Monday, August 3, 2015

King Cotton And Queen Misery

Twenty years ago, textile mills in the Carolinas closed up shop due to cheap Chinese labor.  Now in 2015, Chinese textile giants like Keer Group are finding out that the cheaper labor is over here in Red State, "right-to-work" America.

Once the epitome of cheap mass manufacturing, textile producers from formerly low-cost nations are starting to set up shop in America. It is part of a blurring of once seemingly clear-cut boundaries between high- and low-cost manufacturing nations that few would have predicted a decade ago.

Textile production in China is becoming increasingly unprofitable after years of rising wages, higher energy bills and mounting logistical costs, as well as new government quotas on the import of cotton.

At the same time, manufacturing costs in the United States are becoming more competitive
. In Lancaster County, where Indian Land is located, Keer has found residents desperate for work, even at depressed wages, as well as access to cheap and abundant land and energy and heavily subsidized cotton.

Politicians, from the county to the state to the federal government, have raced to ply Keer with grants and tax breaks to bring back manufacturing jobs once thought to be lost forever.

The prospect of a sweeping Pacific trade agreement that is led by the United States, and excludes China, is also driving Chinese yarn companies to gain a foothold here, lest they be shut out of the lucrative American market.

Keer’s $218 million mill spins yarn from raw cotton to sell to textile makers across Asia. While Keer still spins much of its yarn in China, importing the raw cotton from America, that is slowly changing.

“The reasons for Keer coming here? Incentives, land, the environment, the workers,” Zhu Shanqing, Keer’s chairman, said on a recent trip to the United States.

“In China, the whole yarn manufacturing industry is losing money,” he added. “In America, it’s very different

Automation is a huge part of the deal.  Maximum profits, minimum workers.

“I never thought the Chinese would be the ones bringing textile jobs back,” said Keith Tunnell, president of the Lancaster County Economic Development Corporation, who helped put together subsidies for Keer estimated at about $20 million, including infrastructure grants, revenue bonds and tax credits.

The inner workings of Keer’s factory in Lancaster County help demonstrate why yarn can now be produced for such a low cost in the United States and point to the kind of capital-intensive manufacturing that could thrive again in America.

Inside the 230,000-square-foot spinning plant, giant machines help clean the seeds and dirt from the cotton and send the fluff into carding machines that assemble the cotton into thick, long ropes of fiber. Workers then feed the ropes into machines that spin the cotton into spools of yarn or thread.

The work is highly automated, with the factory’s 32 production lines churning out about 85 tons of yarn a day. Even when Keer opens a second factory next year, it will hire just 500 workers, a fraction of the thousands of workers who toiled at cotton mills across the South for much of the 19th and 20th centuries — a big reason Keer is able to keep costs down.

$20 million in tax credits for 500 jobs.  Seems like a pretty good deal for Keer Group, huh?

Not so much for Lancaster County taxpayers, or schools, or roads, or bridges, or infrastructure, or people.  TPP or not, Red State America is already moving forward with the dark side of international trade, and we're on the wrong side of the ledger for sure. No unions, no benefits, no hope.

But shrinking manufacturing jobs have spurred a willingness in places like Lancaster County to work for lower pay, making them increasingly attractive production bases. Global manufacturers have also been drawn to so-called right-to-work states like South Carolina, where there is little unionization.

“I think I’m going to like it here,” said Enabel Perez, a former apparel factory worker and one of Ms. Ni’s trainees. Ms. Perez said she had jumped at Keer’s call for workers, an event welcomed in Lancaster County with a segment on the evening news.

Future of America seems pretty bleak.

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