STATEMENT OF SAMUEL Y. AUSTIN, JR., VICE PRESIDENT, CROMPTON-SHENANDOAH CO., WAYNESBORO, VA. Mr. AUSTIN. My name is Samuel Y. Austin, Jr., from Waynesboro, Va. I am vice president of Crompton-Shenandoah Co., Waynesboro, Va., which is in the velveteen-manufacturing business. I have a prepared statement I would like to file for the record. STATEMENT BY SAMUEL Y. AUSTIN, JR., VICE PRESIDENT, CROMPTON-SHEN- Mr. Chairman and members of the committee, my name is Samuel Y. Austin, Jr. I am vice president of Crompton-Shenandoah Co., located in Waynesboro, Va., and I am officer of Crompton Co., the parent corporation. Mr. Howard Richmond, who was scheduled to make this appearance before you on behalf of Crompton-Richmond Co., suffered a thrombosis last week. He is in the hospital and unable to be here. He is the leader in our organization on this subject of tariffs. The rest of us are not as well prepared as Howard Richmond to present our views on the question before the committee, but the matter is of such critical importance to us, that we could not allow this opportunity to go by default Some members of the committee are familiar with the Crompton organization. but for the benefit of those of you who are not, I shall take a few minutes to explain it: Crompton Co. of West Warwick, R. I., is the parent corporation. It is engaged in the textile manufacturing business and specifically in the making of corduroy, velvet, and velveteen. Crompton Co. is a vertically integrated manufacturing organization and owns the following subsidiaries: Cromptor-Highland Mills, Inc., of Griffin, Ga., a cotton spinning and weaving mill which makes corduroy and velveteen greige goods. Arkansas Cotton Mills, Inc., of Morrilton, Ark., a cotton spinning and weaving mill which makes corduroy greige goods. Osceola Finishing Co., Inc., of Osceola, Ark., is a corduroy cutting, dressing, dyeing, and finishing plant. Crompton-Shenandoah Co., of Waynesboro, Va., is a rayon velvet weaving. dyeing, and finishing plant, and a corduroy and velveteen cutting, dressing, dyeing, and finishing plant. Crompton-Richmond Co. of New York City is the selling agency for the three fabrics. All of our plants are located in the United States, and we use domestically grown cotton as our raw material and domestically produced synthetic fibers such as rayon, acetate, and a small amount of other synthetics. On the average we employ approximately 2,300 people. Our customers are predominantly garment and clothing manufacturers, retail stores, and specialty trades. Although this appearance is listed on the agenda as being on behalf of CromptonRichmond Co., it is for the organization as a whole. The effect of a matter of this nature cannot be limited to any one segment of the company. What is good or bad for any particular division is likewise either good or bad for the company as a whole. We appear in opposition to H. R. 5550. Other witnesses have appeared before this committee and presented arguments on the constitutionality and legality of H. R. 5550. We do not intend to go into those points; although in passing we would like to say that we heartily endorse what those opponents of H. R. 5550 have said on the subject. By article XXIX of the General Agreement on Trade and Tariffs (hereinafter referred to as "GATT") the parties agree, on call by the Organization for Trade Cooperation (hereinafter referred to as "OTC") to enter into round-robin negotiations "directed to substantial reduction in the general level of tariffs." H. R. 5550, if adopted, would authorize membership by the United States in a new international agency known as the Organization for Trade Cooperation. OTC is set up for the purpose of administering GATT. Therefore, it logically follows that the long term result of the adoption of H. R. 5550 would be to commit the United States and the State Department to a program of substantial reduction in the general level of tariffs. Such a policy and program is bad for Crompton Co. and is detrimental to the textile industry as a whole. We base this statement upon what has happened to Crompton Co. and particularly to its velveteen manufacturing division. Crompton Co. was the first textile company in America to manufacture velveteens. The art was started by us in 1885, and the company has continued in that business ever since that date; that is for a span of 70 continuous years. During World War II we converted our machinery normally used to manufacture velveteens to the manufacture of jungle cloth for the United States Navy. From 1941 through 1945 we made and shipped 9 million yards of this foul weather gear material. The cutting department is the key to the yardage of velveteen production going through the mill. In 1944 the velveteen cutting department dropped to a low of 9 cutters. We maintained this low level of production so that we could keep our "hand in," so to speak, and preserve a bare minimum of the art and skill necessary to resume the trade following the close of the war. In 1946 we were able to expand velveteen production to meet market demands. Velveteen production increased steadily until 1951. During that year the company produced and sold 2,879,277 square yards of velveteen. Over most of that year we had in our velveteen division approximately 586 employees, 150 of these were velveteen cutters. In 1950 the importation of foreign made velveteens began to build up to a significant proportion of the American market. The following is a tabulation showing, domestically produced, imported, and total sales of velveteens in yards in the United States from 1949 through 1955. In 1953 the quantity of imports reached a point where it began to cut into Crompton Co.'s sales and our first curtailment took place. From 1952 through 1955 imports jumped 496 percent and in 1955 consumed 671⁄2 percent of the American market. Naturally during this period prices were severely depressed. The reason foreign competition has usurped as much of the American market as it has, is because the foreigner can bring his goods into this country and sell them cheaper than the American manufacturer. We fully expect the same pattern to be repeated in 1956. As a matter of fact we are so sure it will happen, that we have stopped weaving high-grade velveteen and are concentrating on a cheaper construction. This is what you might classify as a "last ditch" effort on our part to keep our velveteen division alive. At the present level of production and price it is a nonprofit operation for Crompton Co. There are now 19 cutters in the department. Foreign competition requires that we further reduce this to 15. In all plants we have 113 employees working on velveteen production. This compares to 586 in 1951, 150 of whom were velveteen cutters, and represents a reduction of 81 percent. We have done everything within our power to keep our quality competitive with foreign goods and our cost to a minimum. Even so, foreign manufacturers can buy cotton at world market prices, manufacture the goods, ship them to the United States, pay all charges, including a tariff, add a reasonable profit and sell the goods in New York City at 20 percent below our cost of production. How can we survive with that type of competition? We cannot! The answer is it is costing us money to keep the art alive. This is our story, Crompton's story. We have been hurt and hurt badly, and so has the rest of the velveteen industry. This industry is composed primarily of 3 manufacturers: Crompton Co., A. D. Julliard and Co., Inc., of New York City and Merrimack Mfg. Co., Inc., of New York City and Lowell, Mass. Foreign competition has hurt the velveteen industry to such an extent that on January 23, 1956, it filed a petition with the United States Tariff Commission for relief under the "Escape Clause" provisions of the Trade Agreements Act of 1934. I quote from page 12 of that petition: "The Japanese are now in full possession of the American market for plainback velveteens, and in command of the twillback market. Other than the consump tive power of the American market, there is no limit to the amount of velveteens that Japan will send to this market, it (importers) being able to sell readily at prices far below American costs." Also I call your attention to the statistical information attached to that escape clause brief. It shows the total domestic production and sales of velveteens in square yards and dollars, from 1928 through the first 9 months of 1955. Appendix II shows the square yards and dollars value of velveteen imports from 1928 through the first 10 months of 1955. Appendix III shows the domestic consump‐ tion of velveteens during those years. With the chairman's permission I ask that I be allowed to file a copy of this escape clause petition following the end of this presentation. To bring this discussion back to its pertinence to H. R. 5550, we could not continue doing business were it not for corduroy and velvet. Foreign competition as yet has not hurt these 2 fabrics badly. But just let our tariff traders lower the protection on these fabrics, and in a very short time we shall be defunct and out of business. Since H. R. 5550 is the baby of "free traders," and since it seeks approval of GATT and since GATT is devoted to a long range program of lower and lower tariffs, if H. R. 5550 is passed, we can see the hand writing on the wall. It will be as though Congress said to us, "You are in a business which can more easily be performed by foreign labor and foreign capital. We think it better, for the overall economy of the country, for you to discontinue that business and go into some other line of endeavor." We cannot agree with this philosophy. The United States needs the textile industry. It is one of the largest businesses we have. It performs a very essential and vital service to the people of this country. Not only does it manufacture products which are essential but also it is the major consumer of the cotton farmer's crop. Therefore, we submit without any hesitation whatsoever, that in our opinion, the enactment of H. R. 5550 will not be for the best interest of Crompton Co. and in a larger sense it will be against the best interest of the people of the United States of America. We believe that if H. R. 5550 becomes a law, that in a very short time it will put Crompton Co. out of business and it will have the same effect upon a majority of the companies in the textile industry. For these reasons we are here in opposition to it, and we request that you give careful consideration to the arguments set forth by us in our brief and in our oral discussion of the matter. Respectfully submitted. CROMPTON Co. CROMPTON-RICHMOND Co. CROMPTON-HIGHLAND MILLS. The CHAIRMAN. Mr. Harrison of Virginia is recognized. Mr. HARRISON. Mr. Austin is mayor of the city of Waynesboro, Va., and is a man highly respected, extremely well thought of, and very deserving. He presents a story here that I would like to ask the indulgence of the committee on for just a moment. I would like to ask unanimous consent to place in the record at the conclusion of Mr. Austin's testimony, a letter from the chairman of the Tariff Commission, which develops that this is a very small industry; that prior to 1951 American production enjoyed 99 percent of the American market; that as a result of a GATT agreement on November 17, 1951, the Japanese have been able to sell in the American market in New York competitive products, built in factories built by Americans, manufactured by labor paid 13 cents an hour, which sell at 35 percent below the cost of manufacturing the product in the United States. As a result of that, the Japanese share of our cosmetic market today has grown from less than one percent of the American market to over 60 percent. It is selling now about 5 million square yards of velveteen in the United States. Five-sixths of the employees of this industry have suffered loss of employment as a result of this. The executive branch of the Government asks support for this legislation and strongly urges it as a necessary part of the American foreign policy. But sometimes it is quite difficult to give that support when they permit an industry to suffer as this one has, and the failure of the peril point to function or the escape clause to function in the case of this industry seems to me to be a very inexcusable thing in the light of the statement made by the chairman of the Tariff Commission to me. The CHAIRMAN. Without objection, the request is granted. (The matter referred to appears on p. 1052.) The CHAIRMAN. You may proceed, Mr. Austin. Mr. AUSTIN. Thank you. We appear in opposition to H. R. 5550, and here are our reasons: Article 29 of the General Agreement on Trade and Tariffs, GATT, the parties agree on call by the organization for trade cooperation, to enter into round-robin negotiations, and I quote, "directed to substantial reduction in the general level of tariffs." We claim that a policy of that nature will harm our business even more than it has been hurt up to the present time. We base this upon what has happened to the velveteen division of our business. We also manufacture corduroy and velvet. We are in the textile business. The velveteen business, because of foreign competition, has been put in an unprofitable position. In 1951, which was a normal year following reconstruction of the business after the war, we had altogether in our velveteen division 586 employees. 150 of these were velveteen cutters, and a velveteen cutter is the key to the amount of production going through the plant. Right now we have 113 employees in that whole division and only 19 of them are cutters. In other words, our production of velveteen has been reduced 81 percent, mainly because of importation of velveteen from foreign countries. That is a clear indication that our particular business has been hurt, and, as I say, we could not continue in the textile business were it not for our other 2 fabrics, corduroy and velvet. That is why we are so interested in this legislation, because if the principles of GÅTT are approved by the Congress, then we can see the handwriting on the wall. It is just as though Congress said to us, "We think that economically from an overall standpoint your business should be sacrificed for international trade." We cannot agree with that. The velveteen industry as a whole, of which we are only a part, has been hurt, and they have been hurt to such an extent that they have filed a petition with the Tariff Commission under the escape clause provisions of the Trade Agreements Act. I would like to quote for just a minute from that petition, one paragraph: The Japanese are now in full possession of the American market for plain backed velveteens and in command of the twill back market. Other than the consumptive power of the American market, there is no limit to the amount of velveteens that Japan will send to this market, it being able to sell readily at prices far below American costs. If the protection is lowered, as I said, our other two fabrics will be hurt, and, therefore, we are opposed to a policy which is devoted to a substantial reduction in tariffs. Furthermore, if this policy hurts us, it hurts the velveteen industry, it most likely will hurt the textile industry as a whole, and that, as has been explained to you, is a very important part of American busi ness. So for those reasons, we submit we are in opposition to H. R. 5550. I referred to the escape clause brief which the velveteen industry has filed. There are statistics in the back which go to back up the allegations made. I request permission to file a copy of that as an exhibit in connection with my testimony. The CHAIRMAN. Without objection, it is so ordered. (The document referred to follows:) BEFORE THE UNITED STATES TARIFF COMMISSION APPLICATION FOR INVESTIGATION AND PUBLIC HEARING WITH RESPECT TO VELVETEENS UNDER THE PROVISIONS OF SECTIONS 6 AND 7 OF THE TRADE AGREEMENTS EXTENSION ACT, OR IMPOSITION OF AN ABSOLUTE IMPORT QUOTA, JANUARY 23, 1956 STATEMENT We, the undersigned, hereby make application for an investigation and public hearing with respect to the injurious effect upon the domestic velveteen industry of increased imports of velveteens under the "Escape Clause" provisions of sections 6 and 7 of the Trade Agreements Extension Act of 1951 (Treasury Decisions 47117, U. S. C. A. title 19, sec. 1351), and Article XIX of the General Agreement on Tariffs and Trade (GATT). The 3 parties to this petition produce over 95 percent of all the velveteen made in the United States. The individual members of the velveteen industry are listed herewith and are parties to this petition: Crompton Co., West Warwick, R. I.: Crompton Richmond Co., Inc., New A. D. Juilliard & Co., Inc., New York, N. Y.: New York Mills Division, New Merrimack Manufacturing Co., Inc., New York, N. Y.: Mills, Lowell, Mass. Attached hereto are 3 tabulations which tell the history of domestic production and sales of velveteens for the years 1928 through the first 9 months of 1955. Appendix Ia shows the production and sales of twill-back velveteens. Appendix İb shows the production and sales of plain-back velveteens. Appendix Ic shows the total of both twill-back and plain-back velveteens, production and sales. Both twill-back and plain-back velveteens are all cotton filling pile fabrics and are classified under paragraph 909 of the Tariff Act of 1930. They are both made on exactly the same equipment and employ the same skills. The only difference is in the weaving construction, type of yarns used, and grade and staple of cotton employed. Twill-backs are the more expensive types used in all kinds of children's, girls' and women's ready-to-wear, where fastness of pile is of prime importance for durability. Plain-backs are the cheaper constructions used |