Suffering the death of thousands cut.

• Position: North Carolina apparel and textile makers face stiff competition from cheap Asian imports

Sharing lunch with the dozen Cone Mills Corp. retirees who meet at the Golden Corral restaurant on Lawndale Drive in Greensboro each month isn't a good idea for industry executives suffering from more bad news than they can stomach. "The future of textile companies looks very, very bleak," says Ben Thrift, a Cone Mills retiree. Another, James Patton, adds, "A few years from now, when all the trade barriers come down, it is going to get tougher."

North Carolina textile and apparel makers are scrambling to compete with cheap Asian imports by eliminating jobs, closing unprofitable factories and opening plants in Mexico. "They are unfortunately having to move a lot of the production out of North Carolina," says former N.C. Commerce Secretary Rick Carlisle. Through the first quarter of 2000, textile and apparel employment stood at 183,077, down 5.8% from the previous year.

In December, the Harnett County town of Erwin lost its nickname as "The World's Denim Capital" after New York-based Galey & Lord Inc. closed its denim mill, eliminating 740 jobs. It moved some of the production to Hidalgo, Mexico, where it bought 50% of a denim factory. Like Greensboro-based Cone and Burlington Industries Inc., Galey & Lord is expanding in Mexico to take advantage of cheap labor.

The North American Free Trade Agreement, enacted seven years ago, has been a boon to trade, but it hasn't pulled the domestic textile industry from its prolonged slump. In fact, elimination of quotas and duties has encouraged Mexican companies to set up fabric mills, contributing to a surplus that makes it harder for U.S. manufacturers to compete, says Fernando Silva, managing partner at Kurt Salmon Associates, an Atlanta-based consulting firm.

Consider denim. Mexico's annual production capacity has grown from 150 million yards before NAFTA to more than 450 million, and global oversupply has depressed wholesale prices. Denim sells for about $2.20 a yard, down 27% from four years ago.

"Either we play the game by looking at the most cost-effective way of production, or we go out of business," says Cone CEO John Bakane. For Cone, that means investing an additional $108 million in Mexico by year end even as it closes Tar Heel plants and cuts its domestic work force. It let 200 employees go as it closed a fabric-printing factory in Marion, S.C.

Cone is building a $90 million plant to make denim in Altamira, its second denim mill in Mexico. It's spending $18 million to expand another it...