I  spent four plus decades on factory floors, in my own plant, in other plants.  I do know that the only things that actually matter in a business are customers and employees.  That’s all that matters.  Everything else is real estate, intellectual property - it’s all fungible - but customers and workers, they’re the only things that matter.”   

I have boots on the ground manufacturing experience.  I’ve dealt with cost increases and tax increases and economic cycles of boom and bust. I’d like to answer one question that’s been raised today about taxes.  My company and my competitors never made a decision based on taxes.  They made decisions incorporating what the tax structure is because we can’t change it. If you want to do something about taxes, if taxes are an issue, remember that Japan may cut its corporate tax rate, but it has a value added tax, which we don’t have in the USA. Roger Berkley

American disadvantage in export is related to VAT. When the American product gets sold to France, I have all that American tax on it and then my French customer has to apply the French value added tax which is about eighteen percent in France today.  That’s a real tough nut.  

So if you’re going to cut corporate taxes that’s not really going to help me that much in my exporting efforts. You must do something about that value added tax.   

On another subject, I sat with a group of employees and told them they were being downsized, face to face; because my job, as the owner of a company, is to talk to my greatest asset face to face.  Don’t run and hide behind some third party who is going to say to them, I’ve got to let you go.     I’m letting them go and they should hear it from me.  That’s my responsibility.   

I fought against the incredible stupidity and finality of banks which took billions of taxpayer dollars in bailouts and then kept it, rather than lending it to the people who needed it.  I lost that fight. I really did.  I saw my business killed by the stupidity of a bank.  They just didn’t like what they saw.  That bank hadn’t lost a penny on us.  They just didn’t like what it looked like. 

What did they know?  They knew nothing. Over the years I’ve learned that bankers… are   generally lying bankers (and) really stupid.  They’re asked to look at all different kinds of fields and areas and understand them. That means   they look at all kinds of things and they understand none of them.  Then they make decisions based on their lack of knowledge.    

I’ve spoken to the remaining weavers.  I understand their strategies and concerns. Most of the textile manufacturers are private companies.  The companies that were public went away because there is no commodity business in the United States anymore.  That business is long gone.     

The textile industry was the poster-boy for giving away manufacturing.  Long before, when Dick Nixon stepped off that plane in China, we could feel the noose being tightened around our necks.  From that point forward, even before that, (the tough competitor)   was Japan.  The textile business went to Korea in the mid-seventies.  My father fought that.  He testified in front of various committees about that problem.  

(As an industry) we have been essentially raped as the first to go.  Right now, every country has some sort of textile industry.  They have to.  So what’s the easiest thing to give them when they want something?  Hey, give them the damn textile industry.  Nobody will miss it. 

Except we have the Berry Amendment, which says that anything used by the military, and now the TSA - you know those nice blue shirts - those are made in the United States because the Berry Amendment says that all has to be made here in the United States.  And every time the Berry Amendment comes up for renewal there’s a group in Congress that says, you know, we could get it for less if we bought it in China.  Yeah, but, what are your soldiers going to wear when the Chinese get pissed off at you?  You’re going to have a whole bunch of naked soldiers running around the field.  I mean, that’s what it’s all about.

So what happens is, we have to buy, the country has to buy, textile and apparel products made in the United States of America.  But then, by killing the textile industry, all the support industries that supply the textile industry - the entire supply chain - is demolished.  So now those companies have to keep alive companies to make the yarns necessary because the only thing those companies can do is sell to companies making military and government textiles.  There’s no other customer in the United States.  There are just a handful of us and we don’t use enough.    

When Burlington Industries was in the upholstery business, they were in my part of the business which is jacquard, where the pattern is actually woven into the fabric.  That part of the business made up one percent of the overall textile industry in the United States.  Of that one percent, Burlington had seventy-two percent of the looms.  Burlington got out of the business in the mid-seventies.  Bye-bye yarn guys; so long yarn dyers; so long independent fabric finishers. 

We’re here to talk about solutions so let me give you the good news.  My former competitors are really terrific people; they work hard.  I learned to respect them and know them through trade associations.  I have always had more in common with my competitors than with any other single group of companies.  We had the same equipment problems and similar sourcing issues.  There were a whole bunch of things we couldn’t talk about in a trade association and that’s ok.  But we got to know each other and we didn’t sue each other over intellectual property; Not like the Chinese where there’s nobody to sue.  The Chinese take your patterns and sell it globally but not in the USA. They don’t sell it to the United States because they know the importer will be sued for copyright infringement.  They sell it everywhere else in the world, making the product in the United States worthless.  

That’s what intellectual property is.  It’s a thousand little wounds.  You hear about the one huge wound, but not the thousand little wounds inflicted on small and mid-sized manufacturers every single day.  The good news is we’ve learned some things that make us good.  R&D - we are very good at that.  The U.S. has always led the world’s textile industries in R&D.  Our design and our use of raw materials are excellent.  The key there is you always keep the footsteps behind you.  They’re always there, but you must keep them behind you.  That’s one of the things the U.S. textile industry has learned that serves us well.                     

Specialize.  Don’t try to be all things to all people.  Specialize.  Find a niche and go in it.  If it’s a small niche, believe me, the guy in China whose first words to you are, ‘how many containers a week can we ship you’-- is not interested in the 400 yards of fabric you sell to the store in the San Francisco Opera House.  They just don’t care.  That’s not for them.

Avoid hubris.  Don’t think you’re better than you are.  See where you are; be realistic in your expectations.  Don’t live on past successes.  I don’t care what you did before.  I don’t care if thirty percent of all the furniture made in the United States is covered in your fabric today.  That’s the past.  That will never come back.  You cannot re-shore textile manufacturing.  You can in-source it, but you can’t re-shore.         

Forget commodity products.  But some of our manufacturers were in that commodity business and they need to have some of that volume.  So what they’ve done is they’ve created hybrids.  The hybrid is the product that we cannot make competitively here, we will design, we will copyright, and we will outsource that.  It’s never going to get made here again.  Nobody will ever make it.  So do that. 

So those are really the key things that happen on the factory floor.  What do we need from the folks in Washington?  You have to know what you’re doing.  You have to have a trade association, or somebody who knows what’s going on in Washington, because all the people sitting in this room you guys, and ladies, are all really knowledgeable.  You really know what’s going on.  But let me assure you, the guy making kitchen cabinets back in your state where you came from originally, has not a clue.  They don’t know where that ax is going to fall. They don’t know what’s coming at them, but they do need to know.       

We need Washington to do something about real intellectual property protection because it doesn’t exist today.  We need regulation that works and is commercially viable.  The Consumer Product Safety Commission back in the seventies, which is how I got involved in the trade association, was looking to do something about furniture flammability.  And they wanted to make fabrics that would protect homes in case of furniture fires.  So I sat with a number of different chairs of CPSC and said to them, so, Consumer Product Safety Commission, let me see if I can get this straight, there’s a fire and at the end of the fire the house is gone, there’s nothing there but this immaculate sofa which has not a single burn on it.  That’s what you’re looking for, really?  How is that even viable?

We have fought this battle through the Reagan Administration, the Bush I Administration, the Clinton Administration, and the Bush II Administration when they finally sort of backed off. It’s now beginning to rear its little head again but we’re not that big of a group; we can’t give a lot of lobbying money.  The polyurethane foam industry is pretty powerful.  So the fact that the polyurethane foam, in the furniture, is essentially nothing more than solid gasoline, right, they will not regulate that.  They only want to regulate what wraps around it. 

The above speech was made by consultant and former mill owner and Chairman of The National Textile Association, Roger Berkley at the Second Annual Conference on the Renaissance of American Manufacturing: Jobs, Trade and the Presidential Election, National Press Club, Washington, D.C. on March 27, 2012.