Factory Revitalization from Reshoring
Giant Sucking Sound – the Collapse of Southeast Industries
Ross Perot was a highly successful businessman from Texas. He was so popular that he ran for President in 1992. One of the hot topics at the time was the pending North American Free Trade Agreement, or NAFTA. Perot argued against it, and said these words in the 1992 Presidential Debate:
We have got to stop sending jobs overseas. It's pretty simple: If you're paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor, ... have no health care—that's the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don't care about anything but making money, there will be a giant sucking sound going south…you've wrecked the country with these kinds of deals.(1)
Sound familiar? Perot was 100% correct – NAFTA was a disaster, and it was compounded by the admission of China into the World Trade Organization in 2001. We threw open the doors to foreign competition and got nothing in return except cheaper t-shirts and toys, plus an annual trillion-dollar plus trade deficit with the rest of the world, with China owning a third of that deficit.
NAFTA and WTO Impact on the Textile Industry
Every industry from steel to automobiles to furniture have been decimated by the lopsided trade policies. Politicians in Washington aren’t even focused on this issue, so it will remain intractable for years to come – the most likely scenario to reverse this course will be the inevitable end of globalization, but that’s a topic for another day. Let’s focus on textiles for a moment:
In South Carolina, the industry peaked in the mid-1970s, with 437 mills operating in the state and employing about 143,000 workers. Today, the number hovers around 18,000 workers – an 87% drop in forty years. The same type of drop occurred in the other two HermitCrab states – even though the textile employment today is around 90,000 people, it once was in excess of half a million workers, a third of the national total. Worse, the “employment” is in the production of the raw materials, not in the value-added processes of cutting and sewing. When the textile industry collapsed, the mills were shuttered, and hundreds dot the landscape of the Carolinas and Georgia.
No company, regardless of its brand and prestige, was spared.
Springs Industries: In 1988, Springs Industries operated 24 plants in South Carolina and employed nearly 18,000 people. Then, in the mid 2000’s, Springs merged with a Brazilian company and shuttered the last of its South Carolina manufacturing operations in 2007. The town of Fort Mill bought the headquarters building and converted it to a town hall. Springs…gone.
Hanes: In August of 2023, textile manufacturer HanesBrands announced it would shutter its hosiery plant in Clarksville, Arkansas, in September, and lay off 330 workers. The plant, which was brought back stateside from Honduras in 2015, was the last HanesBrands U.S. facility, after it sold a fabric plant earlier in the year. Hanes…gone.
Nine Recent Factory Closings: In October, Gildan announced a textile plant closure in Salisbury, North Carolina, with 250 jobs lost. The same month, Milliken closed two plants in South Carolina, on the heels of shuttering a separate one in North Carolina in May; and Parkdale Mills, a yarn company, closed three of its four plants in Hillsville, Virginia, and laid off 326 workers, after closing a separate facility in Graniteville, South Carolina, in February. Finally, earlier this month National Spinning shut the doors at its last yarn-spinning facility in Whiteville, North Carolina, which had operated for six decades. A hundred National Spinning employees are now out of work. 1888 Mills stopped making towels in Griffin, GA. The reason is offered below in a company statement:
The decision to cease production was primarily driven by rising operational costs, which “have made it increasingly difficult to maintain a sustainable manufacturing platform in the United States,” the company said.
People rely on paradigms to make sense of the world by looking for the safety of truisms disguised as fact. Paradigms help us understand the world by giving us a set of rules or models to follow. They shape how we see things and help us organize our experiences. This makes
Figure 1: Recent Shuttered Factories
Where Does This Leave Us?: We have hundreds of abandoned textile plants and hundreds of thousands of unemployed workers. To put the workers back to work, we need to reoccupy the abandoned shells. With what? That’s what HermitCrab is designed to figure out.
Reoccupy Versus Build from Scratch
Sometimes you really need to build from scratch. Large companies need specific logistical controls, location, manufacturing layouts, etc. But for the most part, and definitely for the HermitCrab concept, it is far better to reoccupy an abandoned factory, with ample space to expand and scale, than to wait an extra year, spend extra millions of dollars, and damage the environment by building a new plant. Griffin, GA or Salisbury, NC, or Graniteville, SC would love to get their abandoned textile shells reopened soon, whether or not they are producing textile products.
There are ten great reasons to reoccupy an old manufacturing facility “shell”:
Cost Savings: Reoccupying abandoned factories typically involves lower upfront investment compared to new construction. Businesses can avoid significant expenses related to land acquisition, foundational work, and structural building. This financial relief allows for more budget flexibility that can be redirected towards equipment upgrades, workforce training, or market expansion efforts.
Time Efficiency: An existing structure allows operations to commence relatively quickly, significantly reducing the time required to be market ready. With foundational elements in place, businesses can bypass lengthy construction phases, enabling faster production and service initiation. This accelerated timeline can lead to competitive advantages and quicker revenue realization.
Location Benefits: Abandoned factories are often strategically located in industrial zones with established infrastructure. This includes proximity to transportation links, utility services, and supply chain networks. Reoccupation can capitalize on these existing amenities, reducing logistic costs and streamlining operational efficiency, which is essential for maintaining economic viability.
Reduced Environmental Impact: Reutilizing a factory is an eco-friendly option that conserves construction materials and reduces waste. By minimizing new land development and construction, companies can adhere to sustainable practices. This can enhance brand reputation among environmentally conscious consumers and contribute to overall corporate social responsibility goals. It’s all about ESG!
Regulatory Advantages: An existing factory may already satisfy zoning and regulatory requirements, simplifying the process of obtaining necessary permits. This can reduce bureaucratic hurdles, save legal fees, and decrease project risk. Navigating these regulatory landscapes more smoothly can expedite the operational timeline and facilitate quicker business scaling.
Community Support: Revitalizing an abandoned factory can stimulate the local economy by creating jobs and supporting surrounding businesses. This endeavor might gain community goodwill and local government incentives aimed at economic development. Building strong community ties can lead to mutually beneficial relationships and long-term business sustainability.
Tax Incentives: Local governments may offer economic incentives for reoccupying brownfield sites, such as tax breaks, grants, or subsidized loans. These incentives make the financial aspect of revitalization more attractive, contributing to lower operating costs and enhancing the project's overall financial feasibility. Every HermitCrab state offers location services; South Carolina’s LocateSC is a world-class example.
Established Utility Connections: Existing factories generally come equipped with utility connections such as water, electricity, and sewage systems. These pre-installed services eliminate the need for disruptive and costly installation of new utilities, allowing smoother operational commencement and contributing to overall project savings and system reliability.
Labor Availability: Factories are often located in regions with skilled labor pools familiar with industrial work. Reoccupying such a site allows businesses to access experienced workers, thus lowering training costs. This labor force availability can improve production efficiency and maintain consistent quality standards from the onset of operations.
Historic Value Utilization: Yes, I might be reaching here, but some factories possess historical or architectural significance, which can be leveraged as a unique branding element. Incorporating history into the brand narrative can enhance marketing strategies and tap into niche tourism sectors.
Conclusion: Reoccupying abandoned factories is not a new concept. HermitCrab has already cited the Chobani example, where a nearly shuttered factory was not only brought back to life, but dramatically expanded thanks to the foresight of their founder, Hamdi Ulukaya.
The ten reasons above all makes sense - but it also just comes down to common sense. It is better for HermitCrab customers, state and local governments, the workforce, and the environment to move into an empty shell, clean it up, and use the blank canvas to lay out a modern, efficient manufacturing facility. All we need to do now is start identifying the products. Hundreds of buildings look forward to humming again.
Thank you for Reading! Come back tomorrow for Day 15: Community Revitalization: How reshoring can revive small towns & communities. It’s the perfect follow-on to today’s article.
Thanks for reading,
The HermitCrab Team
Footnotes:
(1) https://en.wikipedia.org/wiki/Giant_sucking_sound
