The billionaire real-estate developer and reality TV star Donald Trump famously wooed white, working-class voters in the Rust Belt, frustrated by economic stagnation and resentful of perceived gains made by racial minorities, by promising to reverse bad trade deals and bring home jobs.
“Our workers’ loyalty was repaid, you know it better than anybody, with total betrayal,” Trump said during a typically populist jeremiad in Monessen, Pa. in late June. “Our politicians have aggressively pursued a policy of globalization, moving our jobs, our wealth and our factories to Mexico and overseas. Globalization has made the financial elite, who donate to politicians, very, very wealthy.”
The then-candidate promised: “I am going to direct the secretary of commerce to identify every violation of trade agreements a foreign country is using to harm you, the American worker.”
Those Trump voters in Pennsylvania might be surprised to know that Wilbur Ross, Trump’s pick for secretary of commerce, has been called, variously “a billionaire corporate raider” (Foreign Policy), “the bottom feeder king” (New York magazine) and “the king of bankruptcy” (Politico). Then again, this is a president-elect forming a plutocrat cabinet that includes the CEO of ExxonMobil for secretary of state and a fast-food magnate for secretary of labor.
The normally voluble Trump has had little to say about Ross, who actually has a track record of running businesses in distressed industries like steel, coal and textiles that form the economic backbone of his constituency.
A former banker, Ross snapped up Cone Mills and Burlington Industries, two once-mighty Greensboro firms facing bankruptcy, at fire-sale prices in 2004, and operated them through International Textile Group until he sold them to Platinum Equity two weeks before the election. He performed a similar function in steel and coal by buying up distressed properties and consolidating them.
The last annual report filed earlier this year by Greensboro-based International Textile Group with the US Securities & Exchange Commission before it was taken private has some interesting things to say about global competition.
“While imports of textile and apparel garments from Asia have leveled off in recent periods, the company cannot predict the level of future imports from China, Vietnam and similar countries that may have price advantages as a result of lower labor costs and improving production and distributing facilities,” the report reads. “Any future growth of imports could place additional competitive pressure on the company’s US and Mexico manufacturing locations.”
Got that? Competition from China could threaten production in the US and Mexico. But wait, ITG has a hedge against competition from China — locating some of its production in China.
“The company has strategically located certain of its operations in China in order to, among other things, more effectively compete with lower cost producers, and believes that its geographic manufacturing diversity provides certain competitive benefits including the ability to increase lower cost production based on industry conditions,” the report continues.
To give Ross his due, many observers credit him with at least allowing Cone Mills and other besieged companies to maintain some of their domestic production capacity and operate on a smaller scale instead of closing altogether. Bruce S. Raynor, the former president of the UNITE HERE union once told New York magazine: “I really think the future of domestic manufacturing is people like Wilbur Ross.”
Based on a computation of plant floor area recorded in ITG’s 2016 annual report, 63.8 percent of the company’s production capacity remains in the United States. And yet its largest facility, Cone Mill’s White Oak plant in Greensboro, is only a shadow of its former self, with Bloomberg reporting that its employment dropped from 2,800 in the 1970s to 300 in 2012.
The names of ITG’s plants in Mexico and China attest to the company’s offshoring activity by leaving the signatures of the legacy companies sprouted from the North Carolina Piedmont: Cone Denim Jiaxing Plant and Jiaxing Burlington Textile Co. in Jiaxing, Zhejiang, China, and Parras Cone Plant in Parras de Fuentes, Coahuila, Mexico.
And while Trump routinely lambasted the North American Free Trade Agreement and threatened to withdraw from it, the trade deal is viewed positively by the company recently unloaded by Ross.
“Because the company is an apparel fabrics manufacturer and a resident, diversified textile product manufacturer in Mexico, the company believes that NAFTA is generally advantageous to the company,” ITG said in its most recent annual report. “Generally, trade agreements such as NAFTA affect the company’s business by reducing or eliminating the duties and/or quotas assessed on products manufactured in a particular country.”
And in contrast to Trump railing against China for devaluing its currency, ITG salutes the “devaluation of the Chinese yuan against the US dollar” as having “a net positive effect on the company’s operating expenses.”
If what Ross did for Cone Mills as an investor is any indication of what he’s likely to do for American manufacturing as commerce secretary, Trump’s supporters might be underwhelmed.