It's whether the trade agreement with the Caribbean countries would create a level playing field with China is where he is weary.
Avondale does business with the Caribbean countries included in the pact. Just like Russell, much of the company's cutting and sewing, what he calls the "needle trade" is done in CAFTA countries.
"We're very dependent upon the duty-free needle trade south of the border," he said. "It allows the western hemisphere to compete with the eastern by allowing duty-free access to the needle trade. There is very little of the needle trade left in this country. There really is competition between the hemispheres. In that respect, we're very pro-CAFTA. We believe it accomplishes the goals of free trade with the Caribbean."
But Felker also believes those siding with the current pact need to consider China as well.
U.S. Quotas were lifted on China in January, and since then, the market has been flooded with Chinese goods.
That's nothing new, according to Young. The only difference is now the Chinese are invading all markets, instead of a select few.
"Asia, with the quotas going away, is sending all it wants," she said. "But it used to only make department store type products because it didn't want to use up its quotas on cheap products."
Competition with foreign countries, where labor is cheaper, has caused the cost of products to drop, but that happened before NAFTA and it happened before the Chinese quotas were lifted, Young said.
In 1997 a cotton T-shirt produced by Russell cost about $2.25. Today that cost has plummeted to about 90 cents, according to Young.
If CAFTA doesn't pass Young said Russell couldn't compete with Asia, and in the end, it could be forced to restructure once again, as it did before in 1998, but this time moving its production to Asia instead of Mexico or Honduras.
In 1998, Russell changed its manufacturing model and moved its sewing operations to Mexico and Honduras. The switch cost the Alexander City area alone more than 1,000 jobs, but in the end, Young said it allowed the company to remain in existence and competitive.
"Russell will still survive," she said. "All we have to do is the same we did in 1998. We'll have to look at changing the model, but that's not what we really want."
Changing the model for a second time could mean sourcing jobs to Asia, as opposed to Caribbean countries.
But if the pact passes, Felker said it could also hurt existing textile jobs in America. While the trade agreement may not make it legal, he said it would open loopholes for China to trade duty free with the CAFTA countries.
Although quotas have been lifted on China, Felker said the textile industry still has an advantage on Asia because the country still has to pay duties and tariffs on products imported into the U.S.
So far, both Avondale and Russell say they haven't seen the impact of Chinese quotas being lifted, but only time will tell.
The Bush administration has launched an investigation into the impact Chinese quotas has had on apparel in the U.S. While there is a possibility quotas could be reinstated, neither textile companies is investing in it.
This is not the first time CAFTA has come before Congress. Rep. Mike Rogers, who's in his second term, said the trade pact has been an issue since he's been is office.
Russell has supported it since then, yet Avondale has not.
In the past, Rogers has strongly opposed CAFTA, but now, the congressman is leaning in his no vote.
"Part of the problem is we've got Russell for it and Avondale against it," he said. "We want to have fair trade practices. I've got to adhere to what I said in the campaign. I made an explicit statement in the debate in your town (Alexander City) that I would not vote for CAFTA in absence of Avondale. Avondale has made it very clear that it would be devastating to them."
Rogers said he would be more comfortable with the trade agreement if it would close any loopholes allowing China to benefit from the pact, but he said he would still have to factor in agriculture and other industries in the state that would be affected.
"I would be much closer to yes if we could take care of Avondale's concerns," he said. "I've been very clear to Russell about this. This is not a new position, and they know that."
Although Russell officials say a new manufacturing model would be needed if CAFTA fails, Young said she couldn't promise changes wouldn't be made in Alexander City if the agreement does pass.
As for Avondale, Felker said the company was unsure what impact the trade agreement would have on the company, but if it further opened the gates for Chinese trade, it would hurt the company.