Bobbin and weaving: mills fight to survive.

• Position: Textile/apparel industry in North Carolina - Industry Overview

Falling prices for cotton, wool and polyester helped some textile and apparel manufacturers rebound in 1996 after a year they'd like to write off. But some of the profit-draining conditions of 1995 didn't go away. Overseas producers are still eating into domestic market share, and fierce competition at retail outlets is keeping a lid on wholesale prices. "Profit margins are a little better, but they're still pretty lame," says Mark Vitner, an economist at Charlotte-based First Union Corp.

Still, he adds, "they should be better in 1997." Raw-material prices are coming back to earth. Clothing sales started improving in late 1996, and mortgage rates dipped, creating a favorable climate for buying houses and furnishings. Another boost to bottom lines, and unfortunately to unemployment lines, should come from consolidation and modernization. "There's still too much capacity, so companies are looking at places where they have two or three plants that can be consolidated into one," Vitner says.

The only consolation for textile workers is that mills aren't bleeding jobs as fast as before, because the leaner companies are more competitive. Through September, roughly 9,700 textile jobs had been cut, compared with 14,200 through September 1995. But job losses in apparel haven't slackened. That sector lost about 6,200 jobs through September, compared with 5,700 a year earlier. "This two-year period is the worst we've seen in decades," Vitner says.

Manufacturers have been hurt by retailers' demands for discounts and quicker turnarounds on orders. Computerized inventories mean store managers have cut the time items spend in the back room waiting for shelf space. And that means manufacturers have less time to plan production. "Retailers are holding things close to the vest and managing inventories very, very closely," says Sid Smith, president of the National Association of Hosiery Manufacturers.

Hosiery production in the first six months of 1996 inched up 5.1% over a year earlier, but only sock makers had reason to celebrate. A 13.5% jump in sock shipments offset declines in tights and women's sheers. One reason? Women are dressing more casually at work. "Women are just not dressing up in skirts and dresses to the degree they used to," Smith says.

At least textile manufacturers got a break from the raw-material price surge of 1995. Cotton, for instance, which peaked in June 1995 at $1.18 a pound, was selling for about 83 cents in late 1996.

Textile and...