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With New Textile Rules, US Mill Shuts Down and Turns to Chinese Partner

For nearly 90 years, the L.W. Packard Woolen Mill has adapted to changes in the worldwide textile industry -- and prospered. But the latest change requires not a minor shift in its business practices, but a revolution.

With the January 1st expiration of a set of export quotas that determined who could sell which textiles to whom, the rules of the game have changed. The big winner is expected to be China, with its vast resources and cheap labor. And the shift could seal the fate of what's left of the U.S. textile industry.

"Everybody in town once worked in here," recalls Margot Hughes, one of the six remaining employees at L.W. Packard in Ashland, New Hampshire. "As long as I can remember, when I came in, the punch clock was out there, people would talk to each other, took care of each other."

Working alone in a big, empty room, Ms. Hughes turns back to her 30-year-old sewing machine and resumes stitching blankets out of what's left of the company's wool inventory.

L.W. Packard was long at the center of the industry. In the mid-1990s, the company had one of the most modern textile manufacturing facilities in the world. 300 employees worked with luxury fabrics like angora and cashmere, providing products for L.L. Bean, Saks and Lands End. Today, most of the machines that would mix, spin and weave those fabrics have been sold to a factory in China. L.W. Packard is 99 percent closed.

Workers are disassembling what's left of the machinery. It, too, will be sold and shipped to factories in China. Company president John Glidden points to the work in progress. "Here we are, we're taking some machines apart," he says. "These stainless steel dye kettles…we'll have to patch the floor when we're done."

Mr. Glidden represents the fourth generation of his family to run L.W. Packard. His grandfather's uncle, Luther Packard, started the company in 1916. Back then, New Hampshire was one of the capitals of the country's booming manufacturing sector. L.W. Packard stayed in business in the face of the Great Depression of the 1930's. The company also managed to survive over the next several decades as textile manufacturing began suffering from competition from developing countries.

Each time, the company adapted. "In the last 15 years of operation, we concentrated on going upscale in our market," notes John Glidden. "The bottom end was getting consumed by Italians, Uruguayans, Asian markets. We kept going more expensive, higher quality, more value added, right to the top of market."

But company officials found they could not keep adapting forever and stay in New Hampshire. "The facility was so large, the volume available in this high-end market so small, that it really became unmarketable, unprofitable," laments Mr. Glidden.

So the company turned a competitor into a partner. Mr. Glidden signed a joint venture agreement with a manufacturer in Beijing to expand a small subsidiary company he started about five years ago. Minus 33 makes premium long underwear out of super-soft wool. The L.W. Packard president says the business is starting to pick up.

"Hopefully a small New England company can make some profit manufacturing in China," he says with a shake of his head. "It's a daunting task, risky task, but I think we can do it. It's our wool, it's our skills, our knowledge…and it still applies." Mr. Glidden believes Minus33 will allow him and his few remaining employees to stay in the business -- even if their product labels say "Made in China."

He is also predicting a steady loss of textile jobs -- and not just in the United States. For example, businesses in Guatemala have been cutting and sewing significant amounts of American-made fabric. But, under the new rules, "that little country is struggling," he says. "Now they have to compete with China even more head on."

Mr. Glidden ticks off other potential victims of the end of export quotas. "The Dominican Republic will lose business," he says. "Mexico is under a lot of strain. Canada is under a lot of strain. So all of our nice, reliable, close trading partners are going to have an awful struggle. The American worker is not the only loser in this free trade economy."

Although the textile industry underwent a major shift on January 1, changes have been coming for many years. "Just like getting old, it didn't happen all at once," John Glidden observes. "I'm sure my grandfather and my father both would be very sad to see the state of the business. But both would understand that there was an end coming to manufacturing in the U.S."

The head of L.W. Packard sees that end as a sign that America doesn't seem to make things anymore. Instead, today's economy is "just digital this and digital that, lots of virtual things."

He gestures around the now-quiet mill. "Here, we actually made things," he says. "That was a very rewarding feeling for me. I see it's missing in the U.S. economy. It's part of the heartbeat of this country that's going away."

John Glidden plans to close his family's mill completely by the end of the summer.