To compete, mills lose the use of their hands.

• Position: Textiles/Apparel

With few exceptions, North Carolina's mills kept spinning troubling yarns in 2002, with announcements of more than 30 plant closings and nearly 5,000 layoffs. The struggling industry became a major issue in the U.S. Senate campaign, with both Republican Elizabeth Dole and Democrat Erskine Bowles pledging to seek help in Washington for what they agreed was the main problem: cheap imports flooding the U.S. market, much of it being illegally shipped here in excess of quotas.

Tougher enforcement of trade laws no doubt would benefit North Carolina textile producers but not as much as the political campaigns suggest. N.C. State University economist Michael Walden says the real issue is simple economics. Certain products--apparel, for instance--are cheaper to produce overseas, and there is little hope that trade restrictions can bring back those lost jobs. As for textiles, the real weapon in the global battle for market share is production efficiency, which is where technology and strategy come into play. North Carolina's surviving mills are the ones that have been going increasingly high-tech, Walden says, and they should continue to be competitive.

But the price paid for more-efficient mills is fewer jobs. "If you listened to the political debate between Dole and Bowles, you got the idea that the whole job loss was due to cheating: Enforce the trade laws, the job loss will stop," Walden says. "But I am confident that over the next five to 10 years, we will still see textile jobs go down.

The good-news/bad-news scenario is being played out at some of the largest textile companies in the state. Case in point: Greensboro-based Cone Mills, which reported its best results in years. Thanks to a restructuring that started in 1999, including cutting nearly 800 Tar Heel jobs since 2000 and saving an estimated $30 million in annual costs, Cone reported net income of $3.8 million in the third quarter of 2002, its best third quarter in seven years. The company lost $4.6 million in the same quarter a year earlier. Cone rang up three straight quarters of profits in 2002.

Cone is on a track similar to one being followed by Greensboro-based VF, which also restructured early, cutting more than 1,600 jobs in the state, and was enjoying its second year of solid results. VF reported record earnings for the third quarter of $128.6 million, an increase of 25% from 2001.

By the time some of the state's largest textile companies got around to major restructuring, they...