N.C. textiles need to knit new niches.

• Position: ECONOMIC OUTLOOK - Interview

For more than two decades, North Carolina's textile industry has struggled with increased competition from overseas. But Tar Heel mills can survive if they change their business models, says a report from Anderson Bauman Tourtellot Vos & Co., a Greensboro-based turnaround company. Managing Director Peter Tourtellot says they need to find solid niches. Two promising ones: nonwoven fabric, which has an estimated annual economic impact of $3 billion in North Carolina, and nanotechnology used in stain-proof cloth.

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BNC: Why are our textile companies suffering so much?

Tourtellot: They were more focused on what they do and how to protect what they do--as opposed to being focused on what was happening around them and what was happening to their business in terms of global effect. When it dawned on them that something was wrong, it was too late.

What companies made the right moves?

Of the big ones, no one. If you look at Burlington, Cone, Dan River, J.P. Stevens, they all tried to change. Some of them tried to change by merger. I don't see any that failed or went into bankruptcy that took the steps that were necessary early on. But there are private companies, like Milliken in South Carolina, that must be doing something right because you don't read much about any trouble. They have always been proud of their research and development and patents. They have thousands of patents over the years. That is one of the keys to survival--innovation and research and development.

Textile companies here have resisted outsourcing manufacturing. Why do it now?

To compete in today's environment, you're going to have to buy your product from a different manufacturer or outsource it. A good example: Cone is manufacturing denim in the U.S., but that is a difficult product for most companies to try to make. It's the dye. There's a lot of art and science to it. That's a niche that Cone does really well. But there are other products that Cone doesn't do well, so it's going to outsource those products. It's kind of like Nike: What it does well here is marketing, research and design. But it outsources all of the manufacturing. That's the way textiles will have to grow. The companies should always control the design and the added value of the product. If they can control the research and development, they should be able to grow.

If other countries control production, what stops them from controlling the rest?

Nothing is going to stop the Chinese...