Posted on Sun, Sep. 30, 2007

POSSIBLE TRADE SAFEGUARD

Sock makers seek protection from foreign competitor

Local producers cite threat from Honduras

JEN ARONOFF

jaronoff@charlotteobserver.com

Local sock makers are urging the federal government to establish a trade safeguard against socks from Honduras, saying a rising tide of imports from the Central American country threatens the existence of their already-struggling industry.

North Carolina is among the nation's leading sock-producing states, with dozens of producers concentrated largely in the Hickory and Greensboro areas.

However, as in other segments of the domestic apparel industry, hosiery manufacturers have shed thousands of jobs during the past decade amid increased competition from cheaper imports.

Since 2005, when Congress approved the Central America Free Trade Agreement, Honduran socks' market share in the United States has doubled.

And Honduran sock imports between January and June of 2007 were up 65 percent over the same period last year, from 89.1 million pairs to 147.1 million pairs, according to the U.S. Department of Commerce.

Between 2005 and March 2007, meanwhile, domestic socks' share of the U.S. market has dropped, from 38 to 29 percent.

In August, the Committee for the Implementation of Textile Agreements, part of the U.S. Department of Commerce, decided to consider whether Honduran sock imports have increased to the point that they're causing, or threatening, serious damage to the domestic sock industry.

If the committee determines they have -- a decision that's expected in the next two months -- protective trade measures could follow.

More than 70 interested parties shared their views during a public comment period that concluded Sept. 20.

About 15 commenters -- representing retailers, importers and yarn manufacturers -- opposed new tariffs; under CAFTA, Honduran socks are manufactured largely with American-made yarn, so U.S. yarn exports to Honduras have grown significantly in recent years.

The U.S. sock industry, some said, was declining before CAFTA. Gildan, a Canadian apparel company that has bought U.S. sock companies and closed plants here recently, argued that making mass-market socks in the United States is no longer competitive, and that erecting new barriers to Honduran trade could have the unintended effect of forcing buyers seeking low-priced socks to buy more socks from countries like Pakistan and China.

But nearly all of the rest of the commenters -- mostly small, family-owned manufacturers -- favored increased protection.

The Catawba County Economic Development Corp., Hickory Mayor Rudy Wright, Valdese Mayor James Hatley and nine Hickory-area sock or sock-related companies urged the government to protect the domestic industry, noting that inaction could have stark consequences.

Hosiery mill owners have already weathered recessions, faced foreign competition they describe as unfair, and endured the loss of business to Mexico and Asia, they said -- and could have easily shut down already.

Their domestic supply chains are withering, they said. And they voice concerns about their ability to weather the latest wave of imports, this time from Honduras.

Domestic sock makers have tried to compete and want to continue to provide American jobs, Dennis Martin, president of Hickory's N.C. Sock Company, wrote in a letter. But amid such unrelenting price pressure, he said, "There are very few changes left that we can make and stay in business."

R. Evans Hosiery of Connelly Springs has decreased employment by 50 percent due to imports, President James Evans wrote. And Catawba Sox of Newton has lost 50 employees over the past five years and is fighting to keep the 120 it has left, President George Clark wrote.

That points to a larger economic issue, said Jim Schollaert, executive director of Made in USA Strategies, which represents domestic sock makers in Washington.

"If (consumers) buy a pair of (Honduran) socks as opposed to a pair of socks made by a domestic manufacturer, much more of their consumer dollars are going to flow right overseas instead of staying here to circulate in the form of more jobs, more utility revenue, more tax revenue, et cetera," he said.

A new tariff, should the textile committee decide to institute it, can last for a maximum of three years. It could take five months for the government to reach a final agreement on a safeguard, according to the textile office.

Hosiery Employment

North Carolina is among the nation's leading sock-producing states. But as with other domestic apparel manufacturers, hosiery employment has fallen in recent years, as imports have increased. Number of hosiery jobs, as of March of each year: