State can't manufacture the kinds of jobs it loses.

• Position: MANUFACTURING

Here's the good news for the state's manufacturing sector: During the first nine months of 2004, it lost about 6,800 jobs, according to the U.S. Bureau of Labor Statistics. That's compared with the 30,000 that disappeared during the same period in 2003.

The bad news: Trade quotas that expired Jan. 1 have opened the door for even more imports from low-wage countries, especially China. That could mean more job losses as domestic producers try to compete. Furniture and textiles likely will take the brunt.

Three once-powerful textile giants are no longer independent companies. Two Greensboro-based textile makers, Cone Mills and Burlington Industries, were bought out of bankruptcy by New York-based WL Ross & Co. and folded into Greensboro-based International Textile Group. In April, GMI Merger, an affiliate of New York-based Cerberus Capital Management, bought Greensboro-based Guilford Mills, which emerged from bankruptcy in 2002, for $107 million.

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Not all textile and apparel companies are hurting. Since 2002, Greensboro-based VF has been ditching weak lines, shuttering North Carolina plants, moving manufacturing jobs overseas and buying hot brands such as Nautica Enterprises and Vans. It reported net income of $349 million, up 20%, for the first nine months of 2004.

Despite job losses, furniture makers had a better year than in 2003 because of an improving economy and booming new home sales. Jerry Epperson, furniture analyst with Mann Armistead & Epperson in Richmond, Va., says domestic wood-furniture shipments were up 5% in the first half of 2004, while imports rose 15%. Domestic upholstered-furniture shipments rose 8.4% for the period, and imports were up 19.4%. Manufacturers who control production costs can look forward to a decent 2005, Epperson says, because of continued demand from home buyers as well as the extra cash that homeowners have from mortgage refinancing and rebounding stock markets.

Industries that are less dependent on cheap labor have fared better in North Carolina. "We should see a job gain in non-traditional areas like transportation equipment, technology and pharmaceuticals," says Michael Walden, an economics professor at N.C. State University.

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They'll be lured here by factors such as wages that are low by domestic standards, a dearth of labor unions and the state's strong worker-training programs. The state also has stepped up its use of financial incentives. The biggest package...