TEXTILES: Recovery in View

The textile business, as white and flat as a bedsheet for the past two years, last week showed signs of returning to health. Among the best indicators were textile share prices, which closed 50% above their 1958 lows. Since last spring, Burlington Industries has gone from 9½ to 14½, Dan River Mills from 9⅛ to 14⅛, M. Lowenstein & Sons from nf to 15, J. P. Stevens from 17½ to 26.

Investors’ optimism was based on facts. The synthetics market has fluffed up in recent months (see chart). In cottons, a fresh burst of heavy orders has many mills booked solid through the first quarter, is bound to turn sales curves upward beginning this month. The price of the industry’s bellwether grade of unfinished cloth has climbed well above April’s 12-year low, has advanced 7% in recent weeks. Prices have jumped as much as 12% for industrial textiles used in such things as cars and shoes.

Out with Old Gear. The rebound is due largely to the general business recovery, plus anticipation of brisk retail sales at Christmas and early next year.* The comeback was also helped by the industry’s campaign to eliminate overproduction. By scrapping some aged equipment and slashing back from a six-day to a five-day week, mills trimmed output by 10% during this year’s first half, whittled inventories from 6.3 weeks of sales in June to 5.3 weeks in September. With inventories down and orders up, mills changed course this fall, boosted output almost 15% above the April level.

Even so, no one expects textiles to bask in the light of a full boom. “In the last 40 years,” says President James E. Robison of Indian Head Mills, “the textile industry has shown the ability to earn a decent return on investment only during periods of unusual demand caused by wartime shortages.”

Why have textiles sagged during “normal” times? One reason is that the industry is a clutter of 500 manufacturers, many of them small, inefficient and hampered by outdated machinery. Though the industry invested $4.4 billion in new plants and equipment during the past decade, an estimated 65% of its machinery is still obsolete. Unlike the automobile or steel industry, the textile industry has no real giants to set the pace in modernization. The largest textile company, Burlington Mills (fiscal 1958 sales: $651 million), has only 5% of the industry sales. All the manufacturers are fiercely independent, have never joined in an intelligent drive to promote textile sales. Competition is so cutthroat that wholesale textile and apparel prices are only 93% of 1947-49 level, while other wholesale industrial prices stand at 126%.

These woes are aggravated by the Government’s absurd cotton-subsidy program, under which the Government dumps cotton abroad at 20% below U.S. prices. Foreign textilemen then make U.S. cotton into cut-price cloth that has won away U.S. markets both abroad and at home.

Up with New Synthetics. The cure “for some of the industry’s ills,” says Indian Head’s Robison, “might be compounded from more aggressive, imaginative policies in research, production, control and marketing.” The industry has already started to follow such a prescription.

From the test tube only recently have come better dyes and finishes, plus much-improved wash-and-wear cloth. The new idea is to bring out improved synthetics every year in a campaign of planned obsolescence. This season alone, chemical and textilemen are introducing more than a dozen new synthetics. Each one is tailored to a special job. For example, Eastman Kodak’s Tennessee Eastman Co. has launched Kodel, which will blend with wool or synthetics to produce wash-and-wear flannels. Dow Chemical Co. has recently brought out Zefran, another wool-like synthetic to be woven into coats, suits, dresses and sweaters.

Such improved synthetics have cut into the market for Old King Cotton. In one generation the percentage of cotton-fiber sales dipped from 85% to 65% of total U.S. fiber sales. But cottonmen are fighting back by developing goods with wash-and-wear finishes. Most of Dan River’s cottons are now treated with finish that produces drip-dry, wrinkle-free cotton shirts, bedsheets, etc.

To sell the new fabrics, textilemen are planning their first major industrywide promotion campaign. Dan River has called for textilemakers to raise $10 million to $15 million a year for the promotion. Other major producers are ready to go along. For one thing, they would like to induce the American male to take as intense an interest in his own clothes as he does in his wife’s apparel. If the average U.S. man spent as much of his income on clothing today as he did in 1929, sales of textile products would soar by some $3 billion a year.

-Last week Kirby, Block & Co., one of the biggest resident buying offices in Manhattan, polled 649 clothing retailers around the country, found that 78% expect a sales pickup in the first quarter, while not one foresees a decrease.