The Textile Renaissance

Abstract

N IMPORTANT TURNING POINT appears to be at hand for the textile industry which should assure it of more consistently profitable operations in future years. This change hinges on the final disappearance of excess cotton system spindle capacity in relation to normal demand which has plagued the industry for the past three decades. The intense competition resulting from this excess capacity has meant abnormally low profit margins, except during special periods such as World War II with its heavy military demands, the 1946-48 postwar period of large demand to satisfy the deferred domestic wartime needs as well as heavy exports, and the Korean war period. Excess cotton system spindle capacity which in 1925 was estimated at 133%, is now down to less than 3%, and in the next year and one half should disappear entirely. This will come about through the combination of a further reduction in the number of spindles in place and the increased need for textiles arising from continued population growth. Even today, in the event of a new national emergency a serious shortage of capacity could immediately develop. The elimination of excess spindle capacity will place the whole textile industry in a much stronger position. Spinning is the beginning stage of textile manufacture, and therefore the capacity available places a limit on the amount of products made by weavers and knitters and so affects the output of all the succeeding stages of manufacture and distribution of textile products, right down to the retailer. Cut-throat competition will disappear, and products will be priced to return a reasonable profit on sales as well as on investment. The volatility of the industry in production and prices will be narrowed. Moreover, during succeeding years the industry will take on some of the characteristics of a growth industry-at least to the extent of the population increase. Textile-machinery manufacturers should likewise benefit substantially. A potential annual demand for about 800,000 new spindles can be estimated over a considerable period in the future, 300,000 of which will be needed to take care of the additional demand for textiles due to population increase, and the remaining 500,000 spindles annually for replacement of over-age spindles now in place. Such demand compares with an average of about 500,000 new spindles installed per year in the postwar years to date, and with only 267,000 in 1953. Other textile machinery should likewise participate in a rising demand. Textile activity in the United States over a long period of years has moved in cycles, usually of two years' duration. This pattern is expected to continue in the future. The present cycle started at a low point in the third quarter 1954, gained momentum in the fourth quarter 1954 and first quarter 1955, and reached its probable peak in the second and third quarters 1955. A moderate declining tendency is expected in the fourth quarter 1955, which should continue through the first and second quarters 1956, with a low to be reached in the third quarter of that year. Thereafter, under normal conditions, a new two-year cycle, 1956 to 1958, should start. The important factor is that, by the end of 1956, excess