Phillips-Van Heusen to close Alabama plant (500 Jobs Lost)

Crains NY Business ^ | March 07, 2006 | Associated Press

[Willie Green]

For education and discussion only. Not for commercial use.

(AP) — Apparel company Phillips-Van Heusen Corp. said Tuesday that it will close its last sewing plant in Ozark, Ala., by May 15, resulting in about 500 job cuts.

The Manhattan company, which owns and markets the Calvin Klein brand as well as other brands, said the plant makes about 5% its dress shirts, with the rest outsourced to international factories.

''This was a difficult but inevitable decision based on the competitive environment in the apparel industry and the expiration of import quotas in 2005,'' said Emanuel Chirico, chief executive, in a statement. The company said it will work with local authorities to see if the facility can be marketed to other potential employers.

Phillips-Van Heusen said it expects to record about $10 million in severance and other costs, and sees about $5 million in annual savings as of 2007.

[MonroeDNA]

We're all gonna die!!!!

[LS]

Just returned from giving a talk at Chapman U. in Orange, CA. Stopped by their beautiful new film school, where a prof. in computer gaming had stacks of "programmers wanted" ads posted to his door. He said he places 95% of his graduates. Maybe these shirt makers should consider another line of work, like game design?

[Mr. Brightside]

(The Manhattan company) will close its last sewing plant in Ozark, Ala., by May 15, resulting in about 500 job cuts.

A Manhattan company has a manufacturing plant in Alabama? Sounds like they started outsourcing years ago.

Let's pass a law that Manhattan companies are not allowed to outsource jobs to Alabama. Make them pay Manhattan wages... unless you have something against New York City residents.

[Pessimist]

"Maybe these shirt makers should consider another line of work, like game design?"

I think you made a good point there, but it wasn't the one you intended to make.

Do you really think the people sewing shirts in that factory could be "retrained" to program computer games?

Heck, maybe they can all become lawyers, brain surgeons or CEOs while they're at it.

[LS]

No, I made it in jest, but I'm showing that when one class of jobs disappears, as happened with all 100% of the Pony Express when it was "destroyed" by the telegraph, another appears. We had thousands of telegraph operators in the 1800s . . . uh oh, wait! This year we just saw the last telegraph operator laid off, even at Western Union. But, of course, those jobs have gone to internet, cell phones, and satellites. And so on. Does ANY employee automatically move into a job in the "next" technology? Not always, maybe not often---but others do, every day.

[nyconse]

Well, as soon as the the Feds ok guest workers. I am sure all the jobs will be filled-but not by Americans.

[Pessimist]

I think the problem is that for relatively unskilled workers (and there will always be a certain number of people in that category by nature) the opportunities are really dwindling. Particularly since they now have to compete with illegals for so many of the jobs they could have traditionally relied on.

Its as if we've taken our least capable, least employable people and just thrown them to the dogs.

Later they'll turn up on welfare rolls, and we'll bemoan that seperately.

I think at very least we need to throttle down our immigration to some rate that provides a less severe transition for our lower class.

[LS]

True, but this has always, always been the case. When the spinning mills came in in 1791 into England, there were wails of how people would be put out of work. Well, studies have shown that in fact that spinning mills CREATED far more jobs than they ever took. Some of those will be skilled, others would be unskilled. For every plant that is built, someone has to build it, and someone has to clean it.

[LS]

Sorry, isn't going to happen. They are red hot out there in that field. Same with the film school's movie division. The fact is, there are lots of jobs in those fields.

[Pessimist]

These people aren't losing their jobs to technology though. They're losing them to cheaper foreign labor.

I'm not really against that per se, I just think we need to manage the changeover by slowing the influx of migrant workers who compete with these people's jobs.

That, and we need to realize that ultimately this means we may forever have to carry a certain number of these people on the public dole when they can no longer find jobs.

Regarding the technology argument though, I've always been interested by that (the popular notion that automation actually creates more jobs then it destroys).

I'm an engineer and I've worked with automating processes for many years. I don't think I believe that argument, and here's why: Automation saves money by reducing payroll. If the new technology itself actually requires more workers to produce than the number its replacing, clearly there would be no savings overall.

[LS]

First, better technology always creates more jobs than it destroys. This really isn't an issue of debate. Think of the Pony Express. It used about 100 riders, maybe 200-300 station hands, and some managers. If you include the people who built the stations, figure 1000 total. The telegraph not only employed that many easily at permanent stations, but because it was cheaper, the telegraph had stations everywhere.

The inexorable math is that technology makes services/products cheaper, therefore broadens the market. The computer is a great example: as it got cheaper, not only did more and more people "need" one, but it started to do things that weren't conceived before, for example, giving rise to a multi-billion dollar gaming industry, which topped $2 billion in the 1990s, not to mention entire on-line businesses such as Amazon. Suddenly there was not only demand for people to make, service, sell, and operate computers but for millions more people to create games, software, business and word programs, then to package, sell, and upgrade all those games, software, and programs.

[reformedliberal]

In every *high tech* economy, there is also a concurrent market for what is known as *high touch*, meaning items made by hand. By definition, this rarely becomes more than limited production by any one artisan, but the high tech world provides the means (computer/Internet)for many of these hand production shops to actually reach the market, as well as produce all their own advertising/marketing materials. Pre-Internet, there was simply no way to take high touch products to a large enough market to be sustaining for the workers.

We began as artists/craftspeople way back in the 1960s and have participated in the expansion and change of this industry over the past 38 years. The biggest change has been Internet marketing, which makes people independent of art fairs, galleries and trade shows, allowing us to reach our individual wholesale and retail customers efficiently. Being able to produce our own printed materials or a web site reduces our marketing costs considerably. Today, in my area of work, there are machinery inventions and use of castoff factory production equipment, much like the antique mechanical dobby loom became the production yardage weaver's loom of choice in the 1980s. The finished work is valued highly. By now, everyone must be related to or knows a successful hand production craftsperson with a viable business and an adequate income.


The displaced workers who aren't capable of high tech jobs or industrial chemical production jobs all have marketable skills and there is already a proven market. For example, there are hundreds of small contract production sewing shops all over this country. They make cheerleader outfits and dance competition outfits and other American designer goods in a modern, professional manner, just as they formerly made whatever brand item.

Back in the 1990s, a shoe plant closed in Stillwater, MN. Several of the workers bought some of the equipment and, with their wives began making and marketing wonderful custom shoes. They were staples in the production craft trade show circuit (probably still are) and also sell at Renaissance Faires. Since they don't have a website, I imagine they are doing quite well enough with the venues they have. They are supporting several families. I traded handwoven clothing for a pair of their shoes, wore them constantly and only managed to wear out the insides in ten years. They are called Beaver Tracks and all I can find on them via Google are references to them at various venues, plus their phone number and address. They are expensive, but my line is doing well and I will be making another purchase from them shortly.

We don't even know all the unforeseen market niches that are being created right this second. Production source changes are not a zero-sum game.

[LS]

Great points. It's interesting, I have a chart of all the industries and approx. # of workers who have disappeared since 1900 . . . and corollary industries that have appeared, many since 1960 (cell phones and computers). By 2020, there will be other brand new industries that we haven't thought of yet . . . because if we had, we wouldn't be here jabbering away at each other on a web site but sitting on a beach in the Caribbean :)

[Pessimist]

I realize that its a popular article of faith, and I also realize that the resulting decreased costs increase the quantity demanded.

However I think there's a problem with that economic calculus as it approaches its limits. Consider:

What if I could make food for 1/100th its current cost? Would the demand for food grow apace? What if I slashed the cost to 1/100th again?

At the limits, demand is not really all that elastic.

The notion of elasticity of demand actually cuts the other way through one of your examples as well: The creations of computer games, etc...

Consider that disposable income is not infinite. In that case, every dollar spent on a computer game is one less spent on some other form of intertainment.

[LS]

Faulty logic. If you cut the cost of, say, bread, by 50%, then you open the door for bright, enterprising bakers to start making cheese bread, corn bread, whatever type of flavored bread that previously was too expensive, and to make it generally available. So where there was once one generic bread maker, now there are a dozen specialty bread makers.

We see this in industry after industry: you begin with a couple of competitors; then as profits rise, more competitors get in; as competition drives prices down, competitors get out---but with lower prices and greater demand comes a multitude of ancillary technologies that make up for the jobs. For example, the earliest autos were quite primitive, but as relative prices fell, you got automatic starter companies, windshield wipers, heaters/air conditioners, then later, radios, then still later, satellite radios and mapping systems. Again, same with computers: these were once CALCULATORS, but have become so vastly more than that as to create an entire industry unheard of in 1960, with millions of jobs (most high paying).

[Pessimist]

I notice you side-stepped my question by conveniently limiting your analysis to a single foodstuff: bread.

Even if your scenario were valid (more on that later), people can only eat so much food. If they double their bread consumption, they also inherently reduce their consumption of some other food.

As for PCs vs calculators, once again the obvious: If the total employment in dollars incurred by the computer industry were not less than the total employment in dollars replaced by computers, computerization would serve no purpose in terms of efficiency to society as a whole.

I think the general argument you're trying to site is this:

Yes, they have reduced employment (and therefore costs) in certain industries. However the money freed up by their doing so is then spent on other things - thereby generating new jobs in those fields.

An my point is that this fails at the limits (and we don't know where those are yet) since demand for anything at all is not limitless. How many "things" do people really want? No doubt its a large amount, but its not infinite.

Now, as to the fault in your bread scenario: Its a non-sequitur.

There is no intrinsic economic link that I can see between bread costs (and prices) and the propensity of bakers to shift toward the production of specialty breads.

They are equally free to do so now as they would be under a lower priced regime. Instead it is vigorous competition -at any price point - which drives attempts to differentiate a product or find niches within a given market.


At any rate, clearly you and I are going to disagree on this no matter what. That's fine too.

You can have the last word if you want.