By Sean Mussenden
Media General News Service
Media General News Service
Rep. Robert Aderholt of Alabama voted for Rep. Robert Aderholt two years ago.
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WASHINGTON – Since the passage of a free trade agreement with Central America two years ago, business has gone from bad to worse for much of North Carolina’s fading sock industry.
Dozens of plants have shut down. Thousands of workers have been laid off.
But smaller domestic sock makers hope a key trade decision the Bush administration is set to make will improve their lot — at least temporarily.
Perhaps as soon as this week, the administration is expected to impose a tariff on socks imported from Honduras.
Since the passage of the Central American Free Trade Agreement, or CAFTA, in 2005, the tiny country has seen its sock exports to the United States grow faster than any other nation.
Wages are far lower in Honduras, which makes socks produced there cheaper than U.S. socks. Not coincidentally, sales of socks produced in the United States have fallen sharply as Honduran imports have risen.
“Every time one of these so-called free trade agreements is passed, we lose more business. We’re being eaten away,” said Dennis Martin, the president and owner of the NC Sock Company, in Hickory.
A decade ago, Martin employed about 80 people. Now, he’s down to 20, and he’s stayed in business by doing special orders for small groups and catalogs.
He was one of about 50 N.C. sock makers to write letters to an obscure federal trade committee, the Committee for the Implementation of Textile Agreements, that has set a deadline of Dec. 19 to decide whether to put the tariff on Honduras, which was in place before the passage of CAFTA. The new proposed tariff would add 13.5 percent to the wholesale cost of the sock.
If the tariff is switched back on, he expects business to pick up after Christmas.
Opponents of the tariff — including retailers like Wal-Mart and some larger sock makers that have shipped production overseas — say Martin’s prediction is overly optimistic.
Though imports from Honduras have grown quickly, imports from China — by far the largest exporter of socks to the United States — have grown nearly as fast. More than a quarter of all socks sold here this year came from China, compared with about 10 percent from Honduras. Chinese socks are already subject to a tariff.
Putting a tariff on Honduran socks will simply open the door for more Chinese socks, said Laurence Sellyn, a spokesperson for Gildan Activewear.
Gildan, a Canadian apparel giant, has in recent years purchased and shut down plants in North Carolina and elsewhere in the South. It has sock operations in Honduras.
“As far as we’re concerned, global competition is now the reality. The beneficiary of invoking safeguards here will not be companies in the U.S., it will be Asian imports,” Sellyn said.
Asian imports ultimately doomed Jill Patton’s sock company, Johnson Hosiery Mills, in Hickory. Five years ago, she had 90 employees. Last month, she had 40. Last week, only a skeleton crew remained, helping to liquidate the company.
“I get so emotional when it comes to talking about my people. My workers were the bedrock of the community, blue collar workers. They worked hard, and I feel like my government did not seem to care about them,” she said.
She was forced to close, she said, after an important customer — a well-known chain store she declined to name — told her they planned to cut back their order and begin buying socks from an unidentified Asian country, either China or Korea.
Though she wrote a letter to the government this fall in favor of the Honduran tariff, she said she does not expect it will save the fading industry.
“The bigger companies will say, ‘OK, Honduras is out, let’s just go somewhere else’,” she said.
Over the last decade, many larger U.S. apparel companies that make socks and other products have shipped labor-intensive jobs to places where workers earn a fraction of U.S. wages, while remaining headquartered in the United States.
“They’ve kept the advanced jobs – marketing, design, management — here in the United States,” said Kitty Dickerson, professor of textile and apparel management at the University of Missouri.
Since April 2006, 22 sock plants in North Carolina have shut down, and approximately 3,000 workers in the sock industry have been let go, according to Made in USA Strategies.
Winston-Salem-based Hanesbrands knits some of its socks at a plant in Mt. Airy, but it ships them to plants in Honduras and the Dominican Republic for the labor-intensive sewing required to finish the socks.
Though the tariff would hurt the company financially, the impact will be minor because much of the sock is assembled domestically and would not be subject to the full tariff, company spokesman Matt Hall said.
Hanesbrands does not oppose the tariff, Hall said. Still, in a letter to the administration, it asked the government not to let this one episode set a precedent for future tariffs on other products from other countries with which the United States has trade agreements.
“We believe in free trade,” Hall said.
The Honduran tariff would likely not exist without Rep. Robert Aderholt. The Alabama Republican has several sock manufacturers in his district, many in Fort Payne, the self-proclaimed sock capital of the United States. Two years ago, he agreed to cast a tie-breaking vote in favor of CAFTA in exchange for a promise from the Bush administration to reimpose the Honduran tariff if imports increased sharply.
Though the final details of the tariff have not been decided, it is likely to stay in effect for three years. And then what will happen to domestic sock makers?
“That’s a good question,” Aderholt said in an interview last week. “We think we just need some time in order to compete with these countries.”
But the economic outlook for domestic sock makers could soon worsen. In 2009, a limitation on sock imports from China is set to expire, said Jim Schollaert, a Washington lobbyist for smaller domestic sock makers.
“We’re trying to fight that one too,” he said.
Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668.
Dozens of plants have shut down. Thousands of workers have been laid off.
But smaller domestic sock makers hope a key trade decision the Bush administration is set to make will improve their lot — at least temporarily.
Perhaps as soon as this week, the administration is expected to impose a tariff on socks imported from Honduras.
Since the passage of the Central American Free Trade Agreement, or CAFTA, in 2005, the tiny country has seen its sock exports to the United States grow faster than any other nation.
Wages are far lower in Honduras, which makes socks produced there cheaper than U.S. socks. Not coincidentally, sales of socks produced in the United States have fallen sharply as Honduran imports have risen.
“Every time one of these so-called free trade agreements is passed, we lose more business. We’re being eaten away,” said Dennis Martin, the president and owner of the NC Sock Company, in Hickory.
A decade ago, Martin employed about 80 people. Now, he’s down to 20, and he’s stayed in business by doing special orders for small groups and catalogs.
He was one of about 50 N.C. sock makers to write letters to an obscure federal trade committee, the Committee for the Implementation of Textile Agreements, that has set a deadline of Dec. 19 to decide whether to put the tariff on Honduras, which was in place before the passage of CAFTA. The new proposed tariff would add 13.5 percent to the wholesale cost of the sock.
If the tariff is switched back on, he expects business to pick up after Christmas.
Opponents of the tariff — including retailers like Wal-Mart and some larger sock makers that have shipped production overseas — say Martin’s prediction is overly optimistic.
Though imports from Honduras have grown quickly, imports from China — by far the largest exporter of socks to the United States — have grown nearly as fast. More than a quarter of all socks sold here this year came from China, compared with about 10 percent from Honduras. Chinese socks are already subject to a tariff.
Putting a tariff on Honduran socks will simply open the door for more Chinese socks, said Laurence Sellyn, a spokesperson for Gildan Activewear.
Gildan, a Canadian apparel giant, has in recent years purchased and shut down plants in North Carolina and elsewhere in the South. It has sock operations in Honduras.
“As far as we’re concerned, global competition is now the reality. The beneficiary of invoking safeguards here will not be companies in the U.S., it will be Asian imports,” Sellyn said.
Asian imports ultimately doomed Jill Patton’s sock company, Johnson Hosiery Mills, in Hickory. Five years ago, she had 90 employees. Last month, she had 40. Last week, only a skeleton crew remained, helping to liquidate the company.
“I get so emotional when it comes to talking about my people. My workers were the bedrock of the community, blue collar workers. They worked hard, and I feel like my government did not seem to care about them,” she said.
She was forced to close, she said, after an important customer — a well-known chain store she declined to name — told her they planned to cut back their order and begin buying socks from an unidentified Asian country, either China or Korea.
Though she wrote a letter to the government this fall in favor of the Honduran tariff, she said she does not expect it will save the fading industry.
“The bigger companies will say, ‘OK, Honduras is out, let’s just go somewhere else’,” she said.
Over the last decade, many larger U.S. apparel companies that make socks and other products have shipped labor-intensive jobs to places where workers earn a fraction of U.S. wages, while remaining headquartered in the United States.
“They’ve kept the advanced jobs – marketing, design, management — here in the United States,” said Kitty Dickerson, professor of textile and apparel management at the University of Missouri.
Since April 2006, 22 sock plants in North Carolina have shut down, and approximately 3,000 workers in the sock industry have been let go, according to Made in USA Strategies.
Winston-Salem-based Hanesbrands knits some of its socks at a plant in Mt. Airy, but it ships them to plants in Honduras and the Dominican Republic for the labor-intensive sewing required to finish the socks.
Though the tariff would hurt the company financially, the impact will be minor because much of the sock is assembled domestically and would not be subject to the full tariff, company spokesman Matt Hall said.
Hanesbrands does not oppose the tariff, Hall said. Still, in a letter to the administration, it asked the government not to let this one episode set a precedent for future tariffs on other products from other countries with which the United States has trade agreements.
“We believe in free trade,” Hall said.
The Honduran tariff would likely not exist without Rep. Robert Aderholt. The Alabama Republican has several sock manufacturers in his district, many in Fort Payne, the self-proclaimed sock capital of the United States. Two years ago, he agreed to cast a tie-breaking vote in favor of CAFTA in exchange for a promise from the Bush administration to reimpose the Honduran tariff if imports increased sharply.
Though the final details of the tariff have not been decided, it is likely to stay in effect for three years. And then what will happen to domestic sock makers?
“That’s a good question,” Aderholt said in an interview last week. “We think we just need some time in order to compete with these countries.”
But the economic outlook for domestic sock makers could soon worsen. In 2009, a limitation on sock imports from China is set to expire, said Jim Schollaert, a Washington lobbyist for smaller domestic sock makers.
“We’re trying to fight that one too,” he said.
Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668.