November 16, 2007    Volume 14, No. 20

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International Trade Commission Finds Another U.S. Industry Completely Gone



BY RICHARD McCORMACK
richard@manufacturingnews.com

The industry that makes luggage with surfaces made out of textile products has disappeared from the United States, reports the International Trade Commission (ITC). The nine companies left in the United States that make suitcases, briefcases, computer cases and sports bags out of manmade fiber textile materials say that at least 70 percent of their business now goes into military applications. Military applications constitute only 5 percent of the total market for such goods, according to the ITC.

Another nine American companies make textiles that are used in such products, which have grown in popularity because they are lighter and are made out of high-tech fibers that are more durable.

The nine firms the ITC identified as being producers of the textile travel goods reported total revenues of $37 million in 2006. "The total U.S. market for travel goods with an outer surface of textile materials is estimated at approximately $3 billion wholesale in 2006," says the ITC. Thus, U.S. producers command a 1 percent share of the U.S. market. "Both the quantity of domestic production and the value of domestic shipments of the subject goods declined from 2005 to 2006," says the ITC. "This primarily reflected a decline in shipments to commercial markets. While domestic production for the U.S. military and government nearly doubled between 2005 and 2006, it represented less than 5 percent of domestic production of such goods."

Because labor costs can range from between 20 percent to 40 percent of the finished good "the majority of U.S. travel goods firms now source their commercial lines from Asian suppliers, mostly China, where labor costs are much lower than those in the United States," says ITC in its report produced at the request of the House of Representatives' Committee on Ways and Means. "Industry sources note that China is the preferred source for offshore production owing to the removal of U.S. import quotas on textile travel goods in 2002, the available low-cost workforce and necessary inputs such as fabric and accessories in China and nearby Asian countries and lower cost, more frequent and shorter shipping times to the United States compared with other Asian countries."

In 2006, China accounted for between 80 percent and 90 percent of imports of soft-sided travel goods to the United States.

The remaining U.S. manufacturers either produce products for niche commercial markets or for the U.S. military and government. "In written statements to the Commission, associations representing the travel goods industry contend that there is no commercially viable domestic production of travel goods," the ITC notes. The remaining U.S. producers are protected by the "Barry Amendment" which requires the Department of Defense to purchase only U.S.-produced clothing or textile articles and that the fibers, yarns and fabrics used in those articles are produced in the United States.

The Travel Goods Association told the ITC that more than two billion pieces of all types of luggage were sold in the United States in 2006, worth about $20 billion. Imports supply more than 95 percent of the U.S. market. The TGA "estimated that the United States government collected $600 million in duties on U.S. imports of textile travel goods in 2006, which, after mark-ups, cost U.S. consumers $1.5 billion," writes the ITC. "The TGA contended that the U.S. textile industry is not interested in protecting travel goods fabric manufacturing. It stated that the U.S. textile industry did not request quotas for travel goods of textile materials in the 2003 U.S.-Vietnam Bilateral Textile Agreement, nor did it request quotas for the U.S.-China 2005 textile agreement. In addition, it pointed out that the United States-Korea Free Trade Agreement would allow all textile travel goods to enter duty-free immediately under a liberal cut and sew rule of origin, unlike other textile provisions of the agreement."

The Outdoor Industry Association could not identify any outdoor recreation companies that produced travel goods of textile materials in commercially viable volumes. "It further noted that for the two-year period of 2005 to 2006, sales of travel goods of textile materials sold through outdoor-specific retailers totaled nearly 10 million pieces worth $625 million."

The report, "Certain Textile Articles: Travel Goods of Textile Materials" (Investigation No. 332-480, USITC Publication 3957, Oct. 2007, 26 pages), is located at http://hotdocs.usitc.gov/docs/pubs/332/pub3957.pdf.



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