A Stunning Comeback

Few major industries were more savagely battered by the recent recession than textiles, which suffered a loss of sales so severe that production and employment plunged to levels unseen since the dark days of the 1930s. Today the industry is making a stunningly strong comeback. Mills that were operating only two or three days a week last winter are now spinning and weaving round the clock, five or even six days a week. Sales and output are surging well ahead of the general pace of recovery despite the less than robust condition of two prime textile markets, housing and autos. Unemployment, which reached an estimated peak of 20% of the mill work force last January, has been cut to 8% --below the national average of 8.6%. With a backlog of new orders piling up, Horace C. Jones, chairman of Burlington Industries, the biggest producer, pre dicts that the surge will continue into 1976; most executives and analysts agree.

The speed of the rebound has surprised even some experts. During the first three months of this year, the industry suffered a collective loss of $66 million on sales of around $5.7 billion. The turn began in late spring, and can be charted by the earnings reports of Burlington, which went from a low of $3.6 million in the March quarter to $11.1 million in the June quarter and $15.9 million in the third quarter. During the same period, Dan River jumped from a loss of $4.9 million to a profit of $900,000, and Springs Mills from a loss of $684,000 (only its second quarterly deficit ever) to a profit of $864,000. Analyst Edward Johnson of Manhattan-based Johnson Redbook Service Inc., a securities-research firm, believes the industry's fourth-quarter earnings "could possibly be the biggest yet"--more than the record $297 million profit registered in the second quarter of 1974.

The industry's resurgence should give a lift to the economy, especially in the South. Textile manufacturers plan to raise capital spending next year to as much as $850 million, from $660 million this year, generating new orders for equipment suppliers. J.P. Stevens & Co., for example, is buying an estimated $15 million worth of new weaving machines that turn out cloth at a much faster rate than present equipment.

The industry's biggest stimulus is coming from fashion-conscious consumers, who are shedding their uncertainty about the future and indulging long-suppressed urges for new clothing, notably sportswear, leisure suits and shirts. A big seller lately has been the "trashy look," seen mainly in women's blouses; made of semitransparent polyester and cotton, the cloth gets its name from its rough, unfinished look. Demand for blue denim for everything from jeans to auto-seat covers is running high, and corduroy is also moving briskly. Home-furnishings sales, which have been impeded by the slowdown in housing construction, are beginning to show some life, especially in sheets, towels and draperies. Industrial textiles, such as conveyor belts, air-conditioning filters and awning fabrics, are selling poorly, but even they are expected to pick up next year as the economy moves into higher gear.

The industry's resurgence is also being speeded by improved technology like the shuttleless loom, which is more flexible in reproducing designs and runs at higher speeds than conventional looms. Textile producers are also turning away from their historical emphasis on volume production, which often resulted in glutted markets and depressed prices, to concentrate on highly salable items that offer greater returns on investment. Finally, the rush of imports that has plagued the industry in the past has slowed, partly because of the 1971 agreement that drastically curbed imports from Japan and the Far East, partly because costs recently have been rising faster overseas than in the U.S.

Whether the upturn in textiles will continue much beyond the middle of next year will depend heavily on how well the mills manage to hold down prices. That will be a struggle. Synthetic fibers, which now go into about 70% of all knitted and woven goods, are made from petrochemicals, and could go up as world oil prices rise. The scarcity of natural gas, which is used in the finishing and drying of many textiles, could cause shortages that drive up prices. But if prices behave and the economy continues on its upward course, the textile upturn could accelerate into a real boom.

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