Manufacturing in America, post-globalisation| FT Film

Where is it written that we cannot lead

manufacturing

in the world? How do we become faster? How do we become more efficient? How do we think about automation? Turning those jobs into not just a job that uses my hands but a job that uses my heart and my mind... It's an adrenaline rush. You want to be the best. I'm blushing because of that. I mean, I'm very excited. So the big question before us is not whether globalization will continue, but how. So what they told us is that we needed to normalize our relationship with China. There's nothing normal about it.

The last man standing in an industry is not the winner. He's just the ultimate loser. I love working in the apparel industry, being proud that in the end you made something, being proud that it was made in the USA. I feel like business is going well because I haven't seen a slowdown since we took off the mask . Globalization has been our economic paradigm for the last half century. But things are changing, and countries and regions are deglobalizing and localizing for all sorts of reasons, from more contentious geopolitics to environmental concerns and labor standards. In this movie we will see why it is important to do things at home.

And we're going to follow an all-American supply chain that starts right here in this cotton field in North Carolina. Do you know how many, 10 or 12 farmers around here? Bayard Winthrop is the CEO of the American Giant clothing company. His supply chain includes cotton gins, weaving and sewing factories. And it's all done about 120 miles from here. This not only reduces shipping costs. It also means he knows his clothing meets American labor and environmental standards. So that's cotton thread. For Bayard, it's about keeping the relationships and experience close to home. You also get this benefit, which is being in a cotton field, meeting the cotton farmers, talking about varieties, talking about what they're doing from a crop production standpoint, creating that connection with the men and women. who are involved in this very complicated process. process of making the things we consume every day.

By the way, are you using one of your products or... am I, yeah? Quite fun. T-shirt and button-down shirt and jeans too. Oh Lord. So this is where those clothes started. And this is where they ended up just down the street at Eagle Sportswear. So the original idea behind the company was to bring back some of those very high quality American made things. I felt that being present in the making of products, the care, the passion, the skill, the craft and the work that goes into it was not only important from the point of view of how a quality product is built, but also emotionally and socially important. .

The idea that there is no longer good textile capacity in the United States is nonsense. I wanted to make this

film

about American

manufacturing

because I think we're at an inflection point. Since the 1980s, manufacturing jobs have plummeted. In the constant drive to make things cheaper, factories and jobs were moved abroad. Textiles were especially affected. But I want to show you how a new regionalization of the industry is taking place after the pandemic. And jobs are starting to go back. It is about focusing not on what is cheapest but on creating better jobs for local communities.

Starting in the 1970s, for about 30 years, my father ran factories in the Midwest. And I remember how important it was to him to give people a sense of pride and place. So what went wrong? Well, it all starts with the neoliberal assumption that it didn't matter to a country's well-being whether it made computer chips or potato chips. Robert Lighthizer was hand-picked by Donald Trump to be his trade representative. He has been working in trade for a long time, even under the Reagan administration. And he says advocates of unfettered globalization like Bill Clinton were always wrong. Free trade is about price and consumption optimization.

I think the important thing is production. Manufacturing leads to good jobs, good wages, and strong, vital American communities. And if you have to sacrifice the price of a T-shirt or a third television to have strong communities in the United States, that's the sacrifice I'm willing to make. He believes that the push toward globalization caused the United States to effectively give up its own prosperity. Trade agreements such as NAFTA between the United States, Canada and Mexico, as well as China's entry into the WTO, meant that the United States could outsource its industrial base while focusing primarily on service sector jobs, and that if trade If global growth grew, countries would be freer and more productive. like the United States.

There was this kind of arrogance that the world had changed and market forces forever, now we're going to take us in the direction of economic growth and freedom around the world and all these notions, which are beautiful, except they just don't exist. . . No generation has ever had the opportunity we all have now to build a global economy that leaves no one behind. I call it this trifecta of stupidity: the combination of NAFTS, WTO and PNTR allowing China to have permanent preferential treatment. And the result was that we lost five or six million jobs and hundreds and hundreds of thousands of manufacturing jobs and 60,000 factories.

And communities across the country were decimated. And we saw families breaking up and opioid addiction, and all that stuff. It was the exact opposite of what all these people had predicted. I have been quite critical of the Trump administration. But Lighthizer had the right idea about trade and, in particular, the outsourcing of intellectual property and jobs by large American multinationals. But there were some companies that managed to survive in that period. The key is that they tend to be smaller, private and family-owned. And that made them more capable of taking more aggressive risks. Private companies similar in type to public ones invest about twice as much in things like worker training, factory upgrades, and research and development.

And that's because they're not subject to the short-term pressures of Wall Street. And it's these types of companies that American Giant chose specifically for its apparel supply chain. After the farm it's time for gin. That's where the seeds are removed and the cotton is packaged. Another major improvement we made this year was our new gin stand. They put our name here. So it's here to stay. And we want to add another one someday. So this is a great investment. You take a risk every time you buy equipment like this, right? I feel like we also take a risk every time we take I-95.

So we have people who take risks. And we have people who are going to sit down. Tatum has worked as a model, as a truck driver, and now he owns and runs this gin. After investing hundreds of thousands of dollars in new equipment, he hopes to increase production. It is a very precarious business. But he finds some stability by building a network of relationships with local farmers, truckers and other ginning companies. Well, the way we make money at this particular gin is simply by selling the cotton seed. And we sell to old factories. We sell to milk producers.

We'll sell it to you if you want to feed your deer, which some people have done. It's all in the relationships you establish with certain people. This is the cotton seed. This is basically a mountain of money here. Well, I like to think of it that way. But there are a mountain of problems and expenses outside. Hurricane Ian is approaching the east coast. Despite the large investments that a small gin like Tatum makes in its business, the entire cotton crop and all its profits can disappear in a big storm. With agriculture they have crop insurance. In my industry there is no protection if I don't pick cotton.

We have to plan well in advance to know how to handle these situations. And honestly, none of us can control the weather. And we just have to pray a lot and be positive. You have to have one of these in a cotton gin. Because? Because your blood pressure is through the roof every day, seriously. We want to be very specific with each farmer as best we can. And we can do it with the technology we've updated here to monitor incoming and outgoing humidity. And in the end, the bottom line is that we want you to make money.

It's incredibly exciting when we start the first engine and there is a sequence on the console. It's like an orchestra. I'm blushing because of that. I mean, I'm very excited. I'm sorry. In addition to small businesses like Enfield, Carolina's cotton supply chain features large companies like Parkdale, the largest cotton yarn producer in North America. It is still privately and family owned, which means they can invest a lot of their money in new technology. Executive Vice President Davis Warlick shows me around one of the facilities. We invest a lot in technology to create better efficiencies and better quality, approximately around half a billion dollars in the last 10 years to create more automation and have the best equipment to prepare the fiber and spin the yarn.

Davis tells me that at this facility what would have required 2,000 workers now requires 200. But those 200 jobs require much more technical expertise. This machine works with 55 bales of cotton at a time. The bales come from different farms. The machine is then programmed using software to make sure they are aligned to create the correct mixture. All you're trying to do is take little bites into the top of each bale. In this way, no bale will be overrepresented. It is part of the mixing process. In the past, workers risked losing their fingers due to the high-speed toothed cylinders that clean the cotton.

But these transport machines are much safer. For Parkdale, it's about being able to compete in a global market by leveraging efficient production in the U.S. to address the low cost of labor abroad. We are constantly striving to automate things more so we can compete. And I think that's been one of the reasons we're still here. Automatically guided vehicles move the cotton reels. And here is a rotary that works at 100,000 RPM twisting individual fibers into yarn with sensors that activate a robot to move the cone on a conveyor belt for packaging. Many people in American manufacturing feel that free trade was never truly free because it did not take into account the lower labor and environmental standards that allowed many countries abroad to make things cheaper.

Andy Warlick, Davis' father, says it's like letting other athletes start a 100-meter race closer to the finish line. Competition is good. And Americans thrive on competition. Now free trade? It's a unicorn that I've been chasing for 30 years trying to find anyone in the world who practices it. My best way to describe it is economic betrayal. About 20 percent of the world's cotton comes from China. And most of it comes from Xinjiang, a region mired in concerns over human rights and forced labor. In fact, the United States has banned cotton imports from Xinjiang. Historically, American cotton has had to fight not only against cheap Asian labor but also against the strength of the dollar.

And facing stiff competition, many American companies moved their own factories overseas years ago or left the market altogether. What we have to do here is make sure that we don't put American industry in a situation where the last man standing is the winner because the last man standing in an industry is not the winner. He's just the ultimate loser. Advocates of globalization might point out that world trade and manufactured goods have also more than doubled since 2000. And extreme global poverty has fallen to a third of what it was in 1990. Of course, it's not that simple. Digital trade, rather than trade in traditional goods and services, has really boosted those numbers in recent years.

And manufacturing is important for many reasons, not just the jobs and economic security it brings, but also the ability of a country, for national security reasons, to be able to make things like masks, vaccines or semiconductors. It also allows countries to maintain industrial expertise that will allow us to prepare for the next big challenge like climate change. By some estimates, every dollar spent on manufacturing has a total impact of $2.68 on the overall economy. The American manufacturing industry attracts $1.9 trillion in foreign direct investment. It employs almost 13 million workers, whichrepresents 2.8 trillion dollars of GDP. And it represents almost 60 percent of all private sector R&D.

And I think it's actually the small and medium-sized companies in the industrial sector that are really a hidden strength in the US market. It is the difference between a good action and a good company. Instead of highly globalized and financialized supply chains dominated by a handful of multinational companies, you get smaller, more regionalized chains that can increase their productivity with lean manufacturing and actually be much more agile in the market. I think this is something that Joe Biden really recognizes. He has been quite explicitly moving the federal government away from a focus on consumers and cheap is better at all costs in favor of income- and jobs-driven growth.

We have created almost 700,000 jobs in the manufacturing sector in the last 19 months alone. Companies are investing here in the United States at a record pace. When he says he's going to build an economy from the bottom up and the middle, that's what he means. How can we ensure we are creating good jobs across the country while also ensuring workers reap the benefits of growth? And at the same time we are focused on making sure that the kind of growth we see in this country is not only equitable, but addresses some of the most important social needs.

We are tackling climate change. Heather Boushey is one of many White House figures pushing the place-based economy. One of the things that I think we never understand is that if a person loses their job, they may be able to cross the street or find another job. But when he closes an entire factory, it affects the entire community. Making sure we serve venues has been priority number one. How do we help places thrive? How do we help places recover? Thirty years ago, the United States led the textile sector. So what they told us is that we needed to normalize our relationship with China so that they would then play by the rules.

So there is nothing normal about their accession to the WTO, which guarantees them a status of normal and permanent trade relations. We have suffered a lot. We have communities that no longer make anything that used to be titans of industry. Last year alone, 470 million pairs of jeans were sold in the United States. Some people argue that if we replaced globalized manufacturing with more localized supply chains, prices would rise. And that would be a huge problem when inflation is already through the roof. But supply chains, agriculture and textiles are some of the most polluting in the world.

A consumer forced to buy fewer, better-quality things more locally would help the planet. And decarbonizing our supply chains in certain sectors does not have to raise prices by much. There are already signs of a US comeback in the manufacturing of critical high-margin strategic goods like semiconductors, as you can see, but also in low-margin goods like textiles. It is an industry that employs more than half a million people in the US with shipments totaling $65 billion. We have seen historic investments in the United States textile production chain, as well as in our Central American Free Trade Agreement partners, including Honduras, Guatemala and El Salvador.

We expect more than a billion dollars of new investments to come to Central America this year alone for textiles. That is an indication that the world has changed. For how long? I don't know. Bob Lighthizer points out the trade deficit with China. America spent its money on cheap consumer goods. China used those dollars to buy American assets such as stocks and real estate. And the value of those multiplies over time. Thus we impoverish our children in a very real way in exchange for our third television or our sneakers. And it's a crazy idea. And the only argument in favor is that we are getting cheaper products or that there is some foreign policy objective or that you are an American company that is making money on imports.

Under Lighthizer and the Trump administration, the United States withdrew from the trans-Pacific partnership agreement. And that marked a decoupling from China. From this day on, it's all just America First, America First. I think we should have a very similar attitude towards China and economic integration as China has towards us. They clearly believe in decoupling. So Lighthizer defended the idea that free trade was good for everyone all the time. But even before Trump took office, in 2015, China unveiled its Made in China 2025 plan, which was really about regionalization. And Biden's ban on shipping high-end semiconductor chips to China did more in a couple of weeks to change supply chains than Trump's entire presidency.

Well guess what? The supply chain will start here and end here in the United States. What really surprises me is how both Democrats and Republicans are moving much more towards a localized economic vision, away from the neoliberalism of the 80s, 90s and 2000s. At the Carolina cotton mill, they dye finished fabrics and specialize in clothing workwear, automotive interiors, fast fashion and flame retardant clothing for the military. I remember before Trump was elected, the Trans-Pacific Partnership, TPP, was a foregone conclusion that we were going to sign it. And say what you want about Trump. He took it off the table.

And he breathed a breath of fresh air into the lungs of the American textile industry. Faced with a difficult internal labor market, this is another family-owned private factory that they have invested in to automate, replacing low-skilled jobs that had high turnover. That meant removing human labor from the packaging process and investing in an automatic system for dispensing soda ash, ensuring the right amount is dispensed at the right time and temperature. It's worth noting that much of the machinery in this factory is Swiss or German, which speaks to how those countries have prioritized high-end manufacturing. The Swiss dyeing machine can process more different types of fabrics.

If you look in here, you can see the fabric. He is living down here. Do you see a red dot? Yes Yes. That comes from this. And when it detects that there is no movement, it is an indicator that the fabric could be tangled. And then it will set off an alarm and call an operator who will come in and try to get you out. Bryan believes Made in America should also be part of the conversation. I remember when I met Bayard and the idea that I was going to make a hoodie in the US and sell it on the Internet, we had been doing business in a world of high-volume manufacturers that were always looking for a way to take five cents out of a meter of fabric.

And all of a sudden this guy shows up with an obviously high quality product and I tried to explain to him that it was a bad idea. And because it is very expensive to do what he proposes. And his approach was that I'm not too concerned about the cost of mine versus the cost of everyone else's. Let's build a meaningful brand. And we are going to build it in the United States. And over time people will migrate. And it will become something of a follow-up. Once again I am amazed at how much of the success here is due to family.

Bryan runs this factory with his brother Hunter. His father Paige, who has since passed away, started the factory and brought his children on board. And he feels very present in the way things are done here. He even has an empty spot in the parking lot. If Dad could come here today, I think he would gasp and fall to the ground because a lot of the things we are doing are things that were on his bucket list years ago. And he could have been in that camp to be conservative and less aggressive in making those investments. And I guess God just spoke to us and said the time is now.

The opportunity is here. Swing for the fences. And that is what we have done. William Lucas is the managing director of Eagle Sportswear, where they cut and sew American Giant's clothing range. Remember a time when there were so many jobs in the textile industry that you could quit your job, walk across the street and get another one right away. I love working in the clothing industry. It's being proud of having done something at the end of the day. It's being proud that it's made in the USA. It's in my blood. And once it gets into your blood, I can't imagine not doing it.

He says the good times came to an end with NAFTA in the early 1990s, when many U.S.-based companies closed and manufacturing moved overseas. But this factory has survived under one owner or another. Here innovation does not have to mean only investing in new technology, but also in people. They have implemented what is known as the Toyota modular sewing system. Instead of one worker sitting down to repeat the same process all day, a team of workers performs each of the different jobs in their chain. They have reduced the time it takes to make a zip-up hoodie from 60 minutes to 43 and have reduced the defect rate from 10 percent to 1 percent.

And it's a one-piece flow that takes you along the line, performing the different operations until it's completed on the side. I see. So there is no wasted effort. Exactly. In a way they become their own bosses. And they push each other all day. And if you have a person who's slacking off or something, they're going to turn to that person, hey, you need to speed up. You need to cover your area. Then they fend for themselves. And that's where they get paid. It's your efficiency at the end of the day. Oh that's interesting. Is this the kind of thing being done with robotics today?

Or do you really need a human being to... It's been proven a lot in the automotive industry. You can do it because it is something stable. The woven fabric is so flimsy that you need that human touch. It was that human touch, that skill that made the textile industry respond so well to the pandemic. And Bayard calls me and says, William, do you want to make masks for the government? And I say, sure. I have never made a mask in my life. It was an obstacle. We had to buy new equipment and train everyone. We went from 0 to earning 60,000 per week in one month.

Human nature is that we don't like change. But we can do it. Todd has seen a lot of changes since he started working in the industry right out of high school 34 years ago. He has a feeling that business is booming. I feel like business is good because I haven't seen a slowdown since we took off the mask. When I was little, there were many textile plants. And little by little they started to leave and everything. But the way we do it is still the old way. And for me, maybe I'm biased and stuff because I'm doing it, it's the best way because you have it in your hands.

So do you feel like you've been able to make a good living working here? I raised a child. I was able to help him finish school and stuff. And now he is 30 years old. He has his family. And of course, he's not doing this. He's doing something else, which I want him to do and stuff. That's why it hasn't always been easy. It's always a struggle because I mean, how much money is enough? I'm sure if you ask the rich, how much money is enough? And I don't know if there's an answer to that. So... Some people believe we shouldn't worry about low-margin industries like textiles.

Other people think that making basic garments will be more important in a deglobalizing world. Either way, the American education system has changed to prioritize four-year degrees over two-year vocational training programs that would become jobs like the ones we see here. I wanted to meet Claudia Hamill Jenkins to talk about education. She is the daughter of farmer Jerry Hamill, who supplied cotton to American Giant and who died just a year ago. She discouraged her daughter from taking up farming. Instead, she became a high school teacher. But from textiles to auto mechanics, it is difficult to find teachers who carry out this type of vocational training.

The saddest thing for me is that we can't get teachers to teach these programs. Once teachers retire, we don't have people to cover them. Therefore, we are not getting that interest sparked in students early enough to continue at the local community college. Do you have the feeling that things are changing right now? And will there be more interest in these jobs and then they will do this type of work again? Well, I have to have hope because that's how dad always taught me that you have to look forward. And we must have hope that there will be a return.

And people will see that if you can find things locally, if it's from dirt to shirt, if it's grown here, if it's ginned here, and if it's spun and made here, and you can find it in your local store, that they'll see that it comes back to them in that same community. But if we don't have places where people can work and earn an honest living, people will become even more separated. They are not going to live in rural areas. And these areas are just going todisappear. The hollowing out of rural America is not something to worry about just for nostalgic or romantic reasons.

States like North Carolina have a lot of political importance. And if we can't bring jobs and a stronger economy back to these areas, we won't have stable politics either. When you have these two worlds emerging, you start to see the cracks in society that I think you're seeing now. And that is seen in our politics. You see that in our media. You see it in the way we communicate with each other. These two worlds need to be integrated much more when we go to the supermarket, when we go to the hardware store. The decisions we are making have implications throughout the economy but also from a cultural point of view.

It's great that politicians stand in front of a microphone and say, let's bring jobs back to America. But show us the commitment that you are serious by giving us some kind of reason to believe that in 18 months the narrative won't change. And suddenly we want to sell industries. Great opportunity for onshore and nearby production chains that do these things much better, much more environmentally conscious and much more aware of human rights. But the reality is that price is king in our industry. I mean, this is the largest economy in the world. And the price of admission is not that high.

And it should be. They should pay their fair share like any American taxpayer. One fundamental thing is that you cannot be the only pure person in the world and still prevail. It will not happen. Never happened. And that's not going to happen now. This is a moment of change. It's time to reward companies that do what's right for their communities, their workers and environmental standards. But we also need the manufacturing industry to create more resilience and redundant supply chains here and elsewhere. We have been following a company that makes hoodies. But guess that? They can also manufacture masks, covers for wind turbines, and upholstery for electric vehicles.

We need to reinforce and take advantage of that type of experience. Not everyone in this country wants to be a banker or a software programmer, and that's not what we need. We need a mix of jobs, a diverse economic ecosystem where people can use their heads, their hearts and their hands. You've been watching the second of three FT

film

s about localizing economies. Our first on agriculture is now available. So give it a view. And stay tuned for the next one we'll publish on 3D printing and additive manufacturing. And please comment, like and share.