US socks manufacturers struggle to survive

US socks manufacturers are going through hard times, faced with very severe competition from China and others.

Companies like Robin-Lynn Mills Inc are witnessing drastically reduced sales each year. For instance, in 1999, Robin-Lynn shipped 30 million airs of socks and its sales topped US$ 24 million. However, as US retailers and their buyers searched for bargains, moving from higher-wage places such as South Korea and Taiwan to Pakistan and China, they squeezed profit margins tighter and tighter. In 2004, Robin-Lynn manufactured about as many socks as in 1999 but generated just US$ 12 million in sales. The company was at one time the top socks manufacturer in the world, boasting of producing one of every eight pairs worn on the planet. The cushion-sole sock was invented here.

Others are also facing a similar situation. However, the industry is fighting to survive, and is cutting costs wherever possible. Almost every manufacturer is investing heavily in the latest technologies and machines. The Robin-Lynn Mills Inc factory, for instance, owns some of the finest equipment in the business, electronic knitting machines from Italy that set the company back more than US$ 25,000 apiece and can spin out a sock in 75 seconds, with the toe seam automatically sewn.

Prewett & Son Inc, another major sock manufacturer in the US, has also installed six automated sock packaging systems that cost US$ 125,000 each. Called Robosox, the Italian system presses, pairs, folds, stacks and packages socks. The equipment eliminated 40 boarding jobs, 10 pairing jobs and 24 sock-folding jobs. Prewett produced 350 million pairs last year, mostly white socks for more than two dozen retail companies, including all the major discount stores.

Alabama Footwear Inc, is also betting on technology. The company spent US$ 5.6 million on 200 new machines with automatic toe closers, paying US$ 28,000 each. Mr Charles Cole, owner of the company insists that the quality and comfort of socks produced by these machines outweigh those whose toes are sewn manually. However, Mr Cole figures it'll take at least five years to recoup the investment on the new machines. "It's a gamble," he conceded.

The companies are depending increasingly on technology, in a bid to reduce workforce, and to cut down on labour costs. For instance, Prewett, with annual sales of US$ 170 million, still employs about 1,300 people at its 15 mills, but that could shrink further. Robin-Lynn Mills, which has shed nearly a third of its workers in the last two years has begun to send packaging work offshore. At Robin-Lynn, 70 people lost their jobs two years ago, and everyone on the payroll, from the chairman on down, suffered a 10 per cent pay cut.

The companies have also started looking for low-cost vendors and suppliers of raw materials and other inputs. Robin-Lynn Mills, which used to buy its yarn from mills in nearby North Carolina, has started shopping for raw materials in Pakistan, and finds that even after adding transportation costs, Pakistani yarn still costs 35 per cent less. Even as the companies are not very happy cutting out their longtime vendors, costs are forcing them to do this. According to them, "We'll change vendors for anything. Yarn, supplies, light bulbs, it doesn't matter," he said. "The old loyalty where your buddy sold you the light bulb, that's gone." Similarly, Prewett has begun sourcing its socks from low cost producers, and has recently placed an order with Pakistan.

Local government does what it can to support one of its most important industry. "The city is subsidising sewer rates a little," said Mayor Bill Jordan, noting that wastewater costs for the hosiery industry haven't gone up in years.

According to US socks manufacturers, a big advantage for China is the cluster approach to textile manufacturing, which is unheard of in the US. American producers' shares of the US hosiery market have fallen from 69 per cent in 2000 to 44 per cent in 2003, according to industry data. Prodded by persistent lobbying from US textile makers, the Bush administration had imposed limits on Chinese socks in 2003, and has again imposed an embargo on imports from China, which is expected to last till November. The 2003 limit was quite ineffective, and one has to wait and see how effective the current embargo would prove.