The nation's textile industry has been in a free-fall for years, like much of the U.S. manufacturing base. In an attempt to arrest the plunge, legislation recently passed in Congress mandates that uniforms and other textile products bought by the U.S. Department of Homeland Security (DHS) be American-made.
Tagged to the Obama administration's stimulus package and shepherded by Rep. Larry Kissell, a freshman Democrat from North Carolina, the mandate (also known as the Berry amendment), was first applied to the U.S. Department of Defense (DOD). The largest government players in the expansion of the amendment are expected to be the Transportation Security Administration (TSA) and U.S. Coast Guard, which are under DHS.
“We're excited about the opportunity we have to extend the Berry (amendment), that's been around for 60 years,” said Kissell at a press conference shortly after his legislation passed. “We had lots of help — tremendous help — in getting the amendment through.
“You'd have thought transferring the Berry amendment from the DOD to what we have in our amendment would be (easy). However, we had to look at concepts and work with all the people who were generous with help. I'm proud of the results and the opportunity to put Americans to work making this product for those who protect us.”
Kissell will surely reap rewards in his home state. Of the 44 textile plants closed in the country in the past year, 14 were in North Carolina, where 10,300 people lost their jobs.
How does the amendment get around World Trade Organization rules?
It turns out, under international trade obligations there is an exemption for national security agency procurement requirements.
“We've been working since the creation of the DHS to extend that procurement code,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition (AMTAC). “Obviously, the Kissell legislation made that a reality.”
Could the mandate be extended to USDA or other federal agencies?
“It's harder to do such for the USDA and others because they aren't defined as national security agencies. Therefore, a different set of rules” are in play.
Might other federal agencies be designated as part of national security and the amendment expanded more?
“That's step two,” said AMTAC's Lynn Wood. “The first thing was to extend” the amendment. “Now that's done, it's a valid question which agencies under DHS should be exempted.”
Textile industry, unions respond
The Berry amendment is important “because it keeps jobs in production flowing in both good and bad times,” said Bret Kelley, director of sales and marketing with Highland Industries. “Expanding (the amendment) to DHS will not only protect what we've got today, but it will allow us to go back and hire people we've been forced to lay off in the (economic) downturn. That's extremely important.”
It makes “perfect sense” to use American tax dollars as part of the stimulus fund to buy American goods, said Kelley. “I think that's what is most important about this whole process.”
The Berry amendment has been under attack in recent years. Kissell's efforts “blunt those attacks,” said Kelley.
“Obviously, I'm in favor of anything that keeps the textile business alive,” said Martin Foil, chairman of Tuscarora Yarns. The expansion won't help every U.S. textile company the same amount. However, “every little bit helps and the more we can concentrate manufacturing jobs here in America, keep Americans employed by making American products to sell to Americans, by George, that's what we need to be doing. Anything we can do to help with that we should be behind 100 percent.”
The new legislation “means 250,000 homeland security employees will be wearing American-made uniforms,” said Bruce Raynor, president of the 450,000-member UNITE HERE union. “Part of the stimulus package (purpose) was to affect working families. This is something that will dramatically affect working families because it will create and retain jobs in the United States.”
Raynor said the legislation was also important symbolically. “American taxpayers want (taxes) to buy American-based products. Every other country in the world does it. It's time we took care of American workers.”
When asked how big an impact the amendment expansion might have, it's “a bit of an unknown,” said Tantillo. “We're trying to get that information.”
Last year, under Berry, the DOD purchased $2.8 billion worth of textiles and apparel. “We estimated that $2.8 billion equates to 210,000 jobs in the United States,” said Tantillo. “If DHS is just 10 percent of that, we're looking at something in the neighborhood of 21,000 jobs.”
Unsure exactly where DHS has been procuring agency uniforms, “we know there is substantial (work) being done in Mexico,” said Cass Johnson, president of the National Council of Textile Organizations. “TSA hasn't been fully forthcoming on where it placed orders. But we can tell you there was a very sharp response to Kissell's amendment within the DHS. They didn't want the amendment to happen.”
Johnson and others have been “trying to get this into law for six years. It's a real statement about Kissell's determination … to ensure leadership heard his message: he needed this, his district needed this and our industry needed this. We were astonished and pleased.”
U.S. textile manufacturers are sure to see benefits from the amendment expansion. When polled last year, the National Council of Textile Organizations (with around 100 members) found almost 90 percent were already doing Berry amendment work.
“When you see the retail meltdown like we're seeing now in the manufacturing sector, even a small amount of continuing work can be the difference between a plant staying open and closing,” said Johnson.
What about cost comparisons between a U.S.-made uniform versus one made in Mexico?
“First, under the Kissell provision and Berry amendment, the contracting officer has the right to waive the buy American rules if the price offered by the U.S. supplier isn't competitive with U.S. market prices,” said Tantillo. “A U.S. market price includes whatever a domestic producer might be charging for an item in the commercial as well as what the Chinese or Pakistanis might be asking for that product in the U.S. market.”
Tantillo said the TSA provides new employees a $250 stipend to purchase six shirts and six pairs of pants.
“If you take that $250 and use it to buy uniforms from Mexico or China, there is no return to the treasury for that purchase. If you take the $250 and buy uniforms made in Ohio or North Carolina out of U.S. components — when you take into account wages and income taxes paid by the workers, profit made, and the corporate income tax paid by the U.S. companies involved — conservatively, there is a $43.63 return (in the form of taxes) on the $250 purchase. If it's a Chinese-made uniform, we get nothing; the money goes offshore and there's no return to the U.S. economy or treasury.”
Also, the benefit to the overall U.S. economy “due to workers being gainfully employed” must be considered, said Tantillo. “They aren't depending on, or leaning on, the federal social safety net. They aren't recipients of welfare, unemployment benefits or trade adjustment assistance. Instead they're paying taxes, paying mortgages, paying for health care. There is an enormous, positive ripple effect through the buy America provisions. It's so dramatic it isn't even a close call.”
In addition to the financial benefit, the new legislation promotes a stable and secure production base. “Do we want someone in China or Pakistan making our TSA uniforms?” asked Tantillo. “Or do we want someone in Ohio, Pennsylvania or North Carolina making them?”
TSA has released “circular after circular” claiming Al Qaeda seeks agency uniforms for its operatives. “They say officers need to be on high alert. It's nonsensical for us to say, ‘There's no concern and let's save 20 cents per shirt by sending (the work) offshore.’ That simply isn't the case.”
No weak sisters
Pointing at the current state of the U.S. textile industry, Wood says all the “weak sisters” are long gone. Those left are the “best of the best, the most competitive in the world … The only reason the (U.S. textile) companies are still in business is because they've been able to out-innovate competitors or they can be more efficient by getting products to market incredibly quickly.”
That's why Kissell's legislation is so vital. “If you create an environment that encourages production and investment in the United States, our textile industry can explode. We have the best in the world and our people can win the market if they're just provided a bit of fertilizer and water and allowed to grow.”
DHS now has 180 days from the enactment of the stimulus bill to implement the Kissell amendment.